Golden Sun Technology Group Ltd 20-F for FY2025
Golden Sun Technology Group Ltd. (GSUN)
About this 20-F
Golden Sun Technology Group Ltd filed this 20-F on February 13, 2026, covering the fiscal year ended September 30, 2025 (FY2025).
Headline figures
Fiscal year ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $35.48M
- up 482.8% from $6.09M a year earlier
- Net loss
- $5.09M
- compared with a net loss of $3.71M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OR
For the fiscal year ended
OR
OR
Date of event requiring this shell company report
For the transition period from to
Commission file
number:
金太阳科技集团有限公司
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Telephone: +
Email:
At the address of the Company set forth above
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
An aggregate of
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Emerging growth company |
If an emerging growth company
that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of
the Exchange Act.
| * | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether
the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report.
If securities are registered
pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| International Financial Reporting Standards as issued by the | Other ☐ | |
| International Accounting Standards Board ☐ |
| * | If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐ |
If this is an annual report,
indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No
TABLE OF CONTENTS
i
INTRODUCTION
We are a holding company incorporated as an exempted company in the Cayman Islands with no material operations of our own, and our business operations are currently conducted by our subsidiaries in China (“PRC subsidiaries”). Investors of our Class A ordinary shares own shares of a Cayman Islands holding company. We currently control and receive the economic benefits of our PRC subsidiaries’ business operation through equity ownership, and we no longer use VIE structure. Prior to September 2021, our operations were conducted through variable interest entities (“VIEs”). In response to the revised Implementation Rules for the Law for Promoting Private Education of the People’s Republic of China (the “Implementing Regulation”), which became effective on September 1, 2021 and governs, among other matters, the establishment, organization and operation of private schools, teachers and educators, and the assets and financial management of schools, we completed a reorganization to divest our operations involving two private schools that provided compulsory education. The revised Implementing Regulation prohibits private schools that provide compulsory education from being controlled through VIE contractual arrangements and from entering into transactions with related parties. For a description of our corporate structure, see “Item 3. Key Information-Corporate Structure.”
Unless otherwise stated, as used in this annual report and in the context of describing our operations and consolidated financial information, “Golden Sun Cayman,” “we,” “us,” the “Company,” or “our company” refers to Golden Sun Technology Group Limited, formerly known as Golden Sun Health Technology Group Limited and, prior thereto, Golden Sun Education Group Limited.
As of the date of this annual report, we operate two principal lines of business: tutorial services and e-commerce services. Prior to November 2023, our operations were primarily focused on tutorial and private education services. In response to the increasingly restrictive regulatory environment affecting the private education sector in the People’s Republic of China (“PRC” or “China”), after November 2023, we began to adjust our business strategy and gradually reduce our reliance on tutorial services as our primary sources of revenue. As part of this transition, we expanded our operations into e-commerce. Currently, more than 90% of our revenue is derived from our e-commerce business. Our tutorial services now account for a relatively small portion of total revenue and are maintained on a limited and supplemental basis. We believe that this business diversification reduces our exposure to regulatory risks associated with the education sector and allows us to leverage our existing customer base, operational experience, and technological infrastructure for our future business developments, although there can be no assurance that this strategy will be successful.
| ● | E-Commerce Services |
In November 2023, we diversified our operations beyond tutoring and secondary language instruction to include e-commerce services. Our e-commerce operations currently consist of data analytics–driven marketing and social media promotional services for small and medium-sized businesses on major short video platforms based in China, including Douyin, Kuaishou, and WeChat Video Accounts, where we provide social media content planning, data-based advertising placement, performance monitoring, and strategy optimization. In connection with these services, we utilize data analytics based on platform algorithms to support targeted advertising and adjust marketing campaigns based on real-time performance data.
Our e-commerce operations are subject to various macroeconomic factors that may affect consumer demand and business performance. During periods of economic growth, consumer purchasing power generally increases, which may support higher demand for e-commerce products and services. Conversely, during periods of economic slowdown, consumers may become more price-sensitive, which could adversely affect demand. Demographic and social trends may also influence consumer behavior. For example, younger consumer cohorts generally place greater emphasis on convenience and may be more willing to adopt new e-commerce models and products, while demand among older consumers for products offered through e-commerce platforms has gradually increased. However, shifts in population structure, consumer preferences, and spending patterns are subject to uncertainty and may not continue as expected. The e-commerce industry in China is highly competitive and subject to evolving laws, regulations, and policies. Our operations face risks and challenges, including intense competition, relatively high operating and customer acquisition costs, changes in platform rules or algorithms, regulatory uncertainty, and the need to continually adapt to changing consumer preferences. These factors may materially and adversely affect the growth, results of operations, and prospects of our e-commerce business.
| ● | Tutorial services |
With the advancement of technology, virtual classrooms and artificial intelligence (“AI”) tutoring tools have become increasingly prevalent. Educational resources will be disseminated more conveniently via digital means, and we believe personalized learning services will also gain growing popularity accordingly. In recent years, our tutorial has gradually adopted intelligent teaching tools, leveraging AI-powered question banks to standardize teaching, improving teaching efficiency through technological means, supervising over teaching activities and faculty members, empowering language teaching, and further driving the reform of teaching methodologies. However, as a traditional sector, our business may not grow at the rate projected by industry data, or at all. If the education industry fails to grow as expected, such conditions could have a material adverse effect on our business and the market price of our Class A ordinary shares. In addition, the rapidly evolving nature of the education industry introduces significant uncertainty into any projections or estimates regarding its growth prospects or future condition. If one or more of the assumptions underlying the industry data prove incorrect, our actual results may differ materially from projections based on such assumptions.
As of September 30, 2025, our education centers offer two main programs: (i) foreign language tutorial programs in less commonly taught languages, including Spanish and Japanese, provided to individual students as well as to companies and other organizations; and (ii) Gaokao repeater tutorial programs, provided to individual students.
Revenues from our continuing operations for the fiscal year ended September 30, 2025 increased by approximately $29.4 million, or 483%, to approximately $35.5 million, from approximately $6.1 million for the fiscal year ended September 30, 2024, primarily attributable to the increased revenue from e-commerce services, as we further expanded our operations on e-commerce since late 2023. For the fiscal year ended September 30, 2025, our net loss increased by approximately $1.3 million, or 32%, to approximately $5.2 million, from approximately $4.0 million in fiscal year 2024, primarily due to an increase of approximately $3.8 million in net loss from continuing operations, offset by an approximately $0.7 million turnaround to net income from discontinued operations.
ii
USE OF CERTAIN TERMS
In this annual report on Form 20-F, unless the context otherwise requires, references to:
| ● | “China” or the “PRC” are to the People’s Republic of China. |
| ● | “Chongwen Middle School” are to Wenzhou City Longwan District Chongwen Middle School, which we controlled prior to the Reorganization (as defined below) via an entrustment agreement among Chongwen Middle School, Golden Sun Shanghai and Mr. Xueyuan Weng , as well as a Concerted Action Agreement among two of Chongwen Middle School’s sponsors and the representative of its employees |
| ● | “Class A ordinary shares” are to our Class A ordinary shares, par value $0.005 per share, each entitled to one vote, and not convertible into Class B ordinary shares under any circumstances. |
| ● | “Class B ordinary shares” are to our Class B ordinary shares, par value $0.005 per share. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights: each Class A ordinary Share is entitled to one vote, and each Class B ordinary share is entitled to fifty votes and is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. |
| ● | “compulsory education” are to the nine years of education mandated by the PRC, consisting of six years of primary education and three years of secondary education. |
| ● | “Double First Class University Plan” are to “The World First Class University” and “First Class Academic Discipline Construction” combined, a tertiary education development initiative designed by the PRC government in 2015 aiming to comprehensively develop elite Chinese universities and their individual faculty departments into world-class institutions by the end of 2050. |
| ● | “Gaokao” are to China’s standardized college entrance examination. |
| ● | “Golden Sun (SH)” are to Golden Sun (SH) Cultural and Tourism Research Institute Limited, formerly named as CF (HK) Health Technology Limited, a wholly owned subsidiary of Golden Sun Hong Kong, a Hong Kong limited company. |
| ● | “Golden Sun Cayman,” “we,” “us,” “our Company,” “Company” or similarly terminology are to Golden Sun Technology Group Limited, formerly known as Golden Sun Health Technology Group Limited and, prior thereto, Golden Sun Education Group Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands. |
| ● | “Golden Sun Hong Kong” are to Hongkong Jintaiyang International Education Holding Group, a Hong Kong private limited company and a wholly owned subsidiary of Golden Sun Cayman. |
| ● | “Golden Sun Selection” are to Zhejiang Golden Sun Selection Technology Co., Ltd., a PRC limited liability company and the wholly owned subsidiary of Golden Sun Wenzhou (as defined below). |
| ● | “Golden Sun Shanghai” are to Shanghai Golden Sun Education Group Co., Limited, a Hong Kong private limited company, which was majority owned by Xueyuan Weng, our Chief Executive Officer and Chairman, prior to the Reorganization and is not part of the Group as of the date of this annual report. |
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| ● | “Golden Sun Wenzhou” or “WFOE” are to Zhejiang Golden Sun Education Technology Group Co., Ltd., formerly known as Wenzhou Golden Sun Education Development Co., Ltd., a PRC limited liability company and the wholly foreign owned subsidiary of Golden Sun Hong Kong. |
| ● | “Gongyu Education” are to Shanghai Golden Sun Gongyu Education Technology Co., Ltd., a PRC limited liability company and a former wholly owned subsidiary of Golden Sun Wenzhou, which is no longer part of the Group (as defined below) as a result of Golden Sun Wenzhou’s divesture of Gongyu Education as of the date of this annual report. |
| ● | “Group” are to our Company and its subsidiaries as a whole. |
| ● | “HK Kim Rong” are to HK Kim Rong International Co., Ltd, a Hong Kong limited company whereby Golden Sun Hong Kong holds 18% of its equity interest. |
| ● | “Hangzhou Jicai” or “Jicai Tutorial” are to Hangzhou Jicai Education Technology Co. Ltd., formerly known as Hangzhou Jicai Tutorial School Co., Ltd., a PRC limited liability company and a former wholly owned subsidiary of Golden Sun Wenzhou, which is no longer part of the Group (as defined below) as a result of Golden Sun Wenzhou’s divesture of Gongyu Education as of the date of this annual report. |
| ● | “Hongkou Tutorial” are to Shanghai Hongkou Practical Foreign Language Tutorial School, a PRC limited liability company and the wholly owned subsidiary of Xianjian Technology, which ceased operation on December 31, 2021. |
| ● | “Nasdaq” are to The Nasdaq Capital Market where our Class A ordinary shares are traded on. |
| ● | “Key Universities” are to universities in China that are included in Project 211, Project 985 and Double First Class University Plan. |
| ● | “MOE” are to the Ministry of Education of the PRC. |
| ● | “Ouhai Art School” are to Wenzhou City Ouhai District Art School, which we controlled prior to the Reorganization via a series of contractual arrangements between Ouhai’s shareholders and Golden Sun Wenzhou and is now wholly owned by Xueyuan Weng, our Chief Executive Officer and Chairman, as of the date of this annual report. |
| ● | “Oulong Longwan Branch” are to Zhejiang Oulong Cultural and Tourism Industry Development Co., Ltd., (Longwan Branch), a PRC limited liability company and a branch office of Zhejiang Oulong. |
| ● | “Project 211” are to a national higher education initiative launched in 1995, designed to strengthen about 100 universities and key disciplines to elevate the overall quality and research prowess of China’s higher education system, thereby supporting the country’s long-term development goals. |
| ● | “Project 985” are to a strategic government project initiated in 1998 to build a select number of top Chinese universities into world-class research institutions. It featured significant concentrated funding from central and local authorities to accelerate their development and enhance China’s global standing in higher education and innovation.. |
| ● | “Qinshang Education” are to Shanghai Qinshang Education Technology Co., Ltd., a PRC limited liability company and the wholly-owned subsidiary of Zhouzhi Culture, which is no longer part of the Group as a result of Golden Sun Wenzhou’s divesture of Gongyu Education, the parent company of Zhouzhi Culture, as of the date of this annual report. |
iv
| ● | “RMB” or “Renminbi” are to the legal currency of China. |
| ● | “SCNPC”are to Standing Committee of the National People's Congress. |
| ● | “SEC” are to the U.S. Securities and Exchange Commission. |
| ● | “Securities Act” are to the Securities Act of 1933, as amended. |
| ● | “secondary schools” are to middle and high schools. |
| ● | “Selection Hangzhou Branch” are to Zhejiang Golden Sun Selection Technology Co., Ltd. (Hangzhou Branch), a PRC limited liability company and a branch office of Golden Sun Selection. |
| ● | “Shanghai Daizong” are to Shanghai Daizong Business Consulting Co., Ltd., a PRC limited liability company, of which Xianjin Technology acquired a 19% equity share in 2023 and is no longer part of the Group as a result of Golden Sun Wenzhou’s divesture of Gongyu Education, the parent company of Xianjin Technology, as of the date of this annual report. |
| ● | “Shanghai Fuyang” are to Shanghai Fuyang Culture Technology Co., Ltd., formally known as Shanghai Fuyang Cultural and Tourism Development Co., Ltd., a PRC limited liability company and the wholly owned subsidiary of Shanghai Wensaier. |
| ● | “Shanghai Fuyouyuan” are to Shanghai Fuyouyuan Health Technology Co., Ltd., a PRC limited liability company and a wholly-owned subsidiary of Shenghai Wensaier. |
| ● | “Shanghai Jicai” are to Shanghai Yangpu District Jicai Tutorial School, which transferred its existing business to Zhouzhi Culture in fiscal year 2022 and discontinued his business operation, and was subsequently deregistered on December 12, 2024. |
| ● | “Shanghai Jinheyu” are to Shanghai Jinheyu Biotechnology Co., Ltd., a PRC limited liability company, which is no longer part of the Group as a result of Golden Sun Wenzhou’s divesture of Gongyu Education, the parent company of Shanghai Jinheyu, as of the date of this annual report. |
| ● | “Shanghai Wensaier” are to Shanghai Wensaier Education Technology Co., Ltd, a PRC limited liability company and the wholly owned subsidiary of Golden Sun Wenzhou. |
| ● | “shares,” “Shares,” or “ordinary shares” are to our Class A ordinary shares and Class B ordinary shares. |
| ● | “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States. |
| ● | “VIE” and “VIEs” are to variable interest entity Ouhai Art School and Chongwen Middle School, individually and collectively. In September 2021, in compliance with the revised Implementing Regulation, the Company divested its operations of both schools. All discussions in this annual report regarding VIEs are provided for historical context only. |
| ● | “Wenzhou Lilong” are to Wenzhou Lilong Network Technology Co., Ltd, formerly, Wenzhou Lilong Logistics Services Co., Ltd., a PRC limited liability company and the wholly owned subsidiary of Golden Sun Wenzhou. |
| ● | “Xianjin Technology” are to Shanghai Xianjin Technology Development Co., Ltd., a PRC limited liability company which is no longer part of the Group as a result of Golden Sun Wenzhou’s divesture of Gongyu Education, the parent company of Xianjin Technology, as of the date of this annual report. |
v
| ● | “Yangfushan Tutorial” are to Wenzhou City Ouhai District Yangfushan Culture Tutorial School and a wholly owned subsidiary of Golden Sun Wenzhou. |
| ● | “Zhejiang Oulong” are to Zhejiang Oulong Cultural and Tourism Industry Development Co., Ltd, formerly known as Kaiye (Wenzhou) Water Project Development Co., Ltd., a PRC limited liability company and a wholly owned subsidiary of Wenzhou Lilong. |
| ● | “Zhejiang Fuyouyuan” are to Zhejiang Fuyouyuan Health Technology Co., Ltd, a PRC limited liability company, which is no longer part of the Group as a result of Wenzhou Lilong divesture of its shareholding in Zhejiang Fuyouyuan as of the date of this annual report. |
| ● | “Zhejiang Kangyuan” are to Zhejiang Kangyuan Medical Technology Co., Ltd., a PRC limited liability company and a wholly owned subsidiary of HK Kim Rong. |
| ● | “Zhouzhi Culture” are to Shanghai Zhouzhi Culture Development Co., Ltd., a PRC limited liability company which is no longer part of the Group as a result of Golden Sun Wenzhou’s divesture of Gongyu Education, the parent company of Zhouzhi Culture, as of the date of this annual report. |
| ● | “Zhouzhi Tutorial” are to the tutorial center operated by Zhouzhi Culture. |
Information Related to, or Based on, the Number of Outstanding Ordinary Shares
On April 18, 2024, the Company effectuated a share consolidation of its ordinary shares on a one-for-ten basis (the “Share Consolidation”). Unless otherwise provided, this annual report reflects the “Share Consolidation.” As a result of the Share Consolidation:
| ● | Every ten (10) Class A ordinary shares with a par value of US$0.0005 each were consolidated into one (1) Class A ordinary share with a par value of US$0.005 each. |
| ● | Every ten (10) Class B ordinary shares with a par value of US$0.0005 each were consolidated into one (1) Class B ordinary share with a par value of US$0.005 each. |
| ● | The consolidated shares have the same rights and are subject to the same restrictions (except for the change in par value) as the previous shares of the respective classes, as specified in the Company’s memorandum and articles of association. |
Following the Share Consolidation, the Company’s authorized share capital was amended from US$50,000 divided into 90,000,000 Class A ordinary shares with a par value of US$0.0005 each and 10,000,000 Class B ordinary shares with a par value of US$0.0005 each, to US$50,000 divided into 9,000,000 Class A ordinary shares with a par value of US$0.005 each and 1,000,000 Class B ordinary shares with a par value of US$0.005 each.
Historical financial information related to the number of ordinary shares outstanding, underlying convertible instruments (e.g., options or warrants), per-share prices, or other data based on the number of outstanding ordinary shares for periods prior to the effective date of the Share Consolidation has been presented as if the Share Consolidation had already been in effect.
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On September 25, 2025, we conducted an extraordinary general meeting of Class A shareholders (the “EGM”), followed by our 2025 annual general meeting of all shareholders (the “AGM”) to approve the following resolutions, among other things, effective immediately:
| ● | that the variation of the rights attaching to Class A ordinary shares of par value US$0.005 each resulting from the number of votes holders of Class B ordinary shares of par value US$0.005 each are entitled to cast on a poll being increased from 5 votes to 50 votes for each Class B ordinary share they hold (the “Class B Variation”); |
| ● | that the change of our name in English from “Golden Sun Health Technology Group Limited” to “Golden Sun Technology Group Limited,” and the change of our foreign name from “金太阳健康科技集团有限公司” to “金太阳科技集团有限公司”(the “Name Change”); |
| ● | that the authorized share capital of the Company be increased from US$50,000 divided into 9,000,000 Class A ordinary shares with a par value of US$0.005 each and 1,000,000 Class B ordinary shares with a par value of US$0.005 each to US$1,000,000 divided into 180,000,000 Class A ordinary shares with a par value of US$0.005 each and 20,000,000 Class B ordinary shares with a par value of US$0.005 each (the “Share Capital Increase”); and |
| ● | that the adoption of amended and restated memorandum and articles of association to reflect the Class B Variation, Name Change and Share Capital Increase. |
Subsequently, we filed an amended and restated memorandum and articles of association, to reflect the Name Change, Share Capital Increase and the Class B Variation, which became effective on September 25, 2025.
At the opening of trading on February 5, 2026, our Class A ordinary shares begin trading on the Nasdaq Capital Market under the new name “Golden Sun Technology Group Limited.” The Company’s CUSIP number will remain the same. The name change reflects the Company’s new business strategy and its future development plans.
Translation of RMB to US$
This annual report on Form 20-F includes our audited consolidated balance sheet data as of September 30, 2025 and 2024, and the consolidated statements of operations and comprehensive loss, changes in shareholders’ equity (deficit), and cash flows for the fiscal years ended September 30, 2025, 2024 and 2023. In this annual report, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in United States dollars. These dollar references are based on the exchange rate of RMB to United States dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of United States dollars which may result in an increase or decrease in the amount of our obligations and the value of our assets.
This annual report contains translations of certain RMB amounts into U.S. dollars at specified rates. Unless otherwise stated, the following exchange rates are used in this annual report:
| September 30, 2025 |
September 30, 2024 |
September 30, 2023 | ||||
| Balance sheet items, except for equity accounts | $1=RMB 7.1190 | $1=RMB7.0176 | $1=RMB 7.2960 | |||
| Items in the statement operations and comprehensive loss and cash flows | $1=RMB 7.2125 | $1=RMB7.2043 | $1=RMB 7.0533 |
vii
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as “approximates,” “assesses,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions in this annual report. These statements are likely to address our growth strategy, financial results and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
| ● | the potential impact on our business of the economic, political and social conditions of the PRC; |
| ● | any changes in the laws of the PRC or local province that may affect our operations; |
| ● | slowdown or contraction in industries in China in which we operate; |
| ● | assumptions about our future financial and operating results, including revenue, income, expenditures, cash balances, and other financial items; |
| ● | our ability to execute our growth, and expansion, including our ability to meet our goals; |
| ● | current and future economic and political conditions; |
| ● | our capital requirements and our ability to raise any additional financing which we may require; |
| ● | our ability to attract clients and further enhance our brand recognition; |
| ● | our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business; |
| ● | trends and competition in the e-commerce and education industries; and |
| ● | other assumptions described in this annual report underlying or relating to any forward-looking statements. |
The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. We describe certain material risks, uncertainties and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this annual report, whether as a result of new information, future events, changes in assumptions, or otherwise.
Industry Data and Forecasts
This annual report primarily contains data related to the e-commerce and private education industries in China. We obtained the industry, market and competitive position data in this annual report from our own internal estimates, surveys, and research as well as from publicly available information, industry and general publications and research, surveys and studies conducted by third parties. Industry publications, research, surveys, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this annual report, and to risks due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these forecasts and other forward-looking information. This industry data includes projections that are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable.
viii
Part I
Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
Item 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
Summary of Risk Factors
An investment in our securities involves significant risks. Below is a summary of material risks that we face, organized under relevant headings. These risks are discussed fully in Risk Factors, which you should read in its entirety starting from page 1, and elsewhere in this annual report.
Risks Related to Our Business and Industry
| ● | We have incurred losses in the past and may incur losses in the future. There is substantial doubt about our ability to continue as a going concern. | |
| ● | Our expansion into the e-commerce industry in China is subject to uncertainty, and our evolving business strategies may make it difficult for investors to evaluate our future prospects. | |
| ● | We face intense competition in the PRC education sector, which could result in pricing pressure, reduced operating margins, loss of market share, difficulties in attracting or retaining qualified teachers, and increased capital expenditures, any of which could materially and adversely affect our business, financial condition and results of operations. | |
| ● | Our business and results of operations are dependent on the level of tuition fees we are able to charge and our ability to maintain or increase such fees. Any inability to do so could materially and adversely affect our financial condition, results of operations and prospects. | |
| ● | We face significant regulatory and compliance risks in connection with our expansion into the e-commerce industry in China. | |
| ● | We are subject to data privacy and cybersecurity regulations that could affect our e-commerce operations. | |
| ● | Our operations may require additional licenses and approvals in future, and changes in PRC e-commerce regulations could restrict our business activities. |
1
| ● | Our expansion into the e-commerce industry exposes us to intense competition and uncertain market acceptance. | |
| ● | Our limited operating experience in the e-commerce industry may increase execution risks and lead to losses. | |
| ● | We face risks related to health epidemics, natural disasters, or terrorist attacks in China. | |
| ● | Our business is dependent on the reputation of our tutorial services. | |
| ● | We may fail to attract and retain students in our tutorial centers. | |
| ● | Changes in policies related to the Gaokao examination by the PRC government may decrease our pool of prospective students, which may materially and adversely affect our results of operations and financial condition. | |
| ● | Our tutorial centers offer refunds to students who withdraw from enrollment within a certain predetermined period, and we cannot assure you that our estimates of refund will be accurate, or that such refunds will remain insignificant to our results of operations and our financial condition. | |
| ● | New legislation or changes in the PRC regulatory requirements regarding private education have affected, and may further affect, our business operations and prospects materially and adversely. | |
| ● | We may fail to attract and retain teachers and we may not be able to maintain consistent teaching quality throughout our schools and tutorial centers. | |
| ● | We are subject to various approvals, licenses, permits, registrations and filings for our tutorial and other services in the PRC. | |
| ● | New legislation or changes in the PRC regulatory requirements regarding private education have affected, and may further affect, our business operations and prospects materially and adversely. | |
| ● | Our PRC subsidiary’s food operation license has expired and is in the process of renewal. Failure to renew may adversely affect our business operations. | |
| ● | Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties. |
Risks Related to Doing Business in the PRC
| ● | Our Class A ordinary shares may be delisted under the Holding Foreign Companies Accountable (“HFCA”) Act if the PRC adopts positions at any time in the future that would prevent the PCAOB from continuing to inspect or investigate completely accounting firms headquartered in mainland China or Hong Kong. The delisting of our Class A ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Furthermore, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which amends the HFCA Act and requires the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time before our Class A ordinary shares may be prohibited from trading or delisted. As a result, trading in our securities may be prohibited under the HFCA Act, as amended by the Accelerating Holding Foreign Companies Accountable Act, and related regulations if the PCAOB determines that it cannot inspect or investigate completely our auditor for a period of two consecutive years, and that as a result an exchange may determine to delist our securities. The HFCA Act, the Accelerating Holding Foreign Companies Accountable Act, which amends the HFCA Act, together with recent joint statement by the SEC and PCAOB, the PCAOB’s determinations, and the Nasdaq rule changes all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments add uncertainties to our offering. |
2
| ● | Changes in the political and economic policies of the PRC government or in relations between China and the United States may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies. |
| ● | Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us. |
| ● | The PRC government exerts substantial influence over the manner in which we conduct our business activities. The PRC government may also intervene or influence our operations and offerings at any time, which could result in a material change in our operations and our Class A ordinary shares could decline in value or become worthless. |
| ● | We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirement we may have, and any limitation on the ability of our subsidiaries to make payments to us and any tax we are required to pay could have a materially adverse effect on our ability to conduct our business. |
| ● | PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using proceeds from our future financing activities to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business. |
Risks Related to Our Ordinary Shares and the Trading Market
| ● | Future sales of our Class A ordinary shares or the anticipation of future sales, could reduce share price. |
| ● | We do not expect to pay dividends in the foreseeable future, so returns depend on share price appreciation. |
| ● | As a foreign private issuer, we follow Nasdaq exemptions, reducing shareholder protections. |
| ● | Anti-takeover provisions in our amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control. |
| ● | During the course of the audit of our consolidated financial statements, we identified material weaknesses in our internal control over financial reporting. If we fail to establish and maintain an effective system of internal control over financial reporting, our ability to accurately and timely report our financial results or prevent fraud may be adversely affected, and investor confidence and the market price of our ordinary shares may be adversely impacted. |
| ● | We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this will make it more difficult to compare our performance with other public companies. |
| ● | The dual class structure of our ordinary shares has the effect of concentrating voting control with our Chairman and Chief Executive Officer, Mr. Xueyuan Weng, who is the only owner of our Class B ordinary shares, and his interests may not be aligned with the interests of our other shareholders. |
3
Risks Related to Our Business
We have incurred losses in the past and may incur losses in the future. There is substantial doubt about our ability to continue as a going concern.
As discussed in Note 3 to the consolidated financial statements to this annual report, we have suffered significant losses, which have resulted in a substantial decline in our working capital and have raised substantial doubt about our ability to continue as a going concern. For the fiscal year ended September 30, 2025, we incurred a net loss from continuing operations of $5,951,827, with net cash used in operating activities of $7,626,557 from continuing operations. As of September 30, 2025, we had an accumulated deficit of $23,570,155. Our auditor, Assentsure PAC, included an explanatory paragraph in its report on our consolidated financial statements for the fiscal year ended September 30, 2025, expressing substantial doubt about our ability to continue as a going concern within one year after the date the consolidated financial statements are issued. If we are unable to improve our operating results, obtain additional financing or otherwise successfully execute our business plan, we may be unable to continue our operations. The existence of substantial doubt regarding our ability to continue as a going concern could materially and adversely affect our ability to raise additional capital through the sale of equity or debt securities or through other financing alternatives. It may also negatively affect investor confidence in us and could have a material adverse effect on our business, financial condition, and results of operations.
Management is evaluating different sources of funding for our future operations. These sources may include, but are not limited to, from current or new investors, officers and directors, debt financing and optimization of costs. The principal shareholder of the Company has pledged to use his personal assets as collateral to support the Company in securing bank loans whenever necessary. We believe that our working capital will be sufficient to fund our operations over at least the next 12 months from the date of this annual report. However, we may need additional cash resources in the future if we experience changed business conditions or other developments. We may also need additional cash resources in the future if we wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If we determine that the cash requirements would exceed our amounts of cash on hand, we may seek to issue debt or equity securities or obtain a credit facility.
Our expansion into the e-commerce industry in China is subject to uncertainty, and our evolving business strategies may make it difficult for investors to evaluate our future prospects.
In recent years, the evolving PRC education regulatory environment has negatively impacted our operations in the education industry and we have been seeking business opportunities to diversify our business. In November 2023, we launched a strategic pivot by entering into the Chinese cultural tourism and e-commerce industries. Although we have generated revenue from our e-commerce business in fiscal years 2024 and 2025 by leveraging our cost structure, there can be no assurance that we will be able to sustain or grow such revenues, or that these advantages will continue to provide us with a competitive benefit. Additionally, we have gradually reduced our cultural tourism services since July 2025 to reallocate resources and management attention to our existing core businesses, as the cultural tourism services performed below our expectations and generated only minimal revenues. To manage and support changes in our existing business and our future growth strategy, we must continue to improve our existing operational, administrative and technological systems and our financial and management controls, and recruit, train and retain additional qualified employees, management personnel and other administrative and sales and marketing personnel, particularly as we enter into new areas. We cannot assure you that we will be able to effectively and efficiently manage our operations, recruit and retain qualified staff and management personnel and integrate new businesses into our operations. Any failure to effectively and efficiently manage changes of our business may materially and adversely affect our ability to capitalize on new business opportunities, which in turn may have a material adverse impact on our financial condition and results of operations.
4
The changes in our business strategies may have some or all of the following unintended effects:
| ● | Our new products and services may not be accepted by our users as we expect; |
| ● | Our new products and services may not attract users and customers or generate the revenue required to succeed; |
| ● | The underlying assumptions and estimates about our new business and the new markets that we attempt to enter into may prove incorrect, which may cause our actual results of operations to fall short of our expectations; |
| ● | To the extent we enter into new business strategies in different industries, our previous operating history may be of limited use for investors to evaluate our future performance and prospects; |
| ● | The development of new products and services could be costly and time-consuming and requires us to make significant investments in research and product development, develop new technologies, and increase sales and marketing efforts, all of which may not be successful; |
| ● | Expenses will be incurred in the implementation of the new business strategies, and the implementation process may distract us from achieving other fundamental business objectives; and |
| ● | The changes in organizational structure required to support our evolving business strategies and offerings may result in dissatisfaction among key employees, which could make it more difficult for us to retain such personnel and could adversely affect our operations. |
We face intense competition in the PRC education sector, which could result in pricing pressure, reduced operating margins, loss of market share, difficulties in attracting or retaining qualified teachers, and increased capital expenditures, any of which could materially and adversely affect our business, financial condition and results of operations.
The private education sector in China is fast evolving, highly fragmented and competitive, and we expect competition in this sector to continue and intensify. Furthermore, the private education industry in China is highly sensitive to demographic changes. Student enrollment in primary and secondary education in China can be substantially affected by PRC government policies on family planning. In Zhejiang, Guangdong and Jiangxi provinces and Shanghai, where most of our operations are located, we face intense competition and pricing pressure. Our competitors may adopt similar or better curricula, student support services and marketing strategies with more appealing pricing and service packages than our current offerings. In addition, some of our competitors may have more resources than we do and may be able to dedicate greater resources than we can to school development and promotions. They may also respond more quickly than we can to changes in student demand, market needs and/or new technologies. As such, we may need to lower our tuition fees, increase our spending in order to be competitive by retaining or attracting students and qualified teachers, or identify and pursue new market opportunities. If we are unable to successfully compete for new students or partners, maintain or increase our fee levels, attract and retain qualified teachers or other key personnel, enhance the quality of our educational services or control the costs of our operations, our business, results of operations and financial condition may be materially and adversely affected.
Our business and results of operations are dependent on the level of tuition fees we are able to charge and our ability to maintain or increase such fees. Any inability to do so could materially and adversely affect our financial condition, results of operations and prospects.
The amount of tuition fees we are able to charge represents one of the most significant factors affecting our profitability related to our tutorial services. Our fees have been determined based on demand for our educational programs and training courses, the cost of our operations, the geographic markets in which we operate our business, the fees charged by our competitors, our pricing strategy to gain market share and the general economic conditions in China and in the areas in which our tutorial centers are located, subject to applicable approvals by local government according to the nature of the private schools, e.g., for-profit or not-for-profit.
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Pursuant to the Law of the People’s Republic of China on the Promotion of Privately-run Schools amended in 2016 and further amended in 2018, the measures for the collection of fees by not-for-profit schools shall be formulated by local government of various provinces, autonomous regions and centrally administrated municipalities. On July 24, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Further Reducing the Burden of Homework and Off-Campus Training for Students in Compulsory Education (the “Guideline”). Pursuant to the Guideline, fees charged for off-campus tutoring services relating to academic subjects provided to students in compulsory education are subject to government-guided pricing, and the same pricing principles are to be applied by reference to academic subject tutoring services provided to senior high school students. Subsequently, in order to implement the Guideline, the Ministry of Education issued a notice (the “Notice”) further clarifying the scope of “academic subjects.” According to the Notice, academic subjects include Morality and Law, Chinese Language, History, Geography, Mathematics, Foreign Languages (including English, Japanese and Russian), Physics, Chemistry and Biology. Pursuant to the Price Law of the People’s Republic of China, prices for services are generally determined by market forces unless such services are subject to government-guided pricing or government-set pricing as required by applicable laws and regulations. Where government-guided pricing or government-set pricing applies, pricing must be implemented in accordance with applicable governmental pricing catalogues.
We provide tutorial services through Yangfushan Tutorial and Shanghai Wensaier. Yangfushan Tutorial is registered as a not-for-profit school and provides non-degree tutorial services to students retaking Gaokao. Such services do not fall within the scope of academic subject tutoring services subject to government-guided pricing under the Guideline, nor are they subject to government-guided pricing or government-set pricing pursuant to the Pricing Catalogue of Zhejiang Province (2022 Edition).
Shanghai Wensaier is a company registered in Shanghai that provides non-English courses for senior high school students. It signs agreements directly with students and offers services directly to general senior high school students.
As of the date of this annual report, Shanghai Wensaier provides Spanish and Japanese courses to senior high school students. Although Spanish is listed as one of the subjects under the PRC Ministry of Education’s General Senior High School Curriculum Program, it is not included within the scope of academic subjects as further clarified in the Notice. Accordingly, Spanish tutoring services are not considered academic subject tutoring services subject to government-guided pricing and are not subject to government-guided pricing or government-set pricing under the Shanghai Pricing Catalogue. In contrast, Japanese is explicitly included within the scope of academic subjects under the Notice, and therefore Japanese language training services constitute academic subject off-campus tutoring services.
Based on the foregoing, our PRC counsel is of the view that Shanghai Wensaier is required to charge fees for Japanese language tutoring services in accordance with the applicable government-guided pricing standards. Other than the foregoing, under currently effective PRC laws and regulations, Yangfushan Tutorial and Shanghai Wensaier are generally permitted to determine their service fees based on market conditions.
In addition, Shanghai Wensaier has not obtained a private school operating permit for the provision of Japanese language tutoring services. Our PRC counsel is of the view that, pursuant to the PRC Private Education Promotion Law, Shanghai Wensaier is required to obtain a private school operating permit in order to lawfully conduct such academic subject tutoring activities. As Shanghai Wensaier has not obtained such permit, it may be subject to regulatory actions, including orders to cease operations, refund tuition fees collected, and administrative fines ranging from one to five times the amount of any illegal gains. Furthermore, the Guideline prohibits foreign investment in academic subject tutoring institutions, and entities already in violation thereof are required to undergo regulatory rectification. Accordingly, we may face regulatory risks, including potential rectification actions required by the relevant authorities in respect of Shanghai Wensaier.
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As of the date of this annual report, within the Group, only Shanghai Wensaier provides Japanese language training services that constitute academic subject tutoring. Such services are provided to a limited number of students and generate immaterial revenue. The Group has ceased enrolling new students in its Japanese language courses. To date, the Group has not received any formal notices, notices of investigation, rectification orders, administrative penalties, or other similar regulatory actions from relevant governmental authorities in connection with Shanghai Wensaier’s provision of Japanese language academic subject tutoring services. Although the revenue generated from Shanghai Wensaier’s Japanese language academic subject tutoring services has been immaterial to date and the Group has ceased enrolling new students in such courses, the Group remains subject to uncertainties arising from the evolving regulatory environment governing off-campus academic subject tutoring in China. Relevant laws, regulations, regulatory interpretations, and implementation practices may continue to change or be further clarified, and regulatory authorities may adopt more stringent enforcement measures in the future. Furthermore, there can be no assurance that the Group will not be subject to future inquiries, inspections, or investigations by relevant governmental authorities in connection with its past or existing academic subject tutoring activities, even if such activities are limited in scope and revenue contribution.
Additionally, there can be no assurance that we will be able to maintain or raise the fee levels we charge in the future, due to various reasons, many beyond our control, such as failure to obtain necessary approvals for fee increases, and even if we are able to maintain or raise fees, we are unsure how our fee rates will impact the number of student applications and enrollment. Our business, financial position and results of operations may be materially and adversely affected, if we fail to maintain or raise our fees while attracting sufficient students.
We face significant regulatory and compliance risks in connection with our expansion into the e-commerce industry in China.
Our operations in these sectors are subject to complex and evolving laws and regulations in China, including those relating to e-commerce, online marketing, consumer protection, data security, and licensing requirements. Regulatory interpretations and enforcement practices may change, and new regulations may be adopted that could restrict or limit our business activities. Any failure to comply with applicable laws or obtain necessary approvals could result in fines, penalties, suspension of operations, or other regulatory actions, which could materially and adversely affect our business, results of operations and financial condition.
We are subject to data privacy and cybersecurity regulations that could affect our e-commerce operations.
Our operations involve the collection, storage and processing of personal and payment data from customers. PRC laws and regulations impose strict requirements regarding the protection, transfer, and use of such data. Any failure to comply with these requirements, or any breach of our systems, could result in regulatory fines, penalties, suspension of services, or damage to our reputation, any of which could materially and adversely affect our business and results of operations.
Our operations may require additional licenses and approvals in future, and changes in PRC e-commerce regulations could restrict our business activities.
We believe that other than business licenses, we are currently not required to obtain and maintain any other licenses and approvals to operate our e-commerce businesses in China. However, changes in regulatory requirements or stricter enforcement could limit our ability to conduct certain business activities, increase compliance costs, or result in suspension of operations. Any such restrictions could materially and adversely affect our business, financial condition, and results of operations.
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Our expansion into the e-commerce industry exposes us to intense competition and uncertain market acceptance.
The e-commerce industry is highly competitive and rapidly evolving, with the presence of well-capitalized domestic and international competitors, frequent product and service innovations, and changing consumer preferences. We may be unable to attract or retain users and customers, differentiate our offerings, or achieve sufficient market share.
The competitive landscape we face includes official platform service providers, established marketing agencies, other experienced service providers, and smaller e-commerce start-ups providing similar services. Each competitor leverages its advantages to carve out a share of the e-commerce market as follows:
| ● | Platform official service providers: Each platform has an official dedicated social media and analytics service which directly competes with us, for example, Douyin’s ByteDance advertising platform, Kuaishou’s advertising platform, and Tencent-related official advertising service provider. |
| ● | Established marketing agencies: These companies have years of industry experience and are better resourced than us, and they offer services beyond short-form social media. They provide services such as offline events, public relations, and other related marketing services. They compete with us for large clients who require more than social media and analytics service. |
| ● | Other international service providers: Other international service providers may have greater experience than us since they operate not only on the three major platforms of Douyin, Kuaishou, and WeChat Video Channels, but also cover platforms like Xiaohongshu and TikTok, which may attract and compete with us for clients that require cross-platform expertise or foreign exposure. |
| ● | Start-ups: As platform advertising tools are further simplified, a large number of small emerging start-ups competes with us where such start-ups can offer lower-priced services. |
If we fail to compete effectively with the competitors as described above or if our services do not gain market acceptance, our business, financial condition, results of operations, and prospects could be materially and adversely affected.
Our limited operating experience in the e-commerce industry may increase execution risks and lead to losses.
We have limited operating history in the e-commerce industry in China. Expanding into this industry may require significant investments in technology, marketing, personnel, and operational infrastructure. We may encounter difficulties in executing our business strategies, managing costs, establishing reliable partnerships, or achieving operational efficiencies. There can be no assurance that our expansion efforts will be successful or that we will generate anticipated revenues or profits. Any failure to execute our plans effectively could materially and adversely affect our business, financial condition, results of operations, and prospects.
We face risks related to health epidemics, natural disasters, or terrorist attacks in China.
Our business could be materially and adversely affected by natural disasters, such as earthquakes, floods, landslides, tornados and tsunamis, and other outbreaks of health epidemics such as avian influenza and severe acute respiratory syndrome, or SARS, and Influenza A virus, such as H5N1 subtype and H5N2 subtype flu viruses, as well as terrorist attacks, other acts of violence or war or social instability in the region in which we operate or those generally affecting China. If any of these occur, our schools and facilities may be required to temporarily or permanently close and our business operations may be suspended or terminated. Our students, teachers and staff may also be negatively affected by such event. Our physical facilities may also be affected. In addition, any of these could adversely affect the Chinese economy and demographics of the affected region, which could cause significant declines in the number of our students in that region and could have a material adverse effect on our business, financial condition and results of operations.
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Our business is dependent on the reputation of our tutorial services.
Our ability to maintain our reputation depends on a number of factors, some of which are beyond our control. As we continue to grow and adapt our programs and services to the demand of our students, it may become difficult to maintain the quality and consistency of the services we offer, which may lead to diminishing confidence in our brand names.
Numerous factors can potentially impact the reputation of our tutorial services, including but not limited to, the degree of students’ and their parents’ satisfaction with our curriculum, our teachers and teaching quality, teacher or student scandals, negative press, interruptions to our services, failure to pass inspections by government educational authorities, loss of certifications and approvals that enable us to operate our tutorial centers and other businesses in the manner they are currently operated, and unaffiliated parties using our brands without adhering to our standards. Any negative impact on the reputation of one or more of our tutorial centers or businesses may lead to a decrease in students’ or their parents’ interest in our tutorial services or lead to termination of our cooperation with our partner-schools, which would materially and adversely affect our business.
We have established and developed our student base primarily through a variety of marketing methods. However, we cannot assure you that these marketing efforts will be successful or sufficient in further promoting our brands or in helping us to maintain our competitiveness. If we are unable to further enhance our reputation and increase market awareness of our programs or services, or if we need to incur excessive marketing and promotional expenses in order to remain competitive, our business, financial condition and results of operations may be materially and adversely affected. If we are unable to maintain or strengthen our reputation and brand recognition, we may not be able to maintain or increase student enrollment, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
We may fail to attract and retain students in our tutorial centers.
Our private education service depends on the number of students enrolled in our tutorial centers, as well as on the amount of fees our students and/or parents are willing to pay. Therefore, our ability to continue to attract students to enroll in our tutorial centers is critical to the continued success and growth of our private education business line. The success of our efforts to enroll students will depend on several factors, including without limitation our ability to:
| ● | enhance existing programs to respond to market changes and student demands; |
| ● | develop new programs that appeal to our students; |
| ● | expand our geographic reach; |
| ● | manage our growth while maintaining the consistency of our teaching quality; |
| ● | effectively market our tutorial centers and programs to a broader base of prospective students; and |
| ● | respond to the increasing competition in the market. |
In addition, local and provincial government authorities may restrict our ability to provide tutorial services, and our business, financial condition and results of operations could be materially and adversely affected if we cannot maintain or increase our enrollment.
9
Changes in policies related to the Gaokao examination by the PRC government may decrease our pool of prospective students, which may materially and adversely affect our results of operations and financial condition.
In December 2019, we established Qinshang Education, which marked the launch of our non-English language training courses through cooperation with high schools and related institutions across China. In 2025, Qinshang Education was divested from the Group along with Gongyu Education, and we established Shanghai Wensaier to provide non-English language services to high school students who need to improve their foreign language scores on their Gaokao exams. As such, the demand for non-English language learning among high school students is closely related to Gaokao policies, and any related policy changes could directly lead to a decrease in customer base. Thus, any changes in policies related to the Gaokao examination by the PRC government may decrease our pool of prospective students, which may materially and adversely affect our results of operations and financial condition.
Our tutorial centers offer refunds to students who withdraw from enrollment within a certain predetermined period, and we cannot assure you that our estimates of refund will be accurate, or that such refunds will remain insignificant to our results of operations and our financial condition.
For our tutorial centers, we generally offer refunds for any remaining classes to students who decide to withdraw from a course within the predetermined period set forth in the education contract the student enters into with the relevant school or center. The refund is limited to the amount of fees that would be charged for any undelivered classes. Refund liabilities estimates are based on a historical refund ratio on a portfolio basis using the expected value method. As of September 30, 2025 and 2024, refund liabilities amounted to $81,554 and $88,502, respectively. The refund amount is currently insignificant to our results of operations and our financial condition. However, we cannot assure you that our estimates of refund will be accurate. Although historically refunds have been insignificant, we cannot assure you that future refunds, including those related to tuition, fees, or other services, will remain immaterial. An increase in refund obligations could adversely affect our revenues, results of operations, and financial condition.
We may fail to attract and retain teachers and we may not be able to maintain consistent teaching quality throughout our schools and tutorial centers.
Our teachers are critical to maintaining and improving the quality of our tutorial services, and to supporting the expansion of our services. We must continue to attract qualified teachers who have strong command of their subject areas and who meet our qualifications. Currently, there is a limited number of teachers in China with the necessary experience, expertise and qualifications that meet our requirements. We also have to provide competitive compensation packages to attract and retain qualified teachers.
Shortages of qualified teachers, or significant decreases in the quality of our tutorial services, whether actual or perceived in one or more of our partner-schools or tutorial centers, may have a material and adverse effect on our business and our reputation. In addition, we may not be able to hire or retain enough qualified teachers to maintain consistent teaching quality. Further, any significant increase in teacher salaries may have a material adverse effect on our business, financial condition and results of operations.
Our historical results may not be indicative of our future performance.
Our financial condition and results of operations may fluctuate due to a number of other factors, such as expansion and related costs in a given period, our ability to maintain and increase our profitability and to enhance our operational efficiency, increased competition and market perception and acceptance of any newly introduced educational programs in any given year. In addition, while we plan to diversify our business and expand into the other industries, there is no guarantee that we will be able to do so successfully.
10
We are subject to taxation in multiple jurisdictions, which is complex and often requires making subjective determinations subject to scrutiny by, and disagreements with, tax regulators.
We are subject to many different forms of taxation in each of the countries and regions we form and/or conduct our business, of operation including, but not limited to, income tax, withholding tax, property tax, VAT and social security and other payroll-related taxes. Tax law and administration is complex, subject to change and varying interpretations and often requires us to make subjective determinations. In addition, we take positions in the course of our business with respect to various tax matters, including in connection with our operations. Tax authorities worldwide are increasingly rigorous in their scrutiny of corporate tax structures and may not agree with the determinations that are made, or the positions taken, by us with respect to the application of tax law. Such disagreements could result in lengthy legal disputes, an increased overall tax rate applicable to us and, ultimately, in the payment of substantial amounts of tax, interest and penalties, which could have a material adverse effect on our business, results of operations and financial condition.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. As of September 30, 2025 and 2024, there were no unrecognized tax benefits. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred for the years ended September 30, 2025, 2024, and 2023.
According to PRC taxation regulation, if tax has not been fully paid, tax authorities may impose tax and late payment penalties within three years. In practice, since all of the taxes owed are local taxes, the local tax authority is typically more flexible and willing to provide incentives or settlements with local small and medium-size businesses to relieve their burden and to stimulate the local economy. There were no interest and penalty charges accrued as of September 30, 2025 and 2024, as the Company has not received any penalty or interest charge notices from local tax authorities. As of the date of this annual report, the tax years ended December 31, 2020 through December 31, 2025 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities.
We are subject to various approvals, licenses, permits, registrations and filings for our tutorial and other services in the PRC.
In order to conduct and operate our education business, we are required to obtain and maintain various approvals, licenses and permits and to fulfill registration and filing requirements pursuant to applicable laws and regulations. For instance, to establish and operate a school, we are required to obtain a private school operation permit from the local education bureau and to register with the local civil affairs bureau to obtain a certificate of registration for a privately operated non-enterprise entity for not-for-profit private schools, or register with the local administration for industry and commerce for for-profit private schools.
Given the significant amount of discretion, the local PRC authorities may have in interpreting, implementing and enforcing relevant rules and regulations, as well as other factors beyond our control, while we intend to use our best efforts to obtain all requisite permits and complete all necessary filings, renewals and registrations on a timely basis, we cannot assure you that we will be able to obtain all required permits. If we fail to receive any required permit in a timely manner or obtain or renew any permits and certificates, we may be subject to fines, confiscation of the gains derived from our noncompliant operations, suspension of our non-compliant operations, compensation payments for any economic loss suffered by our students or other relevant parties, which may materially and adversely affect our business, financial condition and results of operations.
11
New legislation or changes in the PRC regulatory requirements regarding private education have affected, and may further affect, our business operations and prospects materially and adversely.
The private education sector in China is subject to regulations in various aspects. Relevant rules and regulations could be amended or updated from time to time by local government or central PRC authorities.
On September 1, 2021, the Implementing Regulation regulating the establishment, organization and operation of private schools, teachers and educators, assets and financial management of schools, became effective. The revised Implementing Regulation prohibits private schools that provide compulsory education to be controlled by means of agreements (such as VIE Agreements, as defined below), or to enter into any transactions with any related parties. In response to these regulatory changes, in September 2021, the Company completed a Reorganization to divest its operations involving two private schools, which were previously structured as VIEs. These VIEs provided compulsory education through a series of contractual arrangements (the “VIE Agreements”), which provided contractual exposure to foreign investment in Chinese-based companies where Chinese law prohibits direct foreign investment in the Chinese operating companies. However, this practice is prohibited under the revised Implementation Regulation. As a result of the Reorganization, we no longer used a VIE structure. The Reorganization had materially and adversely impacted our operations and future prospects, as these two private schools had represented a significant portion of our business and operations.
On July 24, 2021, the general offices of the Communist Party of China Central Committee and the State Council jointly issued the guideline (the “Guideline”), which contains various requirements and restrictions related to after school tutoring services. The Guideline mandates, among other things, registration requirements for non-for-profit schools, a prohibition on foreign ownership of after school tutoring services, a prohibition for listed companies on raising capital to invest in businesses that teach academic subjects in compulsory education and limitations as to when tutoring services on academic subjects may be provided and new fee standards.
On July 28, 2021, the PRC Ministry of Education issued a notice (the “Notice”) to further clarify the scope of academic subjects in China’s compulsory education system. The Notice specified that academic subjects include the following courses provided in accordance with the learning content of the national curriculum standards: Morality and Law, Chinese Language, History, Geography, Mathematics, Foreign Languages (English, Japanese, and Russian), Physics, Chemistry and Biology.
We provide tutorial services through Yangfushan Tutorial and Shanghai Wensaier. With reference to the Guideline and the Notice, we currently assess that Yangfushan Tutorial’s provision of non-degree tutorial services for students retaking Gaokao rather than for students in the compulsory educational stage or general high school students, is not subject to the requirements and restrictions provided in the Guideline and the Notice. However, Shanghai Wensaier shall comply with the relevant regulations in providing non-English language tutoring services to high school students. (See “Item 4. Information on the Company-B. Business Overview-Regulations-Regulations Related to Private Education-9. Guideline to Significantly Reduce the Excessive Burden of Homework and After-school Tutoring for Students in Primary and Middle Schools (the “Guideline”). Nevertheless, the Guideline may be expanded in the future to cover any aspect of our business or operations. As of the date of this annual report, there remain uncertainties in the interpretation and enforcement of the revised Implementing Regulations and Guideline which could materially and adversely impact our business and financial outlook.
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The Law on the Promotion of Private Schools of the PRC (the “Private Schools Law”) was amended for the third time on December 29, 2018, which constitutes its latest and currently effective version. According to the Private Schools Law, private schools can be established as for-profit or not-for-profit schools, with the exception of schools that provide compulsory education, which can only be established as not-for-profit private schools. In addition, pursuant to the Private Schools Law, (i) school sponsors of for-profit private schools are allowed to receive the operating profits of the schools while the school sponsors of not-for-profit private schools are not permitted to do so; (ii) not-for-profit private schools shall enjoy the same preferential tax and supply of land treatment as public schools while for profit private schools shall enjoy the preferential tax and supply of land treatment as stipulated by the government; and (iii) for-profit private schools have the discretion to determine the fees to be charged by taking into consideration various factors such as the school operating costs and market demand, and no prior approval from government authorities is required, while not-for-profit private schools shall collect fees pursuant to the measures stipulated by the local PRC government authorities. For details on the distinction between for-profit private schools and not-for-profit private schools under the amended Law on the Promotion of Private Schools of the PRC, please see “Item 4. Information On The Company-B. Business Overview-Regulations-Regulations Related to Private Education-2. Law for Promoting Private Education of PRC.” The amount of tuition fees we are able to charge represents one of the most significant factors affecting our results of operations and profitability. As of the date of this annual report, we provide tutorial services through Yangfushan Tutorial and Shanghai Wensaier. Yangfushan Tutorial is registered as a not-for-profit school and provides non-degree tutorial services to students retaking Gaokao. While Shanghai Wensaier provides Spanish and Japanese courses to senior high school students, our PRC counsel is of the view that Shanghai Wensaier is required to charge fees for Japanese language tutoring services in accordance with the applicable government-guided pricing standards. Other than the foregoing, under currently effective PRC laws and regulations, Yangfushan Tutorial and Shanghai Wensaier are generally permitted to determine their service fees based on market conditions. As of the date of this annual report, within the Group, only Shanghai Wensaier provides Japanese language training services that constitute academic subject tutoring. Such services are provided to a limited number of students and generate immaterial revenue. The Group has ceased enrolling new students in its Japanese language courses. To date, the Group has not received any formal notices, notices of investigation, rectification orders, administrative penalties, or other similar regulatory actions from relevant governmental authorities in connection with Shanghai Wensaier’s provision of Japanese language academic subject tutoring services. Although the revenue generated from Shanghai Wensaier’s Japanese language academic subject tutoring services has been immaterial to date and the Group has ceased enrolling new students in such courses, the Group remains subject to uncertainties arising from the evolving regulatory environment governing off-campus academic subject tutoring in China. If local governments start to interfere with how tuition fees are set by not-for-profit schools, then the revenue of our not-for profit schools could be negatively affected. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-Our business and results of operations are dependent on the level of tuition fees we are able to charge and our ability to maintain or increase such fees. Any inability to do so could materially and adversely affect our financial condition, results of operations and prospects.”
On December 30, 2016, the Implementation Regulations for Classification Registration of Private Schools (the “Classification Registration Rules”) were promulgated by five PRC government authorities and became effective on the same date. According to the Classification Registration Rules, existing private schools are required to choose to register either as not-for-profit or for-profit private schools with competent government authorities. If a school elects to register as a for-profit school, it is required to (i) undertake financial settlement, (ii) clarify the ownership of land, school premises and properties it accumulated during its operations, (iii) pay relevant taxes and fees, and (iv) obtain a new private school operation permit and re-register with relevant authorities. We are unable to predict or estimate the potential costs and expenses in choosing and adjusting our structure. We may incur significant administration and financial costs when we choose to or we are required to complete the re-registration process, which may materially and adversely affect our business, financial condition and results of operations. However, we cannot assure you that the implementation of the relevant rules and regulations by the competent authorities will not deviate from our understanding.
Uncertainties exist with respect to the interpretation and enforcement of new and existing laws and regulations, including their interpretations and applications by the government authorities may impact any of our business operations. We cannot assure you that we will be in compliance with the new rules and regulations, or that we will be able to timely and efficiently change our business practices in line with the new regulatory environment. Any such failure could materially and adversely affect our business, financial condition, results of operations and prospects.
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Our PRC subsidiary’s food operation license has expired and is in the process of renewal. Failure to renew or maintain the required license may adversely affect our business operations.
Our PRC subsidiary Yangfushan Tutorial previously held a food operation license required for the provision of catering services in China. This license expired in June 2025 and is in the process of renewal. Yangfushan Tutorial has recently stopped providing catering services since February 2026.
However, Yangfushan Tutorial provided catering services between June 2025 and February 2026 without holding a food operation license. If the relevant authorities determine that Yangfushan Tutorial was in violation of the relevant laws and regulations for such incompliance, Yangfushan Tutorial may be subject to administrative penalties, fines, or other enforcement actions. The relevant PRC authority may also deny Yangfushan Tutorial’s application to renew its food operation based on the foregoing grounds. Any such outcomes could disrupt our operations, adversely affect our reputation, and have an adverse effect on our business, financial condition, results of operations, and prospects.
Additionally, even if we operate under a valid food operation license, we may still be exposed to potential liabilities if we are not able to maintain food quality standards. Although we strive to maintain the quality of meals we provide through our catering service, we cannot assure you that we will always meet the food quality standards required by applicable laws and regulations or maintain proper operations. Therefore, we cannot assure you that incidents and other issues caused by poor food quality will not occur in the future. Any of the foregoing could seriously damage our reputation and affect our student enrollment, which would have an adverse effect on our business, financial condition and results of operations.
PRC regulatory framework governing food safety and catering services is subject to change and may involve heightened scrutiny and enforcement. Compliance with evolving laws, regulations, and regulatory interpretations may increase our operating costs and impose additional compliance burdens. We cannot assure you that we will be able to continue to obtain, renew, or maintain all required licenses, permits, and approvals on commercially reasonable terms, or at all.
Accidents or injuries suffered by our students, our employees or other personnel at our premises may adversely affect our reputation and subject us to liabilities.
We could be held liable for accidents or injuries or other harm to students or other people at our premises, including those caused by or otherwise arising in connection with our facilities or employees. We could also face claims alleging that we are negligent, do not adequately maintain our facilities or provided insufficient supervision to our students and therefore may be held liable for accidents or injuries incurred by our students or by third-parties at our school premises. Furthermore, should any of the foregoing events occur, our tutorial centers may be perceived to be unsafe which may discourage prospective students from applying for or attending our tutorial centers. Although we maintain certain liability insurance for our logistics personnel under Wenzhou Lilong, there is no assurance that this insurance coverage may be adequate to fully protect us from these kinds of claims and liabilities. Further, we may not be able to renew our insurance policies in the future at reasonable prices or at all. A liability claim against us or any of our employees could adversely affect our reputation and student enrollment and retention. Also, any potential claims against us may create unfavorable publicity, cause us to pay compensation, incur costs in defending such claim, and divert the time and attention of our management, all of which may have a material adverse effect on our business, prospects, financial condition and results of operations.
We maintain limited insurance coverage.
We maintain various insurance policies, such as liability insurance, for our logistics personnel under Wenzhou Lilong to safeguard against risks and unexpected events. However, our insurance coverage is still limited in terms of amount, scope and benefit and we do not maintain property insurance for our buildings or premises, nor do we maintain business insurance for our operations. Consequently, we are exposed to various risks associated with our business and operations. We are nevertheless exposed to risks, including, but not limited to, accidents or injuries in our tutorial centers that are beyond the scope of our insurance coverage, fires, explosions or other accidents for which we do not currently maintain insurance, loss of key management and personnel, business interruption, natural disasters, strikes, terrorist attacks and social instability or any other events beyond our control. The insurance industry in China is still at an early stage of development in China and as such they offer limited business-related insurance products. We do not have any business disruption insurance or key-man life insurance. Any business disruption, litigation or legal proceedings or natural disaster, such as epidemics, pandemics or earthquakes, or other events beyond our control could result in substantial costs and the diversion of our resources. Our business, financial condition and results of operations may be materially and adversely affected as a result.
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If we fail to protect our intellectual property rights or prevent the misappropriation of our intellectual property rights, we may lose our competitive edge and our brand, reputation and operations may be materially and adversely affected.
Unauthorized use of any of our intellectual property may adversely affect our business and reputation. We rely on a combination of trademark and trade secret laws to protect our intellectual property rights. Nevertheless, third parties may obtain and use our intellectual property without due authorization. The practice of intellectual property rights enforcement action by the PRC regulatory authorities is in its early stage of development and is subject to significant uncertainty. We may also need to resort to litigation and other legal proceedings to enforce our intellectual property rights. Any such action, litigation or other legal proceedings could result in substantial costs diversion of our management’s attention and resources and could disrupt our business. In addition, there is no assurance that we will be able to enforce our intellectual property rights effectively or otherwise prevent others from using our intellectual property without authorization. Failure to adequately protect our intellectual property could materially and adversely affect our brand name and reputation, and our business, financial condition and results of operations. We may face disputes from time to time relating to the intellectual property rights of third parties. We cannot assure you that materials and other educational content used in our educational programs do not or will not infringe the intellectual property rights of third parties. As of the date of this annual report, we did not encounter any material claim for intellectual property infringement. However, we cannot assure you that in the future third parties will not claim that we have infringed their proprietary rights. Although we plan to defend ourselves vigorously in any such litigation or legal proceedings, there is no assurance that we will prevail in these matters. Participation in such litigation and legal proceedings may also cause us to incur substantial expenses and divert the time and attention of our management. We may be required to pay damages or incur settlement expenses. In addition, in case we are required to pay any royalties or enter into any licensing agreements with the owners of intellectual property rights, we may find that the terms are not commercially acceptable and we may lose the ability to use the related content or materials, which in turn could materially and adversely affect our educational programs and our operations. Any similar claim against us, even without any merit, could also hurt our reputation and brand image and any occurrence of such events could have a material and adverse effect on our business, financial condition and results of operations.
Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.
Pursuant to PRC laws and regulations, we are required to participate in various employee social insurance plans, including pension insurance, unemployment insurance, medical insurance, work-related injury insurance, maternity insurance, and the housing provident fund, and contribute to these plans and fund at the levels specified by the relevant local government authorities from time to time at locations where we operate our business. For the fiscal years ended September 30, 2025, 2024 and 2023, we did not make full contributions to the social insurance plans as required under the relevant laws and regulations. As of September 30, 2025 and 2024, we had outstanding social insurance payments payable in the aggregate amount of approximately $134,622 and $93,589, respectively. Although we have not received any notice from the relevant local government authorities regarding the outstanding contributions, we cannot assure you that the relevant local government authorities will not require us to pay the outstanding amount within a prescribed time or impose late fees or fines on us. A late fee of 0.05% per day and a fine of one to three times the outstanding amount may be imposed by the local government authority, which may materially and adversely affect our business, financial condition and results of operations.
Unauthorized disclosure or manipulation of student, teacher and other sensitive personal data, whether through breach of our network security or otherwise, could expose us to litigation or otherwise could adversely affect our reputation.
Maintaining our network security and internal controls over access rights is of critical importance because proprietary and confidential student and teacher information, such as names, addresses, and other personal information, is primarily stored on our computer database located at each of our tutorial centers. If our security measures are breached as a result of actions by third-parties, employee error, malfeasance or otherwise, third parties may receive or be able to access student or teacher records, which could subject us to liabilities, interrupt our business and adversely impact our reputation. Additionally, we run the risk that our employees or third parties could misappropriate or illegally disclose confidential educational information in our possession. As a result, we may be required to expend significant resources to provide additional protection from the threat of these security breaches or to alleviate problems caused by these breaches. Any security breaches onto our systems and any disruptions and losses as a result of a breach could have a material and adverse effect on our business, financial condition and results of operations.
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We have limited sources of working capital, which have been primarily funded from operations, bank loans, and advances from shareholders, and we cannot assure you that our needs for additional financing will be met in the future.
As of September 30, 2025 and 2024, we had cash of approximately $0.8 million and $0.7 million, respectively, total current assets of approximately $12.7 million and $10.4 million, respectively, and total current liabilities of approximately $10.6 million and $13.6 million, respectively. We have limited sources of working capital and historically have funded our working capital needs primarily from our operations, bank loans, and advances from shareholders. We expect to continue to fund its operations from such sources in the near future. There is no assurance that we will have revenues sufficient to sustain our operations or that we would be able to obtain equity/debt financing in the current economic environment, or we will be able to obtain any additional capital through operations, bank loans, and advances from shareholders, or any combination thereof, on satisfactory terms or at all. Additionally, no assurance can be given that any such financing, if obtained, will be adequate to meet our capital needs and to support our operations. If we do not obtain adequate capital on a timely basis and on satisfactory terms, our revenues and operations would be materially negatively impacted.
Risks Relating to Doing Business in the PRC
Our Class A ordinary shares may be delisted under the HFCA Act if the PRC adopts positions at any time in the future that would prevent the PCAOB from continuing to inspect or investigate completely accounting firms headquartered in mainland China or Hong Kong. The delisting of our Class A ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Furthermore, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which amends the HFCA Act and requires the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time before our Class A ordinary shares may be prohibited from trading or delisted. The HFCA Act, the Accelerating Holding Foreign Companies Accountable Act, which amends the HFCA act, together with recent joint statement by the SEC and PCAOB, the PCAOB’s determinations, and the Nasdaq rule changes all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments add uncertainties to our offering.
On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the disclosure, financial reporting and other risks associated with investing in companies based in or have substantial operations in emerging markets including China as well as the limited remedies available to investors who might take legal action against such companies. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.
On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in “Restrictive Market,” (ii) adopt a new requirement relating to the qualification of management or board of director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors. These proposals were approved by the SEC on October 4, 2021. These developments add uncertainties to our offering, including the possibility that Nasdaq can stop trading in our securities if the PCAOB cannot inspect or fully investigate our auditor.
Furthermore, various equity-based research organizations have recently published reports on China-based companies after examining their corporate governance practices, related party transactions, sales practices and financial statements, and these reports have led to special investigations and listing suspensions on U.S. national exchanges. Any similar scrutiny on us, regardless of its lack of merit, could cause the market price of our shares to fall, divert management resources and energy, cause us to incur expenses in defending ourselves against rumors, and increase the premiums we pay for director and officer insurance.
On May 20, 2020 and December 2, 2020, the United States Senate and the United States House of Representatives, respectively, passed S. 945, the HFCA Act, which was signed into law on December 18, 2020. The HFCA Act requires a foreign company to certify that it is not owned or manipulated by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited from trading on a national exchange. Although we believe that the HFCA Act and the related regulations do not currently affect us, we cannot assure you that there will not be any further implementations and interpretations of the HFCA Act or the related regulations, which might pose regulatory risks to and impose restrictions on us because of our primary operations in China.
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The lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors in our stock to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.
On December 2, 2021, the SEC issued final rules under the HFCA Act, which became effective on January 10, 2022, amending the disclosure requirements in annual reports. These amendments apply to registrants that the SEC identifies as having filed an annual report issued by a registered public accounting firm that is located in a foreign jurisdiction that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The amendments require the submission of documentation to the Commission establishing that such a registrant is not owned or controlled by a governmental entity in that foreign jurisdiction and also require disclosure in a foreign issuer’s annual report regarding the audit arrangements of, and governmental influence on, such registrants. The Commission is to identify a reporting company that has retained a registered public accounting firm to issue an audit report where that registered public accounting firm has a branch or office that:
| ● | Is located in a foreign jurisdiction; and |
| ● | The PCAOB has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction. |
Once identified, Section 104(i)(2)(B) of the Sarbanes-Oxley Act requires these issuers, which the SEC refers to as “Commission-Identified Issuers,” to submit in connection with their annual report documentation to the Commission establishing that they are not owned or controlled by a governmental entity in that foreign jurisdiction and to name any director who is affiliated with the Chinese Communist Party or whether the company’s articles include any charter of the Chinese Communist Party.
On December 16, 2021, the PCAOB determined that the PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, and the PCAOB included in the report of its determination a list of the accounting firms that are headquartered in mainland China or Hong Kong. Our auditor, AssentSure PAC is currently subject to inspection by the PCAOB at least every three years. Therefore, it is not subject to the determinations announced by the PCAOB on December 16, 2021 as it is not on the list published by the PCAOB. However, our auditor’s China affiliate is located in, and organized under the laws of the PRC. We cannot assure you that we will not be identified by the SEC under the HFCA Act as an issuer that has retained an auditor that has a branch or office located in a foreign jurisdiction that the PCAOB determines it is unable to inspect or investigate completely because of a position taken by an authority in that foreign jurisdiction. In the event the PRC authorities would further strengthen regulations over auditing work of Chinese companies listed on the U.S. stock exchanges, which would prohibit our current auditor to perform work in China, then we would need to change our auditor and the audit workpapers prepared by our new auditor may not be inspected by the PCAOB without the approval of the PRC authorities, In which case the PCAOB may not be able to fully evaluate the audit or the auditors’ quality control procedures. In addition, there can be no assurance that, if we have a “non-inspection” year, we will be able to take any remedial measures. If any such event were to occur, trading in our securities could in the future be prohibited under the HFCA Act and, as a result, we cannot assure our investors that we will be able to maintain the listing of our Class A ordinary shares on Nasdaq or that our investors will be allowed to trade our Class A ordinary shares in the United States on the “over-the-counter” markets or otherwise. Notwithstanding the foregoing, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor, then such lack of inspection could cause our securities to be delisted from the stock exchange. Furthermore, due to the recent developments in connection with the implementation of the HFCAA, we cannot assure our investors whether the SEC, Nasdaq or other regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. The requirement in the HFCA Act that the PCAOB be permitted to inspect the issuer’s public accounting firm within three years, may result in our delisting in the future if the PCAOB is unable to inspect our accounting firm at such future time.
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On August 26, 2022, the China Securities Regulatory Commission (CSRC), the Ministry of Finance (MOF), and the PCAOB signed the Protocol to allow the PCAOB to inspect and investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, consistent with the HFCA Act, and the PCAOB will be required to reassess its determinations by the end of 2022. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC.
On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely.
On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was enacted, which amended the HFCA Act by decreasing the number of non-inspection years from three years to two, thus reducing the time period before our Class A ordinary shares may be prohibited from trading or delisted. As a result, trading in our securities may be prohibited under the HFCA Act, as amended by the Accelerating Holding Foreign Companies Accountable Act, and related regulations if the PCAOB determines that it cannot inspect or investigate completely our auditor for a period of two consecutive years, and that as a result an exchange may determine to delist our securities.
Notwithstanding the foregoing, we cannot assure you that, because our books and records are primarily located in mainland China, we will in the future be able to become an issuer that is not a Commission-Identified Issuer, in which event our Class A ordinary shares may not be tradable in any United States stock exchange or market and it may be necessary for us to list on a foreign exchange in order that our Class A ordinary shares can be traded. It is possible that, in the event trading in our stock in the United States is no longer possible, you may lose the entire value of your Class A ordinary shares.
Further, new laws and regulations or changes in laws and regulations in both the United States and China could affect our ability to list our shares on Nasdaq, which could materially impair the market for and market price of our Class A ordinary shares.
Changes in the political and economic policies of the PRC government or in relations between China and the United States may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.
We are a Cayman Islands holding company and are not a PRC operating company. As a holding company with no material operations of our own, we conduct substantially all of our operations in the PRC through our PRC subsidiaries and substantially all of our revenues are sourced from the PRC. Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal developments in the PRC or changes in government relations between China and the United States or other governments. There is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs.
The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, regulating financial services and institutions and providing preferential treatment to particular industries or companies.
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While the PRC economy has experienced significant growth in the past four decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall PRC economy, but may also have a negative effect on us. Our financial condition and results of operation could be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. In addition, the PRC government has implemented in the past certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity.
In July 2021, the PRC government provided new guidance on China-based companies raising capital outside of China. In light of such developments, the SEC has imposed enhanced disclosure requirements on China-based companies seeking to register securities with the SEC. As substantially all of our operations are based in China, any future Chinese, U.S. or other rules and regulations that place restrictions on capital raising or other activities by China based companies could adversely affect our business and results of operations. If the business environment in China deteriorates from the perspective of domestic or international investment, or if relations between China and the United States or other governments deteriorate, the PRC government may intervene with our operations and our business in China and United States, as well as the market price of our Class A ordinary shares, may also be adversely affected.
Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.
Our PRC subsidiaries are subject to various PRC laws, rules and regulations generally applicable to companies in China. The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in China.
As relevant laws and regulations are relatively new and the PRC legal system continues to rapidly evolve with little advance notice, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties.
From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business, impede our ability to continue our operations and reduce the value of your investment in Golden Sun.
On December 28, 2021, the Cybersecurity Review Measures (2021 version) which were promulgated and became effective on February 15, 2022, provide that any “online platform operators” possessing personal information of more than one million users which seeks to list in a foreign stock exchange should be subject to cybersecurity review. The Cybersecurity Review Measures (2021 version), further list the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. The CAC requires that under the new rules, companies possessing personal information of more than 1,000,000 users must apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.” The cybersecurity review will also look into the potential national security risks from overseas IPOs.
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As of the date of this annual report, as advised by our PRC counsel, Pacgate Law Firm, we do not believe we are required to conduct a cybersecurity review because (i) we do not possess a large amount of personal information on more than one million users in our business operations; and (ii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities. In addition, neither Golden Sun nor any of its subsidiaries is deemed an operator of any “critical information infrastructure” as defined under the PRC Cybersecurity Law and the Security Protection Measures on Critical Information Infrastructure promulgated by the State Council on July 30, 2021, which became effective on September 1, 2021, because neither of them is identified and notified by the PRC competent government authorities that any of them is a critical information infrastructure operator (“CIIO”).
However, our operations could be adversely affected, directly or indirectly, by future laws and regulations relating to our business or industry, if we inadvertently conclude that such approvals or permissions are not required when they are, or applicable laws, regulations, or interpretations change and we are required to obtain approvals or permissions in the future. We may be subject to penalties and sanctions imposed by the PRC or Hong Kong regulatory agencies, including the CSRC, if we fail to comply with such rules and regulations, which could adversely affect the ability of the Company’s securities to continue to trade on Nasdaq, which may cause the value of our securities to significantly decline or become worthless.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) with five interpretive guidelines (together with the New Overseas Listing Rules, collectively, the “New Overseas Listing Rules”), which came into effect on March 31, 2023. The New Overseas Listing Rules apply to overseas securities offerings and/or listings conducted by (i) companies incorporated in the PRC, or PRC domestic companies, directly and (ii) companies incorporated overseas with operations primarily in the PRC and valued on the basis of interests in PRC domestic companies, or indirect offerings. The New Overseas Listing Rules requires (1) the filings of the overseas offering and listing plan by the PRC domestic companies with the CSRC under certain conditions, and (2) the filing of their underwriters with the CSRC under certain conditions and the submission of an annual report to of such filed underwriters the CSRC within the required timeline. The required filing scope is not limited to the initial public offering, but also includes subsequent overseas securities offerings, single or multiple acquisition(s), share swap, transfer of shares or other means to seek an overseas direct or indirect listing, a secondary listing or dual listing.
Under the New Overseas Listing Rules, a filing-based regulatory system applies to “indirect overseas offerings and listings” of companies in mainland China, which refers to securities offerings and listings in an overseas market made under the name of an offshore entity but based on the underlying equity, assets, earnings or other similar rights of a company in mainland China that operates its main business in mainland China. The New Overseas Listing Rules state that, any post-listing follow-on offering by an issuer in an overseas market, including issuance of shares, convertible notes, exchangeable notes and preferred shares, shall be subject to filing requirement within three business days after the completion of the offering.
As of the date of this annual report, except for the matters already disclosed in the annual report, we believe we are in compliance with the relevant permission or approval from the CSRC or any other PRC state or local government. See “Item 4. Information on the Company - B. Business Overview”. However, if any other filings, approval, review or other procedure are required, there is no assurance that we will be able to obtain such filings, approval or complete such review or other procedures timely or at all. For any approval or permission that we have received or may receive in future, it could nevertheless be revoked or cancelled, and the terms of its reissuance may impose restrictions on our operations and offerings relating to our securities. Besides, the New Overseas Listing Rules may subject us to additional compliance requirement in the future. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to continue to offer our Class A ordinary shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Class A ordinary shares to significantly decline in value or become worthless.
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On February 24, 2023, the CSRC, together with other PRC government authorities, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises (the “Confidentiality and Archives Administration Provisions”), which come into effect on March 31, 2023. The Confidentiality and Archives Administration Provisions require, among others, that PRC domestic enterprises seeking to offer and list securities in overseas markets, either directly or indirectly, shall establish the confidentiality and archives system, and shall complete approval and filing procedures with competent authorities, if such PRC domestic enterprises or their overseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets of PRC government agencies to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals. It further stipulates that providing or publicly disclosing documents and materials which may adversely affect national security or public interests, and accounting files or copies of important preservation value to the state and society shall be subject to corresponding procedures in accordance with relevant laws and regulations.
Given the PRC government’s authority, oversight may also extend to Golden Sun Hong Kong, our Hong Kong subsidiary, and the legal and operational risks associated with operating in mainland China could also apply to Golden Sun Hong Kong. In Hong Kong, the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems.” We cannot assure you that there will not be any changes in the economic, political and legal environment in Hong Kong. We may be subject to uncertainty about any future actions of the PRC government and is possible that most of the legal and operational risks associated with operating in the PRC may also apply to the PRC operating entities’ operations in Hong Kong if they conduct business in Hong Kong in the future. The PRC government may intervene or influence the PRC operating entities’ future operations in Hong Kong at any time and exert more influence over the manner in which the PRC operating entities must conduct their business activities. Such government actions, if and when they occur, could result in a material change in their operations in Hong Kong. The protection of personal data is governed by the Personal Data (Privacy) Ordinance (Chapter 486 of The Laws of Hong Kong) (the “PDPO”) in Hong Kong. All organizations that collect, hold, process or use personal data must comply with the PDPO, including the six Data Protection Principles (“DPPs”) in Schedule 1 of the PDPO. In particular, Data Protection Principle 4 specifies the data security requirements which stipulate that, among other things, all practicable steps shall be taken to ensure that any personal data held by a data user is protected against unauthorized or accidental access, processing, erasure, loss or use. In addition, the Competition Ordinance and the relevant anti-monopoly law in Hong Kong are designed to promote competition and prohibit anti-competitive practices for entities conducting business operations in Hong Kong. The Merger Rule in the Competition Ordinance prohibits undertakings from directly or indirectly carrying out a merger that has, or is likely to have, the effect of substantially reduce the level of competition in Hong Kong. This rule is only applicable to telecommunication carrier licensees. There is no general merger control regime in Hong Kong. We believe, as of the date of this annual report, the relevant data security, anti-monopoly and merger laws and ordinance in Hong Kong, i.e. the PDPO and the Competition Ordinance are not applicable to our HK subsidiary and have no impact on our ability to conduct our business through our PRC operating entities, accept foreign investment or continue listing on an U.S. exchange as our Hong Kong subsidiary is currently a holding company with no material operations since its incorporation in Hong Kong. Furthermore, there are currently no regulatory actions related to data security or anti-monopoly concerns in Hong Kong that may impact our ability to conduct our business through our PRC operating entities, accept foreign investment or continue to list on a U.S./foreign exchange, and our Hong Kong subsidiary has not received any inquiry, notice, warning or sanctions regarding our continued listing on the Nasdaq from the Hong Kong government. Notwithstanding the foregoing, there is no assurance that regulators in Hong Kong will not take a contrary view or will not subsequently require us to obtain any approval or permission in Hong Kong and subject us to fines or penalties for non-compliance.
The PRC government authorities may further strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us. Any such action may adversely affect our operations and significantly limit or hinder our ability to continue to offer securities to investors or reduce the value of such securities or cause such securities to become worthless.
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There are risks arising from the legal systems in China, including the risks and uncertainties regarding the interpretation, application and enforcement of current and future PRC laws and regulations. The rules and regulations in China can change quickly with little advance notice and uncertainties in the interpretation and enforcement of PRC laws, rules and regulations could limit the legal protections available to you and us. The PRC government may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations, financial performance and/or the value of our Class A ordinary shares.
The PRC government exerts substantial influence over the manner in which we conduct our business activities. The PRC government may also intervene or influence our operations and our offerings at any time, which could result in a material change in our operations and our Class A ordinary shares could decline in value or become worthless.
We are a Cayman Islands holding company and are not a PRC operating company. As a holding company with no material operations of our own, we conduct substantially all of our operations in China through our PRC subsidiaries. We currently control and receive the economic benefits of our PRC subsidiaries’ business operation, if any, through equity ownership. Our corporate structure, i.e., a Cayman Islands holding company with operations conducted by our PRC subsidiaries, involves unique risks to investors. The PRC regulatory authorities could change the rules and regulations regarding foreign ownership in the industry in which the company operates, which would likely result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.
The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to foreign investment, taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditure and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in our operations in China.
Additionally, our business segments may be subject to various government and regulatory interference in the regions in which we operate. We could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.
The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may increase our labor costs, impose limitations on our labor practices and adversely affect our business and our results of operations.
The PRC Labor Law and the Labor Contract Law of the People’s Republic of China (the “Labor Contract Law”) require that employers must execute written employment contracts with full-time employees. All employers must compensate their employees with wages equal to at least the local minimum wage standards. Violations of the PRC Labor Law and the Labor Contract Law may result in the imposition of fines, compensation and other administrative sanctions, and serious violations may constitute criminal offenses.
The protection of employees who, under the PRC Labor Contract Law, have the right, among others, to enter into written labor contracts, to enter into labor contracts with no fixed terms under certain circumstances, to receive overtime wages and to terminate or alter terms in labor contracts. Besides, we are required to pay various statutory employee benefits, including pension, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees under the PRC laws and regulations. The relevant government agencies may examine whether an employer has made adequate payments to the statutory employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties.
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In addition, the Labor Contract Law, which became effective in January 2008 with its amendments being effective in July 2013 and its implementing rules being effective in September 2008, introduces specific provisions related to fixed-term employment contracts, part-time employment, probation, consultation with labor unions and employee assemblies, employment without a written contract, dismissal of employees, severance, and collective bargaining, which together represent enhanced enforcement of labor laws and regulations. For example, according to the PRC Labor Contract Law, an employer is obliged to sign an unfixed-term labor contract with any employee who has worked for the employer for 10 consecutive years. Further, if an employee requests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively, the resulting contract must have an unfixed term, with certain exceptions. The employer must pay economic compensation to an employee where a labor contract is terminated or expires in accordance with the PRC Labor Contract Law, except for certain situations which are specifically regulated. In addition, the government has issued various labor-related regulations to further protect the rights of employees. According to such laws and regulations, employees are entitled to annual leave ranging from 5 to 15 days and are able to be compensated for any untaken annual leave days in the amount of three times their daily salary, subject to certain exceptions.
In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules, and other labor-related regulation may also limit our ability to effect those changes in a manner that we believe to be cost-effective, which could adversely affect our business and results of operations. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to control our labor costs or pass on these increased labor costs to the insurance companies by increasing the fees of our brokerage services, our financial condition and results of operations may be adversely affected.
Our PRC subsidiaries are currently not subject to any labor disputes or related queries, investigations or interference by a PRC governing body. However, due to the uncertainties as to the interpretation and implementation of these PRC laws and regulations, our PRC subsidiaries’ employment practices may not be at all times deemed in compliance with the laws and regulations. If we are subject to severe penalties or incur significant liabilities in connection with labor disputes or investigations, our business and financial conditions may be adversely affected.
We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirement we may have, and any limitation on the ability of our subsidiaries to make payments to us and any tax we are required to pay could have a materially adverse effect on our ability to conduct our business.
We are a Cayman Islands holding company and we rely principally on dividends and other distributions on equity from our PRC subsidiaries for our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Any limitation on the ability of our PRC subsidiaries to distribute dividends or other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.
Under PRC laws and regulations, our PRC subsidiary, Golden Sun Wenzhou, as a wholly foreign-owned enterprise in the PRC, may pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such fund reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends.
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In response to the persistent capital outflow and the RMB’s depreciation against U.S. dollar in the fourth quarter of 2016, the People’s Bank of China (“PBOC”) and State Administration of Foreign Exchange (“SAFE”) have implemented a series of capital control measures, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, PBOC issued the Circular on Further Clarification of Relevant Matters Relating to Offshore RMB Loans Provided by Domestic Enterprises, or “PBOC Circular 306,” on November 26, 2016, which provides that offshore RMB loans provided by a domestic enterprise to offshore enterprises with which it has an equity relationship shall not exceed 30% of the domestic enterprise’s most recent audited owner’s equity. PBOC Circular 306 may constrain our PRC subsidiaries’ ability to provide offshore loans to us. The PRC government may continue to strengthen its capital controls, and our PRC subsidiaries’ dividends and other distributions may be subjected to tighter scrutiny in the future. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. See also “Item 3. Key Information-D. Risk Factors- Risks Relating to Doing Business in the PRC-Under the EIT Law, we may be classified as a ‘resident enterprise’ of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.”
PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using proceeds from our future financing activities to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with relevant governmental authorities in China. According to the relevant PRC regulations on foreign-invested enterprises, or “FIEs,” in China, capital contributions to our PRC subsidiary, Golden Sun Wenzhou, which are FIEs, are subject to the approval of or filing with the Ministry of Commerce of the PRC (“MOFCOM”) or its local counterparts and registration with a local bank authorized by SAFE. There is, in effect, no statutory limit on the amount of capital contribution that we can make to our PRC subsidiaries. The reason is that there is no statutory limit on the amount of registered capital for our PRC subsidiaries, and we are allowed to make capital contributions to our PRC subsidiaries by subscribing for their initial registered capital and increased registered capital, provided that the PRC subsidiaries complete the relevant filing and registration procedures.
On the other hand, any foreign loan provided by us to our PRC subsidiaries is required to be registered with SAFE or its local branches or filed with SAFE in its information system, and our PRC subsidiaries may not procure foreign loans which exceed the difference between its total investment amount and registered capital (the “Current Foreign Debt Mechanism”) or, as an alternative, only procure loans subject to the calculation approach and limitations as provided in the PBOC’s Circular on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing, or “PBOC Notice No. 9” (the “PBOC Notice No. 9 Mechanism”), which shall not exceed 200% of the net asset of the relevant PRC subsidiary. According to PBOC Notice No. 9, after a transition period of one year since its promulgation, PBOC and SAFE will determine the cross-border financing administration mechanism for the FIEs after evaluating the overall implementation of PBOC Notice No. 9. As of the date hereof, neither PBOC nor SAFE has promulgated and made public any further rules, regulations, notices, or circulars in this regard. It is uncertain which mechanism will be adopted by PBOC and SAFE in the future and what statutory limits will be imposed on us when providing loans to our PRC subsidiaries. Currently, our PRC subsidiaries have the flexibility to choose between the Current Foreign Debt Mechanism and the PBOC Notice No. 9 Mechanism. However, if a more stringent foreign debt mechanism becomes mandatory, our ability to provide loans to our PRC subsidiaries may be significantly limited, which may adversely affect our business, financial condition, and results of operations.
If we seek to make capital contributions into our PRC subsidiaries or provide any loans to our PRC subsidiaries in the future, we may not be able to obtain the required government approvals or complete the required registrations on a timely basis, if at all. If we fail to receive such approvals or complete such registrations, our ability to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.
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Under the EIT Law, we may be classified as a “resident enterprise” of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.
The PRC Enterprise Income Tax Law (the “EIT Law”) and its implementing rules provide that enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises” under PRC tax laws. The implementing rules promulgated under the EIT Law define the term “de facto management bodies” as a management body which substantially manages, or has control over the business, personnel, finance and assets of an enterprise. In April 2009, the State Administration of Taxation, or the “SAT,” issued a circular known as “SAT Circular 82” (partially abolished on December 29, 2017), which provides certain specific criteria for determining whether the “de facto management bodies” of a PRC-controlled enterprise that is incorporated offshore are located in China. There are, however, no further detailed rules or precedents governing the procedures and specific criteria for determining “de facto management body.” Although our board of directors and management are located in the PRC, it is unclear if the PRC tax authorities would determine that we should be classified as a PRC “resident enterprise.”
If we are deemed as a PRC “resident enterprise,” we will be subject to PRC enterprise income tax on our worldwide income at a uniform tax rate of 25%, although dividends distributed to us from our existing PRC subsidiaries and any other PRC subsidiaries which we may establish from time to time could be exempt from the PRC dividend withholding tax due to our PRC “resident recipient” status. This could have a material and adverse effect on our overall effective tax rate, our income tax expenses and our net income. Furthermore, dividends, if any, paid to our shareholders may be decreased as a result of the decrease in distributable profits. In addition, if we were considered a PRC “resident enterprise,” any dividends we pay to our non-PRC investors, and the gains realized from the transfer of our ordinary shares may be considered income derived from sources within the PRC and be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty). It is unclear whether holders of our ordinary shares would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. This could have a material and adverse effect on the value of your investment in us and the price of our ordinary shares.
There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our Hong Kong subsidiaries may not qualify to enjoy certain treaty benefits.
Under the EIT Law and its implementation rules, the profits of a foreign invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and the PRC and the Notice of the SAT on Issues Regarding the Implementation of Dividend Provisions in Tax Treaties, or the “SAT Circular 81,” issued by the SAT, such rate may be reduced to 5% if the PRC enterprise is at least 25% held by a Hong Kong enterprise for at least 12 consecutive months prior to the distribution of the dividends and is determined by the relevant PRC tax authority to have satisfied other conditions and requirements under the China-Hong Kong special arrangement and other applicable PRC laws. Furthermore, under the SAT’s Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties effective in August 2015, non-resident taxpayers shall determine whether they are qualified to enjoy the preferential tax treatment under the tax treaties and file relevant report and materials with the tax authorities. See “Item 10. Additional Information-E. Taxation-People’s Republic of China Taxation.” We have determined that we are qualified to enjoy the preferential tax treatment. We cannot assure you, however, that our determination will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the China-Hong Kong special arrangement with respect to dividends to be paid by our PRC subsidiaries to our Hong Kong subsidiaries.
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We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
In February 2015, the SAT issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or “SAT Bulletin 7,” which was partially abolished in 2017. Pursuant to this bulletin, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. In respect of an indirect offshore transfer of assets of a PRC establishment, the resulting gain is to be included with the enterprise income tax filing of the PRC establishment or place of business being transferred, and would consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immovable properties located in China or to equity investments in a PRC resident enterprise, which is not related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax of 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. SAT Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a transaction through a public stock exchange.
There is uncertainty as to the application of SAT Bulletin 7. We face uncertainties as to the reporting and other implications of certain future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries or investments. We may be subject to filing obligations or taxed if we are transferor in such transactions, and may be subject to withholding obligations if we are transferee in such transactions under SAT Bulletin 7. For transfer of shares in our Company by investors that are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under SAT Bulletin 7. As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our Company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.
Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business.
We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.
Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a PRC company is required to set aside at least 10% of its after-tax profits as statutory reserve funds, until the cumulative amount of such reserve funds reaches 50% of its registered capital, unless laws regarding foreign investment provide otherwise. Our PRC subsidiaries may also allocate a portion of their respective after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends. These limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments, or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
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To address the persistent capital outflow and the RMB’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s Bank of China and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, the Circular on Promoting the Reform of Foreign Exchange Management and Improving Authenticity and Compliance Review, or the SAFE Circular 3, issued on January 26, 2017, provides that the banks shall, when dealing with dividend remittance transactions from domestic enterprise to its offshore shareholders of more than US$50,000, review the relevant board resolutions, original tax filing form and audited financial statements of such domestic enterprise based on the principle of genuine transaction. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’ dividends and other distributions may be subject to tightened scrutiny in the future. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
In addition, the EIT Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are tax resident. See “Item 3. Key Information-D. Risk Factors-Risks Relating to Doing Business in the PRC-Under the EIT Law, we may be classified as a ‘resident enterprise’ of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.”
Restrictions on currency exchange may limit our ability to utilize our revenues or make foreign currency payments effectively.
All of our revenues are denominated in Renminbi. The Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. Currently, our WFOE may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Since we expect a significant portion of our future revenue will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies to our shareholders. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant PRC governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries.
Also, substantially all of the Company’s operating activities that were conducted through the PRC subsidiaries in China and related assets and liabilities are denominated in Renminbi, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the Peoples’ Bank of China (“PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. The value of Renminbi is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.
It may be difficult for overseas shareholders and/or regulators to conduct investigation or collect evidence within China.
Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC without first receiving approval from the CSRC. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.
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The CSRC’s New Overseas Listing Rules for China-based companies seeking to conduct overseas offering and listing in foreign markets, effective as of March 31, 2023, allows the PRC government to exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to continue to offer our Class A ordinary shares to investors and/or could cause the value of our Class A ordinary shares to significantly decline or such shares to become worthless.
The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters.
On February 17, 2023, the CSRC released the New Overseas Listing Rules, which came into effect on March 31, 2023. The New Overseas Listing Rules apply to overseas securities offerings and/or listings conducted by (i) companies incorporated in the PRC, or PRC domestic companies, directly and (ii) companies incorporated overseas with operations primarily in the PRC and valued on the basis of interests in PRC domestic companies, or indirect offerings. The New Overseas Listing Rules requires (1) the filings of the overseas offering and listing plan by the PRC domestic companies with the CSRC under certain conditions, and (2) the filing of their underwriters with the CSRC under certain conditions and the submission of an annual report to of such filed underwriters the CSRC within the required timeline. The required filing scope is not limited to the initial public offering, but also includes subsequent overseas securities offerings, single or multiple acquisition(s), share swap, transfer of shares or other means to seek an overseas direct or indirect listing, a secondary listing or dual listing.
Under the New Overseas Listing Rules, a filing-based regulatory system applies to “indirect overseas offerings and listings” of companies in mainland China, which refers to securities offerings and listings in an overseas market made under the name of an offshore entity but based on the underlying equity, assets, earnings or other similar rights of a company in mainland China that operates its main business in mainland China. The New Overseas Listing Rules state that, any post-listing follow-on offering by an issuer in an overseas market, including issuance of shares, convertible notes, exchangeable notes and preferred shares, shall be subject to filing requirement within three business days after the completion of the offering.
Based on our understanding of the rules, we believe that we are currently not required to make any CSRC filing until we conduct a new offering in the future.
As of the date of this annual report, we believe we are not required to obtain permission or approval from any other PRC state or local government to continue listing on Nasdaq. However, if any other filings, approval, review or other procedure are required, there is no assurance that we will be able to obtain such filings, approval or complete such review or other procedures timely or at all. For any approval or permission that we have received or may receive in future, it could nevertheless be revoked or cancelled, and the terms of its reissuance may impose restrictions on our operations and offerings relating to our securities. Besides, the New Overseas Listing Rules may subject us to additional compliance requirements in the future. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to continue to offer our Class A ordinary shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Class A ordinary shares to significantly decline in value or become worthless.
On February 24, 2023, the CSRC, together with other PRC government authorities, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises, which came into effect on March 31, 2023. The Confidentiality and Archives Administration Provisions require, among others, that PRC domestic enterprises seeking to offer and list securities in overseas markets, either directly or indirectly, shall establish the confidentiality and archives system, and shall complete approval and filing procedures with competent authorities, if such PRC domestic enterprises or their overseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets of PRC government agencies to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals. It further stipulates that providing or publicly disclosing documents and materials which may adversely affect national security or public interests, and accounting files or copies of important preservation value to the state and society shall be subject to corresponding procedures in accordance with relevant laws and regulations.
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As of the date of this annual report, we believe no relevant laws or regulations in the PRC explicitly require us to seek approval or permissions from any other PRC governmental authorities for our continued listing on the Nasdaq, nor has our company, any of our subsidiaries received any inquiry, notice, warning or sanctions regarding our continued listing on the Nasdaq from any other PRC governmental authorities. We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CAC or other PRC regulatory authorities required for our operations and future overseas listings. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities. The PRC government may take actions to exert more oversight and control over offerings by China-based issuers conducted overseas and/or foreign investment in such companies, which could significantly limit or completely hinder our ability to continue to offer securities to investors outside China and cause the value of our securities to significantly decline or become worthless. If it is determined in the future that the approval or permissions of any regulatory authority is required for our operations through our PRC subsidiaries and our offerings and we or our PRC subsidiaries do not receive or maintain the approvals or permissions, or we or our PRC subsidiaries inadvertently conclude that such approvals or permissions are not required, or applicable laws, regulations, or interpretations change such that we or our PRC subsidiaries are required to obtain approvals or permissions in the future, we and our PRC subsidiaries may be subject to investigations by competent regulators, fines or penalties, ordered to suspend our relevant operations and rectify any non-compliance, limit our ability to pay dividends outside of mainland China, delay or restrict the repatriation of the proceeds from any future financings into mainland China or take other actions prohibited from engaging in relevant business or conducting any offering, and these risks could result in a material adverse change in our operations, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.
The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.
The M&A Rules discussed in the preceding risk factor and related regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand, (iv) or in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. Mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the MOFCOM when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings issued by the State Council in January 2024 is triggered.
In addition, the security review rules issued by the MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. Furthermore, according to the security review, foreign investments that would result in acquiring the actual control of assets in certain key sectors, such as critical agricultural products, energy and resources, equipment manufacturing, infrastructure, transport, cultural products and services, information technology, Internet products and services, financial services and technology sectors, are required to obtain approval from designated governmental authorities in advance.
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In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions, if required, could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions. It is unclear whether our business would be deemed to be in an industry that raises “national defense and security” or “national security” concerns. However, the MOFCOM or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected. Furthermore, according to the M&A Rules, if a PRC entity or individual plans to merge or acquire its related PRC entity through an overseas company legitimately incorporated or controlled by such entity or individual, such a merger and acquisition will be subject to examination and approval by the MOFCOM. There is a possibility that the PRC regulators may promulgate new rules or explanations requiring that we obtain the approval of the MOFCOM or other PRC governmental authorities for our completed or ongoing mergers and acquisitions. There is no assurance that, if we plan to make an acquisition, we can obtain such approval from the MOFCOM or any other relevant PRC governmental authorities for our mergers and acquisitions, and if we fail to obtain those approvals, we may be required to suspend our acquisition and be subject to penalties. Any uncertainties regarding such approval requirements could have a material adverse effect on our business, results of operations and corporate structure.
To the extent cash or assets in our business are in mainland China or Hong Kong or a mainland China or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of mainland China or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of our company and our subsidiaries by the PRC government to transfer cash or assets, which may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.
Golden Sun is an offshore holding company with no material operations of its own, and conducts substantially all of its operations through its PRC subsidiaries. As of the date of this annual report, all of our cash and assets are located primarily in the PRC. As a holding company, Golden Sun may rely on dividends and other distributions on equity paid by its PRC subsidiaries for its cash and financing requirements. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to us. We are currently in the process of adopting our formal cash management policies which will dictate the purpose, amount and procedure of cash transfers among Golden Sun and our subsidiaries. Historically, one PRC operating entity provides financial support for other entities’ operations by inter-company loans and they have not experienced difficulties or limitations on their ability to transfer cash between themselves. In terms of Hong Kong, we believe that there is no restriction imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including funds from Hong Kong to mainland China), except transfer of funds involving money laundering and criminal activities. However, to the extent cash or assets in our business are in mainland China or Hong Kong or a mainland China or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of mainland China or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of our company and our subsidiaries by the PRC government to transfer cash or assets. As of the date of this annual report, no transfers, dividends or other distributions have been made from our subsidiaries to Golden Sun or our investors, and no transfers, loans, or capital contributions have been made from Golden Sun to any of our subsidiaries or our investors.
The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of mainland China. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to transfer cash out of mainland China, and pay dividends in foreign currencies to our shareholders. Therefore, to the extent cash or assets in our business are in mainland China or Hong Kong or a mainland China or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of mainland China or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of our company and our subsidiaries by the PRC government to transfer cash or assets, which may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.
Notwithstanding the foregoing, there can be no assurance that the PRC government will not intervene or impose restrictions in future on our ability to transfer or distribute cash within our PRC subsidiaries or to foreign investors, which could result in an inability or prohibition on making transfers or distributions outside of mainland China and may adversely affect our business, financial condition and results of operations.
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You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws.
Golden Sun Cayman is an exempted company incorporated under the laws of the Cayman Islands. We conduct substantially all of our operations in China through our PRC subsidiaries, and substantially all of our assets are located in China. In addition, our executive officers and certain directors are PRC nationals and reside within China for a significant portion of the time. The PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom, Japan and many other jurisdictions. As a result, it may not be possible for investors to serve process upon us or those persons in China, or to enforce against us or them in China, any judgments obtained from non-PRC jurisdictions. As a result, it may be difficult for you to effect service of process upon us or those persons inside China. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors who do not reside in the United States or have substantial assets located in the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state.
Furthermore, there is uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. We believe that foreign judgments of United States courts will not be directly enforced in Hong Kong as there are currently no treaties or other arrangements providing for reciprocal enforcement of foreign judgments between Hong Kong and the United States. However, the common law permits an action to be brought upon a foreign judgment. As a result, a foreign judgment itself may form the basis of a cause of action since the judgment may be regarded as creating a debt between the parties to it. In a common law action for enforcement of a foreign judgment in Hong Kong, the enforcement is subject to various conditions, including but not limited to, that the foreign judgment is a final judgment conclusive upon the merits of the claim, the judgment is for a liquidated amount in civil matter and not in respect of taxes, fines, penalties, or similar charges, the proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the judgment is not contrary to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a “competent” court as determined by the private international law rules applied by the Hong Kong courts. The defenses that are available to a defendant in a common law action brought on the basis of a foreign judgment include lack of jurisdiction, breach of natural justice, fraud, and contrary to public policy. However, a separate legal action for debt must be commenced in Hong Kong in order to recover such debt from the judgment debtor. As a result, subject to the conditions with regard to enforcement of judgments of United States courts being met, including but not limited to the above, a foreign judgment of the United States of civil liabilities predicated solely upon the federal securities laws of the United States or the securities laws of any State or territory within the United States could be enforceable in Hong Kong.
Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such regulatory cooperation with the securities regulatory authorities in the United States has not been efficient in the absence of mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the PRC. Accordingly, without the consent of the competent PRC securities regulators or other relevant authorities, no entity or individual may provide any documents and materials relating to securities business activities to foreign entities or government agencies.
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The tension in international trade and rising political tension, particularly between U.S. and China, may adversely impact our business, financial condition, and results of operations.
Although cross-border business may not be an area of our focus, as we plan to expand our business internationally in the future, any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for our products and services, impact our competitive position, or prevent us from being able to conduct business in certain countries. If any new tariffs, legislation, or regulations are implemented, or if existing trade agreements are renegotiated, such changes could adversely affect our business, financial condition, and results of operations. Recently, there have been heightened tensions in international economic relations, such as the one between the United States and China. In February and March 2025, the United States administration imposed an additional 20% duty on Chinese imports. Subsequently, authorities in China announced tariffs over selected United States products and regulatory investigation against United States companies in response to the tariff imposed by the United States. Furthermore, on April 2, 2025, President Trump announced that the United States would impose a 10% tariff on all countries, effective on April 5, 2025, and an individualized reciprocal higher tariff on countries with which the United States has the largest trade deficits, including a 34% additional reciprocal tariff on goods imported from China that brings the total tariff rate to 54%. On April 4, 2025, the Foreign Ministry of China announced that China would impose a retaliatory 34% tariff on goods imported from the United States. On April 8, 2025, President Trump announced an additional 50% tariff on Chinese imports. The Trump administration proceeded to implement a 104% tariff on goods imported from China on April 9, 2025. On April 10, 2025, President Trump announced a temporary suspension of reciprocal tariff measures targeting most U.S. trading partners for a 90-day period, while concurrently escalating tariffs on Chinese goods to 125%. Subsequently, on April 16, 2025, the White House announced that China faced tariffs of up to 245% on imports to the United States. Additionally, the U.S. government continues to signal that it may alter trade agreements and terms between China and the United States, including limiting trade with China, and may impose additional tariffs on imports from China and other countries. Since April 16, 2025, the U.S. government has continued to indicate that it may further adjust trade policies with China, including by imposing additional tariffs or other trade restrictions. Although we currently have limited exposure to China-related tariffs, future changes in U.S.–China trade relations could result in increased costs, supply chain disruptions, or broader economic uncertainty. Any such developments could adversely affect our business, financial condition and results of operations.
In addition, political tensions between the United States and the PRC have escalated due to, among other things, trade disputes, the COVID-19 outbreak, sanctions imposed by the U.S. Department of Treasury on certain officials of the Hong Kong Special Administrative Region, the PRC central government and the executive orders issued by former U.S. President Donald J. Trump in August 2020 that prohibit certain transactions with certain Chinese companies and their applications and allegations that the PRC may provide support to Russia in its continued invasion of Ukraine. Partially in response to these actions, the PRC government has also taken a number of steps affecting U.S.-China relations, including the issuance of the Unreliable Entity List in 2019 and the enactment of the Anti-Foreign Sanctions Law in 2021. Rising political tensions could reduce levels of trades, investments, technological exchanges, and other economic activities between the two major economies, which would have a material adverse effect on global economic conditions and the stability of global financial markets. Any of these factors could have a material adverse effect on our business, prospects, financial condition, and results of operations.
Risks Relating to Our Ordinary Shares and the Trading Market
Substantial future sales of our Class A ordinary shares or the anticipation of future sales of our ordinary shares, whether by us or our shareholders, could cause the price of our Class A ordinary shares to decline.
An aggregate of 8,325,870 Class A ordinary shares are outstanding as of September 30, 2025. If our existing shareholders sell, or indicate an intent to sell, substantial amounts of our ordinary shares in the public market, the trading price of our Class A ordinary shares could decline significantly. Similarly, the perception in the public market that our shareholders might sell our ordinary shares could also depress the market price of our shares. A decline in the price of our Class A ordinary shares might impede our ability to raise capital through the issuance of additional Class A ordinary shares or other equity securities. In addition, the issuance and sale by us of additional ordinary shares, or securities convertible into or exercisable for our ordinary shares, or the perception that we will issue such securities, could reduce the trading price for our Class A ordinary shares as well as make future sales of equity securities by us less attractive or not feasible.
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Because we do not expect to pay dividends in the foreseeable future, you must rely on the price appreciation of our Class A ordinary shares for return on your investment.
We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our Class A ordinary shares as a source for any future dividend income.
Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend be paid if this would result in the Company being unable to pay its debts due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions, and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Class A ordinary shares will likely depend entirely upon any future price appreciation of our Class A ordinary shares. There is no guarantee that our Class A ordinary shares will appreciate in value or even maintain the price at which you purchased the Class A ordinary shares. You may not realize a return on your investment in our Class A ordinary shares and you may even lose your entire investment in our Class A ordinary shares.
Securities analysts may not cover our Class A ordinary shares and this may have a negative impact on the market price of our Class A ordinary shares.
The trading market for our Class A ordinary shares depends, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over independent analysts (provided that we have engaged various non-independent analysts). We do not currently have and may never obtain research coverage by independent securities and industry analysts. If no independent securities or industry analysts commence coverage of us, the trading price for our Class A ordinary shares would be negatively impacted. If we obtain independent securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our Class A ordinary shares, changes their opinion of our shares, or publishes inaccurate or unfavorable research about our business, the price of our Class A ordinary shares would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Class A ordinary shares could decrease and we could lose visibility in the financial markets, which could cause the price and trading volume of our Class A ordinary shares to decline.
The trading price of our Class A ordinary shares is likely to be volatile, which could result in substantial losses to our investors.
The trading price of our Class A ordinary shares is likely to continue to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in their trading prices. The trading performances of other Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of our Class A ordinary shares, regardless of our actual operating performance.
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In addition, the market price of our Class A ordinary shares may be volatile, both because of actual and perceived changes in our financial results and reports, and because of general volatility in the stock market. The factors that could cause fluctuations in our share price may include, among other factors discussed in this section, the following:
| ● | actual or anticipated variations in the financial results and prospects of our Company or other companies in the activated carbon business; |
| ● | changes in financial estimates by research analysts; |
| ● | mergers or other business combinations involving us; |
| ● | additions and departures of key personnel and senior management; |
| ● | changes in accounting principles; |
| ● | the passage of legislation or other developments affecting us or our industry; |
| ● | the trading volume of our Class A ordinary shares in the public market; |
| ● | the release of lockup, escrow, or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; |
| ● | changes in economic conditions, including fluctuations in global and Chinese economies; |
| ● | financial market conditions; |
| ● | natural disasters, terrorist acts, acts of war, or periods of civil unrest; and |
| ● | the realization of some or all of the risks described in this section. |
In addition, the stock markets have experienced significant price and trading volume fluctuations from time to time, and the stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. These broad market fluctuations may materially and adversely affect the market price of our Class A ordinary shares.
Techniques employed by short sellers may drive down the market price of our Class A ordinary shares.
Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.
Public companies listed in the United States that have a substantial majority of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.
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We may in the future be the subject of unfavorable allegations made by short sellers. Any such allegations may be followed by periods of instability in the market price of our Class A ordinary shares and negative publicity. If and when we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable federal or state law, or issues of commercial confidentiality. Such a situation could be costly and time-consuming and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact on our business operations and shareholders’ equity, and the value of any investment in ours could be greatly reduced or rendered worthless.
The requirements of being a public company may strain our resources and divert management’s attention.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act,” the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations. Despite recent reforms made possible by the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act,” compliance with these rules and regulations will nonetheless increase our legal, accounting, and financial compliance costs and investor relations and public relations costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires, among other things, that we file annual and current reports with respect to our business and operating results as well as proxy statements.
As a result of disclosure of information in the Form 20-F and in filings required of a public company, our business and financial condition are more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, brand and reputation and results of operations.
Being a public company and these new rules and regulations make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting, and other expenses that we would not incur as a foreign private issuer.
As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors, and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we are not required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently are qualified as a foreign private issuer, we may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.
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Because we are a foreign private issuer and have taken advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.
As an exempted company incorporated in the Cayman Islands with limited liability that is listed on the Nasdaq, we are subject to the Nasdaq corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. We have relied on and plan to rely on certain home country practice with respect to our corporate governance. Specifically, we have elected to be exempt from the requirements under (i) Nasdaq Rule 5635(c), which provides (with certain exceptions not relevant to the conclusions expressed herein) that each company listed on NASDAQ is required to obtain shareholder approval prior to the issuance of securities when a stock option or purchase plan or other equity compensation arrangement is established or materially amended; (ii) Nasdaq Rule 5620(a), which provides (with certain exceptions not relevant to the conclusions expressed herein) that each company listing common stock or voting preferred stock, and/or their equivalents, must hold an annual meeting of shareholders no later than one year after the end of the company’s fiscal year; and (iii) Nasdaq 5605(b)(2), which provides (with certain exceptions not relevant to the conclusions expressed herein) that the independent directors must have regularly scheduled meetings at which only independent directors are present. As a result, our shareholders may be afforded less protection than they otherwise would enjoy under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.
If we cannot satisfy, or continue to satisfy, the continued listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.
Our securities are listed on the Nasdaq Capital Market. We cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the criteria for maintaining our listing, our securities could be subject to delisting.
If our securities are subsequently delisted from trading, we could face significant consequences, including:
| ● | a limited availability for market quotations for our securities; |
| ● | reduced liquidity with respect to our securities; |
| ● | a determination that our Class A ordinary shares is a “penny stock,” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Class A ordinary shares; |
| ● | limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
We do not know whether a market for our Class A ordinary shares will be sustained or what the trading price of our Class A ordinary shares will be and as a result it may be difficult for you to sell your Class A ordinary shares.
Although our Class A ordinary shares trade on Nasdaq, an active trading market for our Class A ordinary shares may not be sustained. It may be difficult for you to sell your Class A ordinary shares without depressing the market price for our Class A ordinary shares. As a result of these and other factors, you may not be able to sell your Class A ordinary shares. Further, an inactive market may also impair our ability to raise capital by selling Class A ordinary shares, or may impair our ability to enter into strategic partnerships or acquire companies or products by using our Class A ordinary shares as consideration.
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Anti-takeover provisions in our amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control.
Some provisions of our amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control of our Company or management that shareholders may consider favorable, including, among other things, the following:
| ● | provisions that authorize our board of directors to issue shares with preferred, deferred, or other special rights or restrictions without any further vote or action by our shareholders; and |
| ● | provisions that restrict the ability of our shareholders to call meetings and to propose special matters for consideration at shareholder meetings. |
During the course of the audit of our consolidated financial statements, we identified material weaknesses in our internal control over financial reporting. If we fail to establish and maintain an effective system of internal control over financial reporting, our ability to accurately and timely report our financial results or prevent fraud may be adversely affected, and investor confidence and the market price of our ordinary shares may be adversely impacted.
We are subject to reporting obligations under U.S. securities laws. The SEC adopted rules pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 requiring every public company to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of its internal control over financial reporting.
In connection with the audits of our consolidated financial statements included in this annual report, we and our auditors identified three material weaknesses in our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
The three material weaknesses that have been identified relate to: (1) our lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to properly address certain accounting issues, and prepare and review financial statements and related disclosures in accordance with U.S. GAAP and SEC reporting requirements, (2) our lack of lack formal accounting policies and procedures manual to ensure proper financial reporting in accordance with U.S. GAAP and SEC reporting requirements, and (3) for certain related party related party transactions, we do not have an audit committee process for review, approval, or related documentation in place. See “item 15. Controls and Procedures -Disclosure Controls And Procedures.” Our management is currently in the process of evaluating the steps necessary to remediate the ineffectiveness, such as (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework, (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel, and (iii) setting up formal protocols to review, approve, and document related party transactions. However, measures that we implement may not fully address the material weaknesses in our internal control over financial reporting and we may not be able to conclude that the material weaknesses have been fully remedied.
Failure to correct the material weaknesses and other control deficiencies or failure to discover and address any other control deficiencies could result in inaccuracies in our consolidated financial statements and could also impair our ability to comply with applicable financial reporting requirements and make related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations, and prospects, as well as the trading price of our ordinary shares, may be materially and adversely affected. Due to the material weaknesses in our internal control over financial reporting as described above, our management concluded that our internal control over financial reporting was not effective as of September 30, 2025. This could adversely affect the market price of our Class A ordinary shares due to a loss of investor confidence in the reliability of our reporting processes.
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If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to produce timely and accurate financial statements and may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If that were to happen, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which could lead to a decline in the market price of our Class A ordinary shares and we could be subject to sanctions or investigations by SEC or other regulatory authorities. We may also be required to restate our financial statements for prior periods.
We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this will make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This will make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Class A ordinary shares.
We are classified as an “emerging growth company” under the JOBS Act. For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. If some investors find our Class A ordinary shares less attractive as a result, there may be a less active trading market for our Class A ordinary shares and our share price may be more volatile.
The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.
Our corporate affairs are governed by our amended and restated memorandum and articles of association, by the Companies Act (Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law. Decisions of the Privy Council (which is the final Court of Appeal for British overseas territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court and the Court of Appeal are generally of persuasive authority but are not binding in the courts of the Cayman Islands. Decisions of courts in other Commonwealth jurisdictions are similarly of persuasive but not binding authority. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws relative to the United States. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.
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If we are classified as a Passive Foreign Investment Company (“PFIC”), United States taxpayers who own our Class A ordinary shares may have adverse United States federal income tax consequences.
A non-U.S. corporation such as us will be classified as a PFIC, for any taxable year if, for such year, either:
| ● | At least 75% of our gross income for the year is passive income; or |
| ● | The average percentage of our assets (determined at the end of each quarter) during the taxable year which produces passive income or which are held for the production of passive income is at least 50%. |
Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business), and gains from the disposition of passive assets.
If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our Class A ordinary shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.
Depending on the amount of cash we have and any other assets held for the production of passive income, it is possible that, for our current taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders. We will make this determination following the end of any particular tax year.
Although the law in this regard is unclear, we treat PRC subsidiaries as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operations of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their operating results in our consolidated financial statements. For purposes of the PFIC analysis, in general, a non-U.S. corporation is deemed to own its pro rata share of the gross income and assets of any entity in which it is considered to own at least 25% of the equity by value.
For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were or are determined to be a PFIC, see “Item 10. Additional Information-E. Taxation-United States Federal Income Taxation-Passive Foreign Investment Company (“PFIC”).”
The dual class structure of our ordinary shares has the effect of concentrating voting control with our Chairman and Chief Executive Officer, Mr. Xueyuan Weng, who is the only owner of our Class B ordinary shares, and his interests may not be aligned with the interests of our other shareholders.
Our Class B ordinary shares have fifty votes per share, and our Class A ordinary shares have one vote per share, on all matters subject to vote at general meetings of the Company. Mr. Xueyuan Weng, our Chairman and CEO, currently beneficially hold approximately 67.67% of the total votes for our issued and outstanding share capital. Because of the fifty-to-one voting ratio between our Class B ordinary shares and Class A ordinary shares, the holder of our Class B ordinary shares could collectively control a majority of the aggregate voting power of our issued ordinary shares and therefore be able to control all matters submitted to our shareholders for approval. This concentrated control may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate actions requiring shareholder approval. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our share capital that you may feel are in your best interest as one of our shareholders. Such concentration of voting power could also have the effect of delaying, deterring, or preventing a change of control or other business combination, which could, in turn, have an adverse effect on the market price of our Class A ordinary shares or prevent our shareholders from realizing a premium over the then-prevailing market price for their Class A ordinary shares.
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The dual-class structure of our ordinary shares may cause shareholder advisory firms to publish negative commentary about our corporate governance practices thus adversely affect the trading market for our Class A ordinary shares.
Several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our ordinary shares may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A ordinary shares.
Since we are a “controlled company” within the meaning of the Nasdaq listing rules, we are allowed to follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.
Our largest shareholder, Mr. Xueyuan Weng, owns more than a majority of the voting power of our outstanding ordinary shares. Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and is permitted to phase in its compliance with the independent committee requirements. Although we do not intend to rely on the “controlled company” exemptions under the Nasdaq listing rules even if we are deemed a “controlled company,” we could elect to rely on these exemptions in the future. If we were to elect to rely on the “controlled company” exemptions, a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.
Item 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Golden Sun Technology Group Limited, formerly known as Golden Sun Health Technology Group Limited and, prior thereto, Golden Sun Education Group Limited, was incorporated under the laws of the Cayman Islands on September 20, 2018. On September 26, 2023, the shareholders of the Company adopted a resolution to change the Company’s name to “Golden Sun Health Technology Group Limited,” and on September 25, 2025, the shareholders of the Company adopted a further resolution to change the Company’s name to “Golden Sun Technology Group Limited.” At the opening of trading on February 5, 2026, the Company’s Class A ordinary shares begin trading on the Nasdaq Capital Market under the new name “Golden Sun Technology Group Limited.” The Company’s CUSIP number will remain the same. The name change reflects the Company’s new business strategy and its future development plans.
Our principal executive office is located at Room 503, Building C2, No. 1599, Xinjinqiao Road, Pudong New Area, Shanghai, China 200083. Our telephone number is +86-0577-56765303. Our registered office in the Cayman Islands is located at the offices of Vistra (Cayman) Limited, P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1 - 1205 Cayman Islands. We maintain a corporate website at http://www.jtyjyjt.com. The information contained in, or accessible from, our website or any other website does not constitute a part of this annual report.
Recent Developments
Completion of Acquisition or Disposition of Assets
On April 10, 2023, Wenzhou Lilong (the “Purchaser”) signed a Share Purchase Agreement (“Wenzhou SPA”) to purchase 100% equity interest of Zhejiang Oulong from an unrelated third party and Dongfang Zhao, a minority shareholder of the Company (the “Sellers”).
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Pursuant to the Wenzhou SPA, the Sellers sold to the Purchaser all of the issued and outstanding shares of Zhejiang Oulong, a company incorporated and existing under the laws of the People’s Republic of China, established on July 2, 2020. Pursuant to the Wenzhou SPA, the total consideration is $5,000,000 to be paid in three installments. On March 1, 2024, according to Asset Appraisal Report issued by Shanghai Ruihong Assessment Company, all parties agreed to amend the consideration under the Wenzhou SPA to $6,068,268 (RMB43.2 million), and the parties shall complete the shareholders registration by March 30, 2024. On June 10, 2025, the parties completed the share transfer registration after the relevant contract terms were met. As a result, Zhejiang Oulong became a wholly-owned subsidiary of Wenzhou Lilong. As of September 30, 2025, we paid the consideration of $5,860,534 (RMB 41,721,142) under the Wenzhou SPA with a balance of $207,734 (RMB1,478,858) outstanding as of September 30, 2025 and the date of this annual report.
Nasdaq Stockholders’ Equity Deficiency Notice
On February 24, 2025, we received a written notice from Nasdaq, notifying us of our failure to meet the minimum shareholders’ equity of $2.5 million under the Nasdaq Listing Rule 5550(b)(1) (the “Shareholder Equity Rule”) for continued listing. The Nasdaq notice had no immediate effect on the listing of our securities. We subsequently submitted a plan for compliance to the Staff to regain compliance with the Shareholder Equity Rule.
On August 22, 2025, pursuant to a Securities Purchase Agreement (the “SPA”) dated October 28, 2024 entered into between us and two accredited investors (the “Investors”) whereby we sold to the Investors i) a Convertible Note (the “Note”) in the aggregate principal amount of $5,000,000 and ii) a Warrant (the “Warrant”) to purchase an amount of Class A ordinary shares, the Investors fully exercised the Warrant and converted all outstanding principal and interest under the Note into Class A ordinary shares, resulting in the issuance of an aggregate 6,747,926 Class A ordinary shares to such Investor. As such, the Note and the Warrant are no longer outstanding. The fair value of the Note and the Warrant immediately prior to conversion was assessed at approximately $12.9 million.
On August 27, 2025, we received formal notice from Nasdaq that we have evidenced compliance with the Shareholder Equity Rule and all other applicable criteria for continued listing on Nasdaq. Nasdaq will continue to monitor the Company to ensure its ongoing compliance with the Shareholder Equity Rule and, if at the time of the filing of our next periodic financial statements, we cannot evidence compliance with the Shareholder Equity Rule, we may again be subject to delisting. In such event, Nasdaq would provide written notice of the deficiency the Company, which the Company may appeal to a Nasdaq Hearings Panel.
Resignation and Appointment of Chief Operating Officer
On September 18, 2025, Ms. Xiaoyi Wang resigned as the Chief Operating Officer (“COO”) of the Company effective on September 18, 2025. On September 23, 2025, the Board appointed Mr. Duo Ye as COO of the Company, effective on September 18, 2025, to fill in the vacancy.
Variation of the Rights of Class B Ordinary Shares, Name Change and Share Capital Increase
On September 25, 2025, we conducted an extraordinary general meeting of Class A shareholders (the “EGM”), followed by our 2025 annual general meeting of all shareholders (the “AGM”) to approve the following resolutions, among other things, effective immediately:
| ● | that the variation of the rights attaching to Class A ordinary shares of par value US$0.005 each resulting from the number of votes holders of Class B ordinary shares of par value US$0.005 each are entitled to cast on a poll being increased from 5 votes to 50 votes for each Class B ordinary share they hold (the “Class B Variation”); |
| ● | that the change of our name in English from “Golden Sun Health Technology Group Limited” to “Golden Sun Technology Group Limited,” and the change of our foreign name from “金太阳健康科技集团有限公司” to “金太阳科技集团有限公司”(the “Name Change”); |
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| ● | that the authorized share capital of the Company be increased from US$50,000 divided into 9,000,000 Class A ordinary shares with a par value of US$0.005 each and 1,000,000 Class B ordinary shares with a par value of US$0.005 each to US$1,000,000 divided into 180,000,000 Class A ordinary shares with a par value of US$0.005 each and 20,000,000 Class B ordinary shares with a par value of US$0.005 each (the “Share Capital Increase”); and |
| ● | that the adoption of amended and restated memorandum and articles of association to reflect the Class B Variation, Name Change and Share Capital Increase. |
Subsequently, we filed an amended and restated memorandum and articles of association, to reflect the Name Change, Share Capital Increase and the Class B Variation, which became effective on September 25, 2025.
At the opening of trading on February 5, 2026, the Company’s Class A ordinary shares begin trading on the Nasdaq Capital Market under the new name “Golden Sun Technology Group Limited.” The Company’s CUSIP number will remain the same. The name change reflects the Company’s new business strategy and its future development plans.
Adoption of the Golden Sun Technology Group Limited 2025 Equity Incentive Plan
On December 9, 2025, our board of directors approved the adoption of the Golden Sun Technology Group Limited 2025 Equity Incentive Plan (the “2025 Plan”) and forms of award agreements (the “Award Agreements”) to be used to grant awards under the 2025 Plan, effective on December 10, 2025.
The 2025 Plan provides for the grant of awards representing the right to acquire, or based on the value of, Class A ordinary shares, and includes option awards, stock appreciation rights awards, restricted stock awards, restricted stock unit awards, performance awards, dividend equivalent awards and other share or cash based awards (each, and “Award”, collectively, the “Awards”) to eligible participants of the 2025 Plan or any related entity, as defined in the 2025 Plan.
The maximum number of Class A ordinary shares that may be issued under the 2025 Plan is 1,309,330 Class A ordinary shares, equivalent to 15% of the total number of ordinary shares of the Company (including both Class A ordinary shares and Class B ordinary shares) issued and outstanding as of the effective date of the 2025 Plan. Beginning on January 1, 2027, and continuing annually on each anniversary thereof through and including January 1, 2035, the number of Class A ordinary shares available for issuance under the 2025 Plan shall be increased by a number of shares equal to the lesser of (i) 5% of the total number of ordinary shares of the Company issued and outstanding on the last day of the immediately preceding calendar year and (ii) such smaller number of Class A ordinary shares as determined by the Board or the compensation committee of the Board (“Compensation Committee”).
See “Item 6. Directors, Senior Management and Employees - E. Share Ownership.”
On December 16. 2025, we registered an aggregate of up to 1,309,330 Class A ordinary shares on a registration statement on Form S-8 for issuance under the 2025 Plan.
On January 12, 2026, we granted an aggregate of 1,300,000 Class A ordinary share under the 2025 Plan to our five employees (neither officers nor directors of the Company) for the services so rendered to the Group. Such grants were duly approved and ratified by the Company’s board of directors.
Adoption of Home Country Exemption from Nasdaq Requirements
As a company incorporated in the Cayman Islands and listed on Nasdaq, we are subject to the Nasdaq corporate governance listing standards. Under the Nasdaq Rule 5600 Series (“Nasdaq Rules”), a foreign private issuer may generally follow its home country corporate governance practices in lieu of certain Nasdaq corporate governance requirements. Pursuant to the home country practice exemption under the Nasdaq Rules, which permits (with certain exceptions not relevant to the conclusions expressed herein) a foreign private issuer to follow its home country’s practices in place of applicable Nasdaq requirements, we have elected to rely on the following exemptions:
| (i) | Nasdaq Rule 5635(c) provides (with certain exceptions not relevant to the conclusions expressed herein) that each company listed on Nasdaq is required to obtain shareholder approval prior to the issuance of securities when a stock option or purchase plan or other equity compensation arrangement is established or materially amended. |
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| (ii) | Nasdaq Rule 5620(a) provides (with certain exceptions not relevant to the conclusions expressed herein) that each company listing common stock or voting preferred stock, and/or their equivalents, must hold an annual meeting of shareholders no later than one year after the end of the company’s fiscal year. | |
| (iii) | Nasdaq 5605(b)(2) provides (with certain exceptions not relevant to the conclusions expressed herein) that the independent directors must have regularly scheduled meetings at which only independent directors are present. |
Except as described above, there are no significant differences between our corporate governance practices and the corporate governance requirements applicable to domestic U.S. companies under the Nasdaq Rules.
Corporate Information
Golden Sun Technology Group Limited, formerly known as Golden Sun Health Technology Group Limited and, prior thereto, Golden Sun Education Group Limited, or Golden Sun Cayman, was incorporated in the Cayman Islands on September 20, 2018. On September 26, 2023, the shareholders of the Company adopted a resolution to change the Company’s name to “Golden Sun Health Technology Group Limited.” On September 25, 2025, the shareholders of the Company adopted a resolution to change the Company’s name to “Golden Sun Technology Group Limited.” At the opening of trading on February 5, 2026, the Company’s Class A ordinary shares begin trading on the Nasdaq Capital Market under the new name “Golden Sun Technology Group Limited.”
Our principal executive office is located at Room 503, Building C2, No. 1599, Xinjinqiao Road, Pudong New Area, Shanghai, China 200083. Our telephone number is +86-0577-56765303. Our registered office in the Cayman Islands is located at the offices of Vistra (Cayman) Limited, P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1 - 1205 Cayman Islands. We maintain a corporate website at http://www.jtyjyjt.com. The information contained in, or accessible from, our website or any other website does not constitute a part of this annual report.
The SEC maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system.
B. Business Overview
As of the date of this annual report, we primarily operate two principal lines of business: tutorial services and e-commerce services. Prior to November 2023, our operations were primarily focused on tutorial and tutorial services. In response to the increasingly restrictive regulatory environment affecting the private education sector in China, after November 2023, we began to adjust our business strategy and gradually reduce our reliance on tutorial services as our primary sources of revenue. As part of this transition, we expanded our operations into e-commerce. Currently, more than 90% of our revenue is derived from our e-commerce business. Our tutorial services now account for a relatively small portion of total revenue and are maintained on a limited and supplemental basis. We believe that this business diversification reduces our exposure to regulatory risks associated with the education sector and allows us to leverage our existing customer base, operational experience, and technological infrastructure for our future business developments, although there can be no assurance that this strategy will be successful.
| ● | E-Commerce Services |
In November 2023, we diversified our operations beyond tutoring and secondary language instruction to include e-commerce services. Our e-commerce operations currently consist of data analytics–driven marketing and social media promotional services for small and medium-sized businesses on major short video platforms based in China, including Douyin, Kuaishou, and WeChat Video Accounts, where we provide social media content planning, data-based advertising placement, performance monitoring, and strategy optimization. In connection with these services, we utilize data analytics based on platform algorithms to support targeted advertising and adjust marketing campaigns based on real-time performance data.
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Our e-commerce operations are subject to various macroeconomic factors that may affect consumer demand and business performance. During periods of economic growth, consumer purchasing power generally increases, which may support higher demand for e-commerce products and services. Conversely, during periods of economic slowdown, consumers may become more price-sensitive, which could adversely affect demand. Demographic and social trends may also influence consumer behavior. For example, younger consumer cohorts generally place greater emphasis on convenience and may be more willing to adopt new e-commerce models and products, while demand among older consumers for products offered through e-commerce platforms has gradually increased. However, shifts in population structure, consumer preferences, and spending patterns are subject to uncertainty and may not continue as expected. The e-commerce industry in China is highly competitive and subject to evolving laws, regulations, and policies. Our operations face risks and challenges, including intense competition, relatively high operating and customer acquisition costs, changes in platform rules or algorithms, regulatory uncertainty, and the need to continually adapt to changing consumer preferences. These factors may materially and adversely affect the growth, results of operations, and prospects of our e-commerce business.
| ● | Tutorial services |
With the advancement of technology, virtual classrooms and artificial intelligence (“AI”) tutoring tools have become increasingly prevalent. Educational resources will be disseminated more conveniently via digital means, and we believe personalized learning services will also gain growing popularity accordingly. In recent years, our tutorial has gradually adopted intelligent teaching tools, leveraging AI-powered question banks to standardize teaching, improving teaching efficiency through technological means, supervising over teaching activities and faculty members, empowering language teaching, and further driving the reform of teaching methodologies. However, as a traditional sector, our business may not grow at the rate projected by industry data, or at all. If the education industry fails to grow as expected, such conditions could have a material adverse effect on our business and the market price of our Class A ordinary shares. In addition, the rapidly evolving nature of the education industry introduces significant uncertainty into any projections or estimates regarding its growth prospects or future condition. If one or more of the assumptions underlying the industry data prove incorrect, our actual results may differ materially from projections based on such assumptions.
As of September 30, 2025, our education centers offer two main programs: (i) foreign language tutorial programs in less commonly taught languages, including Spanish and Japanese, provided to individual students as well as to companies and other organizations; and (ii) Gaokao repeater tutorial programs, provided to individual students.
Revenues from our continuing operations for the fiscal year ended September 30, 2025 increased by approximately $29.4 million, or 483%, to approximately $35.5 million, from approximately $6.1 million for the fiscal year ended September 30, 2024, primarily attributable to the increased revenue from e-commerce services, as we further expanded our operations on e-commerce since late 2023. For the fiscal year ended September 30, 2025, our net loss increased by approximately $1.3 million, or 32%, to approximately $5.2 million, from approximately $4.0 million in fiscal year 2024, primarily due to an increase of approximately $3.8 million in net loss from continuing operations, offset by an approximately $0.7 million turnaround to net income from discontinued operations.
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E-commerce services
Our e-commerce operations currently consist of data analytics–driven marketing and social media promotional services for small and medium-sized businesses on major short video platforms based in China, including Douyin, Kuaishou, and WeChat Video Accounts, where we provide social media content planning, data-based advertising placement, performance monitoring, and strategy optimization. In connection with these services, we utilize data analytics based on platform algorithms to support targeted advertising and adjust marketing campaigns based on real-time performance data.
For the fiscal years ended September 30, 2025, 2024 and 2023, our revenues generated from e-commerce services and others accounted for approximately 95%, 63% and nil, respectively, of our total revenues from continuing operations.
E-commerce Customers
Our e-commerce customers primarily consist of e-commerce merchants and live-streaming e-commerce agencies in China operating on platforms such as Douyin that seek to increase product sales and online visibility.
These customers typically rely on our data-driven social media strategies to enhance their customer engagement, optimize their advertising spending, and drive targeted traffic. We also serve small and medium-sized businesses, including restaurants, beauty salons, cultural tourism businesses, and retail stores, that seek to increase customer traffic and brand exposure through social media platforms.
In addition, we work with businesses across various industries that wish to leverage social media and digital marketing strategies to establish or enhance their online presence. Our e-commerce customers range from established brands seeking to expand their digital footprint to emerging businesses looking to capitalize on e-commerce opportunities in a competitive environment.
Our e-commerce customers typically view our services as part of their overall marketing strategy and as a cost-effective solution for increasing sales and brand recognition. We work with both short-term campaign-driven customers, who prioritize immediate sales outcomes, and long-term partners focused on sustained brand building and customer loyalty.
We believe our diversified customer base enables us to remain adaptable in the dynamic e-commerce and social media marketing landscape. As we continue to grow, we aim to expand our client base by targeting additional industries and business segments that can benefit from our services.
E-commerce Suppliers
Our suppliers primarily include major social media platforms, such as Douyin, third-party short-video content production teams, and technology service providers that support content creation, data analytics, and advertising placement.
We typically engage these suppliers on a non-exclusive basis and do not rely on any single supplier for the provision of content production or technology services. Our relationships with social media platforms are generally governed by standard platform terms and policies, including advertising and content distribution rules, which may be amended by the platforms from time to time.
We do not have long-term contractual arrangements with these platforms, and access to their services is subject to continued compliance with applicable platform rules and policies.
We believe that alternative suppliers providing comparable services are generally available in the market; however, changes in platform policies, pricing structures, algorithms, or service availability, or the termination or suspension of our access to any major platform, could adversely affect our operations and results of operations.
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E-commerce Customer Engagement and Service Process
Our typical process for entering into a contractual relationship with e-commerce customers includes the following stages:
| 1. | Client intake. We communicate with prospective customers to understand their business model, product offerings, prior marketing and traffic acquisition experience, business objectives (such as short-term sales growth or long-term brand exposure), budget parameters, and any specific requirements. This information is documented in a client intake report. |
| 2. | Contract formation. Based on the client intake report, we determine the scope of services, service period, pricing structure, and the respective rights and obligations of the parties, which are set forth in a written service agreement executed by the customer and us. |
| 3. | Payment and settlement. Customers pay service fees in accordance with the applicable service agreement using agreed-upon payment methods. In addition to service fees, we typically charge an additional fee equal to approximately 0.3% to 0.5% of the total amount paid to us for traffic conversion services. |
| 4. | Content production. Based on the agreed-upon social media strategy, we conduct script planning and produce social media content. Sample content is submitted to customers for review, and adjustments are made based on customer feedback. |
| 5. | Campaign execution and targeting. We implement social media campaigns in accordance with predefined audience targeting parameters and scheduling plans. During campaign execution, we monitor traffic data and conversion performance on a real-time basis. |
| 6. | Post-campaign review. Upon completion of a campaign, we collect relevant data and performance indicators and prepare a post-campaign report, which may include performance analysis, identified issues, and operational recommendations, and share the results with the customer. |
E-commerce Service Characteristics
We believe our e-commerce services are characterized by the following features to better serve our customers:
| ● | Data-driven targeting. We utilize data analytics and platform-specific algorithms to support audience segmentation and targeted advertising, and adjust campaign strategies based on performance data. |
| ● | Integrated service offerings. By combining content planning and production, advertising placement, and data analysis, we provide end-to-end social media marketing solutions to customers. |
| ● | Operational efficiency. Through standardized processes and scale efficiencies, we seek to provide cost-effective services to small and medium-sized businesses. |
E-commerce Marketing and Customer Acquisition
We promote our e-commerce services through participation in e-commerce industry communities and sourcing groups, which we believe helps enhance customer recognition and trust. We also engage with local e-commerce groups by periodically hosting small-scale informational events, typically accommodating 10 to 20 participants, to present case studies and introduce our service offerings. In addition, we rely on referrals from existing customers, which we believe is an effective means of customer acquisition.
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Tutorial Services
We operate tutorial centers through our PRC subsidiaries. As of September 30, 2025, our subsidiaries that provide tutorial services are Yangfushan Tutorial, which provides non-degree education services to students, and Shanghai Wensaier, which provides foreign language teaching to secondary school students.
For the fiscal years ended September 30, 2025, 2024 and 2023, our revenues generated from our tutorial services accounted for approximately 4%, 30% and 73%, respectively, of our total revenues from continuing operations.
The following table sets forth the basic information of our tutorial services as of December 31, 2025.
| Name | Year Opened / Acquired | Type | Programs/ Services Offered | Number of Students | Number of Classes | Number of Teachers and Educational Staff | ||||||||||||
| Yangfushan | 2008/2018 (1) | Tutorial center; operates as a Not-for-profit school | Non-degree education services to students. | 217 | 8 | 10 | ||||||||||||
| Sub-total | 217 | 8 | 10 | |||||||||||||||
| Wensaier | 2025/2025 | Operated as a company | Non-English foreign Language Program | 473 | 13 | 16 | ||||||||||||
| Sub-total | 473 | 13 | 16 | |||||||||||||||
| Total | 690 | 21 | 26 | |||||||||||||||
| (1) | Yangfushan Tutorial commenced operation in 2008. Mr. Weng acquired Yangfushan Tutorial in 2008 and Yangfushan Tutorial was later acquired by the Company in 2018. |
Our Tutorial Centers
We operate tutorial centers through our PRC subsidiary, Golden Sun Wenzhou and its subsidiaries. Each center offers different programs and offers to different groups of students.
Yangfushan Tutorial is registered as a not-for-profit school in Wenzhou, Zhejiang Province and provides non-degree tutorial services to students retaking Gaokao. The students at Yangfushan Tutorial are Gaokao repeaters who are dissatisfied with their previous Gaokao results and seek to retake the annual examination in order to improve their scores and increase their chances of admission to higher-ranking universities or colleges. Students at Yangfushan Tutorial are enrolled for one academic year to complete the curriculum of the senior year of high school.
Shanghai Wensaier is a company registered in Shanghai that provides non-English courses for senior high school students. It signs agreements directly with students and offers various language courses to individual students and corporate customers. Individual students and corporate customers typically sign up to take a specific language course for a period of time.
For our tutorial centers, tuition fees vary depending on the type of programs or courses we offer. For the years ended September 30, 2025, 2024 and 2023, the average fee charged per student in tutorial programs amounted to $1,435, $2,250 and $1,306, respectively.
Our PRC counsel is of the view that Shanghai Wensaier is required to charge fees for Japanese language tutoring services in accordance with the applicable government-guided pricing standards. Other than the foregoing, under currently effective PRC laws and regulations, Yangfushan Tutorial and Shanghai Wensaier are generally permitted to determine their service fees based on market conditions.
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In addition, Shanghai Wensaier has not obtained a private school operating permit for the provision of Japanese language tutoring services. Our PRC counsel is of the view that, pursuant to the PRC Private Education Promotion Law, Shanghai Wensaier is required to obtain a private school operating permit in order to lawfully conduct such academic subject tutoring activities. As Shanghai Wensaier has not obtained such permit, it may be subject to regulatory actions, including orders to cease operations, refund tuition fees collected, and administrative fines ranging from one to five times the amount of any illegal gains. Furthermore, the Guideline prohibits foreign investment in academic subject tutoring institutions, and entities already in violation thereof are required to undergo regulatory rectification. Accordingly, we may face regulatory risks, including potential rectification actions required by the relevant authorities in respect of Shanghai Wensaier.
As of the date of this annual report, within the Group, only Shanghai Wensaier provides Japanese language training services that constitute academic subject tutoring. Such services are provided to a limited number of students and generate immaterial revenue. The Group has ceased enrolling new students in its Japanese language courses. To date, the Group has not received any formal notices, notices of investigation, rectification orders, administrative penalties, or other similar regulatory actions from relevant governmental authorities in connection with Shanghai Wensaier’s provision of Japanese language academic subject tutoring services. Although the revenue generated from Shanghai Wensaier’s Japanese language academic subject tutoring services has been immaterial to date and the Group has ceased enrolling new students in such courses, the Group remains subject to uncertainties arising from the evolving regulatory environment governing off-campus academic subject tutoring in China. Relevant laws, regulations, regulatory interpretations, and implementation practices may continue to change or be further clarified, and regulatory authorities may adopt more stringent enforcement measures in the future. Furthermore, there can be no assurance that the Group will not be subject to future inquiries, inspections, or investigations by relevant governmental authorities in connection with its past or existing academic subject tutoring activities, even if such activities are limited in scope and revenue contribution.
See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business- New legislation or changes in the PRC regulatory requirements regarding private education have affected, and may further affect, our business operations and prospects materially and adversely” and “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-Our business and results of operations are dependent on the level of tuition fees we are able to charge and our ability to maintain or increase such fees. Any inability to do so could materially and adversely affect our financial condition, results of operations and prospects.”
Our Students
We have operated in Wenzhou city and Shanghai for over twenty years. We believe that prospective students are attracted to our tutorial centers due to our brand name and the quality of our programs. Our prospective students for our tutorial centers are Gaokao repeaters, companies or organizations with training needs, as well as high schools with students who can benefit from our non-English foreign languages programs when participating in Gaokao.
We typically reach out to prospective students and their parents through WeChat, our website and physical flyers. We also rely on the referrals of our previous and existing students and their parents.
As of December 31, 2025, we had approximately 690 students across China in our tutorial programs and partner-schools.
Our Teachers
We seek to hire teachers and educational staff who hold the necessary academic credentials, are dedicated and active professionals in their fields, and are committed to improving their students’ performance. Typically, our teachers have 10-20 years of educational experience. As of December 31, 2025, approximately 14.38% of our teachers and educational staff held a master’s degrees or above, 85.63% held bachelor’s degrees.
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Our teachers are hired based on classroom experience, educational background, expertise in their specific subject areas, communication skills and commitment to students and teaching. We expect teachers to have or develop excellent teaching skills, including the ability to mentor other teachers and develop innovative curriculums. They are also required to meet PRC regulatory requirements. We post descriptions of vacant positions on our website and social media to recruit teachers. We also recruit qualified graduates from reputable teaching universities and foreign language schools. We review official transcripts and resume to evaluate a candidate’s academic achievement and work experience. Qualified candidates are interviewed, required to pass a written test and teach a mock class in front of a school’s hiring team. Once hired, a teacher is also expected to pass a probation period during which he or she can be evaluated regularly.
Newly hired teachers undergo a training program on teaching skills and techniques as well as the Company’s culture. We also provide continuing training to our teachers in areas such as ethics, lesson preparation, teaching skills, production efficiency, and teaching without a script. We typically provide our teachers with 1-10 days of ongoing training each year. We also arrange or encourage experienced teachers to mentor, assist, and provide guidance to newly hired teachers and regularly hold teaching research meetings and activities among teachers of the same subjects. Our teachers are regularly evaluated, both qualitatively, on their teaching skills, and quantitatively, on their students’ test scores, typically once every semester.
Our teachers’ compensation is based on their experience, educational background, and the results of evaluations of their performance. We provide outstanding teachers with bonuses and other benefits and perks to incentivize them to stay, and those who do not meet our teaching standards are terminated.
Logistic, consulting services and education related services
Between December 2019 and June 2024, we provided logistics and consulting services to kindergartens. Between December 2019 and February 2026, we provided catering services to our affiliated schools, and as of the date of this annual report, we only provided logistics services to Yangfushan Tutorial.
Our logistics services include, but are not limited to, dormitory management services, including oversight of students’ daily schedules, access control and entry management, visitor registration, waste collection and disposal, cleaning and maintenance of common areas, and general security management. These services are designed to maintain a safe, orderly, and hygienic living environment for students in accordance with applicable rules and regulations. In addition, we previously offered catering services, however, as of the date of this annual report, such catering services have been suspended pending the completion of the required regulatory procedures and the receipt of the relevant food operation license from the competent authorities. The catering services will not resume until all applicable licenses and permits have been duly obtained and we are in full compliance with relevant food safety and operational regulations.
Our revenue generated from this revenue stream is insignificant. For the years ended September 30, 2025, 2024 and 2024, our revenues generated from logistic, consulting services and education related services accounted for approximately 1%, 7% and 27%, respectively, of our total revenues from continuing operations.
Marketing and Sales Related to Tutorial Services
We employ various methods in marketing our tutorial centers and our services. We take measures to increase word-of-mouth referrals, which have been key to bringing in new students and building our brands. In addition, we also advertise via our social media accounts (primarily WeChat) and our websites, and post advertisement posters on school campuses and other areas with high traffic of our target students, especially during student recruiting seasons.
Referrals. Word-of-mouth referrals by former and current students and their families have historically been a significant source of student enrollment. We actively work with our alumni and current students to encourage them to recommend our programs to potential students. We believe that our student enrollment will continue to benefit from referrals by our extensive network of alumni and families, many of whom have enjoyed satisfactory learning experiences and achieved their study goals at our schools and tutorial centers.
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Social media and traditional media advertising. We maintain several official accounts with the most used social media in China, WeChat, China’s largest social media mobile application and regularly post updates and news about our schools and tutorial centers on our official WeChat accounts. Currently, we also selectively post advertisement on university school campuses in their cafeteria and dormitory areas, as well as other areas with high traffic of our target students, such as newsstands.
Promotional events. From time to time, we organize in-person promotional and recruiting events so that prospective students and their parents can learn more about our tutorial centers, programs, teachers and services. Prospective students and their parents would be able to meet and interact with our teachers and staffs, and ask questions about our tutorial centers.
Divesture of Gongyu Education
On July 6, 2025, as part of our initiative to further diversify our business away from China’s educational sector, our PRC subsidiary, Golden Sun Wenzhou signed an agreement with a third party to sell 100% equity interests of its wholly-owned subsidiary, Gongyu Education, and its subsidiaries, comprised of (i) Shanghai Xianjin Technology Xianjin Technology, whereby Gongyu Education held 85% of its equity interests; (ii) Shanghai Zhouzhi Culture Zhouzhi Culture, a wholly-owned subsidiary of Gongyu Education; (iii) Shanghai Jinheyu Biotechnology Co., Ltd. Shanghai Jinheyu, whereby Gongyu Education held 51% of its equity interest; (iv) Hangzhou Jicai Education Hangzhou Jicai, a wholly-owned subsidiary of Zhouzhi Culture; (v) Qinshang Education, a wholly-owned subsidiary of Zhouzhi Culture; and (vi) Hongkou Tutorial, whereby Xianjin Technology held 90% of its equity interest, for a total consideration of approximately $0.7 million (RMB5.0 million). The transaction closed on July 21, 2025.
After the divesture of Gongyu Education by Golden Sun Wenzhou, the only subsidiaries that provide educational services under our Group are Shanghai Wensaier and Yangfushan Tutorial.
Diversification into the Cultural Tourism Industry in 2024 and Subsequent Gradual Reduction in July 2025
In January 2024, we started implementing a strategic transition to diversify our business and expand our operations into the cultural tourism industry in China. Our cultural tourism offerings include digital and social media integration services for locales frequented by cultural tourists, which can include scenic spots and ancient sites, by providing planning, design, buildout and management services. At the planning phase, we leverage user behavior data from platforms such as Douyin and Kuaishou to design immersive script-based role-playing games and nighttime light shows for scenic locales. We also design short video to target potential tourists that have an interest in visiting such locales. Next, at the buildout phase, we realize our designs at the scenic spots in a manner that optimize visitor flow and integrate existing digital infrastructure such that our visitors can use social media services such as livestreaming seamlessly. Finally, at the operation phase, we utilize data optimization to convert visitors into repeat customers, thus generating repeat purchases at the locale. As such, we aim to help our customers to differentiate their cultural tourism offerings from competitors and overcome pain points such as fluctuations in visitor flow through digital and social media integration.
However, our cultural tourism sector contributed minimally to our historical revenue, and as such, we gradually reduced our cultural tourism services with effect from July 2025 by shifting our resources and focus to e-commerce and tutorial services.
Diversification into the Wellness Industry in 2023 and Subsequent Gradual Abandonment in 2025
In 2023, we started implementing a strategic transition to expand our operations into the wellness industry in China. Through our new wellness business initiatives, we endeavored to establish our own wellness brands and an e-commerce platform that would be used to promote and sell wellness products. We did not generate material revenue from our wellness business in fiscal years 2024 and 2023. On July 6, 2025, we decided to discontinue our wellness services and focus our efforts on other industries by divesting our subsidiary Shanghai Jinheyu which operated our wellness services.
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Facilities
Our PRC subsidiary Zhejiang Oulong owns two properties, with a total combined gross floor area and site area of 18,106 square feet at Room 301 and 401, Building C, Taian Building, No. 554 Chezhan Avenue, Lucheng District, Wenzhou City, Zhejiang Province. We additionally lease properties with a total combined gross floor area and site area of approximately 71,244 square feet in Wenzhou, Zhejiang province and Shanghai, from various non-related entities or grants of use from the local government.
The below table sets forth a summary of our facilities as of the date of this annual report:
| No. | Entity | Lease (L)/ Own (O) |
Lease Amount | Area (Gross Floor Area) |
Location | Lease Term | ||||||
| 1 | Golden Sun Wenzhou | L | $17,177 /year | 4,521 sq ft | 3/F, Tai’an Building, 554 Chezhan Avenue, Lucheng District, Wenzhou City | October 1, 2025 – September 30, 2026 | ||||||
| 2 | Yangfushan Tutorial | L | $42,942/year | 24,980 sq ft | 114 Ruixing Road, L’ao Sub-district, Ouhai District, Wenzhou City | August 1, 2024 – April 30, 2029 | ||||||
| 3 | Wenzhou Lilong | L | $17,177 /year | 4,521 sq ft | 4/F, Tai’an Building, No.554 Chezhan Avenue, Lucheng District, Wenzhou City | August 1, 2025 – July 30, 2026 | ||||||
| 4 | Wenzhou Lilong | L | $50,099/year | 32,666 sq ft | 114 Ruixing Road, L’ao Sub-district, Ouhai District, Wenzhou City | August 1, 2024 – April 30, 2029 | ||||||
| 5 | Golden Sun Selection | L | $3,579/year for the first year, $5,726/year for the second to third years. | 1,615 sq ft | Room 108, 1/F, Building 1, Bachelor’s Dormitory Building, Jinhua Polytechnic University, and the West Hall | November 1, 2025 – October 31, 2028 | ||||||
| 6 | Shanghai Fuyouyuan | L | $26,720/year | 1,456sq ft | Room 504b, Building C2, 1599 Xinqiaojin Road, Pudong New Area, Shanghai | July 1, 2024 – March 31, 2027 | ||||||
| 7 | Shanghai Wensaier | L | $28,628/year | 1,485sq ft | Room 504b, Building C2, 1599 Xinqiaojin Road, Pudong New Area, Shanghai | Jul 1, 2025 – June 30, 2026 | ||||||
| 8 | Zhejiang Oulong | O | / | 18,006 sq ft | Room 301 and 401, Tai’an Building, 554 Chezhan Avenue, Lucheng District, Wenzhou City | N/A |
All of our current leases contain priority renewal provisions which provide that we have the right of first refusal to renew the lease upon the expiration of the lease term.
We believe the above offices and facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate any such expansion of our operations.
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Intellectual Property
To protect our intellectual properties, we rely on a combination of trademark, copyright and trade secret laws.
As of the date of this annual report, we have two registered software copyrights, and one trademark application pending approval by the Trademark Office of SAIC in China.
We currently also have three registered domain names with the China Internet Network Information Center.
Competition
We operate in highly competitive markets across our two major lines of business: tutorial services and e-commerce services. In the tutorial services sector, we face competition from local and national private tutorial schools, online education platforms, and other specialized training programs, many of which compete on curriculum quality, teacher experience, student outcomes, and brand reputation. In e-commerce, we compete with both established national platforms and emerging niche sellers, with competition centered on product variety, pricing, delivery speed, user experience, and brand recognition. Across these two sectors, competitors vary in size, geographic coverage, and resources, and we must continually invest in service quality, technological capabilities, and brand development to maintain and expand our market position. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-We face intense competition in the PRC education sector, which could result in pricing pressure, reduced operating margins, loss of market share, difficulties in attracting or retaining qualified teachers, and increased capital expenditures, any of which could materially and adversely affect our business, financial condition and results of operations” and “Our expansion into the e-commerce industry exposes us to intense competition and uncertain market acceptance.”
Employees
We and our PRC operating entities had 95, 217, and 336 employees as of September 30, 2025, 2024, and 2023, respectively. As of December 31, 2025, we had 88 employees. The following table sets forth the numbers of our employees, categorized by function as of December 31, 2025.
| As of | As of | As of | ||||||||||
| December 31, | December 31, | December 31, | ||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Teachers (1) | 26 | 100 | 211 | |||||||||
| Cafeteria and dining hall staff | 9 | 11 | 12 | |||||||||
| Student living staff | 3 | 4 | 13 | |||||||||
| Security and safety staff | 3 | 3 | 5 | |||||||||
| Technology staff (2) | 3 | 25 | 3 | |||||||||
| Management and Administrative staff (3) | 44 | 67 | 72 | |||||||||
| Total | 88 | 210 | 316 | |||||||||
| (1) | There was a significant decrease in headcounts for a total of 74 teachers, or approximately 385% of the total teachers for the fiscal year ended September 30, 2025, compared to the same period in 2024. Similarly, there was also a significant decrease in headcounts for a total of 111 teachers, or approximately 211% of the total teachers for the fiscal year ended September 30, 2025, compared to the same period in 2023. Those decrease was primarily attributable to our divesture of Gongyu Education, which led to the significant decrease in the number of our teachers. |
| (2) | There was a significant decrease in headcounts for a total of 22, or approximately 88%, of the total technology staff for the fiscal year ended September 30, 2025, compared to the same period in 2024. The decrease was primarily attributable to our discontinuation of our live streaming platform in connection with our e-commerce arm Golden Selection. There was also a significant increase of headcounts for a total of 22, or approximately 88%, of the total technology staff for the fiscal year ended September 30, 2024, compared to the same period in 2023. The increase was primarily attributable to our establishment of our live streaming platform in connection with our e-commerce arm Golden Selection. |
| (3) | There was a significant decrease of headcounts for a total of 23 management and administrative staff, or approximately 34%, of the total management and administrative staff for the fiscal year ended September 30, 2025, compared to the same period in 2024. The decrease was due to our internal restructuring which led to a reduction in our management and administrative staff. There was no significant decrease in staff of this department in 2024 compared to 2023. |
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As required by regulations in China, we participate in various mandatory employee social security plans that are organized by local governments, including social insurance, pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance. We are required under Chinese law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government.
Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We believe that we maintain a good working relationship with our employees and to date, we have not experienced any significant labor disputes.
Seasonality
We do not experience impact of seasonality in our overall operations.
Legal Proceedings
We know of no material, active, pending or threatened proceeding against ourselves or our subsidiaries, including our PRC subsidiaries, nor we, or our subsidiaries, including the PRC subsidiaries, involved as a plaintiff or defendant in any material proceeding or pending litigation.
We and our subsidiaries, including the PRC subsidiaries, may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of the Company’s resources, including the Company’s management’s time and attention.
Transfer of Funds and Other Assets Between Our Company and Our Subsidiaries
For the fiscal year ended September 30, 2025, Golden Sun Cayman transferred to Golden Sun Hong Kong $4.8 million of the proceeds from a convertible note. Golden Sun Hong Kong transferred approximately $0.5 million to Golden Sun Cayman and approximately $4.3 million to Golden Sun Selection.
For the fiscal year ended September 30, 2024, Golden Sun Hong Kong transferred approximately $1.5 million to Golden Sun Cayman and approximately $49,000 to WFOE.
For the fiscal year ended September 30, 2023, Golden Sun Hong Kong transferred approximately $6.4 million to Golden Sun Cayman and approximately $0.7 million to WFOE. Golden Sun Cayman further transferred approximately $0.2 million to WFOE and approximately $0.9 million to Qinshang Education.
Our finance department supervises cash management on the instructions of our management and is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary and department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested and submits it to our finance department. Our finance department reviews the cash demand plan and prepares a summary for our management. Subsequently, our management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred.
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Dividends or Distributions and Tax Consequences
Under Cayman Islands law, a Cayman Islands exempted company may pay a dividend on its shares out of either profits or share premium amounts, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts due in the ordinary course of business. As of the date of this annual report, no dividends or distributions have been made by a subsidiary or the former VIEs, and the Company has not made any dividends or distributions to investors. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future, or any funds will be transferred from one entity to another. As such, we have not installed any cash management policies that dictate how funds are transferred among Golden Sun Cayman, its subsidiaries, or investors.
Our PRC operating entities receive substantially all of our revenue in RMB. Under our current corporate structure, to fund any cash and financing requirements we may have, Golden Sun Cayman may rely on dividend payments from its PRC operating subsidiaries, Golden Sun Wenzhou and its subsidiaries, which may make distribution of such payments to Golden Sun Hong Kong and then to Golden Sun Cayman as dividends.
Under existing PRC foreign exchange regulations, payment of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior approval from the SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulations, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. Approval from or registration with appropriate government authorities is, however, required where the RMB is to be converted into foreign currency and remitted out of China to pay capital expenses, such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions.
Current PRC regulations permit our PRC subsidiaries to pay dividends to the Company only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China 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 its registered capital. Each such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.
Cash dividends, if any, on our Class A ordinary shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10.0%. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC project. The 5% withholding tax rate, however, does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong project must be the beneficial owner of the relevant dividends; and (b) the Hong Kong project must directly hold no less than 25% share ownership in the PRC project during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong project must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to any dividends paid by Golden Sun Wenzhou to its immediate holding company, Golden Sun Hong Kong. As of the date of this annual report, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Golden Sun Hong Kong intends to apply for the tax resident certificate if and when Golden Sun Wenzhou plans to declare and pay dividends to Golden Sun Hong Kong.
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Regulations
This section sets forth a summary of the principal PRC laws, regulations, and rules relevant to our business and operations in China.
Regulations Relating to E-commerce
On August 31, 2018, the Standing Committee of the National People’s Congress issued the E-commerce Law of the People’s Republic of China (the “E-commerce Law”), which came into force on January 1, 2019. The E-commerce Law shall apply to e-commerce activities in the People’s Republic of China. E-commerce business operators engaging in business activities shall adhere to the principles of “voluntary participation, equality, fairness and integrity”, comply with laws and business ethics, participate in market competition fairly, perform the obligations of consumer rights protection, environmental protection, intellectual property protection, cyber security and protection of personal information, etc., undertake product and service quality responsibilities, and accept government and public supervision.
On March 15, 2021, the State Administration for Market Regulation issued Measures for the Supervision and Administration of Online Transactions, which took effect on May 1, 2021. According to such Measures, goods sold or services provided by online transaction operators shall meet the requirements for the protection of personal and property safety and the requirements for environmental protection, and online transaction operators shall not sell goods or provide services that are prohibited by law or administrative regulations, damage the national interest and public interest, or violate public order and good morals.
On April 23, 2021, the State Internet Information Office and seven other departments jointly issued the Network Broadcast Marketing Management Measures (Trial), which was implemented on May 25, 2021. According to such measures, operators of live studios and live-streaming marketing personnel engaging in online live-streaming marketing activities should comply with laws, regulations and the relevant provisions of the State, follow public order and good customs, and truthfully, accurately and comprehensively release information on goods or services, and shall not commit any of the following acts: (1) violating Articles 6 and 7 of the Provisions on the Ecological Governance of Network Information Contents; (2) publicizing false or misleading information to cheat or mislead users; (3) marketing counterfeit or shoddy goods or goods that infringe upon intellectual property rights, or goods that fail to meet the requirements for personal and property safety; (4) fabricating or tampering with data relating to traffic, such as transactions, attention, number of views, number of comments, etc.; (5) making promotion or diversion for a person after any illegal or irregular act or act with high risks committed by the person is known or should have been known; (6) harassing, slandering, vilifying or intimidating others, or infringing upon the legitimate rights and interests of others; (7) pyramid marketing, fraud, gambling, or selling prohibited or controlled goods, etc.; and (8) other acts in violation of the laws, regulations and relevant provisions of the State.
On October 27, 1994, the Standing Committee of the National People’s Congress adopted the Advertising Law of the People’s Republic of China (the “Advertising Law”), which was last amended on April 29, 2021. The Advertising Law applies to commercial advertising activities conducted within the territory of the People’s Republic of China, and advertisers, advertising operators, advertising publishers, and advertising spokespersons shall all comply with the Advertising Law. An advertising operator refers to a natural person, legal person, or other organization that accepts entrustment to provide advertising design, production, and agency services.
The Advertising Law stipulates the content and conduct of advertisements and sets out legal liabilities. Pursuant to the Advertising Law, advertisements shall not involve any of the following circumstances:(1) Using or using in a disguised form the national flag, national anthem, national emblem, military flag, military anthem, or military emblem of the People’s Republic of China;(2) Using or using in a disguised form the name or image of a state organ or a staff member of a state organ;(3) Using expressions such as “national - level”, “highest - level”, or “best”;(4) Impairing the dignity or interests of the country or disclosing state secrets;(5) Impeding social stability or harming public interests of the society;(6) Endangering the safety of personal and property or disclosing personal privacy;(7) Disrupting public order or violating public morality;(8) Containing pornographic, sexual, gambling - related, superstitious, terrifying, or violent content;(9) Containing content involving ethnic, racial, religious, or gender discrimination;(10) Impeding the protection of the environment, natural resources, or cultural heritage;(11) Other circumstances prohibited by laws and administrative regulations. False advertisements are strictly prohibited. If an advertising operator, knowing that an advertisement is false, still undertakes its design, production, or agency, such operator shall be ordered to confiscate the advertising expenses and imposed a fine. If the circumstances are serious, its business license may be revoked.
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Regulations Related to Private Education
| 1. | Education Law of PRC |
On March 18, 1995, the National People’s Congress of the PRC, enacted the Education Law of PRC, or the Education Law, which was amended on August 27, 2009 and further amended on December 27, 2015. The Education Law sets forth provisions relating to the fundamental education systems of the PRC, including a school education system comprising infant school education, primary education, secondary education and higher education, a system of nine-year compulsory education, a national education examination system, and a system of education certificates. The Education Law stipulates that the state shall encourage enterprises, institutions, mass associations, other social organizations and private citizens to establish schools and other educational institutions in accordance with the law.
| 2. | Law for Promoting Private Education of PRC |
On December 28, 2002, the Standing Committee of the National People’s Congress, promulgated the Law for Promoting Private Education of PRC, or the Law for Promoting Private Education and was later amended on December 29, 2018. Pursuant to the Law for Promoting Private Education, with regard to private schools, the State applies the principles of enthusiastic encouragement, vigorous support, correct guidance, and administration according to law. The sponsors of private schools may establish non-profit or for-profit private schools at their own discretion. However, they shall not establish for-profit private schools providing mandatory education. The sponsor of a non-profit private school shall not gain proceeds from school running, and the cash surplus of the school shall be used for school running. The sponsor of a for-profit private school may gain proceeds from school running, and the cash surplus of the school shall be disposed of in accordance with the Company Law and other relevant laws and administrative regulations. As of the date of this annual report, we provide tutorial services through Yangfushan Tutorial and Shanghai Wensaier. Yangfushan Tutorial is registered as a not-for-profit school and provides non-degree education services to students retaking Gaokao. Shanghai Wensaier is a company providing Spanish and Japanese courses to senior high school students.
Furthermore, according to Article 38 of the Law for Promoting Private Education, the items and rates of fees to be charged by private schools shall be determined according to the cost of running a school, market demand and other factors and made available to the public. They are subject to supervision by the relevant authority. The measures for the collection of fees by non-profit private schools shall be formulated by the governments of respective provinces, autonomous regions and centrally-administered municipalities; the charging criteria of for-profit private schools are subject to market conditions and shall be determined by the schools themselves.
| 3. | Implementation Rules for the Law for Promoting Private Education of the PRC |
On March 5, 2004, the PRC State Council promulgated the Implementation Rules for the Law for Promoting Private Education of the PRC (the “Implementing Regulation”). According to the Implementing Regulation, any social organization or individual, except the state governments, may run non-state schools of different types and levels, other than any specialized non-state schools engaging in military, police or political education, with non-state financial funds.
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On April 7, 2021, the revised Implementing Regulation was promulgated and became effective on September 1, 2021. The revised Implementing Regulation regulates the establishment, organization and operation of private schools, teachers and educators, assets and financial management of schools, etc. The Implementing Regulation prohibits foreign investment in private schools that provide tutoring in subjects offered under compulsory education. In addition, Article 13 of the Implementing Regulation states that “No social organization or individual may, by means of merger, acquisition, agreement-based control, etc., control any private school that provides compulsory education or any non-profit private school that provides pre-school education”. Furthermore, the Implementing Regulation prohibits a private school that provides compulsory education to conduct any transactions with any interested related party. Regarding the organization and operation of private schools, the Implementing Regulation further stipulates that members of the board or other forms of decision-making bodies of private schools that provide compulsory education, shall have the nationality of the People’s Republic of China and shall be appointed by the supervision and approval authority. In order to be compliant with the revised Implementing Regulation, the Company completed a Reorganization in September 2021 and divested the operations of two private schools through contractual arrangements. It is the opinion of our PRC counsel that except for the matters already disclosed in the annual report, the Company is currently compliant with the revised Implementing Regulation.
| 4. | Several Opinions of the State Council on Encouraging the Operation of Education by Social Forces and Promoting the Healthy Development of Private Education |
On December 29, 2016, the State Council issued the Several Rules of the State Council on Encouraging the Operation of Education by Social Forces and Promoting the Healthy Development of Private Education (Guofa [2016] No. 81), which aims to ease the access to the operation of private schools and encourages social forces to enter the education industry. The rules also provide that each level of the PRC government shall increase their support for the private schools in terms of financial investment, financial support, funding policy, preferential tax treatments, land policies, fee policies, autonomy operation, protection of the rights of teachers and students, etc.
| 5. | Implementation of Regulations on Classification Registration of Private Schools |
On December 30, 2016, the Ministry of Education (MOE), the Ministry of Civil Affairs (MCA), the State Administration for Industry and Commerce (currently known as the State Administration for Market Regulation) (SAIC), the Ministry of Human Resources and Social Security (MOHRSS), and the State Commission Office of Public Sectors Reform (SCOPSR) jointly issued the Implementation Rules on the Classification Registration of Private Schools (Jiaofa [2016] No. 19). If a private school established before promulgation of the Amendment chooses to register as a not-for-profit school, it shall amend its articles of association, continue its operation and complete the new registration process. If such private school chooses to register as a for-profit school, it shall conduct financial liquidation process, acquire the property rights of its assets such as lands, school buildings, and have its net balance examined by relevant government authorities. It shall also pay up relevant taxes, apply for a new Permit for Operating a Private School, re-register the for-profit school as a corporation and continue its operation. As of the date of this annual report, the Company has determined to register and keep the status of not-for-profit for all of our existing not-for-profit schools.
| 6. | Teachers Law of the People’s Republic of China |
On October 31, 1993, the standing Committee of the National People’s Congress promulgated the Teachers Law of the People’s Republic of China (“Teachers Law”), which became effective on January 1, 1994, and was amended on August 27, 2009. According to the Teachers Law, China institute a system of qualifications for teachers, the qualifications for teachers in primary and middle schools shall be evaluated and approved by the administrative departments of education under the local people’s governments at or above the county level. Besides, Schools and other institutions of education shall gradually institute a system of appointment for teachers. Appointment of teachers shall be based on the principle of equality between both parties. The school and the teacher shall sign an appointment contract defining each other’s rights, obligations and responsibilities.
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| 7. | Local Regulations related to Private Education in Shanghai |
On March 31, 2022, the Shanghai Municipal Education Commission and other five authorities jointly issued the Implementation Measures for the Establishment and Management of Off - campus Training Institutions in Shanghai, or “the Implementation Measures”, which applies to academic training for students in the compulsory education stage and ordinary high school students, as well as cultural and artistic, sports, science and technology, and non-academic cultural knowledge training for primary and secondary school students and preschool children within the administrative area of Shanghai Municipality through online or offline means. Pursuant to the Implementation Measures, the establishment of off-campus training institutions shall meet the corresponding establishment standards, and the establishment standards are to be led by the corresponding industry regulatory authorities.
On December 26, 2017, local government of Shanghai issued Implementation Opinions on Promoting the Healthy Development of Private Education. This Implementation Opinions provide guidance for the development of local private education. For example, this Implementation Opinions (1) details the implementation of classified management for profit/non-profit institutions and designates multiple government departments to jointly promote this work; (2) details the tuition reform arrangements, and clarifies that the charging standards of for-profit private schools are determined by the schools themselves; (3) emphasizes that private schools should pay social insurance premiums and housing provident funds for teachers and staff in full in accordance with the law. Besides, this Implementation Opinions also arranged specific work in other areas and designated corresponding responsible government agencies.
| 8. | Local Regulations related to Private Education in Zhejiang |
In 2018, Zhejiang province completed the construction of a new policy system for private education, including an overall guideline issued by the Zhejiang provincial government and seven supporting specific regulations. On December 26, 2017, Zhejiang Provincial government issued the Implementation Opinions on Encouraging Social Forces to Set up Education and Promoting the Healthy Development of Private Education, which stipulated in principle the development of private education from 21 aspects, including the classified management of for-profit private schools and non-profit private schools. Corresponding to this, government agencies under the provincial government have specifically formulated seven supporting local rules, including “Implementation Measures for the Change of Registration Types of Existing Private Schools”, “Measures for the Financial Settlement of Private Schools”, “Implementation Measures for Public Finance to Support the Development of Private Education”, “Implementation Measures for the Implementation of the Autonomy of Private Schools”, “Implementation Measures for the Construction of the System of Faculty Development in Private Schools “, “Measures for Financial Management of Private Schools” and “Measures for Information Disclosure and Information Management of Private Schools.”
On June 17, 2022, the Zhejiang Municipal Development and Reform Commission issued the Catalogue of Price-setting Items in Zhejiang Province. According to this Catalogue, government-set prices shall apply to the following items: (1) charges for academic education provided by public schools, fees charged by public kindergartens and public infant care service institutions; (2) charges for degree-education provided by non-profit private schools; (3) the unit price per printing sheet and retail price of textbooks included in the list of primary and secondary school teaching materials promulgated by the provincial competent education department, as well as teaching auxiliary materials included in the provincial primary and secondary school evaluation announcement; (4) academic off-campus training targeting the compulsory education stage. The administration of charges for academic off-campus training targeting general senior high school students shall be implemented by reference to the charging standards for academic off-campus training in the compulsory education stage.
We operate one school, Yangfushan Tutorial, which is registered as a non-profit school and provides non-degree education services to students. Therefore, Yangfushan Tutorial does not fall under the scope of items subject to government-set prices as specified in the Catalogue.
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| 9. | Guideline to Significantly Reduce the Excessive Burden of Homework and After-school Tutoring for Students in Primary and Middle Schools (the “Guideline”) |
The Guideline, jointly issued by the general offices of the Communist Party of China Central Committee and the State Council, was released on July 24, 2021. The Guideline mainly includes the following:
| (1) | Primary and middle schools should reduce the amount and the difficulty of homework and offer after-school service with activities such as homework tutoring, sports, arts, reading, hobbies, and other extra-curricular activities. |
| (2) | Educational departments should use national and local education teaching resource platforms and school network platforms to provide students with high-quality educational resources and learning resources covering all grades and subjects for free. |
| (3) | Regulations for the development of tutoring institutions, including: (a) tutoring institutions providing after-school tutoring services on academic subjects in China’s compulsory education system, or Academic AST Institutions, need to be registered as non-profit, no approval will be granted to new Academic AST Institutions, and an approval mechanism will be adopted for online Academic AST Institutions; charges for off-campus academic subject tutoring are placed under the administration of government-guided pricing; (b) local government shall clarify the corresponding competent authorities for the management of different types of tutoring institutions for nonacademic course; (c) Academic AST Institutions are strictly prohibited from conducting capitalized operations, including IPOs, accepting investment from listed companies whose investment funds are from stock market financings, or sales of assets to listed companies; (d) foreign capital is not allowed to control or participate in Academic AST Institutions through mergers and acquisitions, entrusted operations, franchise chains, and the use of variable interest entities; (e) tutoring institutions are not allowed to teach foreign education courses or content too advanced for the school curriculum; (f) tutoring institutions cannot conduct academic course training on weekends, national holidays or winter and summer vacations; (g) personnel providing academic subject training services must have corresponding teacher qualifications, and the teacher qualification information must be displayed in the tutoring institutions’ premises or on their websites; (h) strictly control the excessive influx of capital into tutoring institutions, the financing and fees of tutoring institutions should be mainly used for training business operations; (i) unfair competition in the form of fictitious original prices, false discounts, and false propaganda for the promotion of business are strictly prohibited, and industry monopolies shall be resolutely investigated and dealt with in accordance with laws and regulations; (j) online training should pay attention to protecting the eyesight of students - each online session should be no more than 30 minutes, the interval between courses should be no less than 10 minutes, and the training end time should be no later than 9pm; (k) online tutoring institutions shall not provide and disseminate unhealthy learning methods such as “photographic search for questions”; and (k) it is strictly forbidden to hire foreign personnel who are not in China to carry out training activities. |
| (4) | Improve the overall quality of education and accelerate the reduction of the education quality gap between urban and rural areas, regions, and schools. |
| (5) | Strengthen the management of tutoring institutions advertisements. Mainstream media, new media, public places, various billboards and online platforms in residential areas, etc. should not publish or broadcast advertisement for tutoring institutions. Commercial advertising activities shall not be carried out in primary and middle schools and kindergartens, and advertisements shall not be published or disguised in disguised form using textbooks, auxiliary materials, exercise books, stationery, teaching aids, school uniforms, school buses, etc. |
| (6) | No approval shall be granted for new academic off-campus training institutions targeting general senior high school students. The administration of existing academic off-campus training institutions targeting general senior high school students shall be implemented with reference to the relevant provisions of this Guideline. |
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On July 28, 2021, to further clarify the scope of academic subjects provided by Academic AST Institutions in China’s compulsory education system, the PRC Ministry of Education issued the Notice. The Notice specifies that academic subjects include the following courses provided in accordance with the learning content of the national curriculum standards: Morality and Law, Chinese Language, History, Geography, Mathematics, foreign languages (English, Japanese, and Russian), Physics, Chemistry and Biology.
Yangfushan Tutorial provides non-degree education services to students; Shanghai Wensaier offers non-English foreign language tutorial programs.
As of the date of this annual report, Shanghai Wensaier provides Spanish and Japanese courses to senior high school students. Although Spanish is listed as one of the subjects under the PRC Ministry of Education’s General Senior High School Curriculum Program, it is not included within the scope of academic subjects as further clarified in the Notice. Accordingly, Spanish tutoring services are not considered academic subject tutoring services. In contrast, Japanese is explicitly included within the scope of academic subjects under the Notice and as such Japanese language training services constitute academic subject off-campus tutoring services.
Based on the foregoing, our PRC counsel is of the view that Shanghai Wensaier is required to charge fees for Japanese language tutoring services in accordance with the applicable government-guided pricing standards. In addition, Shanghai Wensaier has not obtained a private school operating permit for the provision of Japanese language tutoring services. Our PRC counsel is of the view that, pursuant to the PRC Private Education Promotion Law, Shanghai Wensaier is required to obtain a private school operating permit in order to lawfully conduct such academic subject tutoring activities. As Shanghai Wensaier has not obtained such permit, it may be subject to regulatory actions, including orders to cease operations, refund tuition fees collected, and administrative fines ranging from one to five times the amount of any illegal gains. Furthermore, the Guideline prohibits foreign investment in academic subject tutoring institutions, and entities already in violation thereof are required to undergo regulatory rectification. Accordingly, the Company may face regulatory risks, including potential rectification actions required by the relevant authorities in respect of Shanghai Wensaier.
As of the date of this annual report, within the Group, only Shanghai Wensaier provides Japanese language training services that constitute academic subject tutoring. Such services are provided to a limited number of students and generate immaterial revenue. The Group has ceased enrolling new students in its Japanese language courses. To date, the Group has not received any formal notices, notices of investigation, rectification orders, administrative penalties, or other similar regulatory actions from relevant governmental authorities in connection with Shanghai Wensaier’s provision of Japanese language academic subject tutoring services. Although the revenue generated from Shanghai Wensaier’s Japanese language academic subject tutoring services has been immaterial to date and the Group has ceased enrolling new students in such courses, the Group remains subject to uncertainties arising from the evolving regulatory environment governing off-campus academic subject tutoring in China.
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Approvals from the PRC Authorities to Conduct Our Operations
As of the date of this annual report, except for the matters already disclosed in the annual report, our Company and our PRC subsidiaries have received from the PRC authorities all requisite licenses, permissions, or approvals that are required for conducting our operations in China, such as business licenses, private school operation permits, certificates of registration for a privately operated non-enterprise entity for not-for-profit private schools. However, it is uncertain whether we or our PRC subsidiaries will be required to obtain additional approvals, licenses, or permits in connection with our business operations pursuant to evolving PRC laws and regulations, and whether we would be able to obtain and renew such approvals on a timely basis or at all. Failing to do so could result in a material change in our operations, and the value of our Class A ordinary shares could depreciate significantly or become worthless. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-We are subject to various approvals, licenses, permits, registrations and filings for our tutorial and other services in the PRC.”
As advised by our PRC counsel, Pacgate Law Firm, other than those requisite for a domestic company in China to engage in the businesses similar to those of the operating entities, except the matters already disclosed in the annual report, the operating entities are not required to obtain any permission from Chinese authorities, including the CSRC, the CAC, or any other governmental agency that is required to approve the operating entities’ operations. However, if the operating entities do not receive or maintain the approvals, or we inadvertently conclude that such approvals are not required, or applicable laws, regulations, or interpretations change such that the operating entities are required to obtain approval in the future, the operating entities may be subject to investigations by competent regulators, fines or penalties, ordered to suspend the operating entities’ relevant operations and rectify any noncompliance, prohibited from engaging in relevant business or conducting any offering, and these risks could result in a material adverse change in the operating entities’ operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless. As of the date of this annual report, except the matters already disclosed in the annual report, we and the operating entities have received from PRC authorities all requisite licenses, permissions, or approvals needed to engage in the businesses currently conducted in China, and no permission or approval has been denied.
Given the current regulatory environment in the PRC, we are still subject to the uncertainty of different interpretations and enforcement of the rules and regulations in the PRC adverse to us, which may take place quickly with little advance notice. See “Item 3. Key Information-D. Risk Factors-Risks Relating to Doing Business in the PRC- Any actions by the Chinese government, including any decision to intervene or influence the operating entities’ operations or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause them to make material changes to their operations, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.”
Regulations Relating to Foreign Investment
| 1. | Foreign Investment Law of PRC |
On March 15, 2019, the National People’s Congress approved the Foreign Investment Law of PRC, or the Foreign Investment Law, which replaces the Sino-foreign Joint Ventures Law of PRC, the Sino-foreign Cooperative Enterprises Law of PRC and the Foreign Investment Enterprise Law of PRC.
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The Foreign Investment Law aims to further open up and expand the Chinese market, promote foreign investment and protect the legitimate rights and interests of foreign investors. The Foreign Investment Law defines the foreign investment as direct or indirect investment by foreign investors in China. It includes the following categories: (i) foreign investors alone or jointly with other investors establish a foreign investment enterprise in China; (ii) foreign investors acquire shares, equity, property shares or other similar rights and interests in Chinese domestic enterprises; (iii) foreign investors alone or jointly with other investors invest in new projects in China; and (iv) legal and administrative investment in other ways specified by regulations or the State Council.
The Foreign Investment Law stipulates the pre-access national treatment and negative list management system for foreign investment. Under the Pre-entry National Treatment, foreign investors enjoy at least the same level of market access to investment with domestic investors. The Negative List refers to the special administrative measures required by the government to implement foreign investment in certain industries. The Negative List stipulates that foreign investors are not allowed to invest in industries where investment is prohibited. The Negative List also stipulates industries where investment is restricted, and foreign investors should meet the relevant stipulated conditions. China grants national treatment to foreign investment outside of the negative list. The Negative List shall be approved by the State Council and published after approval.
The Foreign Investment Law stipulates that the PRC government shall not expropriate or requisition the investment of foreign investors, except under special circumstances in accordance with the existing law and regulations. In case of expropriation or requisition, statutory procedures shall be followed, and fair and reasonable compensation shall be made in a timely manner. Foreign investors may, according to the present law and regulations, freely remit into or out of China, in RMB or any other foreign currency, their capital contributions, profits, capital gains, income from asset disposal, intellectual property royalties, lawfully acquired compensation, indemnity or liquidation income, etc., within the territory of China. The PRC government shall protect the intellectual property of foreign investors and foreign-funded enterprises, as well as the legitimate rights and interests of intellectual property obligees and relevant obligations.
| 2. | Implementation Regulations for the Foreign Investment Law of PRC |
On December 26, 2019, the State Council promulgated the Implementation Regulations for the Foreign Investment Law of the People’s Republic of China, which stipulate implementation measures and detailed rules to ensure the effective implementation of the Foreign Investment Law.
| 3. | Special Administrative Measures (Negative List) for Foreign Investment Access (Edition 2024) |
On September 6, 2024, the Ministry of Commerce and the National Development and Reform Commission jointly promulgated the Special Administrative Measures (Negative List) for Foreign Investment Access (Edition 2024). Negative List (Edition 2024) stipulates that pre-school education, ordinary high school and higher education institutions are subject to Sino-foreign cooperative education, and must be led by the Chinese Party (the president or the chief executive shall have Chinese nationality, and the Chinese Party shall comprise not less than half of the council, board or joint administrative committee).
It is prohibited to invest in mandatory education institutions or religious education institutions. Furthermore, training business is not on the Negative List (Edition 2024).
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Regulations Related to Mergers and Acquisitions and Overseas Listings
On August 8, 2006, six PRC governmental and regulatory agencies, including MOFCOM and the CSRC, promulgated the Rules on Acquisition of Domestic Enterprises by Foreign Investors, or the M&A Rules, governing the mergers and acquisitions of domestic enterprises by foreign investors that became effective on September 8, 2006, and was amended on June 22, 2009. The M&A Rules, among other things, requires that offshore SPVs that are controlled by PRC companies or individuals and that have been formed for overseas listing purposes through acquisitions of PRC domestic interest held by such PRC companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange.
On February 17, 2023, the CSRC released the New Overseas Listing Rules and five supporting guidelines, which took effect on March 31, 2023. Pursuant to the New Overseas Listing Rules, PRC domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall complete filing procedures with the CSRC pursuant to the requirements of the New Overseas Listing Rules within three working days following its submission of relevant applications or its completion of subsequent offerings. If a domestic company fails to complete required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as an order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.
The Trial Measures outline the circumstances where domestic companies are prohibited from offering and listing securities overseas, if such overseas offering and listing made by domestic companies (i) are explicitly prohibited by laws; (ii) may endanger national security as determined by relevant competent departments under the State Council; (iii) involve criminal offenses that disrupting PRC economy such as corruption, bribery, embezzlement, or misappropriation of property by such domestic company, the controlling shareholder, and/or actual controller in the recent three years; (iv) involve such domestic company in investigations for suspicion of criminal offenses or major violations of laws and regulations; or (v) involve material ownership disputes over the shares held by the controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller. We believe that our listing on Nasdaq does not fall under the circumstance that such overseas listing is prohibited by the Trial Measures.
On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the CSRC Notice, which, among others, clarifies that PRC domestic companies that have already been listed overseas before the effective date of the Trial Measures, which is March 31, 2023, shall be deemed to be “Existing Issuers”, and Existing Issuers are not required to complete the filing procedures with the CSRC immediately, and they shall be required to file with the CSRC for any subsequent offerings. We are an Existing Issuer, based on the foregoing, and we are not required to complete the filing procedures with the CSRC immediately, however, we shall be required to file with the CSRC for any subsequent offerings.
On February 24, 2023, the CSRC, together with the MOF, the National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions, which were issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009. The revised Provisions were issued under the title the “Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies,” and came into effect on March 31, 2023, together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (i) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities, including securities companies, securities service providers, and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (ii) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities, including securities companies, securities service providers, and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. Any failure or perceived failure by our Company or our subsidiaries to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.
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The Trial Measures and the revised Provisions that issued by the PRC authorities may subject us to additional compliance requirements in the future. See “Risk Factors - Risks Related to Doing Business in China - The Trial Measures and the revised Provisions issued by the PRC authorities may subject us to additional compliance requirements in the future.”
Regulations Related to Intellectual Property Rights
| 1. | Trademarks |
The Standing Committee of the National People's Congress (“SCNPC”) adopted The Trademark Law of PRC in 1982 and revised it in 1993, 2001, 2013 and 2019 respectively, with its implementation rules adopted in 2002 and revised in 2014 by the State Council. The PRC Trademark Office of the State Administration for Industry and Commerce, currently known as PRC State Intellectual Property Office of the State Administration for Market Regulation, or the Trademark Office, handles trademark registrations and grants a protection term of ten years to registered trademarks which may be renewed for consecutive ten-year periods upon request by the trademark owner. The PRC Trademark Law has adopted a ‘first-to-file’ principle with respect to trademark registration. Where a trademark for which a registration has been made is identical or similar to another trademark which has already been registered or has been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a ‘sufficient degree of reputation’ through such party’s use.
| 2. | Patents |
The SCNPC adopted the Patent Law of PRC in 1984 and amended it in 1992, 2000, 2008, and 2020, respectively. A patentable invention or utility model must meet three conditions, namely novelty, inventiveness and practical applicability. A design patentable shall not fall under the existing designs, and no other entity has submitted an application for a same design prior to the filing date. Patents cannot be granted for scientific discoveries, rules and methods for intellectual activities, methods used to diagnose or treat diseases, animal and plant breeds, substances obtained by means of nuclear transformation or a design which has major marking effect on the patterns or colors of graphic print products or a combination of both patterns and colors. The Patent Office under the State Intellectual Property Office is responsible for receiving, examining and approving patent applications. A patent is valid for a twenty-year term for an invention and a ten-year term for a utility model and a fifteen-year term for a design, all starting from the application date. Except under certain specific circumstances provided by law, any third-party user must obtain consent or a proper license from the patent owner to use the patent, otherwise the use will constitute an infringement of the rights of the patent holder.
| 3. | Copyrights |
The SCNPC adopted The Copyright Law of PRC in 1990 and revised it in 2001, 2010, and 2020, respectively. Work of Chinese citizens, legal persons or other organizations shall enjoy copyright pursuant to this Law regardless of whether they are published. Work shall refer to original intellectual achievements in the fields of literature, art and science which can be expressed in a certain form, including: (1) Written works; (2) Oral works; (3) Musical, dramatic, opera, dance, acrobatic artistic works; (4) Art, architectural works; (5) Photographic works;(6) Audio-visual works; (7) Graphic works and model works such as engineering design plan, product design plan, map, schematic diagram, etc.; (8) Computer software; and (9) Any other intellectual achievements which comply with the characteristics of the works. Persons who have committed the infringement acts shall bear civil liability to stop the infringement, eliminate the impact, make apologies, compensate losses, etc., in accordance with the circumstances.
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| 4. | Domain Names |
The Ministry of Industry and Information Technology promulgated the Administrative Measures on Internet Domain Names in 2017. Pursuant to such measures, the Ministry of Industry and Information Technology is in charge of the overall administration of domain names in China. Domain name registration services shall in principle implement “first apply first register”. A domain name applicant will become the domain name holder upon the completion of the application procedure.
Regulations Related to Employment
On June 29, 2007, the SCNPC, adopted the Labor Contract Law of PRC, or the Labor Contract Law, which became effective as of January 1, 2008 and was revised in 2012. The Labor Contract Law requires employers to enter into written contracts with their employees, restricts the use of temporary workers. Pursuant to the Labor Contract Law, employment contracts lawfully executed prior to the implementation of the Labor Contract Law and continuing as of the date of its implementation will continue to be performed. Where an employment relationship was established prior to the implementation of the Labor Contract Law but no written employment contract was concluded, a contract must be concluded within one month after the Labor Contract Law’s implementation. All PRC enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities. According to the Social Insurance Law promulgated by SCNPC effective from July 1, 2011 (revised on December 29, 2018), Regulation of Insurance for Work-Related Injury, Provisional Measures on Insurance for Maternity of Employees, Regulation of Unemployment Insurance, Decision of the State Council on Setting Up Basic Medical Insurance System for Staff Members and Workers in Cities and Towns, Interim Regulation on the Collection and Payment of Social Insurance Premiums and Specification for Social Insurance Registration Service, an employer is required to contribute the social insurance for its employees in China, including the basic pension insurance, basic medical insurance, unemployment insurance, maternity insurance and injury insurance. Under the Regulations on the Administration of Housing Funds, promulgated by the State Council on April 3, 1999 and as amended on March 24, 2002, and March 24, 2019 respectively, an employer is required to make contributions to a housing fund for its employees. Our PRC operating entities participate in various employee social security plans for part of our employees that are administered by local governments, including housing, pension, medical insurance and unemployment insurance. Our PRC operating entities compensate our employees with basic salaries as well as performance-based bonuses. However, our PRC operating entities did not make adequate social insurance and housing fund contributions for all employees as required by PRC regulations. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.”
Regulations Related to Foreign Exchange
From 2012, SAFE has promulgated several circulars to substantially amend and simplify the current foreign exchange procedure. Pursuant to these circulars, the opening of various special purpose foreign exchange accounts, the reinvestment of RMB proceeds by foreign investors in the PRC and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE. In addition, domestic companies are no longer limited to extend cross-border loans to their offshore subsidiaries but are also allowed to provide loans to their offshore parents and affiliates and multiple capital accounts for the same entity may be opened in different provinces. SAFE also promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches. In February 2015, SAFE promulgated SAFE Circular 13, which took effect on June 1, 2015. SAFE Circular 13 delegates the power to enforce the foreign exchange registration in connection with inbound and outbound direct investments under relevant SAFE rules from local branches of SAFE to banks, thereby further simplifying the foreign exchange registration procedures for inbound and outbound direct investments.
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SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises (the “Circular 19”), effective on June 1, 2015, in replacement of SAFE Circular 142 (the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises. According to Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans or the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party. Although Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account (the “Circular 16”), effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using RMB capital converted from foreign currency denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 or Circular 16 could result in administrative penalties. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment (the “Circular 28”), effective on October 23, 2019, which allows non-investment foreign-funded enterprises to make domestic equity investment with their capital funds in accordance with the law on the premise that the existing special administrative measures (negative list) for foreign investment access are not violated and the projects invested thereby in China are true and compliant.
On January 26, 2017, SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange Control (the “SAFE Circular 3”), which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits. Moreover, pursuant to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment.
Under our current structure, our income will primarily derive from dividend payments from our subsidiaries in China. Even though we may remit the income outside of China, the fluctuation of exchange rate may be a disadvantage to us if RMB depreciates.
Regulations Related to Taxation
1. Enterprise Income Tax
On March 16, 2007, the National People’s Congress enacted the Enterprise Income Tax Law of PRC, or the Enterprise Income Tax Law, while the State Council promulgated the Implementing Rules of the Enterprise Income Tax Law of PRC, or the Implementing Rules on December 6, 2007, both of which became effective on January 1, 2008. The Enterprise Income Tax Law was further amended by SCNPC on February 24, 2017, which stipulates that corporate income tax shall be payable by a resident enterprise for income derived from or accruing in or outside China. Corporate income tax shall be payable by a non-resident enterprise, for income derived from or accruing in China by its office or premises established in China, and for income derived from or accruing outside China for which the established office or premises has a de facto relationship. The corporate income tax shall be at the rate of 25%. The applicable tax rate for income of a non-resident enterprise under the provisions of the third paragraph of Article 3 shall be 20%. Corporate income tax for qualified small profit enterprises shall be at a reduced tax rate of 20%. Corporate income tax for key advanced and new technology enterprises supported by the State shall be at a reduced tax rate of 15%. On the other hand, the State Administration of Taxation provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled offshore enterprise is located in China. Simply speaking, the criteria is more focused on substantive rather than format. Pursuant to its Circular 82 of 2009, the criteria to determine “de facto management body” include: (a) the senior management and core management departments in charge of its daily operations function have their presence mainly in the PRC; (b) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (c) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (d) more than half of the enterprise’s directors or senior management with voting rights habitually reside in the PRC. Furthermore, the SAT published Bulletin 45 in September 2011, which provides more guidance on the implementation of the definition and provides for procedures and administration details on determining resident status and administration on post-determination matters. However, the SAT Circular 82 and Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups rather than those controlled by PRC individuals or foreign individuals. So far there is no further criteria passed yet and no applicable legal precedents either, therefore it remains unclear how the PRC tax authorities will determine the PRC tax resident treatment of a foreign company controlled by individuals. Under these existing criteria, it is possible that we will be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. If so, it would likely result in unfavorable tax consequences to our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment. Please see “Item 3. Key Information-D. Risk Factors-Risks Relating to Doing Business in the PRC-Under the EIT Law, we may be classified as a ‘resident enterprise’ of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.” for more details.
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On August 21, 2006, China and Hong Kong SAR signed the Arrangement between Mainland China and Hong Kong SAR concerning Avoiding Double Taxation and Preventing Tax Evasion on Income. When a Chinese company distributes dividends to Hong Kong residents (beneficiary owners of dividends), if the recipient directly owns at least 25% of the equity interest in the above-mentioned Chinese company, the Chinese withholding tax rate is 5%, otherwise it is 10%.
On October 14, 2019, the State Administration of Taxation promulgated the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits, which stipulate that non-resident taxpayers claiming treaty benefits shall be handled in accordance with the principles of “self-assessment, claiming benefits, retention of the relevant materials for future inspection”. Where a non-resident taxpayer self-assesses and concludes that it satisfies the criteria for claiming treaty benefits, it may enjoy treaty benefits at the time of tax declaration or at the time of withholding through the withholding agent, simultaneously gather and retain the relevant materials pursuant to the provisions of these Measures for future inspection, and accept follow-up administration by the tax authorities.
| 2. | Value-Added Tax |
On December 25, 2024, the Standing Committee of the National People’s Congress adopted the Law on Value-added Tax of the People’s Republic of China (the “VAT Law”), which shall come into force on January 1, 2026. Upon its entry into force, the Interim Regulations on Value-added Tax of the People’s Republic of China shall be repealed simultaneously. All units and individuals (including individual industrial and commercial households) that sell goods, services, intangible assets or immovable properties, or import goods within the territory of the People’s Republic of China shall be taxpayers of value-added tax (“VAT”), and shall pay VAT in accordance with the provisions of the VAT Law.
On November 16, 2011, the Ministry of Finance and the State Administration of Taxation promulgated the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax. On March 23, 2016, the Ministry of Finance and the State Administration of Taxation further promulgated the Notice on Fully Promoting the Pilot Plan for Replacing Business Tax by Value-Added Tax, which stipulate that the income from the provision of educational services that is exempt from VAT refers to the income from the provision of academic education services for students participating in the government-designated enrollment plan, including tuition, accommodation, teaching materials, and textbook fees that have been inspected and approved by relevant government agencies and collected in accordance with prescribed standards And examination registration fees, as well as income from catering expenses provided by the school cafeteria. In addition to the above income, the sponsorship fees and school selection fees collected by the school in any name are subject to VAT.
Regulations Related to PRC Company
The Company Law of PRC, or the Company Law was promulgated on December 29, 1993 and revised on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013, October 26, 2018, and December 29, 2023, respectively. According to the Company Law, companies are generally divided into two categories: limited liability companies and joint stock limited companies. The Company Law also applies to foreign-invested limited liability companies, but if other relevant laws on foreign investment provide otherwise, those provisions shall be adopted. The Company Law revised in 2023 provides that the registered capital subscribed for by all the shareholders shall, according to the articles of association, be fully paid up by the shareholders within 5 years as of the date of establishment, unless otherwise provided by laws and regulations. On July 1, 2024, the State Council promulgated the Provisions of the State Council on Implementation of the Registered Capital Management System under the Company Law of the PRC. Pursuant to the Provisions, for a company registered for incorporation before June 30, 2024, if the remaining capital contribution period of a limited liability company exceeds five years as from July 1, 2027, the company shall adjust the remaining capital contribution period to five years by June 30, 2027, and record the same in its articles of association.
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Regulations Related to Property
On March 16, 2007, the National People’s Congress promulgated the Property Law of PRC, or the Property Law, which forbids schools, kindergartens, hospitals and other public institutions and social organizations to mortgage educational facilities, medical and health facilities and other public welfare facilities.
On May 28, 2020, the National People’s Congress promulgated the Civil Code of PRC, or the Civil Code, which will become effective on January 1, 2021. The Civil Code merged and replaced a series of special laws in the field of civil law, including the Property Law. The Civil Code stipulates that non-profit legal persons established for public welfare purposes, such as schools, kindergartens, and medical institutions, shall not mortgage their educational facilities, medical and health facilities and other public welfare facilities. In practice, the Civil Code limits the ban on property mortgages to non-profit private schools. However, since the Civil Code is newly promulgated, its interpretation and implementation may be open to change.
Regulations Related to Dividend Distribution
The principal regulations governing the distribution of dividends paid by WFOEs include the PRC Company Law. Under the PRC Company Law, WFOEs in China may pay dividends only out of their accumulated profits, if any, as determined in accordance with the PRC accounting standards and regulations. In addition, a WFOE in China is required to set aside at least 10% of its after-tax profits based on PRC accounting standards each year to its general reserves until its cumulative total reserve funds reaches 50% of its registered capital. These reserve funds, however, may not be distributed as cash dividends.
Regulations Related to Foreign Exchange Registration of Offshore Investment by PRC Residents
In July 2014, SAFE issued SAFE Circular 37, which regulates foreign exchange matters in relation to the use of SPVs by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. Under SAFE Circular 37, an SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate domestic or offshore assets or interests, while “round trip investment” refers to the direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises (namely, Golden Sun Wenzhou) to obtain the ownership, control rights, and management rights of Ouhai Art School. Circular 37 requires that, before making contributions to an SPV, PRC residents or entities are required to complete foreign exchange registration with SAFE or its local branch.
In February 2015, SAFE promulgated SAFE Notice 13. SAFE Notice 13 has amended SAFE Circular 37 by requiring PRC residents or entities to register with qualified banks instead of SAFE or its local branch in connection with their establishment of an SPV.
In addition, pursuant to SAFE Circular 37, an amendment to registration or subsequent filing with qualified banks by such PRC resident is also required if there is a material change with respect to the capital of the offshore company, such as any change of basic information (including change of such PRC residents, change of name, and operation term of the SPV), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. Failure to comply with these registration requirements as set forth in SAFE Circular 37 and SAFE Notice 13, and misrepresentation on or failure to disclose controllers of foreign-invested enterprises that are established by round-trip investment may result in bans on the foreign exchange activities of the relevant onshore company, including the payment of dividends and other distributions to its offshore parent or affiliates, and may also subject relevant PRC residents to penalties under the Foreign Exchange Administration Regulations of the PRC.
Our major shareholders who are subject to the SAFE Circular 37 have completed the initial registrations with the qualified banks as required by SAFE Circular 37.
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Regulations Related to Foreign Debt
As an offshore holding company, we may make additional capital contributions to Golden Sun Wenzhou subject to approval from the local department of commerce and SAFE, with no limitation on the amount of capital contributions. We may also make loans to Golden Sun Wenzhou subject to the approval from SAFE or its local office and the limitation on the amount of loans.
By means of making loans, Golden Sun Wenzhou is subject to the relevant PRC laws and regulation relating to foreign debts. On January 8, 2003, the NDRC, SAFE, and Ministry of Finance, or “MOF,” jointly promulgated the Circular on the Interim Provisions on the Management of Foreign Debts, or the “Foreign Debts Provisions,” which became effective on March 1, 2003, and revised in 2022. Pursuant to the Foreign Debts Provisions, the total amount of foreign loans received by a foreign-invested enterprise shall not exceed the difference between the total investment in projects as approved by the MOFCOM or its local counterpart and the amount of registered capital of such foreign-invested enterprise. In addition, on January 12, 2017, the People’s Bank of China, or the “PBOC”, issued the PBOC Circular 9, which sets out the statutory upper limit on the foreign debts for PRC non-financial entities, including both foreign-invested enterprises and domestic-invested enterprises. Pursuant to the PBOC Circular 9, the foreign debt upper limit for both foreign-invested enterprises and domestic-invested enterprises is calculated as twice the net assets of such enterprises. As to net assets, the enterprises shall take the net assets value stated in their latest audited financial statements.
The PBOC Circular 9 does not supersede the Foreign Debts Provisions, but rather serve as a supplement to it. It provides a one-year transitional period from January 11, 2017 for foreign-invested enterprises, during which foreign-invested enterprises, such as Golden Sun Wenzhou, could adopt their calculation method of foreign debt upper limit based on either the Foreign Debts Provisions or the PBOC Circular 9. The transitional period ended on January 11, 2018. Upon its expiry, pursuant to the PBOC Circular 9, the PBOC and SAFE shall re-evaluate the calculation method for foreign-invested enterprises and determine what the applicable calculation method should be. As of the date of this annual report, neither the PBOC nor SAFE has promulgated and made public any further rules, regulations, notices, or circulars in this regard.
See “Item 3. Key Information-D. Risk Factors-Risks Relating to Doing Business in the PRC-PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using proceeds from our future financing activities to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”
Regulations Related to Social Welfare
Under the Social Insurance Law of the PRC that was promulgated by the SCNPC on October 28, 2010 and came into force as of July 1, 2011, and most recently amended on December 29, 2018, together with other laws and regulations, employers are required to pay basic pension insurance, unemployment insurance, basic medical insurance, employment injury insurance, maternity insurance, and other social insurance for its employees at specified percentages of the salaries of the employees, up to a maximum amount specified by the local government regulations from time to time. On July 20, 2018, the General Office of the State Council issued the Plan for Reforming the State and Local Tax Collection and Administration Systems, which stipulated that the SAT will become solely responsible for collecting social insurance premiums. When an employer fails to fully pay social insurance premiums, relevant social insurance collection agency shall order it to make up for any shortfall within a prescribed time limit, and may impose a late payment fee at the rate of 0.05% per day of the outstanding amount from the due date. If such employer still fails to make up for the shortfalls within the prescribed time limit, the relevant administrative authorities shall impose a fine of one to three times the outstanding amount upon such employer.
In accordance with the Regulations on the Management of Housing Fund which was promulgated by the State Council in 1999 and most recently amended in 2019, employers must register at the designated administrative centers and open bank accounts for depositing employees’ housing funds. Employer and employee are also required to pay and deposit housing funds, with an amount no less than 5% of the monthly average salary of the employee in the preceding year in full and on time.
As of the date of this annual report, our PRC subsidiaries have not paid the social insurance and housing funds for our employees in full and could be required to pay outstanding contributions and penalties. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.”
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| C. | Organizational Structure |
We are an exempted company incorporated under the laws of the Cayman Islands on September 20, 2018. Structured as a holding company with no material operations of our own, we conduct our business through our subsidiaries in China.
The Reorganization (“Reorganization”)
We undertook the Reorganization in response to the revised Implementing Regulation becoming effective on September 1, 2021. The revised Implementing Regulation prohibits private schools that provide compulsory education from being controlled by means of agreements or to enter into any transactions with any related parties. Prior to September 2021, we had controlled and received economic benefits from the VIEs, Ouhai Art School and Chongwen Middle School, two private schools that provide compulsory education, through a series of contractual arrangements (the “VIE Agreements”) to provide contractual exposure to foreign investment in Chinese-based companies, where Chinese law prohibits direct foreign investment in Chinese operating companies. In order to become compliant with the revised Implementing Regulation, in September 2021, we completed a Reorganization to divest its operations of Ouhai Art School and Chongwen Middle School. Through the Reorganization, (1) we sold all of its shares in Golden Sun Shanghai, which is the entity that controls Chongwen Middle School through contractual arrangements; and (2) Golden Sun Wenzhou, one of our subsidiaries, terminated its VIE Agreements with Ouhai Art School. As a result of the foregoing, neither us nor any of our subsidiaries controls or receives economic benefits from any private schools that provide compulsory education, and, as of the date of this annual report, we believe we and our subsidiaries are compliant with the revised Implementing Regulation. All discussions in this annual report relating to our prior operation of Quhai Art School or Chongwen Middle School are provided for historical context only.
No VIE Structure after September 2021
After our Reorganization in September 2021, we no longer used VIE structure to operate our business and we control and receive the economic benefits directly through our equity ownership of our subsidiaries.
The following diagram illustrates our corporate structure as of the date of this annual report.
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Risks Associated with Our Corporate Structure
Our holding company structure involves certain risks in terms of dividend distribution, direct investment in PRC entities, and obtaining benefits under relevant tax treaty. See “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in the PRC-We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirement we may have, and any limitation on the ability of our subsidiaries to make payments to us and any tax we are required to pay could have a materially adverse effect on our ability to conduct our business,” “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in the PRC-PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using proceeds from our future financing activities to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business,” and “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in the PRC-Under the EIT Law, we may be classified as a ‘resident enterprise’ of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.” See also “Item 4. Information On The Company-B. Business Overview-Regulations-Regulations Related to Foreign Exchange.”
| D. | Property, Plants and Equipment |
See “Item 4. Information On The Company-B. Business Overview-Facilities.”
Item 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report. This annual report contains forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information-D. Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.
Overview
As of the date of this annual report, we operate two principal lines of business: tutorial services and e-commerce services. Prior to November 2023, our operations were primarily focused on tutorial and tutorial services. In response to the increasingly restrictive regulatory environment affecting the private education sector in China, after November 2023, we began to adjust our business strategy and gradually reduce our reliance on tutorial services as our primary sources of revenue. As part of this transition, we expanded our operations into e-commerce. Currently, more than 90% of our revenue is derived from our e-commerce business. Our tutorial services now account for a relatively small portion of total revenue and are maintained on a limited and supplemental basis. We believe that this business diversification reduces our exposure to regulatory risks associated with the education sector and allows us to leverage our existing customer base, operational experience, and technological infrastructure for our future business developments, although there can be no assurance that this strategy will be successful.
| ● | E-Commerce Services |
In November 2023, we diversified our operations beyond tutoring and secondary language instruction to include e-commerce services. Our e-commerce operations currently consist of data analytics–driven marketing and social media promotional services for small and medium-sized businesses on major short video platforms based in China, including Douyin, Kuaishou, and WeChat Video Accounts, where we provide social media content planning, data-based advertising placement, performance monitoring, and strategy optimization. In connection with these services, we utilize data analytics based on platform algorithms to support targeted advertising and adjust marketing campaigns based on real-time performance data.
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Our e-commerce operations are subject to various macroeconomic factors that may affect consumer demand and business performance. During periods of economic growth, consumer purchasing power generally increases, which may support higher demand for e-commerce products and services. Conversely, during periods of economic slowdown, consumers may become more price-sensitive, which could adversely affect demand. Demographic and social trends may also influence consumer behavior. For example, younger consumer cohorts generally place greater emphasis on convenience and may be more willing to adopt new e-commerce models and products, while demand among older consumers for products offered through e-commerce platforms has gradually increased. However, shifts in population structure, consumer preferences, and spending patterns are subject to uncertainty and may not continue as expected. The e-commerce industry in China is highly competitive and subject to evolving laws, regulations, and policies. Our operations face risks and challenges, including intense competition, relatively high operating and customer acquisition costs, changes in platform rules or algorithms, regulatory uncertainty, and the need to continually adapt to changing consumer preferences. These factors may materially and adversely affect the growth, results of operations, and prospects of our e-commerce business.
| ● | Tutorial services |
With the advancement of technology, virtual classrooms and artificial intelligence (“AI”) tutoring tools have become increasingly prevalent. Educational resources will be disseminated more conveniently via digital means, and we believe personalized learning services will also gain growing popularity accordingly. In recent years, our tutorial has gradually adopted intelligent teaching tools, leveraging AI-powered question banks to standardize teaching, improving teaching efficiency through technological means, supervising over teaching activities and faculty members, empowering language teaching, and further driving the reform of teaching methodologies. However, as a traditional sector, our business may not grow at the rate projected by industry data, or at all. If the education industry fails to grow as expected, such conditions could have a material adverse effect on our business and the market price of our Class A ordinary shares. In addition, the rapidly evolving nature of the education industry introduces significant uncertainty into any projections or estimates regarding its growth prospects or future condition. If one or more of the assumptions underlying the industry data prove incorrect, our actual results may differ materially from projections based on such assumptions.
As of September 30, 2025, our education centers offer two main programs: (i) foreign language tutorial programs in less commonly taught languages, including Spanish and Japanese, provided to individual students as well as to companies and other organizations; and (ii) Gaokao repeater tutorial programs, provided to individual students.
On July 6, 2025, our PRC subsidiary, Golden Sun Wenzhou, signed an agreement with a third party to sell 100% equity interests of its wholly-owned subsidiary, Shanghai Golden Sun Gongyu Education Technology Co., Ltd. (“Gongyu Education”), and its subsidiaries, comprised of (i) Shanghai Xianjin Technology Development Co., Ltd. (“Xianjin Technology”), where by Gongyu Education held 85% of its equity interest; (ii) Shanghai Zhouzhi Culture Development Co., Ltd. (“Zhouzhi Culture”), a wholly-owned subsidiary of Gongyu Education; (iii) Shanghai Jinheyu Biotechnology Co., Ltd. (“Shanghai Jinheyu”), whereby Gongyu Education held 51% of its equity interest; (iv) Hangzhou Jicai Education Technology Co. Ltd. (“Hangzhou Jicai”), a wholly-owned subsidiary of Zhouzhi Culture; (v) Shanghai Qinshang Education Technology Co., Ltd. (“Qinshang Education”), a wholly-owned subsidiary of Zhouzhi Culture; and (vi) Shanghai Hongkou Practical Foreign Language Tutorial School (“Hongkou Tutorial”), whereby Xianjin Technology hold 90% of its equity interest, for a total consideration of approximately $0.7 million (RMB5.0 million). The transaction closed on July 21, 2025. We determined that the disposal met the criteria to be classified as a discontinued operation; therefore, the related operations were presented and disclosed as discontinued operations. Accordingly, assets, liabilities, revenues and expenses and cash flows related to the disposal have been retroactively reclassified in the consolidated financial statements as discontinued operations for all periods presented.
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Revenues from our continuing operations for the year ended September 30, 2025 (“fiscal year 2025”) increased by approximately $29.4 million, or 483%, to approximately $35.5 million, from approximately $6.1 million for the year ended September 30, 2024 (“fiscal year 2024”), primarily attributable to the increased revenue from e-commerce services, as we further expanded our operations on e-commerce since late 2023. In fiscal year 2025, our net loss increased by approximately $1.3 million, or 32%, to approximately $5.2 million, from approximately $4.0 million in fiscal year 2024, primarily due to an increase of approximately $3.8 million in net loss from continuing operations, offset by an approximately $0.7 million turnaround to net income from discontinued operations.
Factors Affecting Our Results of Operations
We believe the most significant factors that affect our business and results of operations include the following:
| ● | The number of students enrolled is largely driven by the demand for our tutorial programs, our reputation and brand recognition and our ability to improve the variety and quality of the programs we offer. |
| ● | Pricing of our tuition fees is affected by the tuition policy set by the PRC local governments at different levels. Article 38 of the Law for Promoting Private Education stipulates that the items and rates of fees to be charged by private schools shall be determined based on the cost of running a school, market demands and other relevant factors, and must be made available to the public. Tuition and fee rates for private schools are subject to supervision by the relevant authorities. Provincial governments, autonomous regions governments and centrally-administered municipalities set guidelines on fees for not-for-profit schools. The tuition criteria of for-profit private schools are subject to market conditions and shall be determined by the schools themselves. Currently, fees for our not-for-profit schools are determined by the school and filed with the relevant authorities for its supervision, while fees for our for-profit schools are primarily based on demand for our courses, the targeted market for our courses and fees charged by our competitors for the same or similar courses. |
| ● | Our ability to manage our cost of revenues directly affects our profitability. Our cost of revenues mainly consists of labor costs, which are compensation for our teachers and educational staff, student-related costs, depreciation expenses and lease payment for our schools and tutorial centers. | |
| ● | In 2024, we extend our business into the e-commerce and cultural tourism sectors. Starting from July 2025, we decided to gradually discontinue our wellness business and focus our efforts in other industries, including e-commerce. Our ability to execute the new growth strategy will affect our future results and financial condition. |
Risks and Uncertainties
Substantially all of our operations are conducted in China through our PRC subsidiaries. Accordingly, our business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. Our results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC. While we believe that the Company is in compliance with existing laws and regulations, this compliance may not be indicative of future results. Additionally, our business, financial condition, and results of operations may be negatively impacted by various risks including, but not limited to, regional wars, geopolitical tensions, natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents. These events could potentially and significantly disrupt our operations. Management continuously monitors these risks and uncertainties and strives to mitigate their potential impact through strategic planning and operational adjustments.
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Results of Operations
For the fiscal years ended September 30, 2025 and 2024
Revenue
The following table sets forth the breakdown of our revenue from continuing operations for the years presented:
| For the fiscal years ended September 30, | ||||||||||||||||||||||||
| 2025 | 2024 | Amount | % | |||||||||||||||||||||
| Revenue by type | Amount | % of total revenue | Amount | % of total revenue | Increase (Decrease) | Increase (Decrease) | ||||||||||||||||||
| Tutorial services | $ | 1,386,186 | 4 | % | 1,838,168 | 30 | % | $ | (451,982 | ) | (25 | )% | ||||||||||||
| Logistic, consulting services and education related services | 225,525 | 1 | % | 398,872 | 7 | % | (173,347 | ) | (43 | )% | ||||||||||||||
| E-commerce services and others | 33,868,001 | 95 | % | 3,850,417 | 63 | % | 30,017,584 | 780 | % | |||||||||||||||
| Total revenue | $ | 35,479,712 | 100 | % | $ | 6,087,457 | 100 | % | $ | 29,392,255 | 483 | % | ||||||||||||
Revenue from our continuing operations increased by approximately $29.4 million, or 483%, to approximately $35.5 million in fiscal year 2025, from approximately $6.1 million in fiscal year 2024. The increase in revenue was mainly due to an increase of approximately $30.0 million from e-commerce and others segment offset by a decrease of approximately $0.6 million from education segment in fiscal year 2025 and as a result of the growth of our e-commerce and others segment.
Education segment
Tutorial services
Our tutorial services revenue from our continuing operations decreased by approximately $0.5 million, or 25%, to approximately $1.4 million in fiscal year 2025, from approximately $1.8 million in fiscal year 2024. The decrease was primarily attributable to the decrease in average revenue recognized per student in our tutorial programs. Our average revenue recognized per student decreased by $815 from $2,250 per student in fiscal year 2024 to $1,435 per student in fiscal year 2025. The total number of student enrollment increased by 149 from 817 students in fiscal year 2024 to 966 students in fiscal year 2025.
Logistic, consulting services and education related services
Our logistic, consulting services and education related services revenue from our continuing operations decreased by approximately $0.2 million, or 43%, to approximately $0.2 million in fiscal year 2025, from approximately $0.4 million in fiscal year 2024. The decrease was mainly due to a decrease in our consulting and catering services offered to certain kindergartens owned by our CEO and his wife because of the decreased demand for such services.
E-commerce and others segment
Our e-commerce services and others revenue from our continuing operations increased by approximately $30.0 million, or 780%, to approximately $33.9 million in fiscal year 2025, from approximately $3.9 million in fiscal year 2024. This increase was primarily attributed to the expansion of our e-commerce services beginning in November 2023.
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Cost of Revenues
Cost of revenues from our continuing operations increased by approximately $29.6 million, or 580%, to approximately $34.7 million in fiscal year 2025, from approximately $5.1 million in fiscal year 2024. The increase was mainly due to an increase of approximately $29.6 million cost of revenue from e-commerce services and others, which was in line with the corresponding increase in revenue generated from e-commerce services and others.
Gross profit
Gross profit from our continuing operations decreased by approximately $0.2 million, or 19%, to approximately $0.8 million in fiscal year 2025, from approximately $1.0 million in fiscal year 2024. The decrease was primarily due to a decrease in revenue from educational services as a result of lower average revenue recognized per student and low gross margin from e-commerce services and others. Gross margin for educational services and e-commerce services were 29% and 1% in fiscal year 2025, respectively, as compared to 49% and negative 3% in fiscal year 2024, respectively.
Operating Expenses
| For the fiscal years ended September 30, | ||||||||||||||||||||||||
| 2025 | 2024 | Amount | % | |||||||||||||||||||||
| Amount | % of revenue | Amount | % of revenue | Increase (Decrease) | Increase (Decrease) | |||||||||||||||||||
| Selling expenses | $ | 195,519 | 1 | % | $ | 177,611 | 3 | % | $ | 17,908 | 10 | % | ||||||||||||
| General and administrative expenses | 2,706,230 | 8 | % | 2,551,717 | 42 | % | 154,513 | 6 | % | |||||||||||||||
| Total | $ | 2,901,749 | 9 | % | $ | 2,729,328 | 45 | % | $ | 172,421 | 6 | % | ||||||||||||
Total operating expenses from our continuing operations increased by approximately $0.2 million, or 6%, to approximately $2.9 million in fiscal year 2025, from approximately $2.7 million in fiscal year 2024. The increase was mainly due to an increase in general and administrative expenses due to more professional consulting fees in fiscal year 2025.
Selling expenses
Selling expenses from our continuing operations kept at approximately $0.2 million in fiscal year 2025 and 2024.
General and administrative expenses
General and administrative expenses from our continuing operations increased by approximately $0.2 million, or 6%, to approximately $2.7 million in fiscal year 2025, from approximately $2.6 million in fiscal year 2024. As a percentage of revenues, general and administrative expenses represented approximately 8% and 42% of our total revenues in fiscal year 2025 and 2024, respectively. The increase of general and administrative expenses was primarily due to more consulting fees in fiscal year 2025.
Interest expense, net
Net interest expense from our continuing operations increased by approximately $0.1 million, or 43%, to approximately $0.3 million in fiscal year 2025, from approximately $0.2 million in fiscal years 2024. The increase was mainly attributable to the increase of the loans in fiscal year 2025.
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Gain from disposal subsidiaries
On July 21, 2025, we closed the transaction of disposal of Gongyu Education and its several subsidiaries and recorded gain from disposal of subsidiaries of approximately $4.6 million in fiscal year 2025.
Change in fair value of convertible note
Change in fair value of convertible note from our continuing operations in fiscal year 2025 and 2024 amounted to a loss of approximately $0.5 million and nil, respectively. The convertible notes are measured to fair value at the end of each reporting period.
Change in fair value of warrants liabilities
Change in fair value of warrants liabilities from our continuing operations in fiscal year 2025 and 2024 amounted to a loss of approximately $7.4 million and nil, respectively. The fair value of the Company’s warrants derivative liabilities assumed are re-measured to its fair value at the end of each reporting period.
Loss before income taxes
Loss before income tax from our continuing operations increased by approximately $3.8 million, or 177%, to approximately $6.0 million in fiscal year 2025, from approximately $2.1 million in fiscal year 2024. The increase in losses before income taxes was primarily attributable to unrealized loss from change in fair value of convertible notes and warrants liabilities offset by gain from disposal subsidiaries, as stated above.
Income taxes (benefit) provision
Income taxes benefit from our continuing operations was approximately $0.004 million in fiscal years 2025, as compared to income taxes provision of approximately $0.02 million in fiscal years 2024.
Net loss
Net loss from continuing operations increased by approximately $3.8 million, or 175%, to approximately $6.0 million in fiscal year 2025, from approximately $2.2 million in fiscal year 2024, due to the above-mentioned reasons.
Net income from discontinued operations in fiscal year 2025 was $0.7 million as compared to a net loss from discontinued operations of approximately $1.8 million in fiscal year 2024.
Net loss increased by approximately $1.3 million, or 32%, to approximately $5.2 million in fiscal year 2025, from approximately $4.0 million in fiscal year 2024. The increase was primarily due to an increase of approximately $3.8 million in net loss from continuing operations, offset by an approximately $0.7 million turnaround to net income from discontinued operations.
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For the fiscal years ended September 30, 2024 and 2023
Revenue
The following table sets forth the breakdown of our revenue from continuing operations for the years presented:
| For the fiscal years ended September 30, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| Revenue by type | Amount | % of total revenue | Amount | % of total revenue | Change | % Change | ||||||||||||||||||
| Tutorial services | $ | 1,838,168 | 30 | % | $ | 1,900,865 | 73 | % | $ | (62,697 | ) | (3 | )% | |||||||||||
| Logistic, consulting services and education related services | 398,872 | 7 | % | 692,124 | 27 | % | (293,252 | ) | (42 | )% | ||||||||||||||
| E-commerce services | 3,850,417 | 63 | % | - | - | % | 3,850,417 | - | % | |||||||||||||||
| Total revenue | $ | 6,087,457 | 100 | % | $ | 2,592,989 | 100 | % | $ | 3,494,468 | 135 | % | ||||||||||||
Revenue from our continuing operations increased by approximately $3.5 million, or 135%, to approximately $6.1 million in fiscal year 2024, from approximately $2.6 million in fiscal year 2023. The increase in revenue was mainly due to an increase of approximately $3.9 million from e-commerce services, offset by decreased of approximately $0.3 million from logistic, consulting services and education related services.
Education segment
Tutorial services
Tutorial services revenue from our continuing operations decreased by approximately $0.1 million, or 3%, to approximately $1.8 million in fiscal year 2024, from approximately $1.9 million in fiscal year 2023. Our total number of student enrollments in our tutorial programs decreased by 638 from an aggregate of 1,455 students in fiscal year 2023 to an aggregate of 817 students in fiscal year 2024. Our average revenue recognized per student increased by $944 from $1,306 per student in fiscal year 2023 to $2,250 per student in fiscal year 2024.
Logistic, consulting services and education related services
Logistic, consulting services and education related services revenue from our continuing operations decreased by approximately $0.3 million, or 42%, to approximately $0.4 million in fiscal year 2024, from approximately $0.7 million in fiscal year 2023. The decrease was mainly due to a decrease in our consulting and catering services offered to certain kindergartens owned by our CEO and his wife, mainly as a result of the decreased demand for such services.
E-commerce segment
Beginning in November 2023, we started providing e-commerce services and related products on e-commerce platforms. Our e-commerce services revenue from our continuing operations has generated approximately $3.9 million in fiscal year 2024.
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Cost of Revenues
Cost of revenues from our continuing operations increased by approximately $3.8 million, or 288%, to approximately $5.1 million in fiscal year 2024, from approximately $1.3 million in fiscal year 2023. The increase in cost of revenues in fiscal year 2024 was mainly due to an increase of approximately $4.0 million cost of revenue from e-commerce services.
Gross profit
Gross profit from our continuing operations decreased by approximately $0.3 million, or 23%, to approximately $1.0 million in fiscal year 2024, from approximately $1.3 million in fiscal year 2023. The decrease in gross profit was mainly due to a decrease of approximately $0.2 million from education services and approximately $0.1 million gross loss in e-commerce services during our expansion period. Gross margin for education services and e-commerce services were 49% and negative 3% in fiscal year 2024, respectively, as compared to 49% and nil in fiscal year 2023, respectively.
Operating Expenses
| For the fiscal years ended September 30, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| Amount | % of revenue | Amount | % of revenue | Change | % Change | |||||||||||||||||||
| Selling expenses | $ | 177,611 | 3 | % | $ | 127,134 | 5 | % | $ | 50,477 | 40 | % | ||||||||||||
| General and administrative expenses | 2,551,717 | 42 | % | 4,454,706 | 172 | % | (1,902,989 | ) | (43 | )% | ||||||||||||||
| Total | $ | 2,729,328 | 45 | % | $ | 4,581,840 | 177 | % | $ | (1,852,512 | ) | (40 | )% | |||||||||||
Total operating expenses from our continuing operations decreased by approximately $1.9 million, or 40%, to approximately $2.7 million in fiscal year 2024, from approximately $4.6 million in fiscal year 2023. The decrease in operating expenses was mainly due to a decrease of approximately $1.9 million in general and administrative expenses in fiscal year 2024.
Selling expenses
Selling expenses from our continuing operations increased by approximately $0.1 million, or 40%, to approximately $0.2 million in fiscal year 2024, from approximately $0.1 million in fiscal year 2023. The increase in selling expenses was mainly due to an increase in advertising fee of approximately $0.1 million in fiscal year 2024.
General and administrative expenses
General and administrative expenses from our continuing operations decreased by approximately $1.9 million, or 43%, to approximately $2.6 million in fiscal year 2024, from approximately $4.5 million in fiscal year 2023. The decrease in general and administrative expenses was mainly driven by a decrease of approximately $1.8 million in stock-based compensation. As a percentage of revenues, general and administrative expenses represented approximately 42% and 172% of our total revenues in fiscal year 2024 and 2023, respectively.
Interest expense, net
Interest expense, net from our continuing operations kept at approximately $0.2 million in fiscal year 2024 and 2023.
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Other (expense) income, net
Other expense from our continuing operations amounted to approximately $0.1 million in fiscal year 2024, which mainly consisted of foreign exchange losses. Other income from our continuing operations amounted to approximately $1.0 million in fiscal year 2023, which mainly consisted of government subsidies.
Loss before income taxes
Loss before income taxes from our continuing operations decreased by approximately $0.5 million, or 17%, to approximately $2.1 million in fiscal year 2024, from approximately $2.6 million in fiscal year 2023. The decrease was primarily attributable to lower operating expenses offset by increased other expense in fiscal year 2024, as stated above.
Income taxes provision
Income tax provision from our continuing operations was approximately $0.02 million in fiscal years 2024, as compared to income taxes provision of approximately $0.1 million in fiscal years 2023.
Net loss
Net loss from our continuing operations decreased by approximately $0.5 million, or 20%, to approximately $2.2 million in fiscal year 2024, from approximately $2.7 million in fiscal year 2023.
Net loss from discontinued operations decreased by approximately $1.3 million, or 41%, to approximately $1.8 million, from approximately $3.1 million in fiscal year 2023.
Net loss decreased by approximately $1.8 million, or 31%, to approximately $4.0 million in fiscal year 2024, from approximately $5.8 million in fiscal year 2023. The decrease was primarily due to a decrease of approximately $1.3 million in net loss from discontinued operations and a decrease of approximately $0.5 million in net loss from continuing operations.
Liquidity and Capital Resources
For fiscal year 2025, the Company incurred a net loss of approximately $6.0 million from continuing operations and used net cash of approximately $7.6 million in operating activities from continuing operations. As of September 30, 2025, the Company has an accumulated deficit of approximately $23.6 million. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
In assessing liquidity, we monitor and analyze cash on-hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. In fiscal year 2025, our revenue from continuing operations increased by approximately $29.4 million to approximately $35.5 million from approximately $6.1 million in fiscal year 2024. Our net loss from continuing operations increased by approximately $3.8 million, or 175%, to approximately 6.0 million in fiscal year 2025, from approximately $2.2 million in fiscal year 2024. We previously funded our working capital needs primarily from the IPO proceeds, operations, bank loans, convertible note financing and advances from shareholders, and we intend to continue doing so in the near future.
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We currently plan to fund our operations mainly through cash flow from its operations, renewal of bank borrowings, and support from controlling shareholders, if necessary, to ensure sufficient working capital. As of September 30, 2025, deferred revenue included in current liabilities amounted to approximately $4.5 million, which will be recognized as revenue in the next fiscal year when the services are provided. As of September 30, 2025, we had short-term bank loans and long-term bank loans in aggregate of approximately $0.6 million and approximately $2.9 million, respectively. We expect to obtain new bank loans or renew existing bank loans upon maturity based on past experience and our good credit history. Management is evaluating different strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, additional funding from current or new investors, officers and directors, debt financing and optimization of costs. The principal shareholder has pledged to use his personal assets as collateral to support us in securing bank loans whenever necessary. We believe that our working capital will be sufficient to fund our operations over at least the next 12 months from the date of this report. However, we may need additional cash resources in the future if we experience changed business conditions or other developments, and may also need additional cash resources in the future if we wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed our amounts of cash on hand, we may seek to issue debt or equity securities or obtain a credit facility.
Cash flows
For the fiscal years ended September 30, 2025, 2024 and 2023
The following table sets forth a summary of our cash flows for the periods indicated:
| For the fiscal years ended September 30 | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Net cash used in operating activities - continuing operation | $ | (7,626,557 | ) | $ | (2,403,300 | ) | $ | (1,162,907 | ) | |||
| Net cash used in operating activities - discontinued operation | (1,691,615 | ) | (2,497,584 | ) | (3,053,154 | ) | ||||||
| Net cash used in operating activities | (9,318,172 | ) | (4,900,884 | ) | (4,216,061 | ) | ||||||
| Net cash provided by (used in) investing activities - continuing operation | 165,275 | (1,887,373 | ) | (8,432,291 | ) | |||||||
| Net cash used in investing activities - discontinued operation | - | (86,036 | ) | (1,018,280 | ) | |||||||
| Net cash provided by (used in) investing activities | 165,275 | (1,973,409 | ) | (9,450,571 | ) | |||||||
| Net cash provided by financing activities - continuing operation | 6,475,543 | 288,654 | 430,544 | |||||||||
| Net cash provided by (used in) financing activities - discontinued operation | 2,544,618 | 828,550 | (183,743 | ) | ||||||||
| Net cash provided by financing activities | 9,020,161 | 1,117,204 | 246,801 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 68,448 | 44,003 | (374,962 | ) | ||||||||
| Net decrease in cash and cash equivalents | (64,288 | ) | (5,713,086 | ) | (13,794,793 | ) | ||||||
| Cash and cash equivalents, beginning of year | 839,622 | 6,552,708 | 20,347,501 | |||||||||
| Cash and cash equivalents, end of year | $ | 775,334 | $ | 839,622 | $ | 6,552,708 | ||||||
Operating Activities
Net cash used in operating activities was approximately $9.3 million in fiscal year 2025. Net cash used in continuing operating activities in fiscal year 2025 mainly consisted of a net loss from continuing operation of $6.0 million, adjustments of approximately $3.6 million for non-cash items, an increase of approximately $7.1 million in prepayments and other assets, an increase of approximately $2.0 million in Accounts receivable, and a decrease of approximately $0.3 million in operating lease liabilities, offset by an increase of $2.6 million in account payable and an increase of $1.7 million in deferred revenue. Cash used in operating activities from discontinued operations of approximately $1.7 million.
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Net cash used in operating activities was approximately $4.9 million in fiscal year 2024. Net cash used in continuing operating activities in fiscal year 2024 mainly consisted of a net loss from continuing operation of $2.2 million, adjustments of approximately $0.2 million for non-cash items and an increase of approximately $2.1 million in prepayments and other assets and, offset by an increase of $1.4 million in deferred revenue. Cash used in operating activities from discontinued operations of approximately $2.5 million
Net cash used in operating activities was approximately $4.2 million in fiscal year 2023. Net cash used in continuing operating activities in fiscal year 2023 mainly consisted of a net loss from continuing operation of $2.7 million, adjustments of approximately $2.0 million for non-cash items, and a decrease of approximately $0.4 million in accrued expenses and other liabilities. Cash used in operating activities from discontinued operations of approximately $3.1 million.
Investing Activities
Net cash provided by investing activities was approximately $0.2 million in fiscal year 2025. Net cash provided by continuing investing activities in fiscal year 2025 mainly consisted of approximately $0.6 million cash received from disposal of subsidiaries, offset by approximately $0.4 million paid for acquisition.
Net cash used in investing activities was approximately $2.0 million in fiscal year 2024. Net cash used in continuing investing activities in fiscal year 2024 mainly consisted of approximately $1.7 million paid for acquisition, approximately $0.1 million paid for long-term investments and approximately $0.05 million paid for purchase of property and equipment. Cash used in investing activities from discontinued operations of approximately $0.1 million.
Net cash used in investing activities was approximately $9.5 million in fiscal year 2023. Net cash used in continuing investing activities consisted of approximately $4.6 million paid for long-term investments, approximately $3.7 million paid for acquisition and approximately $0.07 million paid for purchase of property, equipment and intangible assets. Cash used in investing activities from discontinued operations of approximately $1.0 million.
Financing Activities
Net cash provided by financing activities was approximately $9.0 million in fiscal year 2025. Net cash provided by continuing financing activities primarily included proceeds from convertible note and warrants of approximately $5.0 million, proceeds from related parties of approximately $1.0 million, net proceeds from short-term bank loans of approximately $0.2 million and net proceeds from third parties of approximately $0.3 million. Cash provided by financing activities from discontinued operations of approximately $2.5 million.
Net cash provided by financing activities was approximately $1.1 million in fiscal year 2024. Net cash provided by continuing financing activities primarily included net proceeds from a related party of approximately $0.3 million. Cash provided by financing activities from discontinued operations of approximately $0.8 million.
Net cash provided by financing activities was approximately $0.2 million in fiscal year 2023. Net cash provided by continuing financing activities primarily included net proceeds from bank loans of approximately $0.3 million and net proceeds from a related party of approximately $0.2 million. Cash used in financing activities from discontinued operations of approximately $0.2 million.
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Capital Expenditures
Our capital expenditures from continuing operations were immaterial in fiscal years 2025, 2024 and 2023, respectively.
Contractual Obligations
We had various outstanding bank loans of approximately $3.5 million and $3.3 million as of September 30, 2025 and 2024, respectively. We have also entered into non-cancellable operating lease agreements for several offices and operating facilities. The lease terms extend through 2029.
The following table sets forth our contractual obligations and commercial commitments as of September 30, 2025:
| Payment Due by Period | ||||||||||||||||
| Total | Less than 1 Year | 1 – 3 Years | 4 – 5 Years | |||||||||||||
| Operating lease arrangements | $ | 296,741 | $ | 91,305 | $ | 182,610 | $ | 22,826 | ||||||||
| Bank loans | 3,525,777 | 604,018 | 2,921,759 | - | ||||||||||||
| Total | $ | 3,822,518 | $ | 695,323 | $ | 3,104,369 | $ | 22,826 | ||||||||
Off-Balance Sheet Arrangements
We have entered into certain off-balance sheet financial guarantees related to the borrowings of related parties.
We do not have any other off-balance arrangement as of September 30, 2025.
Impact of Inflation
We do not believe the impact of inflation on our Company is material. Our operations are in China and China’s inflation rates have been relatively stable in the last three years: being approximately 0.2% in 2023, 0.2% in 2024 and 0.0% in 2025.
Critical Accounting Estimates
In preparing the consolidated financial statements, we have made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Accounting estimates are deemed critical if they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Significant estimates required to be made by management include, but are not limited to, refund liabilities, revenue recognition, the allowance for credit loss on accounts receivables and prepayment and other assets, determinations of the useful lives and valuation of long-lived assets, impairment of goodwill, impairment of long-term investments, valuation of convertible note and warrant liabilities, incremental borrowing rate used in valuation of lease liabilities and right-of-use assets and valuation allowance of deferred tax assets. A summary of our significant accounting policies which are important to the portrayal of our financial condition and results of operations is set forth in Note 2 to our consolidated financial statements included elsewhere in this filing.
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Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| A. | Directors and Senior Management |
The following table sets forth information regarding our directors and executive officers as of the date of this annual report.
| Name | Age | Position(s) | ||
| Xueyuan Weng | 60 | Chairman, Director, Chief Executive Officer | ||
| Yu Sun | 54 | Chief Financial Officer | ||
| Duo Ye | 41 | Chief Operating Officer | ||
| Lizhen Wang | 39 | Chief Technology Officer | ||
| Liming Xu | 63 | Director | ||
| Peilin Ji | 67 | Director | ||
| Yidong Hao | 53 | Independent Director | ||
| Xijing Xu | 51 | Independent Director | ||
| Xiao Jin | 61 | Independent Director | ||
| Zhenghua Yu | 50 | Independent Director |
The following is a brief biography of each of our executive officers and directors:
Mr. Xueyuan Weng has been serving as a director, chairman and Chief Executive Officer of the Company since November 10, 2020, the executive director of Golden Sun Wenzhou since October 2018, the chief executive officer of Chongwen Middle School since August 2018, the executive director of Yinuo Education Technology Co., Ltd., a technology company servicing the education sector since November 2017, the executive director of Gongyu Education since September 2017, the chairman of Golden Sun Hong Kong since June 2017, the executive director of Shanghai Golden Sun Education Technology Co., Ltd., a technology company that focuses on the development of education software and computer software, since December 2015, the chief executive officer of Ouhai Art School since March 2015, the chairman of Golden Sun Shanghai since November 2013, the supervisor of Wenzhou Kunlong Industrial Co., Ltd., a company that intends to engage in the research and development of educational device and computer software, since April 2010, and the chairman of the board of supervisors of Yangfushan Tutorial since April 2008. Prior to joining the Company, Mr. Weng served as the chairmen of Wenzhou New Thought Education Group from September 2000 to August 2008. He served as the chairman of Wenzhou New Century School from September 1997 to August 2000. Prior to that, he worked at various local middle schools and the local government in Wenzhou from 1986 to 1997. Mr. Weng received an EMBA degree from Macau University of Science and Technology in 2009 and graduated from Wenzhou Teachers College with a major in Political Science in 1986.
Mr. Yu Sun has been serving as the Chief Financial Officer of the Company since September 1, 2024, and as a financial director at Golden Sun Wenzhou since August 2018. Previously, she served as a financial manager at Wenzhou New Thinking Education Group from 2015 until 2018, as a finance and audit manager at Wenzhou Shengye Certified Public Accountants from 2007 until 2015, as a financial manager at Wenzhou Huolun Light Industry Manufacturing Co., Ltd. from 2003 until 2006, as an accounting officer at Zhejiang Tetao Group Co., Ltd. from 1998 until 2003 and from 1992 until 1993, and as an accounting supervisor at Wenzhou Henghui Machinery Equipment Co., Ltd. from 1993 until 1998. Ms. Yu Sun attended Wuhan University of Technology, majoring in accounting, from 2004 until 2007.
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Mr. Duo Ye has been serving as the Chief Operating Officer since September 18, 2025 and has extensive experience in the financial services and media industries, with over a decade in senior management roles. From November 2023 to September 2025, he was the General Manager at Zhejiang Jintaiyang Selection Technology Co., Ltd., a company focused on cross border e-commerce, cultural and tourism planning services, and information technology services. From December 2020 to October 2023, he served as Chief Operating Officer of Jinhua Single Dog Culture Media Co., Ltd., a company primarily engaged in cultural tourism planning services, information technology services, and online live streaming expert training. Between October 2014 to October 2020, he served as General Manager of Shanghai Nuoxin Asset Management Co., Ltd., a company focused on asset management and industrial investment, and between December 2010 to October 2014, he served as Deputy General Manager of the Institutional Business Department at Xinhua Trust Co., Ltd., a company primarily engaged in trust and fund business. Earlier in his career, he served as a Branch Manager at the Daikoku Hotel Group in New Zealand, a company focused on accommodation and catering services. Mr. Ye received an MBA from the City University of Macau in Macau in 2016 and a diploma in hospitality from Auckland Wise Institute in Auckland in 2006.
Ms. Lizhen Wang has been serving as the Chief Technology Officer of the Company since December 2021. She previously served as our Assistant General Manager from June 2016 to November 2021. Prior to that, she served as the Assistant General Manager of Shanghai Mengyu Culture Media Co., Ltd. from June 2015 to May 2016. Ms. Wang has over six years of experience in managing education companies and is familiar with the operational process of the education industry, with extensive experience in business development, platform construction, project development, and team management. Ms. Wangr received a master’s in Business Management from Tongji University in China in 2015 and a bachelor’s degree in Business Management from Aachen University of Applied Sciences in Germany in 2015. She is also a FCPA Certified Legal Accountant.
Mr. Liming Xu has been serving as the Company’s executive director since November 10, 2020. He has also served as the chairman of the board of directors of Hongkou Tutorial since May 2014. From May 2002 to April 2014, Mr. Xu served as the principal of Shanghai Huangpu Youth Continuing Education School. He has over 35 years of experience as an educator and in managing schools. He received a bachelor’s degree in physics from Jiangxi Normal University in 1984.
Ms. Peilin Ji has been serving as the Company’s executive director since November 10, 2020. Since January 2013, she has invested in various companies in the restaurant and education industries, and has been engaging in various investment activities since 2007. Previously, she was the business operator for Shanghai Sports Lottery from January 2004 to September 2006, and Yangpu district night market from February 1987 to December 2003. She graduated from Tongji High School in 1975.
Mr. Yidong Hao has been serving as the Company’s independent director since September 2023. He has also been serving as the financial director of Haomu (Shanghai) Energy Conservation Technology Co., Ltd., since June 2017. He also served as the financial director of Shanghai Huayuan Magnetic Industry Co., Ltd. from February 2015 to June 2017. Mr. Hao graduated from Nankai University in China in 1997, majoring in accounting, and received his master’s degree in Software Engineering from Fudan University in China in 2015.
Mr. Zhenghua Yu has been serving as the Company’s independent director since November 6, 2023. He has served as a senior audit manager at Shanghai Huajun Certified Public Accountants Co. Ltd. since October 2015. He served as a financial manager at Shanghai Hanbang Marketing and Planning Co., Ltd from November 2008 to September 2015, and at Jiangxi Chemical Fiber Co., Ltd. from July 1997 to October 2008. Mr. Yu graduated from Jiangxi University of Finance and Economics in 1997, majoring in Corporate Accounting.
Mr. Xiao Jin has been serving as the Company’s independent director and the member of the audit and compensation committees since February 21, 2024. He has also been serving as the Chief Financial Officer for Hebron Technologies Limited since September 2018. Previously, he served as the Chief Financial Officer for Lanzhou Heshengtang Pharmaceutical Co., Ltd. from November 2014 to September 2018, for Zhejiang Hebron Control Engineering Technology Co., Ltd. from May 2012 to October 2014, and for Zhejiang Juneng Lesi Pharmaceutical Co., Ltd. from April 2002 to April 2012. From March 2001 to March 2002, he served as an audit manager at Juneng Industrial Co., Ltd. From August 1999 to March 2001, he served as a finance manager at Lanzhou Juneng Trading Co., Ltd. From July 1985 to July 1999, he served as an accountant at Lanzhou Friendship Hotel Co., Ltd. He graduated from Lanzhou Commercial School, China in 1985, majoring in accounting, and received an EMBA in Business Administration from Shanghai Jiaotong University in 2011. Mr. Xiao Jin serves as a director of the Company, as well as a member of each of our audit committees and compensation committee.
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Mr. Xijing Xu has been serving as the Company’s independent director and a member of the Nominating and Corporate Governance Committee since August 3, 2024. He has also been serving as a general manager of Hangzhou Langte Technology Co., Ltd since April 2014. Previously he was a manager and a shareholder at Anhui Fengyang Changsheng Mining Industry from August 2008 until May 2011, a marketing manager at Hangzhou Fengmo Investment Co., Ltd. From August 2003 until July 2008, a Marketing Department 2 supervisor at Hangzhou Zhengda Textile Co., Ltd. From May 2000 until June 2003, and a business supervisor at Shanghai JiaoTong University from June 1997 until March 2000. Mr Xijing Xu attended Northeast Agricultural University Law from July 2004 until July 2006. He is an independent director under the applicable rules and regulations of the Securities and Exchange Commission and rules of Nasdaq.
Our officers are appointed by and serve at the discretion of our board of directors and the shareholders voting by ordinary resolution. Our directors are not subject to a set term of office and hold office until the next general meeting called for the election of directors and until their successor is duly appointed or at such time as they die, resign or are removed from office by a shareholders’ ordinary resolution. The office of a director will be vacated automatically if, among other things, the directors resign in writing, becomes bankrupt or makes any arrangement or composition with his/her creditors generally or is found to be or becomes of unsound mind.
Family Relationships
None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
Board of Directors
As of the date of this annual report, our board of directors consists of seven directors, four of whom are “independent” within the meaning of the corporate governance standards of the Nasdaq listing rules and meet the criteria for independence set forth in Rule 10A-3 of the Exchange Act.
Duties of Directors
Under Cayman Islands law, all of our directors owe three types of duties: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Companies Act (Revised) of the Cayman Islands imposes a number of statutory duties on a director. A Cayman Islands director’s fiduciary duties are not codified, however, the courts of the Cayman Islands have held that a director owes the following fiduciary duties: (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and, also, to act with the skill, care and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our articles of association. We have the right to seek damages if a duty owed by any of our directors is breached.
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Terms of Directors and Executive Officers
Our officers are appointed by and serve at the discretion of our board of directors and the shareholders voting by ordinary resolution.
Unless removed or re-appointed, each director shall be appointed for a term expiring at the next-following annual general meeting, if one is held. At any annual general meeting held, our directors will be elected by an ordinary resolution of our shareholders. At each annual general meeting, each director so elected shall hold office for a one-year term and until the election of their respective successors in office or removed.
A director may be removed by ordinary resolution.
A director may at any time resign or retire from office by giving us notice in writing. Unless the notice specifies a different date, the director shall be deemed to have resigned on the date that the notice is delivered to us.
Subject to the provisions of the articles, the office of a director may be terminated forthwith if:
| (a) | he is prohibited by the law of the Cayman Islands from acting as a director; |
| (b) | he is made bankrupt or makes an arrangement or composition with his creditors generally; |
| (c) | he resigns his office by notice to us; |
| (d) | he only held office as a director for a fixed term and such term expires; |
| (e) | in the opinion of a registered medical practitioner by whom he is being treated he becomes physically or mentally incapable of acting as a director; |
| (f) | he is given notice by the majority of the other directors (not being less than two in number) to vacate office (without prejudice to any claim for damages for breach of any agreement relating to the provision of the services of such director); |
| (g) | he is made subject to any law relating to mental health or incompetence, whether by court order or otherwise; or |
| (h) | without the consent of the other directors, he is absent from meetings of directors for continuous period of six months. |
Adoption of the Golden Sun Technology Group Limited 2025 Equity Incentive Plan
On December 9, 2025, our board of directors approved the adoption of the 2025 Plan and forms of Award Agreements to be used to grant awards under the 2025 Plan, effective on December 10, 2025.
The 2025 Plan provides for the grant of awards representing the right to acquire, or based on the value of, Class A ordinary shares, and includes option awards, stock appreciation rights awards, restricted stock awards, restricted stock unit awards, performance awards, dividend equivalent awards and other share or cash based awards to eligible participants of the 2025 Plan or any related entity, as defined in the 2025 Plan.
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The maximum number of Class A ordinary shares that may be issued under the 2025 Plan is 1,309,330 Class A ordinary shares, equivalent to 15% of the total number of ordinary shares of the Company (including both Class A ordinary shares and Class B ordinary shares) issued and outstanding as of the effective date of the 2025 Plan. Beginning on January 1, 2027, and continuing annually on each anniversary thereof through and including January 1, 2035, the number of Class A ordinary shares available for issuance under the 2025 Plan shall be increased by a number of shares equal to the lesser of (i) 5% of the total number of ordinary shares of the Company issued and outstanding on the last day of the immediately preceding calendar year and (ii) such smaller number of Class A ordinary shares as determined by the Board or the Compensation Committee of the Board.
On December 16. 2025, we registered an aggregate of up to 1,309,330 Class A ordinary shares on a registration statement on Form S-8 for issuance under the 2025 Plan.
On January 12, 2026, we granted an aggregate of 1,300,000 Class A ordinary share under the 2025 Plan to our five employees (neither officers nor directors of the Company) for the services so rendered to the Group. Such grants were duly approved and ratified by the Company’s board of directors.
Employment Agreements and Indemnification Agreements
We have entered into employment agreements with each of our executive officers. Pursuant to such employment agreements, we have agreed to employ each of our executive officers for a specified time period, which agreements may be renewed upon both parties’ agreement 60 days before the end of the current employment term, and payment of cash compensation and benefits shall become payable when the Company becomes a public reporting company in the US. We may terminate the employment for cause, at any time, without notice or remuneration, for certain acts of the executive officer, including but not limited to the commitments of any serious or persistent breach or non-observance of the terms and conditions of the employment, conviction of a criminal offense, willful disobedience of a lawful and reasonable order, fraud or dishonesty, receipt of bribery, or severe neglect of his or her duties. An executive officer may terminate his or her employment at any time with a one-month prior written notice. Each executive officer agrees to hold, both during and after the employment agreement expires, in strict confidence and not to use or disclose to any person, corporation or other entity without written consent, any confidential information.
We have entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we have agreed to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.
B. Compensation of Directors and Executive Officers
The following table sets forth certain information with respect to compensation for the year ended September 30, 2025, earned by or paid to our chief executive officer and principal executive officer, our principal financial officer, and our other most highly compensated executive officers whose total compensation exceeded US$100,000 (the “named executive officers”).
Summary Compensation Table
| Name and Principal Position | Year | Salary(US$) | Bonus(US$) | Stock Awards (US$) |
Option Awards (US$) |
Non-Equity Incentive Plan Compensation |
Deferred Compensation Earnings |
Other | Total (US$) |
||||||||||||||||||||||||||
| Xueyuan Weng (CEO and Executive Director) | 2025 | 51,594 | - | - | - | - | - | - | 51,594 | ||||||||||||||||||||||||||
| Yu Sun (CFO) | 2025 | 60,728 | - | - | - | - | - | - | 60,728 | ||||||||||||||||||||||||||
Outstanding Equity Awards at Fiscal Year-End
As at September 30, 2025, we do not have any outstanding equity awards.
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Compensation of Independent Directors
For the fiscal year ended September 30, 2025, we paid our independent directors an aggregate of approximately $47,478 in cash for their services.
Insider Participation Concerning Executive Compensation
Our Compensation Committee makes all determination regarding executive officer compensation.
Clawback Policy
Effective as of December 1, 2023, the Board adopted a Policy for the Recovery of Erroneously Awarded Incentive-Based Compensation (the “Clawback Policy”) providing for the recovery of certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer. A copy of the Clawback Policy was filed as Exhibit 97.1 to the Company’s annual report on Form 20-F for the Company’s financial year ended September 30, 2023, as filed with the SEC on December 29, 2023 and incorporated herein by reference.
C. Board Practices
Committees of the Board of Directors
We have established three committees under the board of directors: an audit committee, a compensation committee, and a nominating and corporate governance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.
Audit Committee. Our audit committee consists of Yidong Hao, Zhenghua Yu and Xiao Jin. Yidong Hao is the chairperson of our audit committee. We have determined that Yidong Hao, Zhenghua Yu and Xiao Jin satisfy the “independence” requirements of the Nasdaq listing rules under and Rule 10A-3 under the Securities Exchange Act. Our board also has determined that Yidong Hao qualifies as an audit committee “financial expert” within the meaning of the SEC rules or possesses financial sophistication within the meaning of the Nasdaq listing rules. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:
| ● | appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
| ● | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
| ● | discussing the annual audited financial statements with management and the independent auditors; |
| ● | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
| ● | reviewing and approving all proposed related party transactions; |
| ● | meeting separately and periodically with management and the independent auditors; and |
| ● | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
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Compensation Committee. Our compensation committee consists of Yidong Hao, Zhenghua Yu, and Xiao Jin. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:
| ● | reviewing and approving the total compensation package for our most senior executive officers; |
| ● | approving and overseeing the total compensation package for our executives other than the most senior executive officers; |
| ● | reviewing and recommending to the board with respect to the compensation of our directors; |
| ● | reviewing periodically and approving any long-term incentive compensation or equity plans; |
| ● | selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and |
| ● | reviewing programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. |
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Zhenghua Yu, Yidong Hao, and Xijing Xu. Zhenghua Yu is the chairperson of our nominating and corporate governance committee. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:
| ● | identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy; |
| ● | reviewing annually with our board of directors its current composition in light of the characteristics of independence, age, skills, experience and availability of service to us; |
| ● | identifying and recommending to our board the directors to serve as members of committees; |
| ● | advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to our board of directors on all matters of corporate governance and on any corrective action to be taken; and |
| ● | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
Code of Business Conduct and Ethics
Our board of directors has adopted a code of business conduct and ethics, which is applicable to all of our directors, officers and employees. We have made our code of business conduct and ethics publicly available on our website at http://ir.jtyjyjt.com.
D. Employees
See “Item 4. Information on the Company-B. Business Overview-Employees.”
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E. Share Ownership
The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our ordinary shares as of the date of this annual report for:
| ● | each of our directors and executive officers; and |
| ● | each person known to us to own beneficially more than 5% of our ordinary shares. |
Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all ordinary shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person is based on 9,625,870 Class A ordinary shares and 403,000 Class B ordinary shares outstanding as of January 27, 2026.
Information with respect to beneficial ownership has been furnished by each director, officer, or beneficial owner of 5% or more of our ordinary shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of ordinary shares beneficially owned by a person listed below and the percentage ownership of such person, ordinary shares underlying options, warrants, or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this annual report are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person.
| Class A Ordinary Shares | Class B Ordinary Shares | Percentage of Beneficial Ownership* | Percentage of Aggregate Voting Power** | |||||||||||||
| Number | Number | % | % | |||||||||||||
| Directors and Executive Officers(1): | ||||||||||||||||
| Xueyuan Weng, CEO(2) | — | 403,000 | 4.02 | % | 67.67 | % | ||||||||||
| Yu Sun, CFO | — | — | — | — | ||||||||||||
| Duo Ye | — | — | — | — | ||||||||||||
| Liming Xu(3) | 65,000 | — | 0.65 | % | 0.22 | % | ||||||||||
| Peilin Ji(4) | 192,221 | — | 1.92 | % | 0.65 | % | ||||||||||
| Yidong Hao | — | — | — | — | ||||||||||||
| Xijing Xu | — | — | — | — | ||||||||||||
| Zhenghua Yu | — | — | — | — | ||||||||||||
| Xiao Jin | — | — | — | — | ||||||||||||
| All directors and executive officers as a group (nine individuals): | 257,221 | 403,000 | 6.59 | % | 68.55 | % | ||||||||||
| 5% Shareholders: | — | — | — | % | — | % | ||||||||||
| * | For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our outstanding Class A ordinary shares and Class B ordinary shares as a single class. |
| ** | Each holder of our Class A ordinary shares is entitled to one vote per share, and each holder of our Class B ordinary shares is entitled to fifty votes per share, on all matters submitted to a vote of our shareholders by way of poll. Our Class A ordinary shares and Class B ordinary shares vote generally together as a single class on all matters submitted to a vote of our shareholders. |
| (1) | Unless otherwise indicated, the business address of each of the individuals is Room 503, Building C2, No. 1599, Xinjinqiao Road, Pudong New Area, Shanghai, China 200083. |
| (2) | Represent 403,000 Class B ordinary shares held by Xueyuan Weng. |
| (3) | Represent 65,000 Class A ordinary shares held by Ever Loyal Industrial Limited (“Ever Loyal”). Liming Xu, our director, is the sole shareholder of Ever Loyal and exercises sole voting and dispositive power of the securities held of record by Ever Loyal. |
| (4) | Represent 140,108 Class A ordinary shares held by Well Joy International Investment Limited (“Well Joy”). Peilin Ji, our director, is the sole shareholder of Well Joy and exercises sole voting and dispositive power of the securities held of record by Well Joy. The business address of Well Joy is Room 101, No. 41, Shiguangsan Village, Yangpu District, Shanghai, China. |
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company.
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| F. | Disclosure of Action to Recover Erroneously Awarded Compensation |
Not applicable.
Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| A. | Major Shareholders |
See “Item 6. Directors, Senior Management And Employees-E. Share Ownership.”
| B. | Related Party Transactions |
Employment Agreements
See “Item 6. Directors, Senior Management and Employees-Employment Agreements and Indemnification Agreements.”
Material Transactions with Related Parties
Mr. Xueyuan Weng is the Company’s CEO, director and principal shareholder. Our transactions with him are summarized as follows:
| For the years ended September 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Accounts receivable-related parties: | ||||||||||||
| Kindergartens owned by Mr. Weng | $ | - | $ | - | $ | 15,077 | ||||||
| Amounts due to related party(1): | ||||||||||||
| Due to Mr. Weng | $ | 1,058,818 | $ | 362,550 | $ | 63,689 | ||||||
| Revenue earned from related party(2) | ||||||||||||
| Logistic, consulting services and education related service revenue | $ | -- | $ | 86,582 | $ | 310,465 | ||||||
| (1) | As of September 30, 2025 and 2024, the balance of the amounts due to related party represent non-interesting bearing and unsecured borrowing from related party for working capital purpose. The balance is not required to be repaid within twelve months. |
| (2) | For the years ended September 30, 2025, 2024 and 2023, the Company earned revenue of nil, $86,582 and $310,465, respectively, which was mainly derived from providing educational management consulting services to certain kindergartens owned by the CEO and his wife. |
Guarantee provided by related parties
Several related parties guaranteed the repayment of the Company’s bank loans. (See Note 13).
C. Interests of Experts and Counsel
Not applicable.
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Item 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
We have appended consolidated financial statements filed as part of this annual report. See “Item 18. Financial Statements.”
Legal Proceedings
We are currently not a party to any material legal proceedings. As of September 30, 2025, the Company had no material outstanding litigations. From time to time, however, we may be subject to various claims and legal actions arising in the ordinary course of business.
Dividend Policy
See “Item 3. Key Information-Transfer of Funds and Other Assets Between Our Company and Our Subsidiaries” and “Item 3. Key Information-Dividends or Distributions and Tax Consequences.”
B. Significant Changes
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.
Item 9. THE OFFER AND LISTING
A. Offer and Listing Details.
See “-C. Markets.”
B. Plan of Distribution
Not applicable.
| C. | Markets |
Our Class A ordinary shares have been listed on the Nasdaq Capital Market since June 21, 2022 under the symbol “GSUN.”
| D. | Selling Shareholders |
Not applicable.
| E. | Dilution |
Not applicable.
| F. | Expenses of the Issue |
Not applicable.
Item 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
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B. Memorandum and Articles of Association
The following description of our share capital and provisions of our fourth amended and restated memorandum and articles of association, as amended from time to time, are summaries and do not purport to be complete. Reference is made to our amended and restated memorandum and articles of association, copies of which are filed as an exhibit to this annual report (and which is referred to in this section as, respectively, the “memorandum” and the “articles”).
We were incorporated as an exempted company with limited liability under the Companies Act (2021 Revision) of the Cayman Islands, or the “Cayman Companies Act,” on September 20, 2018. A Cayman Islands exempted company:
| ● | is a company that conducts its business mainly outside the Cayman Islands; | |
| ● | is prohibited from trading in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the exempted company carried on outside the Cayman Islands (and for this purpose can effect and conclude contracts in the Cayman Islands and exercise in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands); | |
| ● | does not have to hold an annual general meeting; | |
| ● | does not have to make its register of members open to inspection by shareholders of that company; | |
| ● | may obtain an undertaking against the imposition of any future taxation; | |
| ● | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; | |
| ● | may register as a limited duration company; and | |
| ● | may register as a segregated portfolio company. |
Ordinary Shares
Our authorized share capital is $1,000,000 divided into 1800,000,000 Class A ordinary shares, par value $0.005 per share and 20,000,000 Class B ordinary shares par value $0.005 per share. All of our issued and outstanding ordinary shares are fully paid and non-assessable. Our ordinary shares are issued in registered form, and are issued when registered in our register of members. Unless the board of directors determine otherwise, each holder of our ordinary shares will not receive a certificate in respect of such ordinary shares. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their ordinary shares. We may not issue shares or warrants to bearer.
Subject to the provisions of the Cayman Companies Act and our articles regarding redemption and purchase of the shares, the directors have general and unconditional authority to allot (with or without confirming rights of renunciation), grant options over or otherwise deal with any unissued shares to such persons, at such times and on such terms and conditions as they may decide. Such authority could be exercised by the directors to allot shares which carry rights and privileges that are preferential to the rights attaching to ordinary shares. No share may be issued at a discount except in accordance with the provisions of the Cayman Companies Act. The directors may refuse to accept any application for shares, and may accept any application in whole or in part, for any reason or for no reason.
Dividends
Subject to the provisions of the Cayman Companies Act and any rights attaching to any class or classes of shares under and in accordance with the articles:
| (a) | the directors may declare dividends or distributions out of our funds which are lawfully available for that purpose; and | |
| (b) | our shareholders may, by ordinary resolution, declare dividends but no such dividend shall exceed the amount recommended by the directors. |
Subject to the requirements of the Cayman Companies Act regarding the application of a company’s share premium account and with the sanction of an ordinary resolution, dividends may also be declared and paid out of any share premium account. The directors when paying dividends to shareholders may make such payment either in cash or in specie.
Unless provided by the rights attached to a share, no dividend shall bear interest.
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Voting Rights
Subject to any rights or restrictions as to voting attached to any shares, unless any share carries special voting rights, on a show of hands every shareholder who is present in person and every person representing a shareholder by proxy shall have one vote per ordinary share. Each holder of ordinary shares shall, on a poll, be entitled to one vote for each ordinary share he or she holds save that each holder of Class B ordinary shares shall, on a poll, be entitled to exercise fifty (50) votes for each Class B ordinary share he or she holds on any and all matters. In addition, all shareholders holding shares of a particular class are entitled to vote at a meeting of the holders of that class of shares. Votes may be given either personally or by proxy.
Variation of Rights of Shares
Whenever our capital is divided into different classes of shares, the rights attaching to any class of share (unless otherwise provided by the terms of issue of the shares of that class) may be varied either with the consent in writing of the holders of not less than two-thirds of the issued shares of that class, or with the sanction of a resolution passed by a majority of not less than two-thirds of the holders of shares of the class present in person or by proxy at a separate general meeting of the holders of shares of that class.
Unless the terms on which a class of shares was issued state otherwise, the rights conferred on the shareholder holding shares of any class shall not be deemed to be varied by the creation or issue of further shares ranking pari passu with the existing shares of that class.
Alteration of Share Capital
Subject to the Cayman Companies Act, we may, by ordinary resolution:
| (a) | increase our share capital by new shares of the amount fixed by that ordinary resolution and with the attached rights, priorities and privileges set out in that ordinary resolution; | |
| (b) | consolidate and divide all or any of our share capital into shares of larger amount than our existing shares; | |
| (c) | convert all or any of our paid up shares into stock, and reconvert that stock into paid up shares of any denomination; | |
| (d) | sub-divide our shares or any of them into shares of an amount smaller than that fixed, so, however, that in the sub-division, the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; and | |
| (e) | cancel shares which, at the date of the passing of that ordinary resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled or, in the case of shares without nominal par value, diminish the number of shares into which our capital is divided. |
Subject to the Cayman Companies Act and to any rights for the time being conferred on the shareholders holding a particular class of shares, we may, by special resolution, reduce our share capital in any way.
Calls on Shares and Forfeiture
Subject to the terms of allotment, the directors may make calls on the shareholders in respect of any monies unpaid on their shares including any premium and each shareholder shall (subject to receiving at least 14 clear days’ notice specifying when and where payment is to be made), pay to us the amount called on his shares. Shareholders registered as the joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or if no rate is fixed, at the rate of ten percent per annum. The directors may waive payment of the interest wholly or in part.
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We have a first and paramount lien on all shares (whether fully paid up or not) registered in the name of a shareholder (whether solely or jointly with others). The lien is for all monies payable to us by the shareholder or the shareholder’s estate:
| (a) | either alone or jointly with any other person, whether or not that other person is a shareholder; and |
| (b) | whether or not those monies are presently payable. |
At any time the directors may declare any share to be wholly or partly exempt from the lien on shares provisions of the articles.
We may sell, in such manner as the directors may determine, any share on which the sum in respect of which the lien exists is presently payable, if due notice that such sum is payable has been given (as prescribed by the articles) and, within 14 days of the date on which the notice is deemed to be given under the articles, such notice has not been complied with.
Unclaimed Dividend
A dividend that remains unclaimed for a period of six years after it became due for payment shall be forfeited to, and shall cease to remain owing by, the company.
Forfeiture or Surrender of Shares
If a shareholder fails to pay any call, the directors may give to such shareholder not less than 14 clear days’ notice requiring payment and specifying the amount unpaid including any interest which may have accrued, any expenses which have been incurred by us due to that person’s default and the place where payment is to be made. The notice shall also contain a warning that if the notice is not complied with, the shares in respect of which the call is made will be liable to be forfeited.
If such notice is not complied with, the directors may, before the payment required by the notice has been received, resolve that any share the subject of that notice be forfeited (which forfeiture shall include all dividends or other monies payable in respect of the forfeited share and not paid before such forfeiture).
A forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the directors determine and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the directors think fit.
A person whose shares have been forfeited shall cease to be a shareholder in respect of the forfeited shares, but shall, notwithstanding such forfeiture, remain liable to pay to us all monies which at the date of forfeiture were payable by him to us in respect of the shares, together with all expenses and interest from the date of forfeiture or surrender until payment, but his liability shall cease if and when we receive payment in full of the unpaid amount.
A declaration, whether statutory or under oath, made by a director or the secretary shall be conclusive evidence that the person making the declaration is a director or secretary and that the particular shares have been forfeited or surrendered on a particular date.
Subject to the execution of an instrument of transfer, if necessary, the declaration shall constitute good title to the shares.
Share Premium Account
The directors shall establish a share premium account and shall carry the credit of such account from time to time to a sum equal to the amount or value of the premium paid on the issue of any share or capital contributed or such other amounts required by the Cayman Companies Act.
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Redemption and Purchase of Own Shares
Subject to the Cayman Companies Act and any rights for the time being conferred on the shareholders holding a particular class of shares, we may by action of our directors:
| (a) | issue shares that are to be redeemed or liable to be redeemed, at our option or the shareholder holding those redeemable shares, on the terms and in the manner our directors determine before the issue of those shares; | |
| (b) | with the consent by special resolution of the shareholders holding shares of a particular class, vary the rights attaching to that class of shares so as to provide that those shares are to be redeemed or are liable to be redeemed at our option on the terms and in the manner which the directors determine at the time of such variation; and | |
| (c) | purchase all or any of our own shares of any class including any redeemable shares on the terms and in the manner which the directors determine at the time of such purchase. |
We may make a payment in respect of the redemption or purchase of its own shares in any manner authorized by the Cayman Companies Act, including out of any combination of capital, our profits and the proceeds of a fresh issue of shares.
When making a payment in respect of the redemption or purchase of shares, the directors may make the payment in cash or in specie (or partly in one and partly in the other) if so authorized by the terms of the allotment of those shares or by the terms applying to those shares, or otherwise by agreement with the shareholder holding those shares.
Conversion Rights
Each Class B ordinary share shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such Share, at the office of the Company or any transfer agent for such Shares, into one fully paid and non-assessable Class A ordinary share. The directors shall at all times reserve and keep available out of the Company’s authorized but unissued Class A ordinary shares, solely for the purpose of effecting the conversion of the Class B ordinary shares, such number of its Class A ordinary shares as shall from time to time be sufficient to effect the conversion of all outstanding Class B ordinary shares; and if at any time the number of authorized but unissued Class A ordinary shares shall not be sufficient to effect the conversion of all then outstanding Class B ordinary shares, in addition to such other remedies as shall be available to the holders of such Class B ordinary shares, the directors will take such action as may be necessary to increase its authorized but unissued Class A ordinary shares to such number of Shares as shall be sufficient for such purposes. All conversions of Class B ordinary shares to Class A ordinary shares shall be affected by way of redemption or repurchase by the Company of the relevant Class B ordinary shares and the simultaneous issue of Class A ordinary shares in consideration for such redemption or repurchase. The shareholder and the Company will procure that any and all necessary corporate actions are taken to effect such conversion.
Transfer of Shares
Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share that has not been fully paid up or is subject to a company lien. Our board of directors may also decline to register any transfer of such ordinary share unless:
| (a) | the instrument of transfer is lodged with the Company, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; | |
| (b) | the instrument of transfer is in respect of only one class of shares; | |
| (c) | the instrument of transfer is properly stamped, if required; |
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| (d) | the ordinary share transferred is fully paid and free of any lien in favor of us; | |
| (e) | any fee related to the transfer has been paid to us; and | |
| (f) | the transfer is not to more than four joint holders. |
If our directors refuse to register a transfer, they are required, within three months after the date on which the instrument of transfer was lodged, to send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, on 14 calendar days’ notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and our register of members closed at such times and for such periods as our board of directors may from time to time determine. The registration of transfers, however, may not be suspended, and the register may not be closed, for more than 30 days in any year.
Inspection of Books and Records
Shareholders of Cayman Islands exempted companies have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies (other than copies of our memorandum and articles of association, register of mortgages and charges, and any special resolutions passed by our shareholders). Under Cayman Islands law, the names of our current directors can be obtained from a search conducted at the Registrar of Companies. Pursuant to our articles of association, shareholders will not have any right to inspect any account or book or document of the Company except as conferred by Companies Act or as authorized by our directors or by ordinary resolution of our shareholders.
General Meetings
As a Cayman Islands exempted company, we are not obligated by the Cayman Companies Act to call shareholders’ annual general meetings; accordingly, we may, but shall not be obliged to, in each year hold a general meeting as an annual general meeting. Any annual general meeting held shall be held at such time and place as may be determined by our board of directors. All general meetings other than annual general meetings shall be called extraordinary general meetings.
The directors may convene general meetings whenever they think fit. General meetings shall also be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than ten percent of the rights to vote at such general meeting in accordance with the notice provisions in the articles, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than 21 clear days’ after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us.
At least 14 days’ notice of an extraordinary general meeting and 21 days’ notice of an annual general meeting shall be given to shareholders entitled to attend and vote at such meeting. The notice shall specify the place, the day and the hour of the meeting and the general nature of that business. In addition, if a resolution is proposed as a special resolution, the text of that resolution shall be given to all shareholders. Notice of every general meeting shall also be given to the directors and our auditors.
Subject to the Cayman Companies Act and with the consent of the shareholders who, individually or collectively, hold at least 90 percent of the voting rights of all those who have a right to vote at a general meeting, a general meeting may be convened on shorter notice.
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A quorum shall consist of the presence (whether in person or represented by proxy) of one or more shareholders holding shares that represent not less than one-third of the outstanding shares carrying the right to vote at such general meeting.
If, within 15 minutes from the time appointed for the general meeting, or at any time during the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be cancelled. In any other case it shall stand adjourned to the same time and place seven days or to such other time or place as is determined by the directors.
The chairman may, with the consent of a meeting at which a quorum is present, adjourn the meeting. When a meeting is adjourned for seven days or more, notice of the adjourned meeting shall be given in accordance with the articles.
At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before, or on, the declaration of the result of the show of hands) demanded by the chairman of the meeting or by at least two shareholders having the right to vote on the resolutions or one or more shareholders present who together hold not less than ten percent of the voting rights of all those who are entitled to vote on the resolution. Unless a poll is so demanded, a declaration by the chairman as to the result of a resolution and an entry to that effect in the minutes of the meeting, shall be conclusive evidence of the outcome of a show of hands, without proof of the number or proportion of the votes recorded in favor of, or against, that resolution.
If a poll is duly demanded it shall be taken in such manner as the chairman directs and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.
In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall not be entitled to a second or casting vote.
Directors
We may by ordinary resolution, from time to time, fix the maximum and minimum number of directors to be appointed. Under the Articles, we are required to have a minimum of one director and the maximum number of directors shall be unlimited.
A director may be appointed by ordinary resolution or by the directors. Any appointment may be to fill a vacancy or as an additional director.
Unless the remuneration of the directors is determined by the shareholders by ordinary resolution, the directors shall be entitled to such remuneration as the directors may determine.
The shareholding qualification for directors may be fixed by our shareholders by ordinary resolution and unless and until so fixed no share qualification shall be required.
Unless removed or re-appointed, each director shall be appointed for a term expiring at the next-following annual general meeting, if one is held. At any annual general meeting held, our directors will be elected by an ordinary resolution of our shareholders. At each annual general meeting, each director so elected shall hold office for a one-year term and until the election of their respective successors in office or removed.
A director may be removed by ordinary resolution.
A director may at any time resign or retire from office by giving us notice in writing. Unless the notice specifies a different date, the director shall be deemed to have resigned on the date that the notice is delivered to us.
Subject to the provisions of the articles, the office of a director may be terminated forthwith if:
| (a) | he is prohibited by the law of the Cayman Islands from acting as a director; | |
| (b) | he is made bankrupt or makes an arrangement or composition with his creditors generally; |
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| (c) | he resigns his office by notice to us; | |
| (d) | he only held office as a director for a fixed term and such term expires; | |
| (e) | in the opinion of a registered medical practitioner by whom he is being treated he becomes physically or mentally incapable of acting as a director; | |
| (f) | he is given notice by the majority of the other directors (not being less than two in number) to vacate office (without prejudice to any claim for damages for breach of any agreement relating to the provision of the services of such director); | |
| (g) | he is made subject to any law relating to mental health or incompetence, whether by court order or otherwise; or | |
| (h) | without the consent of the other directors, he is absent from meetings of directors for continuous period of six months. |
Each of the compensation committees and the nominating and corporate governance committee shall consist of at least three directors and the majority of the committee members shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules. The audit committee shall consist of at least three directors, all of whom shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules and will meet the criteria for independence set forth in Rule 10A-3 or Rule 10C-1 of the Exchange Act.
Powers and Duties of Directors
Subject to the provisions of the Cayman Companies Act and our amended and restated memorandum and articles of association, our business shall be managed by the directors, who may exercise all our powers. No prior act of the directors shall be invalidated by any subsequent alteration of our memorandum or articles of association. To the extent allowed by the Cayman Companies Act, however, shareholders may by special resolution validate any prior or future act of the directors which would otherwise be in breach of their duties.
The directors may delegate any of their powers to any committee consisting of one or more persons who need not be shareholders and may include non-directors so long as the majority of those persons are directors; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the directors. Our board of directors has established an audit committee, compensation committee, and nomination and corporate governance committee.
The board of directors may establish any local or divisional board of directors or agency and delegate to it its powers and authorities (with power to sub-delegate) for managing any of our affairs whether in the Cayman Islands or elsewhere and may appoint any persons to be members of a local or divisional board of directors, or to be managers or agents, and may fix their remuneration.
The directors may from time to time and at any time by power of attorney or in any other manner they determine to appoint any person, either generally or in respect of any specific matter, to be our agent with or without authority for that person to delegate all or any of that person’s powers.
The directors may from time to time and at any time by power of attorney or in any other manner they determine to appoint any person, whether nominated directly or indirectly by the directors, to be our attorney or our authorized signatory and for such period and subject to such conditions as they may think fit. The powers, authorities and discretions, however, must not exceed those vested in, or exercisable, by the directors under the articles.
The board of directors may remove any person appointed and may revoke or vary the delegation.
The directors may exercise all of our powers to borrow money and to mortgage or charge its undertaking, property and assets both present and future and uncalled capital or any part thereof, to issue debentures and other securities whether outright or as collateral security for any debt, liability or obligation of ours or our parent undertaking (if any) or any subsidiary undertaking of us or of any third party.
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A director shall not, as a director, vote in respect of any contract, transaction, arrangement or proposal in which he has an interest which (together with any interest of any person connected with him) is a material interest (otherwise than by virtue of his interests, direct or indirect, in shares or debentures or other securities of, or otherwise in or through, us) and if he shall do so his vote shall not be counted, nor in relation thereto shall he be counted in the quorum present at the meeting, but (in the absence of some other material interest than is mentioned below) none of these prohibitions shall apply to:
| (a) | the giving of any security, guarantee or indemnity in respect of: |
| (i) | money lent or obligations incurred by him or by any other person for our benefit or any of our subsidiaries; or | |
| (ii) | a debt or obligation of ours or any of our subsidiaries for which the director himself has assumed responsibility in whole or in part and whether alone or jointly with others under a guarantee or indemnity or by the giving of security; |
| (b) | where we or any of our subsidiaries is offering securities in which offer the director is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which the director is to or may participate; | |
| (c) | any contract, transaction, arrangement or proposal affecting any other body corporate in which he is interested, directly or indirectly and whether as an officer, shareholder, creditor or otherwise howsoever, provided that he (together with persons connected with him) does not to his knowledge hold an interest representing one percent or more of any class of the equity share capital of such body corporate (or of any third body corporate through which his interest is derived) or of the voting rights available to shareholders of the relevant body corporate; | |
| (d) | any act or thing done or to be done in respect of any arrangement for the benefit of the employees of ours or any of our subsidiaries under which he is not accorded as a director any privilege or advantage not generally accorded to the employees to whom such arrangement relates; or | |
| (e) | any matter connected with the purchase or maintenance for any director of insurance against any liability or (to the extent permitted by the Cayman Companies Act) indemnities in favor of directors, the funding of expenditure by one or more directors in defending proceedings against him or them or the doing of anything to enable such director or directors to avoid incurring such expenditure. |
A director may, as a director, vote (and be counted in the quorum) in respect of any contract, transaction, arrangement or proposal in which he has an interest which is not a material interest or as described above.
Capitalization of Profits
The directors may resolve to capitalize:
| (a) | any part of our profits not required for paying any preferential dividend (whether or not those profits are available for distribution); or | |
| (b) | any sum standing to the credit of our share premium account or capital redemption reserve, if any. |
The amount resolved to be capitalized must be appropriated to the shareholders who would have been entitled to it had it been distributed by way of dividend and in the same proportions.
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Liquidation Rights
If we are wound up, the shareholders may, subject to the articles and any other sanction required by the Cayman Companies Act, pass a special resolution allowing the liquidator to do either or both of the following:
| (a) | to divide in specie among the shareholders the whole or any part of our assets and, for that purpose, to value any assets and to determine how the division shall be carried out as between the shareholders or different classes of shareholders; and | |
| (b) | to vest the whole or any part of the assets in trustees for the benefit of shareholders and those liable to contribute to the winding up. |
The directors have the authority to present a petition for our winding up to the Grand Court of the Cayman Islands on our behalf without the sanction of a resolution passed at a general meeting.
Register of Members
Under the Cayman Companies Act, we must keep a register of members and there should be entered therein:
| ● | the names and addresses of the members of the company, a statement of the shares held by each member, which: |
| ○ | distinguishes each share by its number (so long as the share has a number); |
| ○ | confirms the amount paid, or agreed to be considered as paid, on the shares of each member; |
| ○ | confirms the number and category of shares held by each member; and |
| ○ | confirms whether each relevant category of shares held by a member carries voting rights under the Articles, and if so, whether such voting rights are conditional; |
| ● | the date on which the name of any person was entered on the register as a member; and |
| ● | the date on which any person ceased to be a member. |
For these purposes, “voting rights” means rights conferred on shareholders, including the right to appoint or remove directors, in respect of their shares to vote at general meetings of the company on all or substantially all matters. A voting right is conditional where the voting right arises only in certain circumstances.
Under the Cayman Companies Act, the register of members of our company is prima facie evidence of the matters set out therein (that is, the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a shareholder registered in the register of members is deemed as a matter of the Cayman Companies Act to have legal title to the shares as set against its name in the register of members. Upon completion of this offering, the register of members will be immediately updated to record and give effect to the issuance of shares by us to the custodian or its nominee. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the shares set against their name.
If the name of any person is incorrectly entered in or omitted from our register of members, or if there is any default or unnecessary delay in entering on the register the fact of any person having ceased to be a shareholder of our company, the person or shareholder aggrieved (or any shareholder of our company or our company itself) may apply to the Grand Court of the Cayman Islands for an order that the register be rectified, and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.
Differences in Corporate Law
The Cayman Companies Act is derived, to a large extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Cayman Companies Act and the current Companies Act of the UK. In addition, the Cayman Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Cayman Companies Act applicable to us and the comparable laws applicable to companies incorporated in the State of Delaware in the United States.
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Mergers and Similar Arrangements
The Cayman Companies Act permits mergers and consolidations between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the shareholders and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.
A merger between a Cayman Islands parent company and its Cayman Islands subsidiary or subsidiaries does not require authorization by a resolution of shareholders. For this purpose, a subsidiary is a company of which at least 90% of the issued shares entitled to vote are owned by the parent company.
The consent of each holder of a fixed or floating security interest of a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Except in certain limited circumstances, a dissenting shareholder of a Cayman Islands constituent company is entitled to payment of the fair value of his or her shares upon dissenting from a merger or consolidation. The exercise of such dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, except for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must, in addition, represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| (a) | the statutory provisions as to the required majority vote have been met; |
| (b) | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
| (c) | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
| (d) | the arrangement is not one that would more properly be sanctioned under some other provision of the Cayman Companies Act. |
When a takeover offer is made and accepted by holders of 90% of the shares affected within four months the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been approved unless there is evidence of fraud, bad faith or collusion.
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If an arrangement and reconstruction is thus approved, or if a takeover offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits
In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company and as a general rule, a derivative action may not be brought by a minority shareholder. However, based on English law authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge:
| (a) | an act which is illegal or ultra vires with respect to the company and is therefore incapable of ratification by the shareholders; |
| (b) | an act which, although not ultra vires, requires authorization by a qualified (or special) majority (that is, more than a simple majority) which has not been obtained; and |
| (c) | an act which constitutes a “fraud on the minority” where the wrongdoers are themselves in control of the company. |
Indemnification of Directors and Executive Officers and Limitation of Liability
The Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our articles of association provide to the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director), and any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives against:
| (a) | all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by the existing or former director (including alternate director), secretary or officer in or about the conduct of our business or affairs or in the execution or discharge of the existing or former director (including alternate director), secretary’s or officer’s duties, powers, authorities or discretions; and |
| (b) | without limitation to paragraph (a) above, all costs, expenses, losses or liabilities incurred by the existing or former director (including alternate director), secretary or officer in defending (whether successfully or otherwise) any civil, criminal, administrative or investigative proceedings (whether threatened, pending or completed) concerning us or our affairs in any court or tribunal, whether in the Cayman Islands or elsewhere. |
No such existing or former director (including alternate director), secretary or officer, however, shall be indemnified in respect of any matter arising out of his own dishonesty.
To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing or former director (including alternate director), secretary or any of our officers in respect of any matter identified in above on condition that the director (including alternate director), secretary or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the director (including alternate director), the secretary or that officer for those legal costs.
This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we intend to enter into indemnification agreements with our directors and executive officers that will provide such persons with additional indemnification beyond that provided in our articles of association.
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Anti-Takeover Provisions in Our Articles
Some provisions of our articles of association may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue shares at such times and on such terms and conditions as the board of directors may decide without any further vote or action by our shareholders.
Under the Cayman Companies Act, our directors may only exercise the rights and powers granted to them under our articles of association for what they believe in good faith to be in the best interests of our company and for a proper purpose.
Directors’ Fiduciary Duties
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interests of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands law, a director owes three types of duties to the company: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Cayman Companies Act imposes a number of statutory duties on a director. A Cayman Islands director’s fiduciary duties are not codified, however the courts of the Cayman Islands have held that a director owes the following fiduciary duties (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and, also, to act with the skill, care and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our articles of association, as amended and restated from time to time. We have the right to seek damages if a duty owed by any of our directors is breached.
Shareholder Proposals
Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. The Delaware General Corporation Law does not provide shareholders an express right to put any proposal before the annual meeting of shareholders, but in keeping with common law, Delaware corporations generally afford shareholders an opportunity to make proposals and nominations provided that they comply with the notice provisions in the certificate of incorporation or bylaws. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
The Cayman Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our articles of association provide that general meetings shall be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than 10 percent of the rights to vote at such general meeting in accordance with the notice provisions in the articles of association, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than twenty-one clear days’ after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of twenty-one clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us. Our articles of association provide no other right to put any proposals before annual general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are not obligated by law to call shareholders’ annual general meetings.
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Cumulative Voting
Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. As permitted under the Cayman Companies Act, our articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protection or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors
Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Subject to the provisions of our articles of association (which include the removal of a director by ordinary resolution), the office of a director may be terminated forthwith if (a) he is prohibited by the laws of the Cayman Islands from acting as a director, (b) he is made bankrupt or makes an arrangement or composition with his creditors generally, (c) he resigns his office by notice to us, (d) he only held office as a director for a fixed term and such term expires, (e) in the opinion of a registered medical practitioner by whom he is being treated he becomes physically or mentally incapable of acting as a director, (f) he is given notice by the majority of the other directors (not being less than two in number) to vacate office (without prejudice to any claim for damages for breach of any agreement relating to the provision of the services of such director), (g) he is made subject to any law relating to mental health or incompetence, whether by court order or otherwise, or (h) without the consent of the other directors, he is absent from meetings of directors for continuous period of six months.
Transactions with Interested Shareholders
The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation or bylaws that is approved by its shareholders, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting stock or who or which is an affiliate or associate of the corporation and owned 15% or more of the corporation’s outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.
The Cayman Companies Act has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although the Cayman Companies Act does not regulate transactions between a company and its significant shareholders, under Cayman Islands law such transactions must be entered into bona fide in the best interests of the company and for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.
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Dissolution; Winding Up
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors.
Under the Cayman Companies Act and our articles of association, the Company may be wound up by a special resolution of our shareholders, or if the winding up is initiated by our board of directors, by either a special resolution of our members or, if our company is unable to pay its debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an order of the courts of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Variation of Rights of Shares
Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under the Cayman Companies Act and our articles of association, if our share capital is divided into more than one class of shares, the rights attaching to any class of share (unless otherwise provided by the terms of issue of the shares of that class) may be varied either with the consent in writing of the holders of not less than two-thirds of the issued shares of that class, or with the sanction of a resolution passed by a majority of not less than two-thirds of the holders of shares of the class present in person or by proxy at a separate general meeting of the holders of shares of that class.
Amendment of Governing Documents
Under the Delaware General Corporation Law, a corporation’s certificate of incorporation may be amended only if adopted and declared advisable by the board of directors and approved by a majority of the outstanding shares entitled to vote, and the bylaws may be amended with the approval of a majority of the outstanding shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board of directors. Under the Cayman Companies Act, our articles of association may only be amended by special resolution of our shareholders.
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Data Protection in the Cayman Islands—Privacy Notice
This privacy notice explains the manner in which we collect, process, and maintain personal data about investors of the Company pursuant to the Data Protection Act, 2017 of the Cayman Islands, as amended from time to time and any regulations, codes of practice, or orders promulgated pursuant thereto (the “DPA”).
We are committed to processing personal data in accordance with the DPA. In our use of personal data, we will be characterized under the DPA as a “data controller,” whilst certain of our service providers, affiliates, and delegates may act as “data processors” under the DPA. These service providers may process personal information for their own lawful purposes in connection with services provided to us.
By virtue of your investment in the Company, we and certain of our service providers may collect, record, store, transfer, and otherwise process personal data by which individuals may be directly or indirectly identified.
Your personal data will be processed fairly and for lawful purposes, including (a) where the processing is necessary for us to perform a contract to which you are a party or for taking pre-contractual steps at your request, (b) where the processing is necessary for compliance with any legal, tax, or regulatory obligation to which we are subject, or (c) where the processing is for the purposes of legitimate interests pursued by us or by a service provider to whom the data are disclosed. As a data controller, we will only use your personal data for the purposes for which we collect it. If we need to use your personal data for an unrelated purpose, we will contact you.
We anticipate that we will share your personal data with our service providers for the purposes set out in this privacy notice. We may also share relevant personal data where it is lawful to do so and necessary to comply with our contractual obligations or your instructions or where it is necessary or desirable to do so in connection with any regulatory reporting obligations. In exceptional circumstances, we will share your personal data with regulatory, prosecuting, and other governmental agencies or departments, and parties to litigation (whether pending or threatened), in any country or territory including to any other person where we have a public or legal duty to do so (e.g. to assist with detecting and preventing fraud, tax evasion, and financial crime or compliance with a court order).
Your personal data shall not be held by the Company for longer than necessary with regard to the purposes of the data processing.
We will not sell your personal data. Any transfer of personal data outside of the Cayman Islands shall be in accordance with the requirements of the DPA. Where necessary, we will ensure that separate and appropriate legal agreements are put in place with the recipient of that data.
We will only transfer personal data in accordance with the requirements of the DPA, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction, or damage to the personal data.
If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation to your investment into the Company, this will be relevant for those individuals and you should inform such individuals of the content.
You have certain rights under the DPA, including (a) the right to be informed as to how we collect and use your personal data (and this privacy notice fulfils our obligation in this respect), (b) the right to obtain a copy of your personal data, (c) the right to require us to stop direct marketing, (d) the right to have inaccurate or incomplete personal data corrected, (e) the right to withdraw your consent and require us to stop processing or restrict the processing, or not begin the processing of your personal data, (f) the right to be notified of a data breach (unless the breach is unlikely to be prejudicial), (g) the right to obtain information as to any countries or territories outside the Cayman Islands to which we, whether directly or indirectly, transfer, intend to transfer, or wish to transfer your personal data, general measures we take to ensure the security of personal data, and any information available to us as to the source of your personal data, (h) the right to complain to the Office of the Ombudsman of the Cayman Islands, and (i) the right to require us to delete your personal data in some limited circumstances.
If you consider that your personal data has not been handled correctly, or you are not satisfied with our responses to any requests you have made regarding the use of your personal data, you have the right to complain to the Cayman Islands’ Ombudsman. The Ombudsman can be contacted by calling +1 (345) 946-6283 or by email at info@ombudsman.ky.
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C. Material Contracts
We have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company” or elsewhere in this annual report.
D. Exchange Controls
See “Item 4. Information On The Company-B. Business Overview-Regulations-Regulations Related to Foreign Exchange” and “Item 4. Information On The Company-B. Business Overview-Regulations- Regulations Related to Foreign Exchange Registration of Offshore Investment by PRC Residents.”
E. Taxation
People’s Republic of China Taxation
The following brief description of Chinese enterprise income taxation is designed to highlight the enterprise-level taxation on our earnings, which will affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. See “Item 3. Key Information-Transfer of Funds and Other Assets Between Our Company and Our Subsidiaries” and “Item 3. Key Information-Dividends or Distributions and Tax Consequences.”
According to the EIT Law, which was promulgated by the SCNPC on March 16, 2007, became effective on January 1, 2008, and was then amended on February 24, 2017, and the Implementation Rules of the EIT Law, which were promulgated by the State Council on December 6, 2007, and became effective on January 1, 2008, enterprises are divided into resident enterprises and non-resident enterprises. Resident enterprises pay enterprise income tax on their incomes obtained in and outside the PRC at the rate of 25%. Non-resident enterprises setting up institutions in the PRC pay enterprise income tax on the income obtained by such institutions in and outside the PRC at the rate of 25%. Non-resident enterprises with no institutions in the PRC, and non-resident enterprises with income having no substantial connection with their institutions in the PRC, pay enterprise income tax on their income obtained in the PRC at a reduced rate of 10%.
We are a holding company incorporated in the Cayman Islands and we gain substantial income by way of dividends paid to us from our PRC subsidiaries. The EIT Law and its implementation rules provide that China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential tax rate or a tax exemption.
Under the EIT Law, an enterprise established outside of China with a “de facto management body” within China is considered a “resident enterprise,” which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. Although the implementation rules of the EIT Law define “de facto management body” as a managing body that actually, comprehensively manage and control the production and operation, staff, accounting, property, and other aspects of an enterprise, the only official guidance for this definition currently available is set forth in SAT Notice 82, which provides guidance on the determination of the tax residence status of a Chinese-controlled offshore incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC enterprise or enterprise group as its primary controlling shareholder. Although Golden Sun Cayman does not have a PRC enterprise or enterprise group as our primary controlling shareholder and is therefore not a Chinese-controlled offshore incorporated enterprise within the meaning of SAT Notice 82, in the absence of guidance specifically applicable to us, we have applied the guidance set forth in SAT Notice 82 to evaluate the tax residence status of Golden Sun Cayman and its subsidiaries organized outside the PRC.
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According to SAT Notice 82, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (i) the places where senior management and senior management departments that are responsible for daily production, operation and management of the enterprise perform their duties are mainly located within the territory of China; (ii) financial decisions (such as money borrowing, lending, financing and financial risk management) and personnel decisions (such as appointment, dismissal and salary and wages) are decided or need to be decided by organizations or persons located within the territory of China; (iii) main property, accounting books, corporate seal, the board of directors and files of the minutes of shareholders’ meetings of the enterprise are located or preserved within the territory of China; and (iv) one half (or more) of the directors or senior management staff having the right to vote habitually reside within the territory of China.
We believe that we do not meet some of the conditions outlined in the immediately preceding paragraph. For example, as a holding company, the key assets and records of Golden Sun Cayman, including the resolutions and meeting minutes of our board of directors and the resolutions and meeting minutes of our shareholders, are located and maintained outside the PRC. In addition, we are not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC “resident enterprise” by the PRC tax authorities. Accordingly, we believe that Golden Sun Cayman and its offshore subsidiaries should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as set forth in SAT Notice 82 were deemed applicable to us. However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our offshore entities, we will continue to monitor our tax status.
The implementation rules of the EIT Law provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or gains are treated as China-sourced income. It is not clear how “domicile” may be interpreted under the EIT Law, and it may be interpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered as a PRC tax resident enterprise for PRC tax purposes, any dividends we pay to our overseas shareholders which are non-resident enterprises as well as gains realized by such shareholders from the transfer of our shares may be regarded as China-sourced income and as a result become subject to PRC withholding tax at a rate of up to 10%. Pacgate, our PRC counsel, is unable to provide a “will” opinion because it believes that it is more likely than not that we and our offshore subsidiaries would be treated as non-resident enterprises for PRC tax purposes because we do not meet some of the conditions outlined in SAT Notice 82. In addition, Pacgate is not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC “resident enterprise” by the PRC tax authorities as of the date of the annual report. Therefore, Pacgate believes that it is possible but highly unlikely that the income received by our overseas shareholders will be regarded as China-sourced income.
See “Item 3. Key Information-D. Risk Factors-Risks Relating to Doing Business in the PRC-Under the EIT Law, we may be classified as a ‘resident enterprise’ of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.”
Currently, as resident enterprises in the PRC, Golden Sun Wenzhou and its subsidiaries in PRC are subject to the enterprise income tax at the rate of 25%, except that once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the part of its taxable income not more than RMB1 million is subject to a reduced rate of 5% and the part between RMB1 million and RMB3 million is subject to a reduced rate of 10%. The EIT is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. If the PRC tax authorities determine that Golden Sun Cayman is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. In addition, non-resident enterprise shareholders may be subject to a 10% PRC withholding tax on gains realized on the sale or other disposition of our Class A ordinary shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to dividends or gains realized by non-PRC individuals, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. However, it is also unclear whether our non-PRC shareholders would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. There is no guidance from the PRC government to indicate whether or not any tax treaties between the PRC and other countries would apply in circumstances where a non-PRC company was deemed to be a PRC tax resident, and thus there is no basis for expecting how tax treaty between the PRC and other countries may impact non-resident enterprises.
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Hong Kong Taxation
Entities incorporated in Hong Kong are subject to profits tax in Hong Kong at the rate of 16.5% for each of the fiscal years ended September 30, 2025, 2024, and 2023.
Cayman Islands Taxation
The following is a discussion on certain Cayman Islands income tax consequences of an investment in the Shares. The discussion is a general summary of the present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor’s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains, or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of our ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares, as the case may be, nor will gains derived from the disposal of our ordinary shares be subject to Cayman Islands income or corporation tax.
United States Federal Income Taxation
The following does not address the tax consequences to any particular investor or to persons in special tax situations such as:
| ● | banks; |
| ● | financial institutions; |
| ● | insurance companies; |
| ● | regulated investment companies; |
| ● | real estate investment trusts; |
| ● | broker-dealers; |
| ● | persons that elect to mark their securities to market; |
| ● | U.S. expatriates or former long-term residents of the U.S.; |
| ● | governments or agencies or instrumentalities thereof; |
| ● | tax-exempt entities; |
| ● | persons liable for alternative minimum tax; |
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| ● | persons holding our ordinary shares as part of a straddle, hedging, conversion or integrated transaction; |
| ● | persons that actually or constructively own 10% or more of our voting power or value (including by reason of owning our ordinary shares); |
| ● | persons who acquired our ordinary shares pursuant to the exercise of any employee share option or otherwise as compensation; |
| ● | persons holding our ordinary shares through partnerships or other pass-through entities; |
| ● | beneficiaries of a Trust holding our ordinary shares; or |
| ● | persons holding our ordinary shares through a trust. |
The discussion set forth below is addressed only to U.S. Holders that purchase Class A ordinary shares. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Class A ordinary shares.
Material Tax Consequences Applicable to U.S. Holders of Our Ordinary Shares
The following sets forth the material U.S. federal income tax consequences related to the ownership and disposition of our ordinary shares. It is directed to U.S. Holders (as defined below) of our ordinary shares and is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This description does not deal with all possible tax consequences relating to ownership and disposition of our ordinary shares or U.S. tax laws, other than the U.S. federal income tax laws, such as the tax consequences under non-U.S. tax laws, state, local and other tax laws.
The following brief description applies only to U.S. Holders (defined below) that hold ordinary shares as capital assets and that have the U.S. dollar as their functional currency. This brief description is based on the federal income tax laws of the United States in effect as of the date of this annual report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this annual report, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below.
The brief description below of the U.S. federal income tax consequences to “U.S. Holders” will apply to you if you are a beneficial owner of ordinary shares and you are, for U.S. federal income tax purposes,
| ● | an individual who is a citizen or resident of the United States; |
| ● | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia; |
| ● | an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
| ● | a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
If a partnership (or other entities treated as a partnership for United States federal income tax purposes) is a beneficial owner of our ordinary shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding our ordinary shares are urged to consult their tax advisors regarding an investment in our ordinary shares.
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An individual is considered a resident of the U.S. for Federal Income Tax purposes if they meet either the “Green Card Test” or the “Substantial Presence Test” described as follows:
The Green Card Test: You are a lawful permanent resident of the United States, at any time, if you have been given the privilege, according to the immigration laws of the United States, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Services (USCIS) issued you an alien registration card, Form I-551, also known as a “green card.”
The Substantial Presence Test:
If an alien is present in the United States on at least 31 days of the current calendar year, he/she will (absent an applicable exception) be classified as a resident alien if the sum of the following equals 183 days or more (See §7701(b)(3)(A) of the Internal Revenue Code and related Treasury Regulations):
| 1. | The actual days in the United States in the current year; plus |
| 2. | One-third of his/her days in the United States in the immediately preceding year; plus |
| 3. | One-sixth of his/her days in the United States in the second preceding year. |
Taxation of Dividends and Other Distributions on our Ordinary Shares
Subject to the PFIC (defined below) rules discussed below, the gross amount of distributions made by us to you with respect to the ordinary shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the ordinary shares are readily tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are not a PFIC (defined below) for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Because there is no income tax treaty between the United States and the Cayman Islands, clause (1) above can be satisfied only if the ordinary shares are readily tradable on an established securities market in the United States. Under U.S. Internal Revenue Service authority, ordinary shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on certain exchanges, which presently include the NYSE and the Nasdaq Stock Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our ordinary shares, including the effects of any change in law after the date of this annual report.
Dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our ordinary shares will constitute “passive category income” but could, in the case of certain U.S. Holders, constitute “general category income.”
To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your ordinary shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend income even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
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Taxation of Dispositions of Ordinary Shares
Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the ordinary shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the ordinary shares for more than one year, you will generally be eligible for reduced tax rates as long term capital gain. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes which will generally limit the availability of foreign tax credits.
Passive Foreign Investment Company (“PFIC”)
A non-U.S. corporation is considered a PFIC, as defined in Section 1297(a) of the US Internal Revenue Code, for any taxable year if either:
| ● | at least 75% of its gross income for such taxable year is passive income; or |
| ● | at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). |
Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock. In determining the value and composition of our assets for purposes of the PFIC asset test, the value of our assets must be determined based on the market value of our ordinary shares from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets on any particular quarterly testing date for purposes of the asset test.
Based on our operations and the composition of our assets we do not expect to be treated as a PFIC under the current PFIC rules. We must make a separate determination each year as to whether we are a PFIC, however, and there can be no assurance with respect to our status as a PFIC for our current taxable year or any future taxable year. It is possible that, for our current taxable year or for any subsequent taxable year, more than 50% of our assets may be assets held for the production of passive income. We will make this determination following the end of any particular tax year. Because the value of our assets for purposes of the asset test will generally be determined based on the market price of our ordinary shares and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our ordinary shares. Accordingly, fluctuations in the market price of the ordinary shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our ordinary shares from time to time) that may not be within our control. If we are a PFIC for any year during which you hold ordinary shares, we will continue to be treated as a PFIC for all succeeding years during which you hold ordinary shares. If we cease to be a PFIC and you did not previously make a timely “mark-to-market” election as described below, however, you may avoid some of the adverse effects of the PFIC regime by making a “purging election” (as described below) with respect to the ordinary shares.
If we are a PFIC for your taxable year(s) during which you hold ordinary shares, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the ordinary shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the ordinary shares will be treated as an excess distribution. Under these special tax rules:
| ● | the excess distribution or gain will be allocated ratably over your holding period for the ordinary shares; |
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| ● | the amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and |
| ● | the amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the ordinary shares cannot be treated as capital, even if you hold the ordinary shares as capital assets.
A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election under Section 1296 of the US Internal Revenue Code for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for first taxable year which you hold (or are deemed to hold) ordinary shares and for which we are determined to be a PFIC, you will include in your income each year an amount equal to the excess, if any, of the fair market value of the ordinary shares as of the close of such taxable year over your adjusted basis in such ordinary shares, which excess will be treated as ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the ordinary shares over their fair market value as of the close of the taxable year. Such ordinary loss, however, is allowable only to the extent of any net mark-to-market gains on the ordinary shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the ordinary shares, are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of the ordinary shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such ordinary shares. Your basis in the ordinary shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under “-Taxation of Dividends and Other Distributions on our ordinary shares” generally would not apply.
The mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including the Nasdaq Capital Market. If the ordinary shares are regularly traded on the Nasdaq Capital Market and if you are a holder of ordinary shares, the mark-to-market election would be available to you if we become a PFIC.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election under Section 1295(b) of the US Internal Revenue Code with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. The qualified electing fund election, however, is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold ordinary shares in any taxable year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such ordinary shares, including distributions received on the ordinary shares and any gain realized on the disposition of the ordinary shares.
If you do not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during the period you hold our ordinary shares, then such ordinary shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election” creates a deemed sale of such ordinary shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the ordinary shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your ordinary shares for tax purposes.
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IRC Section 1014(a) provides for a step-up in basis to the fair market value for our ordinary shares when inherited from a decedent that was previously a holder of our ordinary shares. However, if we are determined to be a PFIC and a decedent that was a U.S. Holder did not make either a timely qualified electing fund election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) our ordinary shares, or a mark-to-market election and ownership of those ordinary shares are inherited, a special provision in IRC Section 1291(e) provides that the new U.S. Holder’s basis should be reduced by an amount equal to the Section 1014 basis minus the decedent’s adjusted basis just before death. As such if we are determined to be a PFIC at any time prior to a decedent’s passing, the PFIC rules will cause any new U.S. Holder that inherits our ordinary shares from a U.S. Holder to not get a step-up in basis under Section 1014 and instead will receive a carryover basis in those ordinary shares.
You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our ordinary shares and the elections discussed above.
Information Reporting and Backup Withholding
Dividend payments with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding under Section 3406 of the US Internal Revenue Code with at a current flat rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders. Transactions effected through certain brokers or other intermediaries, however, may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.
Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our ordinary shares, subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold ordinary shares. Failure to report such information could result in substantial penalties. You should consult your own tax advisor regarding your obligation to file a Form 8938.
| F. | Dividends and Paying Agents |
Not applicable.
| G. | Statement by Experts |
Not applicable.
| H. | Documents on Display |
We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing, among other things, the furnishing and content of proxy statements to shareholders, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
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| I. | Subsidiary Information |
Not Applicable.
| J. | Annual Report to Security Holders |
Not Applicable.
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Exchange Risk
Our business is conducted in the PRC by our PRC subsidiaries, whose books and records are maintained in RMB. The financial statements that we file with the SEC and provide to our shareholders are presented in U.S. dollars. Changes in the exchange rates between the RMB and U.S. dollar affect the value of our PRC subsidiaries’ assets and results of operations, when presented in U.S. dollars.
The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions and perceived changes in the economy of the PRC and the United States. Any significant revaluation of the RMB may materially and adversely affect our cash flows, revenue, and financial condition. Further, our ordinary shares offered in the U.S. are offered in U.S. dollars, we need to convert the net proceeds we receive into RMB in order to use the funds for our PRC subsidiaries’ business. Changes in the conversion rate among the U.S. dollar and the RMB will affect the amount of proceeds we will have available for our PRC subsidiaries’ business.
Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into more hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.
Credit Risk
Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and term deposits. As of September 30, 2025 and 2024, $679,150 and $702,120, respectively, in cash deposits, was held at major financial institutions in mainland PRC, respectively. Per mainland PRC regulations, the maximum insured bank deposit amount RMB500,000 for each financial institution. As of September 30, 2025 and 2024, cash of $43,230 and $34,059, respectively, was held at major financial institutions in Hong Kong, PRC. The bank deposits with financial institutions in the Hong Kong Special Administrative Region are insured by the government authority up to Hong Kong Dollar 500,000. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.
Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by our assessment of our customers’ creditworthiness and our ongoing monitoring of outstanding balances. Other receivables include working capital support provided to major suppliers, which are also typically unsecured. We also make advances to certain suppliers to ensure the stable supply of key raw materials. We perform ongoing credit evaluations of our key suppliers to help reduce credit risk.
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Interest Rate Risk
We have not used derivative financial instruments to hedge interest risk. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed, nor do we anticipate being exposed to material risks due to changes in market interest rates. Our future interest income, however, may fall short of expectations due to changes in market interest rates.
Inflation Risk
In recent years, inflation has not had a material impact on our results of operations. According to the National Bureau of Statistics of China, the consumer price index in China increased by 0.0%, 0.2%, and 0.2% in 2025, 2024, and 2023, respectively. Although we have not in the past been materially affected by inflation since our inception, we can provide no assurance that we will not be affected in the future by higher rates of inflation in China. If inflation rises, it may materially and adversely affect our business.
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary Shares
Not applicable.
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Part II
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
See “Item 10. Additional Information” for a description of the rights of securities holders, which remains unchanged.
Use of Proceeds
The following “Use of Proceeds” information relates to the registration statement on Form F-1, as amended (File Number 333-255891) for our initial public offering, which was declared effective by the SEC on June 21, 2022. On June 24, 2022, we closed our initial public offering in which we issued and sold an aggregate of 506,000 Class A ordinary shares, at a price of $40.0 per share for gross proceeds of $20,240,000.
The proceeds raised from the initial public offering were $18,275,182 after deducting underwriting discounts and the offering expenses payable by us.
None of the net proceeds from our initial public offering were directly or indirectly paid to the directors, officers of our company or their associates, persons owning 10% or more of Golden Sun’s Class A ordinary shares, or our affiliates.
As of September 30, 2025, there was no material change in the use of proceeds as described in our registration statement on Form F-1.
Item 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of September 30, 2025, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, which is defined in Rules 13a-15(e) of the Exchange Act. There are inherent limitations to the effectiveness of any disclosure controls and procedure systems, including the possibility of human error and circumventing or overriding them. Even if effective, disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of September 30, 2025.
In the course of preparing our consolidated financial statements for the year ended September 30, 2025, we identified the following material weaknesses: 1) we lack sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to properly address certain accounting issues, and prepare and review financial statements and related disclosures in accordance with U.S. GAAP and SEC reporting requirements, (2) we lack formal accounting policies and procedures manual to ensure proper financial reporting in accordance with U.S. GAAP and SEC reporting requirements, and (3) for certain related party transactions, we do not have an audit committee process for review, approval, or related documentation in place.
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Our management is currently in the process of evaluating the steps necessary to remediate the ineffectiveness, such as (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework, (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel, and (iii) setting up formal protocols to review, approve, and document related party transactions.
However, we cannot assure you that we will remediate our control deficiencies in a timely manner. The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligation. See “Item 3. Key Information-D. Risk Factors- During the course of the audit of our consolidated financial statements, we identified material weaknesses in our internal control over financial reporting. If we fail to establish and maintain an effective system of internal control over financial reporting, our ability to accurately and timely report our financial results or prevent fraud may be adversely affected, and investor confidence and the market price of our ordinary shares may be adversely impacted.” Additionally, we cannot assure you that we have identified all, or that we will not in the future have additional material weaknesses in our internal control over financial reporting.
Attestation Report of the Registered Public Accounting Firm
This annual report on Form 20-F does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC where domestic and foreign registrants that are non-accelerated filers, which we are, and “emerging growth companies,” which we also are, are not required to provide the auditor attestation report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16. [RESERVED]
119
Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Mr. Yidong Hao qualifies as an “audit committee financial expert” as defined in Item 16A of Form 20-F. Mr. Yidong Hao satisfies the “independence” requirements of Section 5605(a)(2) of the NASDAQ Listing Rules as well as the independence requirements of Rule 10A-3 under the Exchange Act.
Item 16B. CODE OF ETHICS
Our board of directors has adopted a code of ethics (“Code”) that applies to all of our executive officers, directors and employees in accordance with the rules of the Nasdaq and the SEC. The purpose of the Code is to promote ethical conduct and deter wrongdoing. The policies outlined in the Code are designed to ensure that our directors, executive officers and employees act in accordance with not only the letter but also the spirit of the laws and regulations that apply to our business. We expect our directors, executive officers and employees to exercise good judgment, to uphold these standards in their day-to-day activities, and to comply with all applicable policies and procedures in the course of their relationship with the company. Any amendment to or waivers of the Code for members of our board of directors and our executive officers that are required to be disclosed by the rules of the SEC or Nasdaq will be disclosed on our website at www.gelteq.com within four business days following the amendment or waiver. During fiscal year ended September 30, 2025, no amendments to or waivers from the Code were made or given for any of our executive officers.
Our code of ethics is publicly available on our website.
Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered and billed by our independent registered public accounting firm, for the periods indicated.
| For the Fiscal Years Ended September 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Audit fees(1) | $ | 413,850 | $ | 360,000 | $ | 285,000 | ||||||
| Audit-Related fees | - | - | - | |||||||||
| Tax fees | - | - | - | |||||||||
| All other fees(2) | - | - | - | |||||||||
| Total | $ | 413,850 | $ | 360,000 | 285,000 | |||||||
| (1) | Audit fees include the aggregate fees billed for each of the fiscal years for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements or for the audits of our financial statements and review of the interim financial statements in fiscal years 2025, 2024 and 2023, respectively. |
| (2) | All other fees include the aggregate fees billed in each of the fiscal years for products and services provided by our independent registered public accounting firm, other than the services reported under audit fees, audit-related fees, and tax fees. |
The Audit Committee has adopted a policy requiring that all audit services to be performed by Assentsure PAC, our independent registered public accounting firm.
120
Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
None.
Item 16G. CORPORATE GOVERNANCE
As an exempted company incorporated in the Cayman Islands with limited liability that is listed on the Nasdaq Capital Market, we are subject to the Nasdaq corporate governance listing standards. Nasdaq rules, however, permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards.
Nasdaq Listing Rule 5635 generally provides that shareholder approval is required of U.S. domestic companies listed on Nasdaq prior to issuance (or potential issuance) of securities (i) equaling 20% or more of the company’s common stock or voting power for less than the greater of market or book value; (ii) resulting in a change of control of the company; and (iii) which is being issued pursuant to a stock option or purchase plan to be established or materially amended or other equity compensation arrangement made or materially amended. Notwithstanding this general requirement, Nasdaq Listing Rule 5615(a)(3)(A) permits foreign private issuers to follow their home country practice rather than these shareholder approval requirements. The Cayman Islands do not require shareholder approval prior to any of the foregoing types of issuances. We, therefore, are not required to obtain such shareholder approval prior to entering into a transaction with the potential to issue securities as described above. Specifically, we have elected to be exempt from the requirements under (a) Nasdaq Listing Rule 5635 to obtain shareholder approval for (i) the issuance 20% or more of our outstanding ordinary shares or voting power in a private offering, (ii) the issuance of securities pursuant to a stock option or purchase plan to be established or materially amended or other equity compensation arrangement made or materially amended, (iii) the issuance of securities when the issuance or potential issuance will result in a change of control of our Company, and (iv) certain acquisitions in connection with the acquisition of the stock or assets of another company and (b) Nasdaq Listing Rule 5640, which requires that the voting rights of a listed company cannot be disparately reduced or restricted through any corporate action or issuance.
Nasdaq Listing Rule 5605(b)(1) requires listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Currently, a majority of our board members are independent. However, if we change our board composition such that independent directors do not constitute a majority of our board of directors, our shareholders may be afforded less protection than they would otherwise enjoy under Nasdaq’s corporate governance requirements applicable to U.S. domestic issuers. See “Item 3. Key Information-D. Risk Factors-Risks Relating to Our ordinary shares and the Trading Market-Because we are a foreign private issuer and have taken advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.”
Other than those described above, there are no significant differences between our corporate governance practices and those followed by U.S. domestic companies under Nasdaq corporate governance listing standards.
121
Item 16H. MINE SAFETY DISCLOSURE
Not applicable.
Item 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
Item 16J. INSIDER TRADING POLICIES
The Company has
Item 16K. CYBERSECURITY.
Since the start of its latest
completed fiscal year and up to the date of this annual report, the Company is not aware of any risks from cybersecurity threats, including
as a result of any previous cybersecurity incidents,
The Company’s
122
Part III
Item 17. FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 18.
Item 18. FINANCIAL STATEMENTS
The consolidated financial statements of Golden Sun Technology Group Limited, and its operating entities are included at the end of this annual report.
Item 19. EXHIBITS
EXHIBIT INDEX
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124
125
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| Golden Sun Technology Group Limited | ||
| By: | /s/ Xueyuan Weng | |
| Xueyuan Weng | ||
| Chief Executive Officer, Director, and | ||
| Chairman of the Board of Directors | ||
| Date: February 12, 2026 | ||
126
GOLDEN SUN TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of and the Board of Directors of
Golden Sun Technology Group Limited
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Golden Sun Technology Group Limited and its subsidiaries (formerly known as “Golden Sun Health Technology Group Ltd”) as of September 30, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for the each of the three years in the period ended September 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial positions of the Company as of September 30, 2025 and 2024, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
Material Uncertainty Related to Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations, has significant accumulated deficits and continues to experience negative cash flows from operations. These factors raise substantial doubts about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement. We believe that our audits provide a reasonable basis for our opinion.
/s/
Assentsure PAC
We have served as the Company’s auditor since 2023.
February 12, 2026
PCAOB ID No. 6783
F-2
GOLDEN SUN TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in U.S. dollars (“$”))
| September 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Contract assets | ||||||||
| Inventories | ||||||||
| Acquisition deposit | ||||||||
| Prepayments and other current assets | ||||||||
| Current assets of discontinued operations | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| NON-CURRENT ASSETS: | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Long-term investments | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Prepayments and other non-current assets | ||||||||
| Non-current assets of discontinued operations | ||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term bank loan | $ | $ | ||||||
| Long-term bank loans - current portion | ||||||||
| Accounts payable | ||||||||
| Deferred revenue | ||||||||
| Refund liabilities | ||||||||
| Operating lease liabilities-current | ||||||||
| Taxes payable | ||||||||
| Loan from a third party | ||||||||
| Accrued expenses and liabilities | ||||||||
| Current liabilities of discontinued operations | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Operating lease liabilities-non-current | ||||||||
| Due to a related party | ||||||||
| Long-term bank loans | ||||||||
| Long-term loan from a third party | ||||||||
| Deferred tax liabilities | ||||||||
| Non-current liabilities of discontinued operations | ||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 19) | ||||||||
| EQUITY: | ||||||||
| Authorized share capital of $ |
||||||||
| Class A ordinary shares | ||||||||
| Class B ordinary shares | ||||||||
| Additional paid in capital | ||||||||
| Statutory reserves | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| Non-controlling interests | ( |
) | ( |
) | ||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
GOLDEN SUN TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in U.S. dollars (“$”))
| For the Years Ended September 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Cost of revenues | ||||||||||||
| Gross profit | ||||||||||||
| Operating expenses: | ||||||||||||
| Selling expenses | ||||||||||||
| General and administrative expenses | ||||||||||||
| Total operating expenses | ||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ||||||
| Other (expense) income: | ||||||||||||
| Interest expense, net | ( |
) | ( |
) | ( |
) | ||||||
| Change in fair value of convertible note | ( |
) | ||||||||||
| Change in fair value of warrants liabilities | ( |
) | ||||||||||
| Gain from disposal of subsidiaries | ||||||||||||
| Investment loss | ( |
) | ( |
) | ( |
) | ||||||
| Other (expense) income, net | ( |
) | ( |
) | ||||||||
| Total other (expense) income, net | ( |
) | ( |
) | ||||||||
| Loss before income taxes | ( |
) | ( |
) | ( |
) | ||||||
| Income taxes (benefit) provision | ( |
) | ||||||||||
| Net loss from continuing operation | ( |
) | ( |
) | ( |
) | ||||||
| Net income (loss) from discontinued operation | ( |
) | ( |
) | ||||||||
| Net loss | ( |
) | ( |
) | ( |
) | ||||||
| Less: net (loss) income attributable to non-controlling interests | ( |
) | ( |
) | ||||||||
| Net loss attributable to the Company | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Other comprehensive loss | ||||||||||||
| Foreign currency translation adjustments | ( |
) | ||||||||||
| Comprehensive loss | ( |
) | ( |
) | ( |
) | ||||||
| Less: comprehensive (loss) income attributable to non-controlling interests | ( |
) | ( |
) | ||||||||
| Comprehensive loss attributable to the Company | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Net (loss) income attributable to the Company | ||||||||||||
| Continuing operation | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Discontinued operation | ( |
) | ( |
) | ||||||||
| Total | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| (Loss) income per share | ||||||||||||
| Continuing operation | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Discontinued operation | ( |
) | ( |
) | ||||||||
| Total | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Weighted average number of shares outstanding | ||||||||||||
| Basic and diluted | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
GOLDEN SUN TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2025, 2024 AND 2023
(Amounts in U.S. dollars (“$”))
| Class A Ordinary shares | Class B Ordinary shares | Additional paid in | Statutory | Accumulated | Accumulated other comprehensive | Non- controlling | Total | |||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | Reserves | deficit | loss | interests | equity | |||||||||||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Share base compensation | ||||||||||||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Statutory reserve | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Deemed distribution to non-controlling shareholder | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance shares for conversion of convertible note | ||||||||||||||||||||||||||||||||||||||||
| Issuance shares for conversion of warrants | ||||||||||||||||||||||||||||||||||||||||
| Statutory reserve | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
GOLDEN SUN TECHNOLOGY
GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in U.S. dollars (“$”))
| For the Years Ended September 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Less: Net income (loss) from discontinued operation | ( | ) | ( | ) | ||||||||
| Net loss from continuing operation | ( | ) | ( | ) | ( | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Loss on disposal of property and equipment | ||||||||||||
| Investment loss | ||||||||||||
| Gain from disposal of subsidiaries | ( | ) | ||||||||||
| Inventories written down | ||||||||||||
| Deferred tax benefits | ( | ) | ||||||||||
| Share-based compensation | ||||||||||||
| Allowance for credit losses | ||||||||||||
| Change in fair value of convertible note | ||||||||||||
| Change in fair value of warrants liabilities | ||||||||||||
| Amortization of operating lease right-of-use assets | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ( | ) | ||||||||
| Accounts receivable-related parties | ||||||||||||
| Inventories | ( | ) | ||||||||||
| Prepayments and other assets | ( | ) | ( | ) | ( | ) | ||||||
| Contract assets | ( | ) | ||||||||||
| Accounts payable | ||||||||||||
| Accrued expenses and other liabilities | ( | ) | ( | ) | ||||||||
| Deferred revenue | ( | ) | ||||||||||
| Refund liabilities | ( | ) | ( | ) | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Taxes payable | ( | ) | ||||||||||
| Net cash used in operating activities-continuing operation | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in operating activities-discontinued operation | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||||||
| Net cash from disposal of subsidiaries | ||||||||||||
| Long-term investments | ( | ) | ( | ) | ( | ) | ||||||
| Prepayment for acquisition | ( | ) | ( | ) | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Prepayment for intangible assets | ( | ) | ||||||||||
| Net cash provided by (used in) investing activities-continuing operation | ( | ) | ( | ) | ||||||||
| Net cash used in investing activities-discontinued operation | ( | ) | ( | ) | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from convertible note and warrants | ||||||||||||
| Proceeds from short-term bank loans | ||||||||||||
| Repayment of short-term bank loans | ( | ) | ( | ) | ||||||||
| Proceeds from long-term bank loans | ||||||||||||
| Repayment of long-term bank loans | ( | ) | ||||||||||
| Proceeds from related parties | ||||||||||||
| Proceeds from third party loans | ||||||||||||
| Net cash provided by financing activities-continuing operation | ||||||||||||
| Net cash provided by (used in) financing activities-discontinued operation | ( | ) | ||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of exchange rates changes on cash and cash equivalents | ( | ) | ||||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
| Cash and cash equivalents beginning of year | ||||||||||||
| Cash and cash equivalents end of year | $ | $ | $ | |||||||||
| Supplemental cash flow disclosures: | ||||||||||||
| Cash paid for income tax | $ | $ | $ | |||||||||
| Cash paid for interest | $ | $ | $ | |||||||||
| Non-cash activities | ||||||||||||
| Operating lease right-of-use assets (extinguished) obtained in exchange for operating lease liabilities | $ | ( | ) | $ | ( | ) | $ | |||||
| Issuance shares for conversion of convertible note | $ | $ | $ | |||||||||
| Issuance shares for conversion of warrants | $ | $ | $ | |||||||||
| Reconciliation to amounts on consolidated balance sheets: | ||||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||
| Cash and cash equivalents included in current assets of discontinued operations | ||||||||||||
| Total cash and cash equivalents shown in the statement of cash flows | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 1 — ORGANIZATION AND BUSINESS DESCRIPTION
Golden Sun Technology Group Limited (“Golden Sun”, formerly named as Golden Sun Health Technology Group Limited), is an exempted company that was incorporated under the laws of Cayman Islands on September 20, 2018 that serves as a holding company with no material operations of its own. Golden Sun, through its subsidiaries in the People’s Republic of China (“China” or “PRC”) (the PRC subsidiaries and Golden Sun collectively, the “Company”), is primarily engaged in the provision of education services and e-commerce services in the PRC. Beginning in late 2023, in addition to providing foreign language tutorial and training services, the Company initiated a strategic expansion to e-commerce.
As of September 30, 2025, the Company’s subsidiaries are as follows:
| Subsidiaries | Date of Incorporation | Jurisdiction of Formation | Percentage of direct/indirect Economic Ownership | Principal Activities | ||||||
| Hong Kong Jintaiyang International Education Holding Group Limited (“Golden Sun Hong Kong”) | % | |||||||||
| Golden Sun (SH) Cultural and Tourism Research Institute Limited (“Golden Sun (SH)”) | % | |||||||||
| Zhejiang Golden Sun Education Technology Group Co., Ltd. (“Golden Sun Wenzhou” or “WFOE”) | % | |||||||||
| Wenzhou City Ouhai District Yangfushan Culture Tutorial School (“Yangfushan Tutorial”) | % | |||||||||
| Wenzhou Lilong Network Technology Co., Ltd. (“Wenzhou Lilong”) (b) | % | |||||||||
| Shanghai Fuyouyuan Health Technology Co., Ltd, (“Fuyouyuan”) (d) | % | |||||||||
| Zhejiang Golden Sun Selection Technology Co., Ltd. (“Golden Sun Selection”) | % | |||||||||
| Shanghai Fuyang Culture Technology Co., Ltd. (“Shanghai Fuyang”) (e) | % | |||||||||
| Zhejiang Oulong Culture and Tourism Industry Development Co., Ltd. (“Zhejiang Oulong”) (f) | % | |||||||||
| Shanghai Wensaier Education Technology Co., Ltd. (“Shanghai Wensaier”) | % | |||||||||
| (a) | On July 6, 2025, the Company’s PRC subsidiary, Golden Sun Wenzhou, signed an agreement with a third party to sell |
| (b) |
| (c) | The Company’s Board of Directors approved the cessation of business operations of Shanghai Jicai on September 7, 2023. The deregistration was completed on December 9, 2024. |
| (d) |
| (e) |
Shanghai Fuyang, formerly known as Shanghai Fuyang Cultural and Tourism Development Co., Ltd. changed its name on November 3, 2025. |
| (f) |
F-7
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 1 — ORGANIZATION AND BUSINESS DESCRIPTION (continued)
Basis of Preparation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”).
The consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation.
Non-controlling interests
Non-controlling interest represents the portion of the net assets of subsidiaries attributable to interests that are not owned or controlled by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest’s operating results are presented on the face of the consolidated statements of operations and comprehensive loss as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company. As of September 30, 2025 and 2024, non-controlling interests represented non-controlling shareholder’s proportionate share of the equity interests in Hongkou Tutorial, Xianjin Technology, Fuyouyuan, Shanghai Jinheyu and Shanghai Fuyang.
Segment reporting
ASC 280, Segment Reporting, (“ASC 280”), establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers.
Based on the criteria established by ASC 280,
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
F-8
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Uses of estimates
In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result. Significant estimates required to be made by management include, but are not limited to refund liabilities, revenue recognition, the allowance for credit loss on accounts receivables and prepayment and other assets, determinations of the useful lives and valuation of long-lived assets, impairment of goodwill, impairment of long-term investments, valuation of convertible note and warrant liabilities, incremental borrowing rate used in valuation of lease liabilities and right-of-use assets, and valuation allowance of deferred tax assets.
Business acquisition
The Company accounts for its business combinations using the acquisition method of accounting. The cost of an acquisition is measured as the aggregate of the acquisition date fair value of the assets transferred to the sellers, liabilities incurred by the Company and equity instruments issued by the Company. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of consideration paid and fair value of the non-controlling interests over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the consideration of acquisition is less than the fair value of the net assets acquired, the difference is recognized directly in the consolidated statements of operations and comprehensive loss.
The Company typically engages external valuation specialists to assist in the fair value determination of assets acquired and liabilities assumed in a business combination. Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.
Discontinued operations
A component of a reporting entity or a group of components of a reporting entity that are disposed or meet the criteria to be classified as held for sale, such as the management, having the authority to approve the action, commits to a plan to sell the disposal group, should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. In the period that a discontinued operation is classified as held for sale, the assets and liabilities of the discontinued operation are presents separately in asset and liability sections, respectively, of the consolidated balance sheets and prior periods are presented on a comparative basis. In the consolidated statements of operations and comprehensive (loss)/income, the results from discontinued operations are reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis. Cash flows for discontinued operations are presented separately in the consolidated statements of cash flows. Unless otherwise noted, discussion in the Notes to consolidated financial statements refers to the Company’s continuing operations.
Cash and cash equivalents
Cash and cash equivalents represent cash on hand and cash at banks or other financial institutions, which are unrestricted as to withdrawal or use, and which have original maturities of three months or less and are readily convertible to known amounts of cash.
F-9
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value of financial instruments
ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, other current assets, acquisition deposit, accounts payable, deferred revenue, accrued liabilities, due to related parties, short term bank loans, taxes payable and convertible notes, approximates their recorded values due to their short-term maturities. The Company determined that the carrying value of the long-term liabilities approximated their present value as the interest rates applied reflect the current quoted market yield for comparable financial instruments.
Assets and liabilities measured or disclosed at fair value on a recurring basis
| (a) | The Company has elected to recognize the convertible note at fair value (Note 14), therefore, there was no further evaluation of embedded features for bifurcation. The Company engaged a third-party valuation firm to perform the valuation of the convertible notes. The fair value of the convertible notes was calculated using the discounted cash flow method approach. |
| For the Year Ended September 30, |
||||
| 2025 | ||||
| Opening balance | $ | |||
| New convertible note issued | ||||
| Change in fair value of convertible notes | ||||
| Conversion of convertible note | ( |
) | ||
| Ending balance | $ | |||
F-10
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value of financial instruments (continued)
| (b) | The freestanding warrants issued in connection with the convertible notes were determined to be derivatives that were accounted for as warrant liabilities measured at fair value on recurring basis (Note 14). The Company engaged a third-party valuation firm to perform the valuation of warrant liabilities using the discounted cash flow method approach with significant unobservable inputs to measure the fair value of the warrant liability (Level 3). |
| For the Year Ended September 30, |
||||
| 2025 | ||||
| Opening balance | $ | |||
| Warrants issued in connection with the convertible note | ||||
| Change in fair value of warrants liabilities | ||||
| Conversion of warrants liabilities | ( |
) | ||
| Ending balance | $ | |||
Accounts receivable, net
Accounts receivables are recognized
and carried at original invoiced amount less an estimated allowance for credit losses. In June 2016, the FASB issued ASU No. 2016-13,
“Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires
the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net
income. The Company adopted this guidance effective from October 1, 2022. The Company establishes an allowance for credit losses based
on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
The allowance is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of
operations and comprehensive loss. Delinquent account balances are written-off against the allowance for credit losses after management
has determined that the likelihood of collection is not probable. For the year ended September 30, 2025, 2024 and 2023, $
Inventories
The Company values its inventories at the lower of cost, or net realizable value. The Company reviews its inventories periodically to determine if any markdown is necessary for potential obsolescence or if a write-down is necessary if the carrying value exceeds net realizable value.
Prepayment and other assets
Prepayment and other assets primarily consist
of prepaid rents, prepaid service fee, advances to vendors for purchasing goods or services that have not been received or provided, loans
to third-parties, security deposits made to customers, and advances to employees. Prepayment and other assets are classified as either
current or non-current based on the terms of the respective agreements. These advances are unsecured and are reviewed periodically to
determine whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the
advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. The allowance is also
based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections
and utilizations. Actual amounts received or utilized may differ from management’s estimate of credit worthiness and the economic
environment. Other receivables are written off against the allowances only after exhaustive collection efforts. For the year ended September
30, 2025, 2024 and 2023, $
F-11
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Acquisition deposit
Acquisition deposit represents the prepaid amount provided to the original shareholders of Zhejiang Oulong Cultural and Tourism Industry Development Co., Ltd, to secure the intended acquisition.
Property and equipment, net
Property and equipment
are recorded at cost less accumulated depreciation and amortization.
| Useful life | ||
| Office equipment | ||
| Leasehold improvement | ||
| Building |
Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations and other comprehensive loss in other income or expenses.
Intangible assets, net
The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its intangible assets with definite useful lives on a straight-line basis over the shorter of the contractual terms or the estimated economic lives, which is determined to be as follows:
| Useful life | ||
| Software | ||
| Customized technology for water transportation equipment |
Impairment of long-lived assets
Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. No impairment charge was recognized for the years ended September 30, 2025, 2024 and 2023.
F-12
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Long-term investments
Long-term investments are primarily consisted of equity investments in privately held entities accounted for using the measurement alternative and equity investments accounted for using the equity method. On October 1, 2022, the Company adopted ASU 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. According to the guidance, the Company started to record equity investments at fair value, with gains and losses recorded through net earnings. And the Company elected to measure certain equity investments without readily determinable fair value at cost, less impairments, plus or minus observable price changes and assess for impairment quarterly.
Equity investments without readily determinable fair values
After the adoption of this new accounting standard, the Company elected to record equity investments without readily determinable fair values and not accounted for under the equity method at cost, less impairment, adjusted for subsequent observable price changes on a nonrecurring basis, and report changes in the carrying value of the equity investment in current earnings. Changes in the carrying value of the equity investment are required to be made whenever there are observable price changes in orderly transactions for the identical or similar investment of the same issuer. Reasonable efforts shall be made to identify price changes that are known or that can reasonably be known.
Equity investments with readily determinable fair values
Equity investments with readily determinable fair values are measured and recorded at fair value using the market approach based on the quoted prices in active markets at the reporting date.
Equity investments accounted for using the equity method
The Company accounts for its equity investment over which it has significant influence but does not own a majority equity interest or otherwise control, using the equity method. The Company adjusts the carrying amount of the investment and recognizes investment income or loss for its share of the earnings or loss of the investee after the date of investment. The Company assesses its equity investment for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, operating performance of the entity, including current earnings trends and undiscounted cash flows, and other entity-specific information. The fair value determination, particularly for investments in a privately held entity, requires judgment to determine appropriate estimates and assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of the investment and determination of whether any identified impairment is other-than-temporary.
Revenue recognition
The Company generates revenues primarily from e-commerce, tuitions fees and other fees collected from services provided. Revenue is recognized when the price is fixed or determinable, persuasive evidence of the arrangement exists, the service is performed or the product is delivered and collectability of the resulting receivable is reasonably assured.
The Company has adopted ASC 606, “Revenue from Contracts with Customers” and all subsequent ASUs that modified ASC 606, using the modified retrospective approach. ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. This new guidance provides a five-step analysis in determining when and how revenue is recognized. Under the new guidance, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the new guidance requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
F-13
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
The Company currently generated its revenue from the following main sources:
Education segment
Tutorial services
The Company offers tutorial program to students. Each contract of tutorial service programs represents a series of distinct services, which is delivery of various courses. The services have substantially the same pattern of transfer to the students, as such, they are considered as a single performance obligation, which is satisfied proportionately based on a straight-line basis over the program term as students simultaneously receive and consume the benefits of these services throughout the program term. The Company is the principal in providing tutorial services as it controls such services before the services are transferred to the customer. The program fees are generally collected in advance and are initially recorded as deferred revenue. Generally, the Company approves refunds for any remaining classes to students who decide to withdraw from a course within the predetermined period in the contract. The refund is equal to and limited to the amount related to the undelivered classes. The Company estimates and records refund liability for the portion the Company does not expect to be entitled based on historical refund ratio on a portfolio basis using the expected value method.
Logistic, consulting services and education related services
The Company provides services to schools, including but not limited to catering and logistic service. Logistic revenue is recognized on a straight-line basis over the period, as customers simultaneously receive and consume the benefits of the services. Catering revenue is recognized at point of sale.
The Company also provides consulting services to related-party kindergartens. According to the contracts signed with each of the three kindergartens, the Company provides a range of educational management and consulting services, including branding, safety management, teacher training, supervision and evaluation on teachers, rating guidance services, to the kindergartens during the contract periods. The intended contractual benefit to the kindergartens of the management and consulting services is to enable the kindergartens’ smooth and effective operations. The promised services in each of the consulting service contracts are combined and accounted as a single performance obligation, as the promised services are considered as a significant integrated service. The consulting services are continuously provided and the kindergartens simultaneously receive and consume the benefits of these services throughout the service period each month. The revenue is recognized over time during the service period.
E-commerce and others segment
Commission
The Company promotes merchants’ products through various online platforms and earns commission based on a fixed commission rate for sales of the products completed. The Company acts as an agent as it does not take control of the products provided by merchants at any point in time during the transactions. Commission revenue is recognized at a point in time when the Company’s service obligation to the merchants is determined to have been completed under each sales transaction completed. Variable consideration is estimated and included in the transaction price to the extent that it is probable that a significant revenue reversal will not occur. Adjustments to the estimated variable consideration related to prior reporting periods were not material.
F-14
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
E-commerce and other segment (continued)
Marketing service
The Company provides marketing services to merchants on certain online and offline platform, for which it receives service fees from the merchants. The Company’s marketing service provides more publicity and brand awareness of the merchant’s brand through online platform and offline by delivery specified marketing content. Most of revenue from marketing service is recognized at the point in time when the marketing content deliverables are completed based on customer acceptance, while a small portion is recognized over a specified period of time and the Company has an enforceable right to payment of its fees.
Product sales
The Company sometimes acquires merchandise from suppliers and sells them to third-party online marketplace. The Company determines the third-party online marketplace is its customer. The Company acts as a principal as it obtains control of merchandise, is primarily obligated for merchandise sold to the customers, bears inventory risks and has the latitude in establishing prices of merchandise sold to the third-party marketplace. Revenues from product sales are recorded on a gross basis, net of discounts and return allowances when the product is delivered and title is passed to customers in this type of transaction. Proceeds received in advance to delivery are recorded as current liabilities as customer advances.
Engineering construction
The Company’s revenues from engineering construction are normally under fixed-price contracts that may last from one to three months. These contracts require the Company to perform construction services including project planning, project design, installation of hardware and equipment and configuration based on customers’ specific needs, which requires significant customization. Upon completion, customer acceptance is generally required. The Company identifies a single performance obligation for the engineering construction contracts, which include a series of integrated services of project planning, project design, installation of hardware and equipment, and configuration. Revenue is recognized over the contract term using an input method under which the percentage of revenue to be recognized for a given project is measured by the estimates of the extent of progress towards project completion. Such contracts provide that the customer accept completion of progress to date and compensate the Company for services rendered, which may be measured in terms of costs incurred, units installed, or some other measure of progress. Application of the input method requires the use of estimates of costs to be incurred for the performance of the contract. Contract costs include all direct material costs, direct labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, and all costs associated with operation of equipment. The cost estimation process is based upon the professional knowledge and experience of the Company’s engineers, project managers and financial professionals. Management conducts periodic reviews to assess the contract’s schedule, performance, technical matters and estimated cost at completion. When changes in estimated contract costs are identified, such revisions may result in current period adjustments to operations applicable to performance in prior periods.
Practical expedient
The Company has applied the new revenue standard requirements to a portfolio of contracts (or performance obligations) with similar characteristics for transactions where it is expected that the effects on the financial statements of applying the revenue recognition guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio. Therefore, the Company elects the portfolio approach in applying the new revenue guidance.
F-15
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
Disaggregation of revenue
Revenues from tutorial service, logistic and consulting services as well as a small portion of the e-commerce marketing service and engineering construction are recognized over time, based on a straight-line basis as the Company’s customers simultaneously receive the Company’s services throughout the service periods. Revenues attributable to most of e-commerce marketing service, commission fees and products sales are recognized at point in time when control of the promised goods or service are transferred to the customers. As the Company’s long-lived assets are all located in PRC, no geographical disaggregation is presented.
For the years ended September 30, 2025, 2024 and 2023, the disaggregation of revenue by major revenue stream and time of the revenue recognition is as follows:
| For the Years Ended September 30, | |||||||||
| 2025 | 2024 | 2023 | |||||||
| Category of Revenue: | |||||||||
| Tutorial service, logistic, consulting services and education related services | $ | $ | $ | ||||||
| E-commerce revenue and others | |||||||||
| Total | $ | $ | $ | ||||||
| Timing of Revenue Recognition: | |||||||||
| Revenue recognized over time | $ | $ | $ | ||||||
| Revenue recognized at a point in time | |||||||||
| Total | $ | $ | $ | ||||||
Contract assets
In accordance with ASC340-40-25-1, an entity shall recognize as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. Entities sometimes incur costs to obtain a contract that otherwise would not have been incurred. Entities also may incur costs to fulfill a contract before a good or service is provided to a customer. The revenue standard provides guidance on costs to obtain and fulfill a contract that should be recognized as assets. Costs that are recognized as assets are amortized over the period that the related goods or services transfer to the customer, and are periodically reviewed for impairment. Only incremental costs should be recognized as assets. Incremental costs of obtaining a contract are those costs that the entity would not have incurred if the contract had not been obtained.
For the year ended September 30, 2025, in order to develop non-English
foreign language tutorial service for middle school students, the Company incurred total of $
F-16
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
Contract liabilities
Contract liabilities are presented as deferred
revenue in the consolidated balance sheets, which mainly represents payment received from customers in advance of completion of performance
obligations under a contract. The balance of deferred revenue is recognized as revenue upon the completion of performance obligations.
As of September 30, 2025 and 2024, the balance of deferred revenue amounted to $
Refund liabilities
Refund liabilities mainly relate to the estimated refunds that are
expected to be provided to students if they decide they no longer want to take the courses. Refund liabilities estimates are based on
historical refund ratio on a portfolio basis using the expected value method. As of September 30, 2025 and 2024, refund liabilities amounted
to $
Cost of revenues
Cost of revenues mainly consists of cost for promotion and marketing service related to e-commence business, merchandise purchase price, remuneration to instructors and tutors, rental expenses for office space and learning centers, teaching materials used in the provision of educational services.
Government subsidies
Government subsidies are recognized when there is reasonable assurance
that the Company will comply with the conditions attached thereto and the grant will be received. Government grant for the purpose of
giving immediate financial support to the Company with no future related costs or obligation is recognized in the Company’s consolidated
statements of comprehensive income when the grant becomes receivable. For the years ended September 30, 2025, 2024 and 2023, income amounted to $
Advertising expenditures
Advertising expenditures are expensed as incurred
for the periods presented. Advertising expenditures have been included as part of selling and marketing expenses. For the years ended
September 30, 2025, 2024 and 2023, the advertising expenses amounted to $
F-17
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Operating leases
The Company adopted Topic 842 on October 1, 2022 using the modified retrospective transition approach. The Company has operating lease contracts for office space. The Company determines whether an arrangement constitutes a lease and records lease liabilities and right-of-use assets on its consolidated balance sheets at lease commencement. The Company measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Company estimates its incremental borrowing rate based on an analysis of weighted average interest rate of its own bank loans. The Company measures right-of-use assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Company begins recognizing lease expense when the lessor makes the underlying asset available to the Company.
For leases with lease term less than one year (short-term leases), the Company records operating lease expense in its consolidated statements of operations on a straight-line basis over the lease term and record variable lease payments as incurred.
Value added tax (“VAT”)
Revenue represents the invoiced value of goods
and services, net of VAT. The VAT is based on gross sales price and VAT rates range up to
Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An uncertain tax position is recognized as a benefit only if it is
“more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest
amount of tax benefit that is greater than
F-18
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Employee benefits
Full-time employees of the Company in the PRC participate in a government-mandated employer contribution social insurance plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to eligible full-time employees. Chinese labor regulations require that the Company make contributions to the government for these benefits based on government prescribed percentage of the employee’s salaries. The contributions to the plan are expensed as incurred. Obligations for contributions to employer contribution social insurance plans are recognized as employee benefit expenses in the period during which services are rendered by employees.
Loss per Share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents the dilutive effect on a per-share basis of the potential Ordinary Shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential Ordinary Shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent annually period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
Share-based compensation
The Company follows the provisions of ASC 718, “Compensation - Stock Compensation,” which establishes the accounting for employee and non-employee share-based awards. For employee share-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight-line basis over the requisite service period for the entire award.
Reclassification
Reclassifications
During the year, the Company separated intangible assets, net from property, equipment and intangible assets, net and comparative amounts in the consolidated balance sheets and consolidated statement of cash flows were restated for consistency.
F-19
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currency translation
The functional currencies of the Company are the local currency of the county in which the subsidiaries operate. The Company’s financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash flows denominated in foreign currencies are translated at the average rates of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect on that date. The equity denominated in the functional currencies is translated at the historical rates of exchange at the time of capital contributions. Because cash flows are translated based on the average translation rates, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component in accumulated other comprehensive income included in consolidated statements of changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of operations and comprehensive loss.
Since the Company operates primarily in the PRC, the Company’s functional currency is the Chinese Yuan (“RMB”). The Company’s consolidated financial statements have been translated into the reporting currency of U.S. Dollars (“$”). The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into $ at the rates used in the translation.
The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:
| September 30, 2025 | September 30, 2024 | September 30, 2023 | ||||
| Balance sheet items, except for equity accounts | $ | $ | $ | |||
| Items in the statements of operations and comprehensive loss and cash flows | $ | $ | $ |
Comprehensive loss
Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders’ equity but are excluded from net loss. Other comprehensive loss consists of foreign currency translation adjustment resulting from the Company not using $ as its functional currency.
Concentrations of risks
(a) Concentration of customers and suppliers
For the year ended September 30, 2025, one customer accounted for approximately
For the year ended September 30, 2025, four suppliers accounted for
approximately
F-20
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentrations of risks (continued)
(b) Concentration of credit risk
Assets that potentially subject the Company to
a significant concentration of credit risk primarily consist of cash and cash equivalents, accounts receivable and other current assets.
The maximum exposure of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of September 30, 2025 and
2024, the aggregate amount of cash and cash equivalents of $
(c) Foreign currency risk
A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.
It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect the Company’s financial results reported in the U.S. dollar terms without giving effect to any underlying changes in the Company’s business or results of operations. Currently, the Company’s assets, liabilities, revenues and costs are denominated in RMB. To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company.
Risks and uncertainties
The Company has substantial operations in China through its PRC subsidiaries. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. The Company believes that it is in compliance with existing laws and regulations including its organization, this may not be indicative of future results.
The Company’s business, financial condition and results of operations may also be negatively impacted by risks related to regional wars, geopolitical tensions, natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could potentially and significantly disrupt the Company’s operations.
F-21
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent accounting pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements — codification amendments in response to SEC’s disclosure Update and Simplification initiative which amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of Cash Flows—Overall, 250-10 Accounting Changes and Error Corrections—Overall, 260-10 Earnings Per Share—Overall, 270-10 Interim Reporting—Overall, 440-10 Commitments—Overall, 470-10 Debt—Overall, 505-10 Equity—Overall, 815-10 Derivatives and Hedging—Overall, 860-30 Transfers and Servicing—Secured Borrowing and Collateral, 932-235 Extractive Activities—Oil and Gas—Notes to Financial Statements, 946-20 Financial Services—Investment Companies—Investment Company Activities, and 974-10 Real Estate—Real Estate Investment Trusts—Overall. The amendments represent changes to clarify or improve disclosure and presentation requirements of above subtopics. Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the Codification with the SEC’s regulations. For entities subject to existing SEC disclosure requirements or those that must provide financial statements to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K. Early adoption is not allowed. For all entities, the amendments will be effective two years later from the date of the SEC’s removal.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures. The Company is currently evaluating the potential impact of adopting this guidance on Financial Statements.
In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of adopting this guidance on Financial Statements.
In March 2024, the FASB issued ASU 2024-02, “Codification Improvements – Amendments to Remove References to the Concept Statements” (“ASU 2024-02”). ASU 2024-02 contains amendments to the FASB Accounting Standards Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on Financial Statements.
F-22
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent accounting pronouncements (continued)
In November 2024, the FASB issued Accounting Standards Update (ASU) 2024-04, Debt-Debt with Conversions and Other Option. ASU 2024-04 is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on its disclosures.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. ASU 2025-03 clarifies the guidance to determine the accounting acquirer in a business combination that is effected primarily by exchanging equity interests, when the legal acquiree is a variable interest entity (“VIE”) that meets the definition of a business. ASU 2025-03 requires entities to consider the same factors in ASC 805, Business Combinations, required for determining which entity is the accounting acquirer in other acquisition transactions. ASU 2025-03 is effective for the Company’s annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-03 is required to be applied on a prospective basis to any acquisition transaction that occurs after the initial application date. The Company is currently evaluating the potential impact of adopting this guidance on Financial Statements.
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue Recognition. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company’s annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Company is currently evaluating the potential impact of adopting this guidance on Financial Statements.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the consolidated financial position, statements of operations and cash flows.
F-23
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 3 — LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
For the year ended September 30, 2025, the Company
incurred a net loss of $
Management monitors and analyzes the Company’s
cash on-hand, its ability to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments.
The Company has historically funded its working capital needs primarily from operations, bank loans, and advances from shareholders and
intends to continue doing so in the near future to ensure sufficient working capital. As of September 30, 2025, the Company had cash and
cash equivalents of $
Notwithstanding the foregoing, management is evaluating different sources of funding for our future operations. These sources may include, but are not limited to, from current or new investors, officers and directors, debt financing and optimization of costs. The principal shareholder of the Company has pledged to use his personal assets as collateral to support the Company in securing bank loans whenever necessary. We believe that our working capital will be sufficient to fund our operations over at least the next 12 months from the date of this annual report. However, we may need additional cash resources in the future if we experience changed business conditions or other developments. We may also need additional cash resources in the future if we wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If we determine that the cash requirements would exceed our amounts of cash on hand, we may seek to issue debt or equity securities or obtain a credit facility.
F-24
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 4 — AQUISITION
On April 10, 2023, the Company signed a Share
Purchase Agreement (“Wenzhou SPA”) to purchase
The following table summarizes the fair value of the identifiable assets and liabilities acquired:
| Amount | ||||
| Total consideration for step acquisition | $ | |||
| Assets acquired and liabilities assumed: | ||||
| Cash acquired | ||||
| Other current assets | ||||
| Property and equipment, net | ||||
| Intangible assets, net | ||||
| Current liabilities | ( | ) | ||
| Deferred tax liabilities | ( | ) | ||
| Total net assets acquired | ||||
| Goodwill | $ | |||
The intangible assets are mainly attributable
to customized technology for water transportation equipment, which are amortized
Note 5 — DISCONTINUED OPERATIONS
On July 6, 2025, the Company’s PRC subsidiary,
Golden Sun Wenzhou, signed an agreement with a third party to sell
The Company determined that the disposal met the criteria to be classified as a discontinued operation and, as a result, the historical financial results are reflected in the Company’s consolidated financial statements as a discontinued operation. The disposal represents a strategic shift that has a significant effect on the Company’s operations and financial results, which trigger discontinued operations accounting in accordance with ASC 205-20-45. The assets and liabilities related to the discontinued operations were retroactively classified as assets/liabilities of discontinued operations, while results of operations related to the discontinued operations, including comparatives, were retroactively reported as loss from discontinued operations for years ended 2025, 2024 and 2023, respectively.
F-25
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 5 — DISCONTINUED OPERATIONS (continued)
The aggregated financial results of the discontinued business are set forth below:
| For the Years Ended September 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Cost of revenues | ||||||||||||
| Gross profit | ||||||||||||
| Operating expenses | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Total other income (expenses), net | ( | ) | ( | ) | ||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ||||||||
| Income taxes provision | ||||||||||||
| Income (loss) from discontinued operations, net of tax | $ | $ | ( | ) | $ | ( | ) | |||||
Assets and liabilities of the discontinued operations:
| September 30, 2025 |
September 30, 2024 |
||||||
| ASSETS | |||||||
| CURRENT ASSETS: | |||||||
| Cash and cash equivalents | $ | $ | |||||
| Contract assets | |||||||
| Inventories | |||||||
| Prepayments and other current assets | |||||||
| TOTAL CURRENT ASSETS | |||||||
| NON-CURRENT ASSETS: | |||||||
| Property, equipment and intangible assets, net | |||||||
| Operating lease right-of-use assets, net | |||||||
| Prepayments and other non-current assets | |||||||
| TOTAL NON-CURRENT ASSETS | |||||||
| TOTAL ASSETS | $ | $ | |||||
| LIABILITIES AND EQUITY | |||||||
| CURRENT LIABILITIES: | |||||||
| Accounts payable | $ | $ | |||||
| Deferred revenue | |||||||
| Accrued expenses and other liabilities | |||||||
| Refund liabilities | |||||||
| Loan from third parties | |||||||
| Operating lease liabilities-current | |||||||
| Taxes payable | |||||||
| TOTAL CURRENT LIABILITIES | |||||||
| NON-CURRENT LIABILITIES: | |||||||
| Operating lease liabilities-non-current | |||||||
| Due to a related party | |||||||
| Long-term loan from third party | |||||||
| TOTAL NON-CURRENT LIABILITIES | |||||||
| TOTAL LIABILITIES | $ | $ | |||||
F-26
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 6 — ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
| September 30, 2025 | September 30, 2024 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for credit losses | ||||||||
| Accounts receivable, net | $ | $ | ||||||
Allowance for credit losses movement:
| September 30, 2025 | September 30, 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision | ||||||||
| Written off | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
Note 7 — INVENTORIES
Inventories consisted of the following:
| September 30, 2025 | September 30, 2024 | |||||||
| Finished goods | $ | $ | ||||||
Inventory write
down was $
F-27
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 8 — PREPAYMENTS AND OTHER ASSETS, NET
Prepayments and other assets, net consisted of the following:
| September 30, 2025 | September 30, 2024 | |||||||
| Prepaid rents | $ | $ | ||||||
| Prepaid service fee (a) | ||||||||
| E-commerce business (b) | ||||||||
| Advance to employees (c) | ||||||||
| Security deposits | ||||||||
| Prepaid board compensation | ||||||||
| Equity investment disposition consideration receivable | ||||||||
| Others (d) | ||||||||
| Prepayment and other assets, net | $ | $ | ||||||
| Including: | ||||||||
| Prepayment and other current assets, net | $ | $ | ||||||
| Prepayments and other non-current assets, net | $ | $ | ||||||
| (a) |
| (b) |
| (c) |
| (d) |
F-28
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 9 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consist of the following:
| September 30, 2025 | September 30, 2024 | |||||||
| Office equipment | $ | $ | ||||||
| Buildings | ||||||||
| Leasehold improvements | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expenses
for the years ended September 30, 2025, 2024 and 2023 amounted to $
Note 10 — INTANGIBLE ASSETS, NET
Intangible assets, net, consist of the following:
| September 30, 2025 | September 30, 2024 | |||||||
| Software | $ | $ | ||||||
| Customized technology for water transportation equipment | ||||||||
| Subtotal | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization expenses
for the years ended September 30, 2025, 2024 and 2023 amounted to $
F-29
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 11 — LONG-TERM INVESTMENTS
| Equity investments without readily determinable fair value(a) | Equity investments accounted for using the equity method(b) | Total | ||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | |||||||||
| Addition | ||||||||||||
| Share of loss in equity method investee | ( | ) | ( | ) | ||||||||
| Foreign exchange translation effect | ||||||||||||
| Balance as of September 30, 2023 | ||||||||||||
| Share of loss in equity method investee | ( | ) | ( | ) | ||||||||
| Foreign exchange translation effect | ||||||||||||
| Balance as of September 30, 2024 | ||||||||||||
| Addition | ||||||||||||
| Share of loss in equity method investee | ( | ) | ( | ) | ||||||||
| Disposal | ( | ) | ( | ) | ||||||||
| Foreign exchange translation effect | ( | ) | ( | ) | ( | ) | ||||||
| Balance as of September 30, 2025 | $ | $ | $ | |||||||||
| (a) |
| (b) | On February 24, 2023, the Company entered into an agreement with a third party to invest and obtain
The controlling shareholder of Zhejiang Fuyouyuan is Ms. Xiuhua Ye, an immediate family member of Mr. Xueyuan Weng , the CEO of the Company, and the Company considers it has significant influence over Zhejiang Fuyouyuan. As a result, the Company accounted for such investment using equity method and recorded share of loss amounted to $
Due to continuous losses, the Company disposal |
As of September 30, 2025, the Company believes there was material market environment change or any other factor that indicating the fair value of other investment was less than its carrying value, hence, the Company concluded there is no impairment of the above investment.
F-30
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 12 — LeaseS
The Company has several operating leases for offices.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expenses
for the years ended September 30, 2025, 2024 and 2023 were $
The table below presents the operating lease related assets and liabilities recorded on the consolidated balance sheets.
| September 30, 2025 | September 30, 2024 | |||||||
| Operating lease right-of-use assets, net | $ | $ | ||||||
| Operating lease liabilities - current | $ | $ | ||||||
| Operating lease liabilities - non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of September 30, 2025:
| Remaining lease term and discount rate: | ||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % | |||
The following is a schedule of maturities of lease liabilities as of September 30, 2025:
| Twelve months ending September 30, | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
F-31
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 13 — BANK LOANS
Bank loans represent amounts due to various banks.
The principal of the borrowings is due at maturity. Accrued interest is due either monthly or quarterly.
| September 30, 2025 |
September 30, 2024 |
|||||||
| Zhejiang Wenzhou Lucheng Rural Commercial Bank Company Limited (a) | $ | $ | ||||||
| Zhejiang Wenzhou Longwan Rural Commercial Bank (“Longwan RCB”) (b) | ||||||||
| Wenzhou Minshang Bank (c) | ||||||||
| Total | ||||||||
| Less: short-term bank loans | ( |
) | ||||||
| Less: Long-term bank loans - current portion | ( |
) | ( |
) | ||||
| Long-term bank loans - non-current portion | $ | $ | ||||||
| (a) | |
| (b) | |
| (c) | On February 15, 2023, the Company entered into a loan agreement with Wenzhou Minshang Bank to obtain a loan of $ |
For the years ended September 30, 2025, 2024 and
2023, the weighted average interest rate for the bank loans was approximately
The repayment schedule for the bank loans is as follows:
| Twelve months ending September 30, | Repayment | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total | $ | |||
F-32
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 14 — CONVERTIBLE NOTE
On October 28, 2024, the Company entered into
the Securities Purchase Agreement with the Investors, to issue and sell to the Investors (i) a senior secured convertible note in an aggregate
original principal amount of $
The Company assessed that the freestanding warrants issued in connection with the Note met the definition of a freestanding derivative instrument pursuant to ASC 815 and were accounted for as warrant liabilities measured at fair value on a recurring basis.
The Company elected to recognize the Note at fair
value and therefore there was no further evaluation of embedded conversion option features for bifurcation. The proceeds from Notes were
allocated to the Note and warrants based on their fair value. Based on the valuation report performed by an independent valuation firm,
the fair value of the Notes upon issuance was determined to be $
For the year ended September 30, 2025, the Note
was fully converted into
Note 15 — ACCRUED EXPENSE AND OTHER LIABILITIES
Accrued expenses and other liabilities consisted of the following:
| September 30, 2025 |
September 30, 2024 |
|||||||
| Payroll payables | $ | $ | ||||||
| Acquisition consideration payable (a) | ||||||||
| Professional fee and others | ||||||||
| Total | $ | $ | ||||||
| (a) |
F-33
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 16 — RELATED PARTIES BALANCES AND TRANSACTIONS
Due to a related party
Due to a related party amounted to $
Revenue earned from related parties
For the years ended September 30, 2025, 2024 and
2023, the Company earned revenue from related parties of , $
Guarantee provided by related parties
Several related parties guaranteed the repayment of the Company’s bank loans. (See Note 13)
Note 17 — TAXES
(a) Corporate Income Taxes (“CIT”)
Cayman Islands
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains, or appreciation and there is no taxation in inheritance or estate duty. There are no other taxes likely to be material to the Company levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of our shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Ordinary Shares, nor will gains derived from the disposal of our shares be subject to Cayman Islands income or corporation tax.
F-34
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 17 — TAXES (continued)
(a) Corporate Income Taxes (“CIT”) (continued)
Hong Kong
Under Hong Kong tax laws, Shanghai Golden Sun
and Hong Kong Golden Sun are subject to a statutory income tax rate at
PRC
Under the Enterprise Income Tax (“EIT”)
Law of PRC, domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified
The PRC tax system is subject to substantial uncertainties. There can be no assurance that changes in PRC tax laws or their interpretation or their application will not subject the Company’s PRC entities to substantial PRC taxes in the future.
| i) |
| For the Years Ended September 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Current income tax | $ | $ | $ | |||||||||
| Deferred income tax | ( | ) | ||||||||||
| Total income tax (benefit) provision | $ | ( | ) | $ | $ | |||||||
| ii) |
| For the Years Ended September 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Income benefit computed based on PRC statutory rate | ( | ) | ( | ) | ( | ) | ||||||
| Tax effect of different tax rates in other jurisdictions | ||||||||||||
| Impact of preferential tax | ||||||||||||
| Tax effect of unrecognized income or loss | ( | ) | ||||||||||
| Change in valuation allowance | ( | ) | ( | ) | ||||||||
| Impact of tax rate change | ||||||||||||
| Non-deductible items and others* | ||||||||||||
| Income tax (benefit) provision | $ | ( | ) | $ | $ | |||||||
| * |
F-35
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 17 — TAXES (continued)
(a) Corporate Income Taxes (“CIT”) (continued)
| iii) |
| September 30, 2025 |
September 30, 2024 |
||||||
| Deferred tax assets: | |||||||
| Net operating loss carry-forward | $ | $ | |||||
| Valuation allowance | ( |
) | ( |
) | |||
| Total deferred tax assets | $ | $ | |||||
| Deferred tax liabilities: | |||||||
| Increase in fair value of intangible assets acquired through acquisition | $ | $ | |||||
| Deferred tax liabilities | $ | $ | |||||
| ⅳ) |
| September 30, 2025 | September 30, 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Charge (credit) to tax expense in current year | ( | ) | ||||||
| Foreign currency translation adjustments | ||||||||
| Ending balance | $ | $ | ||||||
As of September 30, 2025, the total of net operating
losses carried forward was $
F-36
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 17 — TAXES (continued)
(b) Taxes payable
Taxes payable consist of the following:
| September 30, 2025 |
September 30, 2024 |
||||||
| Income tax payable | $ | $ | |||||
| Value-added tax payable | |||||||
| Other taxes payable | |||||||
| Total taxes payable | $ | $ | |||||
A reconciliation of the beginning and ending amount of income tax payable as follows:
| September 30, 2025 |
September 30, 2024 |
||||||
| Balance at beginning of period | $ | $ | |||||
| (Decrease) Increase related to current year tax positions | ( |
) | |||||
| Foreign exchange translation effect | ( |
) | |||||
| Balance at end of period | $ | $ | |||||
According to the PRC Tax Administration and Collection
Law, the statute of limitation is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the
withholding agent. The statute of limitation is extended to five years under special circumstances where the underpayment of taxes is
more than RMB
Note 18 — SHAREHOLDERS’ EQUITY
Ordinary shares
Effective on April 18, 2024, the Company’s shareholders approved
the consolidation of the Company’s authorised and issued share capital, at a ratio of 10:1, such that the authorised share capital
of the Company was consolidated from $
The share consolidation was accounted for on a retroactive basis pursuant to ASC 260. All ordinary shares and per share data for all periods have been retroactively restated accordingly.
On September 25, 2025, the Company’s shareholders
approved to (i) increase share capital to $
As of September 30, 2025, the Company had an
aggregate of
As of September 30, 2024, the Company had an
aggregate of
F-37
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 18 — SHAREHOLDERS’ EQUITY (continued)
Shares issued for service
On February 20,
2023, the Board of Directors of the Company approved to reward Ms. Huang Yunan, the Chief Financial Officer for her past efforts in IPO
with a one-time award of
On February 20,
2023, the Board of Directors of the Company approved to reward a third-party consultant for his past efforts in IPO with a one-time award
of
Shares issued for conversion of convertible note
In connection with
the Note issuance, the Company issued
Warrants
In connection with closing of the Note, the Company
granted to the Investor the three-year warrants, to acquire up to that number of shares of common shares of the Company equal to
The Company determined that the warrants were derivatives that were accounted for as warrant liabilities measured at fair value on a recurring basis. The Company engaged a third-party valuation firm to perform the valuation of warrant liabilities using discounted cash flow method approach with significant unobservable inputs to measure the fair value of the warrant liability (Level 3).
For the year ended September 30, 2025, the Company
issued
F-38
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 18 — SHAREHOLDERS’ EQUITY (continued)
Statutory reserve and restricted net assets
The Company’s ability to pay dividends may depend on the Company receiving distributions of funds from its PRC subsidiary. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations.
The Company’s PRC subsidiaries are required
to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based
on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations
to the statutory surplus reserve are required to be at least
Each of the schools is required to appropriate
Because the Company’s operating subsidiaries
in the PRC can only be paid out of distributable profits reported in accordance with PRC accounting standards, the Company’s operating
subsidiaries in the PRC are restricted from transferring a portion of their net assets to the Company. The restricted amounts include
the paid-in capital and statutory reserves of the Company’s entities in the PRC. The aggregate amount of paid-in capital, statutory
reserves, and development reserve which represented the amount of net assets of the Company’s operating subsidiaries in the PRC
not available for distribution amounted to $
Note 19 — COMMITMENTS AND CONTINGENCIES
Contingencies
From time to time, the Company is subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity. As of September 30, 2025 and 2024, the Company had no material outstanding litigations.
Commitments
The Company had various outstanding bank loans (details refer to Note 13) and non-cancellable operating lease agreements (details refer to Note 12).
F-39
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 20 — SEGMENT INFORMATION
ASC 280, “Segment Reporting”, establishes
standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure
as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s
business segments. The Company uses the “management approach” in determining reportable operating segments. The management
approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating
decisions and assessing performance as the source for determining the Company’s reportable segments. The Company has determined
that it has
Selected financial information is presented below:
| Education | E-commerce and others | Total | ||||||||||||||||||||||||||||||||||
| For the Years End September 30, |
For the Years End September 30, |
For the Years End September 30, |
||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||||||||||||||||||
| Gross profit | ( |
) | ||||||||||||||||||||||||||||||||||
| Interest expenses, net | ||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||||||||||||||||||
| Segment assets | ||||||||||||||||||||||||||||||||||||
| Segment loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||
Note 21 — SUBSEQUENT EVENTS
On December 9, 2025, the board of directors (the
“Board”) of Company approved the adoption of the 2025 Equity Incentive Plan (the “2025 Plan”) and forms of award
agreements (the “Award Agreements”) to be used to grant awards under the 2025 Plan, effective on December 10, 2025 (“Effective
Date”). The 2025 Plan provides for the grant of awards representing the right to acquire, or based on the value of, the Company’s
Class A ordinary shares, and includes option awards, stock appreciation rights awards, restricted stock awards, restricted stock unit
awards, performance awards, dividend equivalent awards and other share or cash based awards (each, and “Award”, collectively,
the “Awards”) to eligible participants of the 2025 Plan or any related entity, as defined in the 2025 Plan. The maximum number
of Class A ordinary shares that may be issued under the 2025 Plan is
The Company evaluated all events and transactions that occurred after
September 30, 2025 up through the date the Group issued these consolidated financial statements. Other than the event disclosed above,
no other subsequent events have occurred that would require recognition or disclosure in the Company’s consolidated financial statements.
On January 12, 2026, the Company granted an aggregate of
F-40
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 22 — CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
The Company’s
PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. The payment of dividends by
entities organized in the PRC is subject to limitations, procedures and formalities. Regulations in the PRC currently permit payment of
dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in the PRC. The Company’s
subsidiaries are also required to set aside at least
In addition, the Company’s operations and revenues are conducted and generated in the PRC, all of the Company’s revenues being earned and currency received are denominated in RMB. RMB is subject to the foreign exchange control regulation in China, and, as a result, the Company may be unable to distribute any dividends outside of China due to PRC foreign exchange control regulations that restrict the Company’s ability to convert RMB into USD.
Regulation S-X
requires the condensed financial information of registrant shall be filed when the restricted net assets of consolidated subsidiaries
exceed
Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted. The Company’s investment in subsidiary is stated at cost plus equity in undistributed earnings of subsidiaries.
Due to subsidiaries, net, on the Condensed Balance Sheets, is comprised of the Parent Company’s net investment deficit in its subsidiaries under the equity method of accounting.
GOLDEN SUN TECHNOLOGY GROUP LIMITED
PARENT COMPANY BALANCE SHEETS
| September 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepayments and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Investments in subsidiaries | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accrued expenses and other liabilities | $ | $ | ||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Authorized share capital of $ | ||||||||
| Class A ordinary shares | $ | $ | ||||||
| Class B ordinary shares | ||||||||
| Additional paid in capital | ||||||||
| Statutory reserves | ||||||||
| Accumulated deficits | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
F-41
GOLDEN SUN TECHNOLOGY GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars (“$”))
Note 22 — CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (continued)
GOLDEN SUN TECHNOLOGY GROUP LIMITED
PARENT COMPANY STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE(LOSS) INCOME
| For the Years Ended September 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Equity in gain (loss) of subsidiaries | $ | $ | ( | ) | $ | ( | ) | |||||
| Change in fair value of convertible note | ( | ) | ||||||||||
| Change in fair value of warrants liabilities | ( | ) | ||||||||||
| General and administration expenses and others | ( | ) | ( | ) | ( | ) | ||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
| Foreign currency translation adjustment | ( | ) | ||||||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
GOLDEN SUN TECHNOLOGY GROUP LIMITED
PARENT COMPANY STATEMENTS OF CASH FLOWS
| For the Years Ended September 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Equity in loss of subsidiaries | ( | ) | ||||||||||
| Change in fair value of convertible note | ||||||||||||
| Change in fair value of warrants liabilities | ||||||||||||
| Share based compensations | ||||||||||||
| Prepayments and other assets | ( | ) | ( | ) | ( | ) | ||||||
| Accrued expenses and other liabilities | ||||||||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| (Loan to) payment from subsidiaries | ( | ) | ( | ) | ||||||||
| NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES | ( | ) | ( | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Proceeds from convertible note | ||||||||||||
| Advance from a related party | ||||||||||||
| NET CASH PROVIEDED BY FINANCING ACTIVITIES | ||||||||||||
| CHANGES IN CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||||||
| CASH AND CASH EQUIVALENTS BEGINNING OF YEAR | ||||||||||||
| CASH AND CASH EQUIVALENTS END OF YEAR | $ | $ | $ | |||||||||
F-42
Exhibit 2.3
Description of Securities
The following securities of Golden Sun Technology Group Limited are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| Class A Ordinary Share, par value US$0.005 per share | GSUN | NASDAQ Capital Market |
The following description of our share capital and provisions of our amended and restated memorandum and articles of association, as amended from time to time, are summaries and do not purport to be complete. Reference is made to our amended and restated memorandum and articles of association, copies of which are filed as an exhibit to the registration statement of which this prospectus is a part (and which is referred to in this section as, respectively, the “memorandum” and the “articles”).
We were incorporated as an exempted company with limited liability under the Companies Act (2021 Revision) of the Cayman Islands, or the “Cayman Companies Act,” on September 20, 2018. A Cayman Islands exempted company:
| ● | is a company that conducts its business mainly outside the Cayman Islands; | |
| ● | is prohibited from trading in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the exempted company carried on outside the Cayman Islands (and for this purpose can effect and conclude contracts in the Cayman Islands and exercise in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands); | |
| ● | does not have to hold an annual general meeting; | |
| ● | does not have to make its register of members open to inspection by shareholders of that company; | |
| ● | may obtain an undertaking against the imposition of any future taxation; | |
| ● | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; | |
| ● | may register as a limited duration company; and | |
| ● | may register as a segregated portfolio company. |
Ordinary Shares
Our authorized share capital is US$1,000,000 divided into 180,000,000 Class A Ordinary Shares with a par value of US$0.005 each and 20,000,000 Class B Ordinary Shares with a par value of US$0.005 each. All of our issued and outstanding Class A Ordinary Shares and Class B Ordinary Shares (together, “Ordinary Shares”) are fully paid and non-assessable. Our Ordinary Shares are issued in registered form, and are issued when registered in our register of members. Unless the board of directors determine otherwise, each holder of our Ordinary Shares will not receive a certificate in respect of such Ordinary Shares. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their Ordinary Shares. We may not issue shares or warrants to bearer.
Subject to the provisions of the Cayman Companies Act and our articles regarding redemption and purchase of the shares, the directors have general and unconditional authority to allot (with or without confirming rights of renunciation), grant options over or otherwise deal with any unissued shares to such persons, at such times and on such terms and conditions as they may decide. Such authority could be exercised by the directors to allot shares which carry rights and privileges that are preferential to the rights attaching to Ordinary Shares. No share may be issued at a discount except in accordance with the provisions of the Cayman Companies Act. The directors may refuse to accept any application for shares, and may accept any application in whole or in part, for any reason or for no reason.
Transfer Agent and Registrar
The transfer agent and registrar for our Class A Ordinary Shares is Transhare Corporation, at 17755 US Hwy 19 N, Clearwater, FL 33764.
Dividends
Subject to the provisions of the Cayman Companies Act and any rights attaching to any class or classes of shares under and in accordance with the articles:
| (a) | the directors may declare dividends or distributions out of our funds which are lawfully available for that purpose; and | |
| (b) | our shareholders may, by ordinary resolution, declare dividends but no such dividend shall exceed the amount recommended by the directors. |
Subject to the requirements of the Cayman Companies Act regarding the application of a company’s share premium account and with the sanction of an ordinary resolution, dividends may also be declared and paid out of any share premium account. The directors when paying dividends to shareholders may make such payment either in cash or in specie.
Unless provided by the rights attached to a share, no dividend shall bear interest.
Voting Rights
Subject to any rights or restrictions as to voting attached to any shares, unless any share carries special voting rights, on a show of hands every shareholder who is present in person and every person representing a shareholder by proxy shall have one vote. Each holder of Ordinary Shares shall, on a poll, be entitled to one vote for each Ordinary Share he or she holds save that each holder of Class B Ordinary Shares shall, on a poll, be entitled to exercise 50 votes for each Class B Ordinary Share he or she holds on any and all matters. In addition, all shareholders holding shares of a particular class are entitled to vote at a meeting of the holders of that class of shares. Votes may be given either personally or by proxy.
Variation of Rights of Shares
Whenever our capital is divided into different classes of shares, the rights attaching to any class of share (unless otherwise provided by the terms of issue of the shares of that class) may be varied either with the consent in writing of the holders of not less than two-thirds of the issued shares of that class, or with the sanction of a resolution passed by a majority of not less than two-thirds of the holders of shares of the class present in person or by proxy at a separate general meeting of the holders of shares of that class.
Unless the terms on which a class of shares was issued state otherwise, the rights conferred on the shareholder holding shares of any class shall not be deemed to be varied by the creation or issue of further shares ranking pari passu with the existing shares of that class.
Alteration of Share Capital
Subject to the Cayman Companies Act, we may, by ordinary resolution:
| (a) | increase our share capital by new shares of the amount fixed by that ordinary resolution and with the attached rights, priorities and privileges set out in that ordinary resolution; |
| (b) | consolidate and divide all or any of our share capital into shares of larger amount than our existing shares; |
| (c) | convert all or any of our paid up shares into stock, and reconvert that stock into paid up shares of any denomination; |
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| (d) | sub-divide our shares or any of them into shares of an amount smaller than that fixed, so, however, that in the sub-division, the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; and | |
| (e) | cancel shares which, at the date of the passing of that ordinary resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled or, in the case of shares without nominal par value, diminish the number of shares into which our capital is divided. |
Subject to the Cayman Companies Act and to any rights for the time being conferred on the shareholders holding a particular class of shares, we may, by special resolution, reduce our share capital in any way.
Calls on Shares and Forfeiture
Subject to the terms of allotment, the directors may make calls on the shareholders in respect of any monies unpaid on their shares including any premium and each shareholder shall (subject to receiving at least 14 clear days’ notice specifying when and where payment is to be made), pay to us the amount called on his shares. Shareholders registered as the joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or if no rate is fixed, at the rate of ten percent per annum. The directors may waive payment of the interest wholly or in part.
We have a first and paramount lien on all shares (whether fully paid up or not) registered in the name of a shareholder (whether solely or jointly with others). The lien is for all monies payable to us by the shareholder or the shareholder’s estate:
| (a) | either alone or jointly with any other person, whether or not that other person is a shareholder; and |
| (b) | whether or not those monies are presently payable. |
At any time the directors may declare any share to be wholly or partly exempt from the lien on shares provisions of the articles.
We may sell, in such manner as the directors may determine, any share on which the sum in respect of which the lien exists is presently payable, if due notice that such sum is payable has been given (as prescribed by the articles) and, within 14 days of the date on which the notice is deemed to be given under the articles, such notice has not been complied with.
Unclaimed Dividend
A dividend that remains unclaimed for a period of six years after it became due for payment shall be forfeited to, and shall cease to remain owing by, the company.
Forfeiture or Surrender of Shares
If a shareholder fails to pay any call, the directors may give to such shareholder not less than 14 clear days’ notice requiring payment and specifying the amount unpaid including any interest which may have accrued, any expenses which have been incurred by us due to that person’s default and the place where payment is to be made. The notice shall also contain a warning that if the notice is not complied with, the shares in respect of which the call is made will be liable to be forfeited.
If such notice is not complied with, the directors may, before the payment required by the notice has been received, resolve that any share the subject of that notice be forfeited (which forfeiture shall include all dividends or other monies payable in respect of the forfeited share and not paid before such forfeiture).
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A forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the directors determine and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the directors think fit.
A person whose shares have been forfeited shall cease to be a shareholder in respect of the forfeited shares, but shall, notwithstanding such forfeiture, remain liable to pay to us all monies which at the date of forfeiture were payable by him to us in respect of the shares, together with all expenses and interest from the date of forfeiture or surrender until payment, but his liability shall cease if and when we receive payment in full of the unpaid amount.
A declaration, whether statutory or under oath, made by a director or the secretary shall be conclusive evidence that the person making the declaration is a director or secretary and that the particular shares have been forfeited or surrendered on a particular date.
Subject to the execution of an instrument of transfer, if necessary, the declaration shall constitute good title to the shares.
Share Premium Account
The directors shall establish a share premium account and shall carry the credit of such account from time to time to a sum equal to the amount or value of the premium paid on the issue of any share or capital contributed or such other amounts required by the Cayman Companies Act.
Redemption and Purchase of Own Shares
Subject to the Cayman Companies Act and any rights for the time being conferred on the shareholders holding a particular class of shares, we may by action of our directors:
| (a) | issue shares that are to be redeemed or liable to be redeemed, at our option or the shareholder holding those redeemable shares, on the terms and in the manner our directors determine before the issue of those shares; | |
| (b) | with the consent by special resolution of the shareholders holding shares of a particular class, vary the rights attaching to that class of shares so as to provide that those shares are to be redeemed or are liable to be redeemed at our option on the terms and in the manner which the directors determine at the time of such variation; and | |
| (c) | purchase all or any of our own shares of any class including any redeemable shares on the terms and in the manner which the directors determine at the time of such purchase. |
We may make a payment in respect of the redemption or purchase of its own shares in any manner authorized by the Cayman Companies Act, including out of any combination of capital, our profits and the proceeds of a fresh issue of shares.
When making a payment in respect of the redemption or purchase of shares, the directors may make the payment in cash or in specie (or partly in one and partly in the other) if so authorized by the terms of the allotment of those shares or by the terms applying to those shares, or otherwise by agreement with the shareholder holding those shares.
Conversion Rights
Each Class B Ordinary Share shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such Share, at the office of the Company or any transfer agent for such Shares, into one fully paid and non-assessable Class A Ordinary Share. The directors shall at all times reserve and keep available out of the Company’s authorized but unissued Class A Ordinary Shares, solely for the purpose of effecting the conversion of the Class B Ordinary Shares, such number of its Class A Ordinary Shares as shall from time to time be sufficient to effect the conversion of all outstanding Class B Ordinary Shares; and if at any time the number of authorized but unissued Class A Ordinary Shares shall not be sufficient to effect the conversion of all then outstanding Class B Ordinary Shares, in addition to such other remedies as shall be available to the holders of such Class B Ordinary Shares, the directors will take such action as may be necessary to increase its authorized but unissued Class A Ordinary Shares to such number of Shares as shall be sufficient for such purposes. All conversions of Class B Ordinary Shares to Class A Ordinary Shares shall be effected by way of redemption or repurchase by the Company of the relevant Class B Ordinary Shares and the simultaneous issue of Class A Ordinary Shares in consideration for such redemption or repurchase. The shareholder and the Company will procure that any and all necessary corporate actions are taken to effect such conversion.
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Transfer of Shares
Our board of directors may, in its absolute discretion, decline to register any transfer of any Ordinary Share that has not been fully paid up or is subject to a company lien. Our board of directors may also decline to register any transfer of such Ordinary Share unless:
| (a) | the instrument of transfer is lodged with the Company, accompanied by the certificate for the Ordinary Shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; | |
| (b) | the instrument of transfer is in respect of only one class of shares; | |
| (c) | the instrument of transfer is properly stamped, if required; | |
| (d) | the Ordinary Share transferred is fully paid and free of any lien in favor of us; | |
| (e) | any fee related to the transfer has been paid to us; and | |
| (f) | the transfer is not to more than four joint holders. |
If our directors refuse to register a transfer, they are required, within three months after the date on which the instrument of transfer was lodged, to send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, on 14 calendar days’ notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and our register of members closed at such times and for such periods as our board of directors may from time to time determine. The registration of transfers, however, may not be suspended, and the register may not be closed, for more than 30 days in any year.
Inspection of Books and Records
Shareholders of Cayman Islands exempted companies have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies (other than copies of our memorandum and articles of association, register of mortgages and charges, and any special resolutions passed by our shareholders). Under Cayman Islands law, the names of our current directors can be obtained from a search conducted at the Registrar of Companies. Pursuant to our articles of association, shareholders will not have any right to inspect any account or book or document of the Company except as conferred by Companies Act or as authorized by our directors or by ordinary resolution of our shareholders.
General Meetings
As a Cayman Islands exempted company, we are not obligated by the Cayman Companies Act to call shareholders’ annual general meetings; accordingly, we may, but shall not be obliged to, in each year hold a general meeting as an annual general meeting. Any annual general meeting held shall be held at such time and place as may be determined by our board of directors. All general meetings other than annual general meetings shall be called extraordinary general meetings.
The directors may convene general meetings whenever they think fit. General meetings shall also be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than ten percent of the rights to vote at such general meeting in accordance with the notice provisions in the articles, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than 21 clear days’ after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us.
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At least 14 clear days’ notice of an extraordinary general meeting and 21 clear days’ notice of an annual general meeting shall be given to shareholders entitled to attend and vote at such meeting. Among other things, the notice shall specify the place, the day and the hour of the meeting and the general nature of that business. In addition, if a resolution is proposed as a special resolution, the text of that resolution shall be given to all shareholders. Notice of every general meeting shall also be given to the directors and our auditors.
Subject to the Cayman Companies Act and with the consent of the shareholders who, individually or collectively, hold at least 90 percent of the voting rights of all those who have a right to vote at a general meeting, a general meeting may be convened on shorter notice.
A quorum shall consist of the presence (whether in person or represented by proxy) of one or more shareholders holding shares that represent not less than one-third of the outstanding shares carrying the right to vote at such general meeting.
If, within 15 minutes from the time appointed for the general meeting, or at any time during the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be cancelled. In any other case it shall stand adjourned to the same time and place seven days or to such other time or place as is determined by the directors.
The chairman may, with the consent of a meeting at which a quorum is present, adjourn the meeting. When a meeting is adjourned for seven days or more, notice of the adjourned meeting shall be given in accordance with the articles.
At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before, or on, the declaration of the result of the show of hands) demanded by the chairman of the meeting or by at least two shareholders having the right to vote on the resolutions or one or more shareholders present who together hold not less than ten percent of the voting rights of all those who are entitled to vote on the resolution. Unless a poll is so demanded, a declaration by the chairman as to the result of a resolution and an entry to that effect in the minutes of the meeting, shall be conclusive evidence of the outcome of a show of hands, without proof of the number or proportion of the votes recorded in favor of, or against, that resolution.
If a poll is duly demanded it shall be taken in such manner as the chairman directs and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.
In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall not be entitled to a second or casting vote.
Directors
We may by ordinary resolution, from time to time, fix the maximum and minimum number of directors to be appointed. Under the Articles, we are required to have a minimum of one director and the maximum number of Directors shall be unlimited.
A director may be appointed by ordinary resolution or by the directors. Any appointment may be to fill a vacancy or as an additional director.
Unless the remuneration of the directors is determined by the shareholders by ordinary resolution, the directors shall be entitled to such remuneration as the directors may determine.
The shareholding qualification for directors may be fixed by our shareholders by ordinary resolution and unless and until so fixed no share qualification shall be required.
Unless removed or re-appointed, each director shall be appointed for a term expiring at the next-following annual general meeting, if one is held. At any annual general meeting held, our directors will be elected by an ordinary resolution of our shareholders. At each annual general meeting, each director so elected shall hold office for a one-year term and until the election of their respective successors in office or removed.
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A director may be removed by ordinary resolution.
A director may at any time resign or retire from office by giving us notice in writing. Unless the notice specifies a different date, the director shall be deemed to have resigned on the date that the notice is delivered to us.
Subject to the provisions of the articles, the office of a director may be terminated forthwith if:
| (a) | he is prohibited by the law of the Cayman Islands from acting as a director; | |
| (b) | he is made bankrupt or makes an arrangement or composition with his creditors generally; | |
| (c) | he resigns his office by notice to us; | |
| (d) | he only held office as a director for a fixed term and such term expires; | |
| (e) | in the opinion of a registered medical practitioner by whom he is being treated he becomes physically or mentally incapable of acting as a director; | |
| (f) | he is given notice by the majority of the other directors (not being less than two in number) to vacate office (without prejudice to any claim for damages for breach of any agreement relating to the provision of the services of such director); | |
| (g) | he is made subject to any law relating to mental health or incompetence, whether by court order or otherwise; or | |
| (h) | without the consent of the other directors, he is absent from meetings of directors for continuous period of six months. |
Each of the compensation committee and the nominating and corporate governance committee shall consist of at least three directors and the majority of the committee members shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules. The audit committee shall consist of at least three directors, all of whom shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules and will meet the criteria for independence set forth in Rule 10A-3 or Rule 10C-1 of the Exchange Act.
Powers and Duties of Directors
Subject to the provisions of the Cayman Companies Act and our amended and restated memorandum and articles of association, our business shall be managed by the directors, who may exercise all our powers. No prior act of the directors shall be invalidated by any subsequent alteration of our memorandum or articles of association. To the extent allowed by the Cayman Companies Act, however, shareholders may by special resolution validate any prior or future act of the directors which would otherwise be in breach of their duties.
The directors may delegate any of their powers to any committee consisting of one or more persons who need not be shareholders and may include non-directors so long as the majority of those persons are directors; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the directors. Our board of directors has established an audit committee, compensation committee, and nomination and corporate governance committee.
The board of directors may establish any local or divisional board of directors or agency and delegate to it its powers and authorities (with power to sub-delegate) for managing any of our affairs whether in the Cayman Islands or elsewhere and may appoint any persons to be members of a local or divisional board of directors, or to be managers or agents, and may fix their remuneration.
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The directors may appoint any person, either generally or in respect of any specific matter, to be our agent with or without authority for that person to delegate all or any of that person’s powers.
The directors may appoint any person, whether nominated directly or indirectly by the directors, to be an attorney or authorized signatory of the Company and for such period and subject to such conditions as they may think fit. The powers, authorities and discretions, however, must not exceed those vested in, or exercisable, by the directors under the articles.
The board of directors may remove any person so appointed and may revoke or vary the delegation.
The directors may exercise all of our powers to borrow money and to mortgage or charge its undertaking, property and assets both present and future and uncalled capital or any part thereof, to issue debentures and other securities whether outright or as collateral security for any debt, liability or obligation of ours or our parent undertaking (if any) or any subsidiary undertaking of us or of any third party.
A director shall not, as a director, vote in respect of any contract, transaction, arrangement or proposal in which he has an interest which (together with any interest of any person connected with him) is a material interest (otherwise than by virtue of his interests, direct or indirect, in shares or debentures or other securities of, or otherwise in or through, us) and if he shall do so his vote shall not be counted, nor in relation thereto shall he be counted in the quorum present at the meeting, but (in the absence of some other material interest than is mentioned below) none of these prohibitions shall apply to:
| (a) | the giving of any security, guarantee or indemnity in respect of: |
| (i) | money lent or obligations incurred by him or by any other person for our benefit or any of our subsidiaries; or | |
| (ii) | a debt or obligation of ours or any of our subsidiaries for which the director himself has assumed responsibility in whole or in part and whether alone or jointly with others under a guarantee or indemnity or by the giving of security; |
| (b) | where we or any of our subsidiaries is offering securities in which offer the director is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which the director is to or may participate; | |
| (c) | any contract, transaction, arrangement or proposal affecting any other body corporate in which he is interested, directly or indirectly and whether as an officer, shareholder, creditor or otherwise howsoever, provided that he (together with persons connected with him) does not to his knowledge hold an interest representing one percent or more of any class of the equity share capital of such body corporate (or of any third body corporate through which his interest is derived) or of the voting rights available to shareholders of the relevant body corporate; | |
| (d) | any act or thing done or to be done in respect of any arrangement for the benefit of the employees of us or any of our subsidiaries under which he is not accorded as a director any privilege or advantage not generally accorded to the employees to whom such arrangement relates; or | |
| (e) | any matter connected with the purchase or maintenance for any director of insurance against any liability or (to the extent permitted by the Cayman Companies Act) indemnities in favor of directors, the funding of expenditure by one or more directors in defending proceedings against him or them or the doing of anything to enable such director or directors to avoid incurring such expenditure. |
A director may, as a director, vote (and be counted in the quorum) in respect of any contract, transaction, arrangement or proposal in which he has an interest which is not a material interest or as described above.
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Capitalization of Profits
The directors may resolve to capitalize:
| (a) | any part of our profits not required for paying any preferential dividend (whether or not those profits are available for distribution); or | |
| (b) | any sum standing to the credit of our share premium account or capital redemption reserve, if any. |
The amount resolved to be capitalized must be appropriated to the shareholders who would have been entitled to it had it been distributed by way of dividend and in the same proportions.
Liquidation Rights
If we are wound up, our shareholders may, subject to the articles and any other sanction required by the Cayman Companies Act, pass a special resolution allowing the liquidator to do either or both of the following:
| (a) | to divide in specie among the shareholders the whole or any part of our assets and, for that purpose, to value any assets and to determine how the division shall be carried out as between the shareholders or different classes of shareholders; and | |
| (b) | to vest the whole or any part of the assets in trustees for the benefit of shareholders and those liable to contribute to the winding up. |
The directors have the authority to present a petition for our winding up to the Grand Court of the Cayman Islands on our behalf without the sanction of a resolution passed at a general meeting.
Register of Members
Under the Cayman Companies Act, we must keep a register of members and there should be entered therein:
| ● | the names and addresses of the members of the company, a statement of the shares held by each member, which: |
| ○ | distinguishes each share by its number (so long as the share has a number); |
| ○ | confirms the amount paid, or agreed to be considered as paid, on the shares of each member; |
| ○ | confirms the number and category of shares held by each member; and |
| ○ | confirms whether each relevant category of shares held by a member carries voting rights under the Articles, and if so, whether such voting rights are conditional; |
| ● | the date on which the name of any person was entered on the register as a member; and |
| ● | the date on which any person ceased to be a member. |
Under Cayman Islands law, the register of members of our Company is prima facie evidence of the matters directed or authorized to be inserted therein by the Cayman Companies Act (that is, the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a shareholder registered in the register of members is deemed as a matter of the Cayman Islands law to have legal title to the shares as set against its name in the register of members.
However, there are certain limited circumstances where an application may be made to a Cayman Islands court for a determination on whether the register of members reflects the correct legal position. Further, the Cayman Islands court has the power to order that the register of members maintained by the company should be rectified, where it considers that the register of members does not reflect the correct legal position. If an application for an order for rectification of the register of members were made in respect of our ordinary shares, then the validity of such shares may be subject to re-examination by a Cayman Islands courts.
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Differences in Corporate Law
The Cayman Companies Act is derived, to a large extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Cayman Companies Act and the current Companies Act of the UK. In addition, the Cayman Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Cayman Companies Act applicable to us and the comparable laws applicable to companies incorporated in the State of Delaware in the United States.
Mergers and Similar Arrangements
The Cayman Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the shareholders and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.
A merger between a Cayman Islands parent company and its Cayman Islands subsidiary or subsidiaries does not require authorization by a resolution of shareholders. For this purpose a subsidiary is a company of which at least 90% of the issued shares entitled to vote are owned by the parent company.
The consent of each holder of a fixed or floating security interest of a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Except in certain limited circumstances, a dissenting shareholder of a Cayman Islands constituent company is entitled to payment of the fair value of his or her shares upon dissenting from a merger or consolidation. The exercise of such dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, except for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
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Separate from the statutory provisions relating to mergers and consolidations, the Cayman Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement. Any such arrangement must be approved by (a) a majority in number of the creditors or each class of creditors, as the case may be, with whom the arrangement is to be made, and who must, in addition, represent seventy-five percent in value of the creditors or each such class of creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose and (b) seventy-five percent in value of the shareholders of each class of shareholders, as the case may be, with whom the arrangement is to be made that are present and voting either in person or by proxy at a meeting, convened for that purpose, as applicable. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| (a) | the statutory provisions as to the required majority vote have been met; |
| (b) | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
| (c) | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
| (d) | the arrangement is not one that would more properly be sanctioned under some other provision of the Cayman Companies Act. |
When a takeover offer is made and accepted by holders of 90% of the shares affected within four months the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction is thus approved, or if a takeover offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits
In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company and as a general rule, a derivative action may not be brought by a minority shareholder. However, based on English law authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge:
| (a) | an act which is illegal or ultra vires with respect to the company and is therefore incapable of ratification by the shareholders; |
| (b) | an act which, although not ultra vires, requires authorization by a qualified (or special) majority (that is, more than a simple majority) which has not been obtained; and |
| (c) | an act which constitutes a “fraud on the minority” where the wrongdoers are themselves in control of the company. |
Indemnification of Directors and Executive Officers and Limitation of Liability
The Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our articles of association provide to the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director), and any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives against:
| (a) | all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by the existing or former director (including alternate director), secretary or officer in or about the conduct of our business or affairs or in the execution or discharge of the existing or former director (including alternate director), secretary’s or officer’s duties, powers, authorities or discretions; and |
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| (b) | without limitation to paragraph (a) above, all costs, expenses, losses or liabilities incurred by the existing or former director (including alternate director), secretary or officer in defending (whether successfully or otherwise) any civil, criminal, administrative or investigative proceedings (whether threatened, pending or completed) concerning us or our affairs in any court or tribunal, whether in the Cayman Islands or elsewhere. |
No such existing or former director (including alternate director), secretary or officer, however, shall be indemnified in respect of any matter arising out of his own dishonesty.
To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing or former director (including alternate director), secretary or any of our officers in respect of any matter identified in above on condition that the director (including alternate director), secretary or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the director (including alternate director), the secretary or that officer for those legal costs.
This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we intend to enter into indemnification agreements with our directors and executive officers that will provide such persons with additional indemnification beyond that provided in our articles of association.
Anti-Takeover Provisions in Our Articles
Some provisions of our articles of association may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue shares at such times and on such terms and conditions as the board of directors may decide without any further vote or action by our shareholders.
Under the Cayman Companies Act, our directors may only exercise the rights and powers granted to them under our articles of association for what they believe in good faith to be in the best interests of our company and for a proper purpose.
Directors’ Fiduciary Duties
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interests of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands law, a director owes three types of duties to the company: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Cayman Companies Act imposes a number of statutory duties on a director. A Cayman Islands director’s fiduciary duties are not codified, however the courts of the Cayman Islands have held that a director owes the following fiduciary duties (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and, also, to act with the skill, care and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our articles of association, as amended and restated from time to time. We have the right to seek damages if a duty owed by any of our directors is breached.’
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Shareholder Proposals
Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. The Delaware General Corporation Law does not provide shareholders an express right to put any proposal before the annual meeting of shareholders, but in keeping with common law, Delaware corporations generally afford shareholders an opportunity to make proposals and nominations provided that they comply with the notice provisions in the certificate of incorporation or bylaws. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
The Cayman Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our articles of association provide that general meetings shall be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than 10 percent of the rights to vote at such general meeting in accordance with the notice provisions in the articles of association, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than twenty-one clear days’ after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of twenty-one clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us. Our articles of association provide no other right to put any proposals before annual general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are not obligated by law to call shareholders’ annual general meetings.
Cumulative Voting
Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. As permitted under the Cayman Companies Act, our articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors
Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Subject to the provisions of our articles of association (which include the removal of a director by ordinary resolution), the office of a director may be terminated forthwith if (a) he is prohibited by the laws of the Cayman Islands from acting as a director, (b) he is made bankrupt or makes an arrangement or composition with his creditors generally, (c) he resigns his office by notice to us, (d) he only held office as a director for a fixed term and such term expires, (e) in the opinion of a registered medical practitioner by whom he is being treated he becomes physically or mentally incapable of acting as a director, (f) he is given notice by the majority of the other directors (not being less than two in number) to vacate office (without prejudice to any claim for damages for breach of any agreement relating to the provision of the services of such director), (g) he is made subject to any law relating to mental health or incompetence, whether by court order or otherwise, or (h) without the consent of the other directors, he is absent from meetings of directors for continuous period of six months.
Transactions with Interested Shareholders
The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation or bylaws that is approved by its shareholders, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting stock or who or which is an affiliate or associate of the corporation and owned 15% or more of the corporation’s outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.
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The Cayman Companies Act has no comparable provisions. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although the Cayman Companies Act does not regulate transactions between a company and its significant shareholders, under Cayman Islands law, our directors owe fiduciary duties to our Company to act in the best interests of the company and exercise their powers for a proper purpose when considering and approving such transactions.
Dissolution; Winding Up
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors.
Under the Cayman Companies Act and our articles of association, the Company may be wound up by a special resolution of our shareholders, or, if our company is unable to pay its debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an order of the courts of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Variation of Rights of Shares
Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under the Cayman Companies Act and our articles of association, if our share capital is divided into more than one class of shares, the rights attaching to any class of share (unless otherwise provided by the terms of issue of the shares of that class) may be varied either with the consent in writing of the holders of not less than two-thirds of the issued shares of that class, or with the sanction of a resolution passed by a majority of not less than two-thirds of the holders of shares of the class present in person or by proxy at a separate general meeting of the holders of shares of that class.
Amendment of Governing Documents
Under the Delaware General Corporation Law, a corporation’s certificate of incorporation may be amended only if adopted and declared advisable by the board of directors and approved by a majority of the outstanding shares entitled to vote, and the bylaws may be amended with the approval of a majority of the outstanding shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board of directors. Under the Cayman Companies Act, our articles of association may only be amended by special resolution of our shareholders.
Data Protection in the Cayman Islands—Privacy Notice
This privacy notice explains the manner in which we collect, process, and maintain personal data about shareholders of the Company pursuant to the Data Protection Act (Revised) of the Cayman Islands, and any regulations, codes of practice, or orders promulgated pursuant thereto (the “DPA”).
We are committed to processing personal data in accordance with the DPA. In our use of personal data, we will be characterized under the DPA as a “data controller,” whilst certain of our service providers, affiliates, and delegates may act as “data processors” under the DPA. These service providers may process personal data for their own lawful purposes in connection with services provided to us.
By virtue of your shareholding in the Company, we and certain of our service providers may collect, record, store, transfer, and otherwise process personal data by which individuals may be directly or indirectly identified. We may combine personal data that you provide to use with personal data that we collect from, or about, you. This may include personal data collected in an online or offline context including from credit reference agencies and other available public databases or data sources, such as news outlines, websites and other media sources and international sanctions lists.
Your personal data will be processed fairly and for lawful purposes, including (a) where the processing is necessary for us to deliver notices and information to you, (b) where the processing is necessary for us to perform a contract to which you are a party or for taking pre-contractual steps at your request, (c) where the processing is necessary for compliance with any legal, tax, or regulatory obligation to which we are subject, (d) where the processing is for the purposes of legitimate interests pursued by us or by a service provider to whom the data is disclosed, or (d) where you otherwise consent to the processing of personal data for any other specific purpose. As a data controller, we will only use your personal data for the purposes for which we collected it. If we need to use your personal data for an unrelated purpose, we will contact you.
We anticipate that we will share your personal data with our service providers for the purposes set out in this privacy notice. We may also share relevant personal data where it is lawful to do so and necessary to comply with our contractual obligations or your instructions or where it is necessary or desirable to do so in connection with any regulatory reporting obligations. In exceptional circumstances, we will share your personal data with regulatory, prosecuting, and other governmental agencies or departments, and parties to litigation (whether pending or threatened), in any country or territory including to any other person where we have a public or legal duty to do so (e.g. to assist with detecting and preventing fraud, tax evasion, and financial crime or compliance with a court order).
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Your personal data shall not be held by the Company for longer than necessary with regard to the purposes of the data processing.
We will not sell your personal data. Any transfer of personal data outside of the Cayman Islands shall be in accordance with the requirements of the DPA. Where necessary, we will ensure that separate and appropriate legal agreements are put in place with the recipient of that data.
We will only transfer personal data in accordance with the requirements of the DPA, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction, or damage to the personal data.
If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation to your shareholding in the Company, this will be relevant for those individuals and you should transmit this document to those individuals for their awareness and consideration.
You have certain rights under the DPA, including (a) the right to be informed as to how we collect and use your personal data (and this privacy notice fulfils our obligation in this respect), (b) the right to obtain a copy of your personal data, (c) the right to require us to stop direct marketing, (d) the right to have inaccurate or incomplete personal data corrected, (e) the right to withdraw your consent and require us to stop processing or restrict the processing, or not begin the processing of your personal data, (f) the right to be notified of a data breach (unless the breach is unlikely to be prejudicial), (g) the right to obtain information as to any countries or territories outside the Cayman Islands to which we, whether directly or indirectly, transfer, intend to transfer, or wish to transfer your personal data, general measures we take to ensure the security of personal data, and any information available to us as to the source of your personal data, (h) the right to complain to the Office of the Ombudsman of the Cayman Islands, and (i) the right to require us to delete your personal data in some limited circumstances.
If you do not wish to provide us with requested personal data or subsequently withdraw your consent, we may be unable to process and register your shareholding.
If you consider that your personal data has not been handled correctly, or you are not satisfied with our responses to any requests you have made regarding the use of your personal data, you have the right to complain to the Cayman Islands’ Ombudsman. The Ombudsman can be contacted by email at info@ombudsman.ky or by accessing their website here: ombudsman.ky.
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Exhibit 4.24
RESTRICTED STOCK AWARD AGREEMENT
GOLDEN
SUN TECHNOLOGY GROUP LIMITED
2025 Equity Incentive Plan
| I. | NOTICE OF RESTRICTED STOCK GRANT |
Name:
Address:
The undersigned Participant has been granted Restricted Stock in Golden Sun Technology Group Limited, an exempted company incorporated and registered in the Cayman Islands (the “Company”), subject to the terms and conditions of the Golden Sun Technology Group Limited 2025 Equity Incentive Plan (the “Plan”) and this Restricted Stock Award Agreement, as follows:
| Date of Grant: | |||
| Vesting Commencement Date: | |||
| Total Number of Restricted Shares: |
Period of Restriction: The Restricted Shares shall become vested and the Period of Restriction shall lapse with respect to the Restricted Shares covered by this Award as follows:
| ● | [___________] |
| II. | AGREEMENT |
1. Grant of Restricted Shares. Pursuant to the terms of the Plan, the Company hereby grants to the Participant named in the Notice of Restricted Stock Grant in Part I of this Award Agreement (“Participant”), the Restricted Shares set forth in the Notice of Restricted Stock Grant. Any capitalized terms not defined herein shall have the meaning set forth in the Plan.
2. Period of Restriction. The Period of Restriction shall lapse as specified in the Notice of Restricted Stock Grant, at which time the affected Restricted Shares shall be treated as unrestricted Shares, although no fractional Shares shall be issued. When a Participant ceases to be a Service Provider, any Restricted Shares that remain subject to the Period of Restriction will be forfeited and revert to the Company.
3. Compliance. No Shares shall be issued pursuant to the lapse of the Period of Restriction unless such issuance complies with Applicable Laws. The Shares shall be unregistered unless the Company voluntarily files a registration statement covering such Shares with the U.S. Securities and Exchange Commission.
4. Participant’s Representations. The Participant represents to the Company that the Participant has reviewed with the Participant’s own tax advisors the tax consequences of receiving this Award Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant further agrees and represents that no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Shares or recoupment of any Shares acquired under the Plan or proceeds therefrom resulting from (i) the application of a clawback policy described in Section 7 hereof or required by Applicable Laws, or (ii) the Participant ceasing to be a Service Provider. Additionally, the Participant acknowledges, understands and agrees that: (a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan, (b) the grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future Awards or benefits in lieu of future Awards, (c) the Participant is voluntarily participating in the Plan, (d) the Award and any income recognized therefrom is not part of normal or expected compensation or salary for any purpose, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, holiday pay, bonuses, long-service awards, leave-related payments, pension or retirement or welfare benefits or similar payments, and (e) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty, and the value of such Shares acquired under the Plan may increase or decrease in the future.
5. Non-Transferability of Restricted Shares. The Restricted Shares may not be transferred in any manner other than by will or by the laws of descent or distribution. The terms of this Award Agreement shall be binding upon the executors, administrators, heirs, successors, and assigns of Participant.
6. Tax Obligations.
(a) Tax Withholding. The Participant acknowledges and agrees that the Participant is ultimately liable for all federal, state, local, and non-U.S. income taxes, social insurance, payroll tax, fringe benefits tax, and payments on account or other tax-related items related to the Participant’s participation in the Plan (collectively, “Tax Items”). The Participant acknowledges that the Company (i) makes no representations or undertakings regarding the treatment of any Tax Item in connection with any aspect of the Award, and (ii) does not commit to and is under no obligation to structure the terms of the grant or any aspect of the Award to reduce or eliminate the Participant’s liability for Tax Items or achieve a particular result. Furthermore, if the Participant becomes subject to Tax Items in more than one jurisdiction, the Participant acknowledges that the Company may be required to withhold or account for Tax Items in more than one jurisdiction. The Participant acknowledges and agrees that the Company may refuse to deliver the Shares if withholding amounts for Tax Items are not satisfied.
(b) Prior to the applicable taxable or tax withholding event, as applicable, the Participant shall pay or make adequate arrangements satisfactory to the Company to satisfy all Tax Items:
(i) If the Participant is not subject to the short-swing profit rules of Section 16(b) of the Exchange Act, the Participant authorizes the Company or its agents, at their discretion, to (A) withhold from the Participant’s wages or other cash compensation paid to the Participant by the Company, (B) arrange for the sale of Shares to be issued upon the settlement of the Award (on the Participant’s behalf and at the Participant’s direction pursuant to this authorization or such other authorization the Participant may be required to provide to the Company or its designated broker in order for such sale to be effectuated) and withhold from the proceeds of such sale, (C) withhold in Shares otherwise issuable to the Participant pursuant to this Award, and/or (D) apply any other method of withholding determined by the Company and, to the extent required by Applicable Law or the Plan, approved by the Administrator.
(ii) If the Participant is subject to the short-swing profit rules of Section 16(b) of the Exchange Act, the Participant may satisfy the liabilities with respect to the Tax Items by one of the following, as determined by the Participant or the Administrator: (A) cash or check, (B) in whole or in part by delivery of Shares, including Shares delivered by attestation and Shares retained from the Award creating the Tax Item liability, valued at their fair market value on the date of delivery, or (C) in whole or in part by the Company withholding Shares otherwise vesting or issuable under this Award.
(c) Depending on the withholding method, the Company may withhold or account for Tax Items by considering applicable statutory or other withholding rates, including minimum or maximum rates in the jurisdiction(s) applicable to the Participant. If liability for Tax Items is satisfied by withholding Shares, for tax purposes, the Participant will be deemed to have been issued the full number of Shares to which the Participant is entitled pursuant to this Award, notwithstanding that a number of Shares are withheld to satisfy Tax Item liabilities.
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(d) Code Section 409A. The Restricted Stock Award is intended to be exempt from Section 409A of the Code, and it shall be administered and interpreted in a manner that is consistent with such intent.
7. Compensation Recovery.
(a) At any time during the three years following the date on which Shares subject to this Award vest, the Company reserves the right to and, in the appropriate cases, will seek restitution of all or part of any Shares that have been issued or cash that has been paid pursuant to this Award Agreement if: (A) (i) the number of Shares or the amount of cash payment was calculated based, directly or indirectly, upon the achievement of financial results that were subsequently the subject of a restatement of all or a portion of the Company’s financial statements, (ii) the Participant engaged in intentional misconduct that caused or partially caused the need for such a restatement, and (iii) the number of Shares or the amount of cash payment that would have been issued or paid to the Participant had the financial results been properly reported would have been lower than the number of Shares actually issued or the amount of cash actually paid, or (B) the Participant has been determined to have committed a material violation of law or Company policy or to have failed to properly manage or monitor the conduct of a Service Provider who has committed a material violation of law or Company policy whereby, in either case, such misconduct causes significant harm to the Company.
(b) In the event the number of Shares issued or cash paid pursuant to this Award is determined to have been based on materially inaccurate financial statements or other Company performance measures or on calculation errors (without any misconduct on the part of the Participant), the Company reserves the right to and, in appropriate cases, will (i) seek restitution of the Shares or cash paid pursuant to this Award to the extent that the number of Shares issued or the amount paid exceeded the number of Shares that would have been issued or the amount that would have been paid had the inaccuracy or error not occurred, or (ii) issue additional Shares or make additional payment to the extent that the number of Shares issued or the amount paid was less than the correct amount.
(c) For purposes of the foregoing, the Participant expressly and explicitly authorizes the Company to issue instructions on the Participant’s behalf, to any brokerage firm and/or third-party administrator engaged by the Company to hold any Shares and other amounts acquired pursuant to this Award to re-convey, transfer or otherwise return such Shares and/or other amounts to the Company upon the Company’s enforcement of its rights under this Section 7. By accepting this Award, the Participant agrees and acknowledges the Participant is obligated to cooperate with and provide any and all assistance requested by the Company in its efforts to recover or recoup Shares or the proceeds received therefrom pursuant to this Award, which may include, but shall not be limited to, executing, completing and submitting any documentation necessary to facilitate the Company’s efforts to recover or recoup Shares or the proceeds received therefrom pursuant to this Award. Additionally, by accepting this Award, the Participant acknowledges and agrees that no recovery or recoupment action pursuant to this Section 7, any Company clawback policy or otherwise will constitute an event that triggers or contributes to any right of the Participant to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.
(d) This Section 7 is not intended to limit the Company’s power to take such action as it deems necessary to remedy any misconduct, prevent its reoccurrence and, if appropriate, based on all relevant facts and circumstances, punish the wrongdoer in a manner it deems appropriate.
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8. Data Privacy Consent. In order to administer the Plan and this Agreement and to implement or structure future equity grants, the Company, its subsidiaries and affiliates and certain agents thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification number, home address and telephone number, date of birth and other information that is necessary or desirable for the administration of the Plan and/or this Agreement (the “Relevant Information”). By entering into this Agreement, the Participant (i) authorizes each Relevant Company to collect, process, register and transfer to each other Relevant Company all Relevant Information; (ii) waives any privacy rights the Participant may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction which a Relevant Company considers appropriate. The Participant shall have access to, and the right to change, the Relevant Information. Relevant Information will only be used in accordance with Applicable Law.
9. Notices. Any notice to be given under this Award Agreement to the Company must be in writing and addressed to the Company in care of the Company’s General Counsel at the Company’s principal office or the General Counsel’s then-current email address. Any notice to be given under the terms of this Award Agreement to the Participant must be in writing and addressed to the Participant at the Participant’s last known mailing address or email address in the Company’s personnel files. By a notice given pursuant to this Section 9, either party may designate a different address for notices to be given to the party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office, or when delivered by a nationally recognized express shipping company..
10. Entire Agreement; Governing Law. This Award Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified in a manner materially adverse to the Participant’s interest except by means of a writing signed by the Company and Participant. This Award Agreement is governed by the internal substantive laws but not the choice of law rules of the State of Delaware.
11. Counterparts. This Award Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Award Agreement may be by actual or facsimile signature.
12. No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF THE RESRICTED SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS AWARD OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
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Participant represents that the Participant is familiar with the terms and provisions thereof, and hereby accepts this Restricted Stock Award subject to all of the terms and provisions thereof. Participant has reviewed the Plan and this Restricted Stock Award in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Restricted Stock Award Agreement and fully understands all provisions of the Restricted Stock Award. Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Administrator upon any questions arising under this Restricted Stock Award or this Restricted Stock Award Agreement. Participant further agrees to notify the Company upon any change in the residence address indicated below.
| PARTICIPANT | GOLDEN SUN TECHNOLOGY GROUP LIMITED | |
| Signature | By | |
| Print Name | Print Name | |
| Print Title | ||
| Residence Address |
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Exhibit 8.1
GOLDEN SUN TECHNOLOGY GROUP LIMITED
List of Subsidiaries
(as of September 30, 2025)
| Subsidiaries | Date of Incorporation | Jurisdiction of Formation | Percentage of direct/indirect Economic Ownership | Principal Activities | |||||
| Hong Kong Jintaiyang International Education Holding Group Limited (“Golden Sun Hong Kong”) | June 23, 2017 | Hong Kong, PRC | 100 | % | Investment holding | ||||
| Golden Sun (SH) Cultural and Tourism Research Institute Limited (“Golden Sun (SH)”) (a) | April 3, 2023 | Hong Kong, PRC | 100 | % | Investment holding | ||||
| Zhejiang Golden Sun Education Technology Group Co., Ltd. (“Golden Sun Wenzhou” or “WFOE”) | October 24, 2018 | PRC | 100 | % | Education and management services | ||||
| Wenzhou City Ouhai District Yangfushan Culture Tutorial School (“Yangfushan Tutorial”) | May 5, 2008 | PRC | 100 | % | Tutorial services | ||||
| Wenzhou Lilong Network Technology Co., Ltd. (“Wenzhou Lilong”) | December 17, 2019 | PRC | 100 | % | Education, logistics and accommodation services | ||||
| Shanghai Fuyouyuan Health Technology Co., Ltd, (“Shanghai Fuyouyuan”) | March 7, 2023 | PRC | 100 | % | Health business | ||||
| Zhejiang Golden Sun Selection Technology Co., Ltd.(“Golden Sun Selection”) | November 17, 2023 | PRC | 100 | % | E-commerce services | ||||
| Shanghai Fuyang Cultural and Tourism Development Co., Ltd. (“Shanghai Fuyang”) | September 5, 2024 | PRC | 100 | % | Cultural and tourism | ||||
| Shanghai Wensaier Education Technology Co., Ltd (“Shanghai Wensaier”） | June 18, 2025 | PRC | 100 | % | Tutorial services | ||||
| Zhejiang Oulong Cultural and Tourism Industry Development Co., Lt（“Zhejiang Oulong”） | July 2, 2020 | PRC | 100 | % | Cultural and tourism |
| (a) | Golden Sun (SH) formerly known as CF (HK) Heath Technology Limited, changed its name on September 25, 2024. |
| (b) | Wenzhou Lilong, formerly known as Wenzhou Lilong Logistics Services Co., Ltd., changed its name on June 19, 2025. |
Exhibit 12.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Xueyuan Weng, hereby certify that:
| 1. | I have reviewed this annual report on Form 20-F of Golden Sun Technology Group Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| February 12, 2026 | /s/ Xueyuan Weng | |
| Name: | Xueyuan Weng | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 12.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Yu Sun, hereby certify that:
| 1. | I have reviewed this annual report on Form 20-F of Golden Sun Technology Group Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| February 12, 2026 | /s/ Yu Sun | |
| Name: | Yu Sun | |
| Title: | Chief Financial Officer | |
| (Principal Financial Officer) |
Exhibit 13.1
CERTIFICATION PURSUANT TO
18 U.S.C. §1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Golden Sun Technology Group Limited (the “Company”) on Form 20-F for the fiscal year ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Xueyuan Weng, as Chief Executive Officer and principal executive officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of the undersigned’s knowledge and belief, that:
| 1. | the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
| 2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
| /s/ Xueyuan Weng | |
| Xueyuan Weng | |
| Chief Executive Officer and Principal Executive Officer | |
| Dated: February 12, 2026 |
This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 13.2
CERTIFICATION PURSUANT TO
18 U.S.C. §1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Golden Sun Technology Group Limited (the “Company”) on Form 20-F for the fiscal year ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Yu Sun, as Chief Financial Officer and principal financial officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of the undersigned’s knowledge and belief, that:
| 1. | the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
| 2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
| /s/ Yu Sun | |
| Yu Sun | |
| Chief Financial Officer and Principal Financial Officer | |
| Dated: February 12, 2026 |
This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-292166) of our report dated February 12, 2026, with respect to the consolidated financial statements of Golden Sun Technology Group Limited and its subsidiaries, which appears in this Form 20-F for the year ended September 30, 2025.
/s/ Assentsure PAC
Singapore
February 12, 2026
Exhibit 15.2
 |
57th Floor, Fortune Financial Center, Suite 57055 East 3rd Ring Road, Chaoyang District Beijing 100020, PRC Tel: +86 (10) 6530-9989 |
Golden Sun Technology Group Limited
Room 503, Building C2, No. 1599
Xinjinqiao Road, Pudong New Area
Shanghai, China
February 12, 2026
We consent to the references to our firm as “PRC counsel” in the annual report on Form 20-F of GOLDEN SUN TECHNOLOGY GROUP LIMITED (the “Company”) for the fiscal year ended September 30, 2025, including all amendments or supplements thereto (the “Annual Report”), filed by the Company with the Securities and Exchange Commission (the “SEC”) on February 12, 2025 under the U.S. Securities Act of 1933 (as amended). We also consent to the filing with the SEC of this consent letter as an exhibit to the Annual Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulation promulgated thereunder.
| Your faithfully, | |
| /s/ Pacgate Law Firm | |
| Pacgate Law Firm |