Core Viewpoint - Linkage Global Inc has completed a strategic private placement to raise capital for growth initiatives in the cross-border e-commerce sector [1][5]. Group 1: Financing Details - The company has entered into a Securities Purchase Agreement for the issuance of senior unsecured convertible notes with an initial principal amount of $3.5 million [1]. - The initial closing is expected to yield gross proceeds of $2.7 million, with an additional $450,000 anticipated shortly after the effectiveness of a registration statement [2]. - The convertible notes were sold at 90% of their principal amount and are convertible into Class A ordinary shares at the holders' option [3]. Group 2: Future Capital Framework - The financing establishes a capital framework allowing for additional issuances of up to $26.5 million in principal amount of similar convertible notes in future tranches [4]. - These follow-on tranches are subject to customary conditions, including compliance with equity conditions and registration requirements [4]. Group 3: Strategic Rationale and Use of Proceeds - The CEO stated that this financing is a key milestone in the company's capital formation strategy, providing flexibility to advance its cross-border e-commerce platform [5]. - The net proceeds will be used for general corporate purposes, including the expansion of cross-border sales operations and integrated e-commerce service lines [5]. Group 4: Registration and Investor Protections - The company has entered into a Registration Rights Agreement and will file a resale registration statement with the SEC covering shares issuable upon conversion of the notes [6]. - While the notes are outstanding, the company is subject to customary investor protections, including restrictions on variable-rate securities and anti-dilution adjustments [7]. Group 5: Company Overview - Linkage Global Inc is a holding company incorporated in the Cayman Islands, operating through subsidiaries in Japan, Hong Kong, and mainland China, focusing on cross-border e-commerce integrated services [10].

Core Viewpoint - Linkage Global Inc reported a significant decline in total revenues and net loss for the first half of 2025, primarily due to a sharp drop in cross-border sales, while integrated e-commerce services showed substantial growth. Financial Performance - Total revenues decreased by approximately $1.30 million, or 27.02%, from approximately $4.80 million for the six months ended March 31, 2024, to approximately $3.50 million for the same period in 2025 [3] - Revenues from cross-border sales fell by approximately $3.74 million, or 82.35%, from approximately $4.54 million to approximately $0.80 million [4] - Revenues from integrated e-commerce services surged by $2.44 million, or 930.08%, from approximately $0.26 million to $2.70 million [5] Cost and Profitability - Cost of revenues fell 80.34%, from approximately $4.09 million to approximately $0.80 million, mainly due to reduced cross-border sales costs [7] - Gross profit increased by approximately $1.99 million, or 280.57%, from approximately $0.71 million to approximately $2.70 million, driven by the new fully managed e-commerce business [8] - Cross-border sales margin improved from 12.70% to 21.31%, while integrated e-commerce services margin rose from 50.67% to 93.56% [9] Operating Expenses - Operating expenses rose by 91.01%, from approximately $2.27 million to approximately $4.34 million, primarily due to higher general and administrative expenses [10] - Selling and marketing expenses dropped 31.15%, from approximately $0.23 million to approximately $0.16 million [11] Net Loss - Net loss increased by approximately $1.68 million, or 119.62%, from approximately $1.41 million to approximately $3.09 million [14] Other Financial Metrics - Non-operating income rose from $998 to approximately $0.39 million, while net interest expenses increased significantly from approximately $0.06 million to approximately $1.50 million due to the issuance of $10 million in convertible bonds [12] - Income tax provision decreased by approximately $0.56 million, resulting in approximately $0.34 million of tax expenses for the six months ended March 31, 2025 [13]

Company Overview - Linkage Global Inc is a cross-border e-commerce integrated services provider headquartered in Japan, with operations in Japan, Hong Kong, and mainland China [4] - The company has developed a comprehensive service system that includes cross-border sales and integrated e-commerce services, initially launching cross-border sales operations in 2011 [4] - Linkage sources products from Japanese and Chinese manufacturers and brands, along with its private label smart products, and provides digital marketing solutions in cooperation with Google [4] Compliance with Nasdaq - On April 23, 2025, Linkage Global Inc announced that it has regained compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market [1] - The company received a notice from Nasdaq on October 31, 2024, indicating it no longer met the minimum bid price requirement, which necessitated maintaining a closing bid price of $1.00 or more for at least 10 consecutive business days [2] - Nasdaq confirmed that for the 10 consecutive business days from April 7, 2025, to April 22, 2025, the closing bid price of the company's Class A ordinary shares was at or above $1.00, thus closing the compliance matter [3]

Core Points - Linkage Global Inc has announced a share consolidation on a 10 for 1 ratio effective April 7, 2025, to regain compliance with Nasdaq Marketplace Rule 5550(a)(2) and maintain its listing on Nasdaq [1][2] - The share consolidation will result in each 10 ordinary shares automatically combining into one ordinary share, with no fractional shares issued [3] - Following the consolidation, the Company's authorized share capital will change from US$2,500,000 divided into 9,980,000,000 Class A ordinary shares to US$2,500,000 divided into 998,000,000 Class A ordinary shares, with the par value increasing from US$0.00025 to US$0.0025 [4] Company Overview - Linkage Global Inc is a holding company incorporated in the Cayman Islands, operating through subsidiaries in Japan, Hong Kong, and mainland China [5] - The Company specializes in cross-border e-commerce integrated services, with two main business lines: cross-border sales and integrated e-commerce services [5]

Financial Performance - Revenues decreased from $22.03 million in the fiscal year ended September 30, 2022, to $12.73 million in the fiscal year ended September 30, 2023, and further decreased to $10.29 million for the year ended September 30, 2024, primarily due to a decrease in cross-border sales[58]. - All revenue in digital marketing services for the fiscal years ended September 30, 2024, 2023, and 2022 came from Google commissions, amounting to $0.31 million, $1.53 million, and $3.95 million, respectively, representing approximately 3.03%, 11.99%, and 17.91% of total revenue for those years[67]. - The company has incurred related party expenses of $446,469, $1,728,398, and $1,424,460 for the fiscal years ended September 30, 2024, 2023, and 2022, respectively[105]. - The amounts due to related parties as of September 30, 2024, 2023, and 2022 were $314,544, $1,413,604, and $1,273,832, respectively[105]. - The company may face limitations in raising capital in the future, which could hinder growth and expansion of its e-commerce platform and logistics services[88]. Regulatory Environment - The PRC government has implemented new regulations affecting business operations, which may impact the Company's future offerings and operations[30]. - The Overseas Listing Trial Measures require PRC domestic companies seeking to list overseas to fulfill filing procedures with the CSRC, but Linkage Cayman is not classified as a domestic company[30]. - The Cybersecurity Review Measures require data processing operators with personal data of at least one million users to undergo a cybersecurity review before foreign listings[47]. - The PRC legal system's uncertainties may limit legal protections and affect the enforcement of rights for the PRC subsidiaries[160]. - The evolving nature of data security and antimonopoly laws in Hong Kong may negatively impact the business operations and financial condition of the company[155]. Corporate Governance - The CEO and Chairman owns 84.02% of the voting power, which may lead to governance issues and influence decisions that may not align with other shareholders' interests[112]. - The company is classified as an "emerging growth company" and will remain so until it meets certain revenue or market capitalization thresholds[119]. - The company’s articles of association allow shareholders holding at least 10% of voting shares to requisition a general meeting[141]. - The company may face increased costs due to compliance with the Sarbanes-Oxley Act and other regulations, impacting its financial resources[117]. Operational Risks - The Operating Entities operate in a highly competitive market, facing competition from various supply chain providers, retailers, and wholesalers, which could adversely affect their results of operations[57]. - System interruptions or performance failures in technology infrastructure could damage the company's reputation and results of operations[59]. - The company faces risks related to doing business in mainland China, including changing regulations and potential government intervention, which could materially affect operations[56]. - The company has not maintained business interruption insurance, which could expose it to significant liabilities[96]. International Expansion - The company plans to venture into the Southeast Asian market, indicating a strategy for international expansion[61]. - The company plans to expand its integrated e-commerce services into Southeast Asia, starting with Thailand, Malaysia, and Indonesia over the next two years[76]. - The company faces risks related to international operations, including compliance with varied legal and regulatory standards in Southeast Asia[77]. Compliance and Legal Issues - The company is subject to legal and regulatory proceedings, which could divert management's attention and resources, potentially harming its brand equity[94]. - The company may face sanctions from the CSRC or other PRC regulatory agencies if it fails to seek necessary approvals for offerings in the U.S., which could include fines and operational limitations[225]. - The company must navigate potential restrictions on the transfer of cash or assets due to PRC government interventions, which could impact its operational funding[191]. - The company may face penalties if it fails to complete required filing procedures or provides false information in filings[223]. Data Security and Privacy - As of the date of the annual report, the PRC subsidiaries have not provided personal information outside of China and are believed to be compliant with existing data protection laws[175]. - The PRC subsidiaries may face penalties for inadequate social insurance and housing provident fund contributions, with potential fines of one to three times the outstanding amount[97]. - Cybersecurity risks could disrupt operations and negatively impact financial results, despite measures taken to mitigate these risks[100]. Shareholder Considerations - Linkage Cayman has not made any dividends or distributions to its shareholders and does not anticipate paying cash dividends in the foreseeable future[36]. - The company does not intend to pay dividends for the foreseeable future, opting to retain earnings for business operation and expansion[123]. - If classified as a Passive Foreign Investment Company (PFIC), U.S. taxpayers holding Class A Ordinary Shares may face adverse tax consequences[142]. Market and Economic Conditions - The Hong Kong subsidiaries' revenue is susceptible to ongoing social, economic, and political instability, which could adversely affect business operations[152]. - Changes in China's economic, political, or social conditions could materially adversely affect the PRC subsidiaries' business and operations[157]. - Increased labor costs in the PRC may adversely affect the profitability of the company's subsidiaries, as average wages are expected to continue rising[196]. Future Outlook - Historical performance may not be sustainable, and the company cannot guarantee future growth, with potential declines in revenue due to various external factors[58]. - The company is currently evaluating options to regain compliance with Nasdaq's continued listing requirements[134]. - The company may face significant consequences if delisted from Nasdaq, including anti-takeover provisions that could discourage changes in control[135].

Core Viewpoint - Linkage Global Inc reported a significant decrease in total revenues for the fiscal year ended September 30, 2024, primarily due to a decline in cross-border sales, while also highlighting growth in integrated e-commerce services and a notable increase in gross profit [3][4][5]. Financial Performance - Total revenues decreased by approximately 19.19%, from USD 12.73 million in 2023 to USD 10.29 million in 2024 [4][5]. - Cross-border sales fell by USD 4.11 million, or 38.82%, from USD 10.59 million in 2023 to USD 6.48 million in 2024, with the Japanese subsidiary experiencing a 53.12% decline [6][7]. - Integrated e-commerce services revenues rose by USD 1.67 million, or 77.64%, from USD 2.15 million to USD 3.81 million, driven by new fully managed e-commerce operation services generating USD 3.28 million [7][8]. - Digital marketing services revenues dropped from USD 1.53 million to USD 0.31 million due to stricter Google policies [3][7]. Profitability - Gross profit increased by approximately USD 2.31 million, or 123.91%, from USD 1.86 million in 2023 to USD 4.17 million in 2024, largely due to the new fully managed e-commerce operation services [5][10]. - Gross profit margin for integrated e-commerce services increased from 48.10% in 2023 to 85.52% in 2024, attributed to the high gross profit margin of the new services [12]. Operating Expenses - Operating expenses increased from USD 2.43 million in 2023 to USD 4.24 million in 2024, representing a year-on-year increase of 74.49%, primarily due to higher general and administrative expenses [14]. Net Loss - Net loss decreased by USD 0.21 million, or 32.69%, from USD 0.65 million in 2023 to USD 0.44 million in 2024 [17]. Geographic Revenue Breakdown - Revenue from Japan decreased from USD 8.75 million in 2023 to USD 4.10 million in 2024, while revenue from Hong Kong increased from USD 1.99 million to USD 3.61 million, and revenue from China rose from USD 1.99 million to USD 2.58 million [6]. Future Outlook - The company remains committed to enhancing partnerships, optimizing operations, and exploring new market opportunities to navigate market fluctuations and achieve sustainable growth [3].

PART I [Key Information](index=9&type=section&id=ITEM%203.%20KEY%20INFORMATION) The company is a Cayman holding company with PRC operations, facing significant legal, regulatory, and currency control risks - Linkage Cayman is a holding company with no operations of its own, conducting its business through Operating Entities in Japan, Hong Kong, and mainland China[27](index=27&type=chunk) - The company acknowledges significant risks associated with its PRC and Hong Kong operations, including vague PRC laws, potential cybersecurity reviews, and uncertainties regarding the CSRC's Overseas Listing Trial Measures[28](index=28&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - As a holding company, its ability to pay dividends depends on receiving funds from its subsidiaries, a process subject to PRC government controls on currency conversion[35](index=35&type=chunk)[36](index=36&type=chunk)[39](index=39&type=chunk) - The company's PRC subsidiaries have obtained the necessary business licenses from the State Administration for Market Regulation (SAMR), and its Hong Kong subsidiaries hold valid business registration certificates[43](index=43&type=chunk)[45](index=45&type=chunk) [Risk Factors](index=20&type=section&id=D.%20Risk%20Factors) The company faces business, market, and jurisdictional risks, especially from PRC regulations and potential delisting under the HFCA Act - **Business and Industry Risks**: The company operates in a highly competitive market, faces risks from system interruptions, cybersecurity threats, and reliance on related-party transactions[55](index=55&type=chunk)[60](index=60&type=chunk)[101](index=101&type=chunk) - **Share and Market Risks**: The CEO and certain shareholders control a majority of voting power, making the company a **"controlled company,"** and **material weaknesses in internal financial controls** have been identified[57](index=57&type=chunk)[117](index=117&type=chunk)[119](index=119&type=chunk) - **Hong Kong Risks**: Operations in Hong Kong are subject to political risks, the Hong Kong National Security Law, and evolving data security and antimonopoly laws[57](index=57&type=chunk)[146](index=146&type=chunk)[149](index=149&type=chunk) - **Mainland China Risks**: Significant risks stem from the PRC government's oversight, evolving regulations on data security (CAC) and overseas listings (CSRC), and the **HFCA Act delisting risk**[58](index=58&type=chunk)[165](index=165&type=chunk)[180](index=180&type=chunk) [Information on the Company](index=66&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) The company is a cross-border e-commerce provider with sales and services segments, focusing on Southeast Asian expansion - The company operates through a holding structure, with Linkage Global Inc. (Cayman Islands) as the ultimate parent of operating entities in Japan, Hong Kong, and mainland China[229](index=229&type=chunk)[234](index=234&type=chunk) - The business model comprises two main segments: cross-border sales (**83.14% of FY2023 revenue**) and integrated e-commerce services (**16.86% of FY2023 revenue**)[239](index=239&type=chunk)[240](index=240&type=chunk)[266](index=266&type=chunk) - A key growth strategy is expansion into the Southeast Asian market, becoming a TikTok Shop partner for Malaysia and a top-tier TikTok guild in Thailand[254](index=254&type=chunk)[260](index=260&type=chunk) - The company is heavily reliant on its relationship with Google for its digital marketing services, which contributed **11.32% of total revenue in FY2023**[69](index=69&type=chunk)[244](index=244&type=chunk)[266](index=266&type=chunk) [History and Development of the Company](index=66&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company was incorporated in the Cayman Islands in 2022 and completed a reorganization in 2023 to establish its current holding structure - Linkage Global Inc. was incorporated in the Cayman Islands on March 24, 2022, and serves as the ultimate holding company[229](index=229&type=chunk) - The company undertook a reorganization, completed on February 17, 2023, to consolidate its operating entities under the Cayman Islands holding company structure[231](index=231&type=chunk)[232](index=232&type=chunk)[793](index=793&type=chunk) [Business Overview](index=68&type=section&id=B.%20Business%20Overview) The company operates two business lines, cross-border sales and integrated e-commerce services, with a strategy to expand private labels and SEA presence Revenue by Business Segment (Fiscal Years 2021-2023) | Revenue Stream | 2023 (USD) | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | :--- | | Cross-border Sales | 11,340,769 | 17,907,407 | 12,417,033 | | Integrated E-commerce Services | 2,147,129 | 4,120,896 | 3,049,829 | | - Digital marketing services | 1,527,247 | 3,945,353 | 3,046,565 | | - Others (Training/Software) | 619,882 | 175,543 | 3,264 | | **Total Revenues** | **13,487,898** | **22,028,303** | **15,466,862** | - The company's growth strategy includes expanding its customer and merchant base into Southeast Asia, leveraging its new status as a TikTok Shop partner[254](index=254&type=chunk)[260](index=260&type=chunk) - The company is developing its private label smart electronics, with **205 SKUs** as of September 30, 2023, using an "original-entrusted-manufacture" model[272](index=272&type=chunk)[273](index=273&type=chunk)[275](index=275&type=chunk) - The company is investing in R&D for its Linkage ERP System and Honeybee software, with R&D expenses totaling **$0.58 million in FY2023**[320](index=320&type=chunk)[321](index=321&type=chunk) [Operating and Financial Review and Prospects](index=111&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) The company experienced a significant revenue decline and a net loss in FY2023, though its liquidity was improved by a post-year-end IPO Financial Performance Summary (Fiscal Years 2021-2023) | Metric | 2023 (USD) | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | :--- | | **Revenues** | 12,733,339 | 22,028,303 | 15,466,862 | | **Gross Profit** | 1,860,855 | 3,704,501 | 2,537,282 | | **Operating (Loss)/Profit** | (570,948) | 1,409,728 | 881,003 | | **Net (Loss)/Income** | (652,728) | 1,066,375 | 751,666 | | **EPS (Basic & Diluted)** | (0.03) | 0.05 | 0.04 | - Total revenues for FY2023 **decreased by $9.29 million (42.17%)** year-over-year, primarily due to a drop in cross-border sales and integrated e-commerce services[462](index=462&type=chunk) - The decrease in cross-border sales was attributed to severe COVID outbreaks in Japan and China and the depreciation of the Japanese yen[463](index=463&type=chunk) - Net cash used in operating activities was **$3.88 million in FY2023**, a reversal from the $1.17 million net cash provided in FY2022[488](index=488&type=chunk)[489](index=489&type=chunk)[490](index=490&type=chunk) - The company completed its IPO in December 2023, raising net proceeds of approximately **$5.4 million**, which is expected to support future operations[485](index=485&type=chunk)[923](index=923&type=chunk) [Directors, Senior Management and Employees](index=124&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) The company is a "controlled company" due to a concerted actor agreement, with a board of five directors and established governance committees - The board consists of five directors, including CEO Zhihua Wu and three independent directors: H. David Sherman, Dong Chen, and Lin Yang[525](index=525&type=chunk)[540](index=540&type=chunk) - The company is a **"controlled company"** as CEO Zhihua Wu and parties to a Concerted Actor Agreement collectively hold **66.51% of the voting power**[537](index=537&type=chunk)[538](index=538&type=chunk) - Total compensation for executive officers and directors for the fiscal year ended September 30, 2023, was **$114,465**[539](index=539&type=chunk) - The board has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each composed entirely of independent directors[545](index=545&type=chunk)[546](index=546&type=chunk)[548](index=548&type=chunk)[549](index=549&type=chunk) [Major Shareholders and Related Party Transactions](index=132&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) A controlling interest is held by a group led by the CEO, and the company has engaged in significant related party transactions - CEO Zhihua Wu, through a Concerted Actor Agreement, controls the voting rights of a group that collectively owns **66.51% of the company's voting power**[561](index=561&type=chunk)[537](index=537&type=chunk) Related Party Transactions (Expenses paid on behalf of the Group) | Fiscal Year Ended Sep 30 | Amount (USD) | | :--- | :--- | | 2023 | 1,728,398 | | 2022 | 1,424,460 | | 2021 | 451,602 | Amounts Due to Related Parties | As of Sep 30 | Amount (USD) | | :--- | :--- | | 2023 | 1,413,604 | | 2022 | 1,273,832 | | 2021 | 466,442 | [Financial Information](index=133&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) The company does not anticipate paying dividends, as earnings will be retained for growth and are subject to PRC currency and profit distribution controls - The company has not paid any dividends and does not plan to in the foreseeable future, intending to retain earnings for business growth[569](index=569&type=chunk) - Dividend payments from PRC subsidiaries are restricted until a statutory reserve reaches **50% of registered capital**[572](index=572&type=chunk) - The PRC government imposes controls on currency conversion, and dividend remittances over **$50,000** are subject to review[573](index=573&type=chunk) - Dividends paid by the PRC subsidiary to its Hong Kong holding company may be subject to a PRC withholding tax of up to **10%**[574](index=574&type=chunk)[575](index=575&type=chunk) [The Offer and Listing](index=135&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) The company's shares began trading on the Nasdaq Capital Market under the ticker "LGCB" in December 2023 - The company's Ordinary Shares commenced trading on the Nasdaq Capital Market on December 19, 2023, under the symbol **"LGCB"**[577](index=577&type=chunk)[578](index=578&type=chunk) [Additional Information](index=135&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details the company's Cayman Islands governance, tax regimes in operating jurisdictions, and potential U.S. PFIC classification risk - The company's corporate affairs are governed by its amended and restated memorandum and articles of association and the laws of the Cayman Islands[582](index=582&type=chunk) - Significant differences exist between Cayman Islands and U.S. (Delaware) corporate law regarding director duties and shareholder rights[640](index=640&type=chunk)[641](index=641&type=chunk) - The company is subject to taxation in Japan (approx. **36.8%**), Hong Kong (**8.25%/16.5%**), and the PRC (**25%**), but not in the Cayman Islands[670](index=670&type=chunk)[672](index=672&type=chunk)[681](index=681&type=chunk)[685](index=685&type=chunk) - There is a risk that the company could be classified as a **Passive Foreign Investment Company (PFIC)**, which would result in adverse U.S. federal income tax consequences for U.S. Holders[703](index=703&type=chunk)[705](index=705&type=chunk)[710](index=710&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=130&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are foreign exchange exposure from JPY and RMB and credit risk from accounts receivable - The company's primary market risk is **foreign exchange risk**, as its operations are in JPY and RMB, but financial statements are reported in USD[722](index=722&type=chunk)[723](index=723&type=chunk) - The company does not currently use derivative financial instruments to hedge its foreign exchange risk exposure[724](index=724&type=chunk) - **Credit risk** is concentrated in accounts receivable, and the company conducts credit evaluations of customers to minimize collection risk[725](index=725&type=chunk) - Inflation in Japan and the PRC has not materially affected the company's results of operations in recent years[726](index=726&type=chunk) PART II [Material Modifications to the Rights of Security Holders and Use of Proceeds](index=132&type=section&id=ITEM%2014.%20MATERIAL%20MODIFICATIONS%20TO%20THE%20RIGHTS%20OF%20SECURITY%20HOLDERS%20AND%20USE%20OF%20PROCEEDS) The company raised approximately $5.4 million in net proceeds from its December 2023 IPO, which are being used for strategic initiatives - The company completed its IPO on December 21, 2023, selling **1,500,000 ordinary shares at $4.00 per share**[735](index=735&type=chunk) IPO Proceeds Summary | Item | Amount (USD) | | :--- | :--- | | Gross Proceeds | 6,000,000 | | Offering Expenses | ~1,304,330 | | Net Proceeds | ~5,400,000 | - As of March 31, 2024, proceeds have been used for supply chain development (~$0.71M), R&D (~$0.2M), and Southeast Asia market development (~$0.2M)[737](index=737&type=chunk) [Controls and Procedures](index=132&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management identified material weaknesses in internal financial controls, including insufficient staffing and formal policies, and is implementing remediation - Management concluded that as of September 30, 2023, there were **material weaknesses** in the company's internal control over financial reporting[739](index=739&type=chunk) - The identified weaknesses are a lack of formal internal control policies and insufficient accounting staff with appropriate U.S. GAAP and SEC reporting knowledge[119](index=119&type=chunk)[739](index=739&type=chunk) - Remediation efforts include hiring qualified accounting personnel and organizing regular training on U.S. GAAP and SEC requirements[740](index=740&type=chunk)[741](index=741&type=chunk)[742](index=742&type=chunk) - As an emerging growth company, this annual report does not include a management report on internal control or an attestation report from its auditor[745](index=745&type=chunk)[746](index=746&type=chunk) [Corporate Governance](index=134&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) As a foreign private issuer, the company follows Cayman Islands governance practices but currently complies with Nasdaq's independent director majority rule - The company is a foreign private issuer and is permitted to follow Cayman Islands corporate governance practices in lieu of certain Nasdaq rules[755](index=755&type=chunk) - A key difference is that Cayman Islands law does not require a majority of the board to be independent, unlike Nasdaq rules; however, the company **currently complies** with this requirement[756](index=756&type=chunk) PART III [Financial Statements](index=135&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) The audited financial statements for FY2023 show a net loss of $0.65 million and highlight significant customer and supplier concentration risks Consolidated Balance Sheet Summary (As of Sep 30, 2023 vs 2022) | Account | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | **Total Assets** | **10,633,513** | **9,079,231** | | Cash and cash equivalents | 1,107,480 | 3,686,391 | | Accounts receivable, net | 2,011,047 | 2,164,213 | | **Total Liabilities** | **7,136,600** | **6,344,678** | | Long-term debts | 1,996,326 | 2,653,764 | | **Total Shareholders' Equity** | **3,496,913** | **2,734,553** | Consolidated Statement of Operations Summary (FY 2023 vs 2022) | Account | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | Revenues | 12,733,339 | 22,028,303 | | Gross Profit | 1,860,855 | 3,704,501 | | Net (Loss)/Income | (652,728) | 1,066,375 | - The company has two reportable segments: EXTEND (Japan) and Other Subsidiaries (Hong Kong and PRC), which generated **$8.75 million** and **$3.98 million** in revenue respectively in FY2023[866](index=866&type=chunk) - **Significant concentration risk** exists, with two customers accounting for **22.68%** of total revenue and three suppliers accounting for **45.58%** of total purchases in FY2023[916](index=916&type=chunk)[918](index=918&type=chunk) - Subsequent to the fiscal year-end, the company completed its IPO in December 2023, raising net proceeds of approximately **$5.4 million**[923](index=923&type=chunk)