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)