Core Insights - Millennium Group International Holdings Limited has officially commenced operations at a new manufacturing facility in Vietnam, enhancing its production capacity and global supply chain [1][4] - The facility is strategically located in Hung Yen Province and is equipped with advanced machinery for producing high-quality packaging solutions [2] - The investment in the Vietnam facility is a significant step in optimizing the company's global supply chain and improving product accessibility for customers worldwide [4] Company Overview - Millennium Group, founded in 1978, specializes in paper-based packaging solutions and offers a range of products and supply chain management services [5] - The company operates in multiple regions, including Hong Kong, the PRC, and Vietnam, and aims to cover the entire value chain for its customers [5] - Its products are distributed across various markets, including Southeast Asia, Australia, the United States, and key European markets [5] Sustainability Commitment - The new facility incorporates an intelligent water and power monitoring system to track resource usage in real time, highlighting the company's commitment to sustainability [3] - The company aims to provide high-quality, sustainable packaging solutions in response to growing market demand [4]

PART I [ITEM 3. KEY INFORMATION](index=7&type=section&id=Item%203.%20Key%20Information) This section provides selected financial data, revealing a decline in assets and a shift to net loss in FY2024, alongside a comprehensive overview of operational and financial risks [Selected Financial Data](index=7&type=section&id=A.%20Selected%20Financial%20Data) The company's financial position deteriorated in FY2024, marked by decreased total assets, reduced liabilities, a significant net loss, and negative operating cash flow Consolidated Balance Sheet Summary (as of June 30) | Financial Metric | 2024 (USD) | 2023 (USD) | | :--- | :--- | :--- | | **Total Current Assets** | 27,765,697 | 44,450,969 | | **Total Assets** | 43,637,106 | 59,043,137 | | **Total Current Liabilities** | 12,134,130 | 19,086,343 | | **Total Liabilities** | 12,591,063 | 19,124,335 | | **Total Shareholders' Equity** | 31,046,043 | 39,918,802 | Consolidated Statement of Operations Summary (for the year ended June 30) | Financial Metric | 2024 (USD) | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | :--- | | **Revenues** | 38,530,773 | 45,598,620 | 66,232,757 | | **Gross Profit** | 8,304,581 | 9,064,262 | 16,270,964 | | **(Loss) Income from Operations** | (6,927,954) | (1,082,354) | 5,535,582 | | **Net (Loss) Income** | (8,770,044) | (354,111) | 4,077,371 | Consolidated Cash Flow Summary (for the year ended June 30) | Cash Flow Activity | 2024 (USD) | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | :--- | | **Net Cash (Used in) Provided by Operating Activities** | (4,106,011) | 8,109,777 | 2,039,600 | | **Net Cash (Used in) Provided by Investing Activities** | (2,243,523) | (216,520) | 2,068,244 | | **Net Cash Provided by (Used in) Financing Activities** | (7,860,347) | 1,799,269 | (5,585,110) | | **Net (Decrease) Increase in Cash and Cash Equivalents** | (14,230,038) | 8,129,171 | (1,822,626) | [Risk Factors](index=12&type=section&id=D.%20Risk%20Factors) The company faces significant operational and financial risks, primarily stemming from regulatory uncertainties in China and Vietnam, customer concentration, and stock volatility - The company faces substantial risks from Chinese regulations, including the CSRC's "Overseas Listing Trial Measures" effective March 31, 2023, which require filings for overseas listings and offerings[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - The Chinese government may intervene in or influence the company's operations at any time, potentially leading to material changes in business, fines, or suspension of operations, which could significantly devalue the company's shares[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The company is dependent on a few major customers; for the fiscal year ended June 30, 2024, one significant customer accounted for **18.8% of total revenues**[161](index=161&type=chunk)[162](index=162&type=chunk) - The company's operations are exposed to geopolitical risks and economic instability in Vietnam, including potential social unrest, high inflation, and an underdeveloped legal system, which could adversely impact business and financial results[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) - As a holding company, its ability to fund operations and pay dividends relies on distributions from its PRC subsidiaries, which are subject to PRC regulations on currency conversion, capital controls, and withholding taxes[70](index=70&type=chunk)[71](index=71&type=chunk)[73](index=73&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=50&type=section&id=Item%204.%20Information%20on%20the%20Company) This section outlines the company's history as a paper-based packaging solutions provider, detailing its integrated business model, product offerings, organizational structure, and property holdings [History and development of the company](index=50&type=section&id=A.%20History%20and%20development%20of%20the%20Company) The company, incorporated in 2021, is a third-generation family business with roots in Hong Kong since 1978, now operating globally across Hong Kong, PRC, and Vietnam - The company is a third-generation family-owned business with a history dating back to **1978**, starting with the sale of Corrugated Paper in Hong Kong[285](index=285&type=chunk) - The business has expanded its operations to Hong Kong, the PRC, and Vietnam, with a global product delivery footprint[286](index=286&type=chunk) [Business overview](index=51&type=section&id=B.%20Business%20Overview) The company provides integrated paper-based packaging solutions, operating production facilities in PRC and supply chain management in Vietnam, leveraging R&D and holding 48 patents - The company operates a one-stop integrated service model for paper-based packaging, covering market research, R&D, design, procurement, production, quality control, and delivery[292](index=292&type=chunk)[298](index=298&type=chunk) - Operations are divided into three main groups: MP Group (offset and flexo printing in PRC), Yee Woo Group (corrugated products in PRC), and MPG Group (supply chain management in PRC, HK, and Vietnam)[301](index=301&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk) - The company's key operating subsidiary, Millennium Shenzhen, is accredited as a High-tech enterprise, entitling it to a preferential tax rate of **15%**, and holds **48 registered patents** as of the report date[296](index=296&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk) - The company has significant customer and supplier concentration; in FY2024, one customer accounted for **18.8% of total revenues**, and two vendors accounted for **19.7% and 13.3% of total purchases**[377](index=377&type=chunk)[378](index=378&type=chunk) [Organizational structure](index=90&type=section&id=C.%20Organizational%20Structure) The company is a Cayman Islands-incorporated holding company operating through a multi-layered structure of wholly-owned subsidiaries in BVI, Hong Kong, PRC, and Vietnam - The company is a holding company incorporated in the Cayman Islands, with a complex structure of subsidiaries in the BVI, Hong Kong, PRC, and Vietnam[544](index=544&type=chunk) [Property, plants and equipment](index=91&type=section&id=D.%20Property,%20Plants%20and%20Equipment) The company owns three properties in China totaling over **54,600 sq.m.** and leases eleven additional properties across Shenzhen, China, and Hung Yen Province, Vietnam Owned Properties | Location | Area (sq.m.) | | :--- | :--- | | Shiyan Street, Baoan District, Shenzhen | 4,042 | | Shiyan Street, Baoan District, Shenzhen | 21,072 | | Yonghu Town, Huiyang District | 29,508 | - The company leases multiple properties for its operations, including industrial parks, dormitories, and canteens in Shenzhen, China, and an industrial park in Hung Yen Province, Vietnam[547](index=547&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=92&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes the company's financial performance, highlighting a **15.5% revenue decrease** and a significant net loss in FY2024, driven by lower sales volume and increased operating expenses Key Financial Performance (FY2024 vs. FY2023) | Metric | FY 2024 (USD) | FY 2023 (USD) | Change | | :--- | :--- | :--- | :--- | | **Revenues** | 38,530,773 | 45,598,620 | -15.5% | | **Gross Profit** | 8,304,581 | 9,064,262 | -8.4% | | **Net (Loss) Income** | (8,770,044) | (354,111) | Increased Loss | | **Gross Profit Margin** | 21.6% | 19.9% | +1.7 p.p. | - The decrease in FY2024 revenue was primarily due to a drop in sales volume from **30,189 tons to 23,736 tons**, attributed to economic downturns in Mainland China, partially offset by an increase in the average selling price from **$1,510 to $1,623 per ton**[565](index=565&type=chunk) - General and administrative expenses increased significantly to **$9.6 million** in FY2024 from **$5.3 million** in FY2023, mainly due to staff compensation related to the winding down of Yee Woo Paper Industry (Shenzhen) Co., Ltd. (YWSZ) and higher professional fees[576](index=576&type=chunk) - Net cash used in operating activities was approximately **$4.1 million** in FY2024, a reversal from **$8.1 million** generated in FY2023, primarily driven by the net loss of **$8.8 million**[582](index=582&type=chunk)[585](index=585&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=102&type=section&id=Item%206.%20Directors,%20Senior%20Management%20and%20Employees) This section details the company's leadership, board composition, executive compensation, significant employee reduction, and highly concentrated share ownership by YC 1926 (BVI) Limited - The board of directors consists of **five members**, three of whom are independent, and the company has established Audit, Compensation, and Nominating committees[634](index=634&type=chunk)[638](index=638&type=chunk) Executive Compensation Summary (FY2024) | Name and Principal Position | Salary ($) | Bonus ($) | Total ($) | | :--- | :--- | :--- | :--- | | Ming Yan "Ray" Lai, CEO | 121,361 | 10,625 | 131,986 | | Wing Wai "John" Au, CFO | 143,418 | 12,122 | 155,540 | Employee Headcount by Function | Function | As of June 30, 2024 | As of June 30, 2023 | | :--- | :--- | :--- | | Administration and Management | 2 | 8 | | Engineering | 8 | 6 | | Research and Development | 64 | 63 | | Sales and Marketing | 30 | 51 | | Business Operations | 394 | 664 | | **Total** | **498** | **792** | - Share ownership is highly concentrated, with YC 1926 (BVI) Limited beneficially owning **10,000,000 shares**, representing an **88.89% stake**, controlled by six shareholders with a voting concert agreement[662](index=662&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=110&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section details the company's major shareholder, YC 1926 (BVI) Limited, holding **88.89%** of shares, and outlines significant related party transactions, primarily from FY2022, including recurring rental expenses - The company's major shareholder, YC 1926 (BVI) Limited, holds **88.89%** of the ordinary shares[663](index=663&type=chunk) - Significant related party transactions primarily occurred in FY2022, involving repayments to/from entities under common control and dividend waivers by controlling shareholders which were capitalized as additional paid-in capital[664](index=664&type=chunk)[666](index=666&type=chunk)[667](index=667&type=chunk) - For FY2024, the main related party transaction was rental expenses of **$659,678** incurred with Yee Woo Paper Packaging (China) Company Limited, an entity under common control by the shareholders[665](index=665&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=114&type=section&id=Item%208.%20Financial%20Information) This section refers to the full financial statements and details the company's dividend policy, indicating no dividends for FY2023-2024, with past declarations being part of recapitalization efforts - The company has not declared dividends for the fiscal years ended June 30, 2024, and 2023, and does not expect to pay cash dividends in the foreseeable future, intending to retain earnings for business growth[670](index=670&type=chunk) - Previous dividend declarations in 2020 (by Yee Woo Shenzhen) and 2022 (by Millennium Printing) were part of recapitalization exercises where the dividends payable to Controlling Shareholders were waived and capitalized as additional paid-in capital to enhance the company's capital structure[668](index=668&type=chunk)[669](index=669&type=chunk)[671](index=671&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=115&type=section&id=Item%2010.%20Additional%20Information) This section provides supplementary details on corporate structure, governance, shareholder rights, foreign exchange controls in China, and tax implications across various jurisdictions, including PFIC rules - The company is an exempted company incorporated under the laws of the Cayman Islands, which provides certain advantages such as no requirement to file an annual shareholder return or hold an annual general meeting[710](index=710&type=chunk) - Under its articles, each ordinary share confers one vote; an ordinary resolution requires a simple majority, while a special resolution requires a two-thirds majority[686](index=686&type=chunk)[690](index=690&type=chunk) - The company discusses its potential classification as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, acknowledging that its status could change based on the market price of its shares and the composition of its assets and income[759](index=759&type=chunk)[788](index=788&type=chunk) - The company is subject to PRC foreign exchange controls, which regulate the conversion of RMB and remittance of funds out of China for both current account items and capital account items[726](index=726&type=chunk) [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=135&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers the reader to Item 5 for disclosures about market risk - This section directs to "Item 5. Operating and Financial Review and Prospects" for information on quantitative and qualitative disclosures about market risk[804](index=804&type=chunk) PART II [ITEM 15. CONTROLS AND PROCEDURES](index=136&type=section&id=Item%2015.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of June 30, 2024, due to a material weakness in internal control over financial reporting, which the company plans to remediate - As of June 30, 2024, management concluded that the company's disclosure controls and procedures were **ineffective**[808](index=808&type=chunk) - A material weakness was identified in internal control over financial reporting: the company does not have sufficient accounting and finance personnel with U.S. GAAP experience[810](index=810&type=chunk) - To remediate the material weakness, the company plans to hire additional personnel with experience in U.S. GAAP financial reporting and control procedures[811](index=811&type=chunk) [ITEM 16. OTHER INFORMATION](index=137&type=section&id=Item%2016.%20Other%20Information) This section covers governance, auditor changes, fees, and policies on insider trading and cybersecurity risk management, including the appointment of Wei, Wei & Co., LLP - On January 5, 2024, the company dismissed its independent auditor, WWC, P.C., and appointed Wei, Wei & Co., LLP as its new independent registered public accounting firm[822](index=822&type=chunk) Principal Accountant Fees (Audit Fees) | Auditor | Fiscal Year | Fee (USD) | | :--- | :--- | :--- | | Wei, Wei & Co., LLP | 2024 | 250,000 | | WWC, P.C. | 2023 | 210,000 | | WWC, P.C. | 2022 | 128,000 | - The company has adopted an insider trading policy that establishes guidelines for trading by affiliates, including defined trading windows and prohibitions on trading while in possession of material non-public information[828](index=828&type=chunk)[829](index=829&type=chunk) - The Board of Directors is responsible for overseeing cybersecurity risk management; the company has a process to assess, identify, and manage material cybersecurity threats, categorized as a "high relevance" risk[834](index=834&type=chunk) PART III [ITEM 18. FINANCIAL STATEMENTS](index=140&type=section&id=Item%2018.%20Financial%20Statements) This section presents the company's audited consolidated financial statements for FY2022-2024, prepared under U.S. GAAP, including reports from independent auditors and detailed notes - The financial statements for the fiscal year ended June 30, 2024, were audited by Wei, Wei & Co., LLP[845](index=845&type=chunk) - The financial statements for the fiscal years ended June 30, 2023, and 2022 were audited by WWC, P.C.[846](index=846&type=chunk) - The notes to the financial statements provide detailed information on significant accounting policies, including revenue recognition (ASC 606), leases (ASC 842), and segment reporting, where the company has determined it has only one reportable segment[867](index=867&type=chunk)[880](index=880&type=chunk)[915](index=915&type=chunk) [ITEM 19. EXHIBITS](index=140&type=section&id=Item%2019.%20Exhibits) This section lists all exhibits filed with the annual report, including corporate governance documents, securities descriptions, employment agreements, and required SEC certifications - The report includes key corporate governance documents such as the Second Amended and Restated Articles of Association and the Code of Business Conduct and Ethics[839](index=839&type=chunk) - Employment agreements for key executives and offer letters for directors are filed as exhibits[839](index=839&type=chunk)

Part I [Key Information](index=8&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section presents selected financial data and outlines significant operational, regional, and securities-related risk factors [Selected Financial Data](index=8&type=section&id=A.%20Selected%20Financial%20Data) Selected financial data shows decreased assets, liabilities, and revenue, a net loss in FY2023, and increased operating cash flow Consolidated Balance Sheet Summary (USD) | Balance Sheet Items | June 30, 2023 | June 30, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $44,450,969 | $48,264,582 | | **Total Assets** | $59,043,137 | $66,009,799 | | **Total Current Liabilities** | $19,086,343 | $25,774,833 | | **Total Liabilities** | $19,124,335 | $25,921,760 | | **Total Shareholders' Equity** | $39,918,802 | $40,088,039 | Consolidated Statement of Operations Summary (USD) | Income Statement Items | FY 2023 | FY 2022 | FY 2021 | | :--- | :--- | :--- | :--- | | **Revenues** | $45,598,620 | $66,232,757 | $64,565,269 | | **Gross Profit** | $9,064,262 | $16,270,964 | $17,353,358 | | **(Loss) Income from Operations** | ($1,082,354) | $5,535,582 | $5,100,234 | | **Net (Loss) Income** | ($354,111) | $4,077,371 | $3,665,810 | Consolidated Statement of Cash Flows Summary (USD) | Cash Flow Items | FY 2023 | FY 2022 | FY 2021 | | :--- | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $8,109,777 | $2,039,600 | $5,340,755 | | **Net Cash (Used in) Provided by Investing Activities** | ($216,520) | $2,068,244 | ($1,466,049) | | **Net Cash Provided by (Used in) Financing Activities** | $1,799,269 | ($5,585,110) | ($7,310,101) | | **Net Increase (Decrease) in Cash** | $8,129,171 | ($1,822,626) | ($3,435,395) | | **Cash at End of Year** | $27,576,622 | $19,447,451 | $21,270,077 | [Risk Factors](index=12&type=section&id=D.%20Risk%20Factors) Significant risks include China's regulatory environment, operational challenges, and issues with securities and foreign private issuer status - Risks related to doing business in China are prominent, including potential requirements for **CSRC approval** for future offerings under the new "Overseas Listing Trial Measures," **cybersecurity reviews**, and the possibility of **government intervention** that could materially alter operations[27](index=27&type=chunk)[32](index=32&type=chunk)[38](index=38&type=chunk) - Business risks include dependency on major customers (one customer accounted for **13.9% of revenue in FY2023**), competitive pricing pressure, raw material shortages, and substantial fixed costs that make profitability sensitive to sales volume[146](index=146&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Risks related to the company's ordinary shares include potential price volatility, the fact that the company is a "controlled company" with **88.89% ownership** by the Chairman and his family, and its status as a foreign private issuer, which allows for exemptions from certain SEC rules[198](index=198&type=chunk)[228](index=228&type=chunk)[246](index=246&type=chunk) - The company has identified a **material weakness** in its internal control over financial reporting due to a lack of sufficient accounting and finance personnel with U.S. GAAP experience[187](index=187&type=chunk)[760](index=760&type=chunk) [Information on the Company](index=50&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) Millennium Group, a family-owned paper-based packaging solutions supplier, offers integrated services across PRC, Hong Kong, and Vietnam [History and development of the company](index=50&type=section&id=A.%20History%20and%20development%20of%20the%20company) Incorporated in the Cayman Islands in 2021, the company's family-owned business history dates to 1978, expanding across Asia - The company is a third-generation family-owned business with a history dating back to **1978**, starting with the sale of Corrugated Paper in Hong Kong[261](index=261&type=chunk) - The holding company, Millennium Group International Holdings Limited, was incorporated in the Cayman Islands on **May 11, 2021**[261](index=261&type=chunk) [Business overview](index=51&type=section&id=B.%20Business%20overview) The company provides integrated paper-based packaging solutions, operating two PRC production sites and a Vietnam supply chain business, holding numerous patents - The company operates a one-stop integrated services model covering the entire value chain for paper-based packaging, including design, R&D, procurement, production, and logistics[267](index=267&type=chunk)[272](index=272&type=chunk) - Operations are divided into three main groups: MP Group (offset and flexo printing), Yee Woo Group (corrugated products), and MPG Group (supply chain management in PRC, Hong Kong, and Vietnam)[275](index=275&type=chunk) - The company owns two production sites in the PRC with a combined annual maximum production of approximately **300 million units**. It also operates an ISTA-certified testing laboratory[269](index=269&type=chunk)[313](index=313&type=chunk) - As of the report date, the company had registered **48 patents** and numerous trademarks in China and Hong Kong[329](index=329&type=chunk)[336](index=336&type=chunk)[341](index=341&type=chunk) [Organizational structure](index=90&type=section&id=C.%20Organizational%20structure) A diagram illustrates the corporate structure of Millennium Group International Holdings Limited and its various subsidiaries - A diagram outlines the company's organizational structure, showing the relationship between the Cayman Islands holding company and its subsidiaries in the BVI, Hong Kong, PRC, and Vietnam[486](index=486&type=chunk)[487](index=487&type=chunk) [Property, plants and equipment](index=90&type=section&id=D.%20Property,%20plants%20and%20equipment) The company owns three properties and leases ten properties in China for its factory and dormitory operations Owned Properties | Location | Area (sq.m.) | | :--- | :--- | | Fourth Industrial Zone, Shuitian Community, Shenzhen | 4,042 | | Fourth Industrial Zone, Shuitian Community, Shenzhen | 21,072 | | Yongda Highway, Maxi Village, Huiyang District | 29,508 | - The company leases ten properties in Shenzhen, China, for its industrial park, dormitory, and canteen facilities[490](index=490&type=chunk) [Operating and Financial Review and Prospects](index=92&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) FY2023 performance reflects a significant revenue decrease, declining gross profit and margin, and a net loss, influenced by economic downturns Consolidated Statement of Operations Summary (USD) | Metric | FY 2023 | FY 2022 | FY 2021 | | :--- | :--- | :--- | :--- | | **Revenues** | $45,598,620 | $66,232,757 | $64,565,269 | | **Gross Profit** | $9,064,262 | $16,270,964 | $17,353,358 | | **Gross Margin** | 19.9% | 24.6% | 26.9% | | **(Loss) Income from Operations** | ($1,082,354) | $5,535,582 | $5,100,234 | | **Net (Loss) Income** | ($354,111) | $4,077,371 | $3,665,810 | - The decrease in FY2023 revenue was attributed to a drop in average selling price from **$1,850/tonnage** in FY2022 to **$1,510/tonnage**, and a reduction in sales volume from **35,839 to 30,189 tonnages**, mainly due to economic downturns in Mainland China[509](index=509&type=chunk) Revenue by Product Category (USD) | Product Category | FY 2023 | % of Total | FY 2022 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Packaging products | $23,065,859 | 50.6% | $36,256,189 | 54.7% | | Corrugated products | $16,977,098 | 37.2% | $23,986,957 | 36.2% | | Packaging products supply chain management | $5,555,663 | 12.2% | $5,989,611 | 9.1% | | **Total** | **$45,598,620** | **100%** | **$66,232,757** | **100%** | Revenue by Country of Delivery (USD) | Country | FY 2023 | % of Total | FY 2022 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Mainland China | $33,266,314 | 73.0% | $52,664,829 | 79.5% | | Hong Kong SAR | $3,285,506 | 7.2% | $3,969,151 | 6.0% | | Vietnam | $3,130,339 | 6.9% | $2,689,693 | 4.1% | | Other Southeast Asian countries | $3,364,678 | 7.4% | $2,980,421 | 4.5% | | Other countries | $2,551,783 | 5.5% | $3,928,663 | 5.9% | | **Total** | **$45,598,620** | **100%** | **$66,232,757** | **100%** | [Directors, Senior Management and Employees](index=103&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the board, senior management, compensation, board practices, employee statistics, and concentrated share ownership [Directors and Management](index=103&type=section&id=A.%20Directors%20and%20Management) The company's leadership includes Chairman, CEO, and CFO, supported by a seven-member board with four independent directors - The key executive team includes **Ming Hung "Matthew" Lai** (Chairman), **Ming Yan "Ray" Lai** (CEO), and **Wing Wai "John" Au** (CFO)[559](index=559&type=chunk)[560](index=560&type=chunk)[562](index=562&type=chunk) - The Board of Directors is composed of **seven members**, including **four independent directors**: Sun Wai But, Hok Han "Henry" Ko, Hon Wai "Marco" Ku, and Hung Leung "Alan" Tsang[559](index=559&type=chunk) [Compensation](index=106&type=section&id=B.%20Compensation) Executive compensation is determined by the Compensation Committee, with specific amounts detailed for the CEO and CFO in FY2023 Executive Compensation Summary (USD) | Name and Principal Position | Fiscal Year | Salary | Bonus | Total | | :--- | :--- | :--- | :--- | :--- | | Ming Yan "Ray" Lai, CEO | 2023 | $80,606 | $5,359 | $85,965 | | | 2022 | $81,764 | $5,574 | $87,338 | | Wing Wai "John" Au, CFO | 2023 | $105,871 | $7,465 | $113,336 | | | 2022 | $107,135 | $7,688 | $114,823 | [Board Practices](index=107&type=section&id=C.%20Board%20Practices) The board comprises seven members, with established Audit, Compensation, and Nominating committees, governed by Cayman Islands law - The company has established an Audit Committee, a Compensation Committee, and a Nominating Committee, each with defined responsibilities and independent members[580](index=580&type=chunk)[582](index=582&type=chunk)[583](index=583&type=chunk) - Under Cayman Islands law, directors owe statutory, fiduciary (duty to act in the company's best interest, avoid conflicts of interest), and common law (skill, care, diligence) duties to the company[585](index=585&type=chunk) [Employees](index=110&type=section&id=D.%20Employees) As of June 30, 2023, the company had **792 employees**, a decrease from the prior year, with most in business operations Employee Breakdown by Function | Function | As of June 30, 2023 | As of June 30, 2022 | | :--- | :--- | :--- | | Administration and Management | 8 | 9 | | Engineering | 6 | 7 | | Research and Development | 63 | 67 | | Sales and Marketing | 51 | 60 | | Business Operations | 664 | 718 | | **Total** | **792** | **861** | [Share Ownership](index=111&type=section&id=E.%20Share%20Ownership) Share ownership is highly concentrated, with YC 1926 (BVI) Limited holding **88.89%** of outstanding shares, controlled by the Chairman's family - YC 1926 (BVI) Limited beneficially owns **10,000,000 ordinary shares**, constituting **88.89%** of the total outstanding shares[601](index=601&type=chunk) - The shareholders of YC 1926 (BVI) Limited, who are family members, have a voting concert agreement. In case of a tie, Chairman **Ming Hung "Matthew" Lai** has the deciding vote[601](index=601&type=chunk) [Major Shareholders and Related Party Transactions](index=111&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details major shareholder ownership, with YC 1926 (BVI) Limited holding **88.89%**, and numerous related party transactions - The company's major shareholder, YC 1926 (BVI) Limited, holds **88.89%** of the ordinary shares[601](index=601&type=chunk)[602](index=602&type=chunk) - Significant related party transactions occurred in FY2022 and FY2021 with entities controlled by the company's shareholders, including M-GEN Innovation, Wah Tong Paper Products, and Yee Woo Paper Packaging. These involved sales, management fees, advances, and repayments[607](index=607&type=chunk)[898](index=898&type=chunk) - In FY2022, dividends of approximately **$7 million** were declared and subsequently waived by the Controlling Shareholders, then capitalized as additional paid-in capital. A similar recapitalization occurred in FY2021 with a dividend of **$8.4 million**[622](index=622&type=chunk)[627](index=627&type=chunk)[917](index=917&type=chunk) [Financial Information](index=117&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section refers to full financial statements and outlines the dividend policy, noting past recapitalizations but no expected future cash dividends - The company does not expect to pay cash dividends in the foreseeable future, planning to retain earnings to support operations and finance growth[628](index=628&type=chunk) - In FY2021 and FY2022, the company undertook recapitalization exercises where dividends were declared to controlling shareholders and subsequently waived and capitalized as additional paid-in capital to optimize the company's capital structure[626](index=626&type=chunk)[627](index=627&type=chunk)[629](index=629&type=chunk) - Any future dividend payments are dependent on receiving funds from PRC subsidiaries and are subject to PRC regulations, including withholding taxes and statutory reserve requirements[631](index=631&type=chunk) [Additional Information](index=118&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details the company's Cayman Islands incorporation, PRC exchange controls, and taxation summary across multiple jurisdictions - The company is an exempted company incorporated under the laws of the Cayman Islands, which provides certain corporate governance flexibilities compared to U.S. domestic companies[639](index=639&type=chunk)[667](index=667&type=chunk) - PRC regulations impose controls on foreign currency exchange, requiring procedural compliance for current account items (like profit distributions) and approval for capital account items. SAFE Circulars 19 and 16 regulate the use of converted RMB capital[684](index=684&type=chunk)[686](index=686&type=chunk) - The company is not subject to income tax in the Cayman Islands. Its PRC subsidiaries are subject to a **25% Enterprise Income Tax**, and dividends paid to foreign investors are subject to a **10% withholding tax** (potentially **5%** for Hong Kong residents)[697](index=697&type=chunk)[699](index=699&type=chunk) - For U.S. Holders, 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. The company does not believe it was a PFIC for FY2021 and does not expect to be one in the foreseeable future[713](index=713&type=chunk)[714](index=714&type=chunk) Part II [Controls and Procedures](index=132&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and procedures were ineffective as of December 31, 2022, due to a material weakness in internal control over financial reporting - Management concluded that as of **December 31, 2022**, the company's disclosure controls and procedures were ineffective[759](index=759&type=chunk) - A **material weakness** was identified in internal control over financial reporting: the company does not have sufficient accounting and finance personnel with U.S.-GAAP experience[760](index=760&type=chunk) - The company plans to hire additional personnel with U.S. GAAP experience to remediate the **material weakness**[761](index=761&type=chunk) [Corporate Governance](index=134&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) As a foreign private issuer, the company follows Cayman Islands corporate governance practices, potentially offering less shareholder protection - The company is a **foreign private issuer** and follows Cayman Islands corporate governance practices, which may differ from Nasdaq listing standards[770](index=770&type=chunk) - Specifically, the company follows home country practice regarding shareholder approval of equity compensation plans, which may offer less protection to shareholders than Nasdaq rules for U.S. companies[770](index=770&type=chunk) Part III [Financial Statements](index=136&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section presents the company's audited consolidated financial statements for FY2021-2023, prepared under U.S. GAAP - The financial statements were audited by **WWC, P.C.**, an independent registered public accounting firm, which issued an unqualified opinion[785](index=785&type=chunk) - On **April 4, 2023**, the company closed its initial public offering (IPO) of **1,250,000 ordinary shares** at **$4.00 per share**, raising net proceeds of approximately **$4.2 million**[803](index=803&type=chunk) - The company's revenue is primarily derived from the sale of paper products and the provision of supply chain management solutions, with revenue recognized at a point in time when control of the product is transferred to the customer[842](index=842&type=chunk)[843](index=843&type=chunk)