Company Operations - The company operates a truckload fleet consisting of 82 tractors, 87 trailers, and 44 vans, with no assets under finance lease[23]. - The company has experienced steady growth in its business, focusing on factory logistics including electronic devices, chemicals, and food[22]. - The company serves merchants in the retail industry in China, focusing on integrated supply chain solutions to meet the demand for faster delivery and shorter inventory cycles[218]. - The company is dependent on third-party suppliers, and any adverse changes in relationships with these suppliers could materially affect its business and financial results[216]. Market Strategy - The company aims to capture additional market share in the underrepresented transportation industry in China, leveraging 21 years of experience[24]. - The company plans to use future earnings for research and development, new product development, and operational expansion[44]. - The company faces competitive pressures in the domestic truckload delivery market, which may adversely affect its market share and financial condition[210]. Financial Structure and Dividends - As of January 19, 2023, the company issued a total of 12,000,000 ordinary shares, including 7,200,000 Class A and 4,800,000 Class B shares[29]. - The company does not anticipate declaring or paying any dividends in the foreseeable future, intending to retain earnings for business operations and expansion[37]. - The company's ability to pay dividends may be restricted, relying on dividends from PRC subsidiaries, which may face currency exchange limitations[72]. - The company currently does not have plans to declare and pay dividends to its Hong Kong holding company, Haoxin HK, and has not applied for a tax resident certificate to potentially benefit from a lower withholding tax rate[208]. Regulatory Environment - The company has not received or been denied permissions from PRC authorities to operate its business as of the report date[45]. - The PRC government may intervene in operations, which could materially affect the company's business and financial condition[59]. - The PRC government continues to exert significant control over the economy, impacting capital investments and tax regulations, which may adversely affect the company's financial condition and operations[103]. - Recent regulatory changes in China, including the Overseas Listing Trial Measures, may impose additional compliance requirements for overseas listings[80]. Compliance and Legal Risks - The company is not required to submit an application to the CSRC for approval of future offerings and trading of its Class A ordinary shares on Nasdaq under the M&A Rules[46]. - The company has not received any inquiries or sanctions from the CSRC or other PRC authorities regarding future offshore offerings[57]. - The company may face various PRC laws and regulations regarding privacy, data security, and cybersecurity, which could lead to liabilities for improper use of personal information[67]. - The interpretation of existing laws and potential new regulations may create substantial uncertainties regarding the legality of foreign investments in internet businesses[178]. Taxation and Financial Implications - The PRC government imposes a 10% withholding tax on dividends payable by Chinese companies to non-PRC-resident enterprises, which may affect the company's ability to distribute earnings[117]. - A withholding tax rate of 10% applies to dividends from PRC subsidiaries to foreign investors, which may be reduced to 5% under certain conditions[158]. - The company relies on dividends, loans, and other distributions from its PRC subsidiaries to meet cash and financing requirements, which could be adversely affected by limitations on these payments[129]. Auditor and Financial Reporting - The company's current auditor, Marcum Asia, is subject to PCAOB inspections and is headquartered in Manhattan, New York[63]. - Recent developments create uncertainty regarding the auditor's ability to cooperate with PCAOB requests due to potential restrictions from Chinese authorities[64]. - The lack of PCAOB inspections in China could lead to a loss of investor confidence in the company's financial statements[199]. Economic and Trade Conditions - Changes in China's economic, political, or social conditions could materially affect the company's business and results of operations[67]. - The U.S. has imposed tariffs on $250 billion worth of Chinese products, with an additional $325 billion threatened, impacting costs and market access for the company[179]. - The company faces potential increases in export costs to the U.S. market and reduced demand from U.S. customers due to higher prices resulting from tariffs[185]. - The company is monitoring evolving trade policies and exploring strategies to diversify its customer base and adjust its supply chain to mitigate risks[184].
Haoxin Holdings(HXHX) - 2024 Q4 - Annual Report