Financial Transfers and Dividends - The company transferred cash of $12,977,522 to its subsidiaries in Hong Kong and $6,349,868 to its subsidiaries in Singapore during the fiscal year ended June 30, 2025[47]. - The company has not made any dividends or distributions to U.S. investors during the fiscal years ended June 30, 2023, 2024, and 2025[52]. - The company currently intends to retain all available funds and future earnings for the operation and expansion of its business, with no present plan to declare or pay any dividends[55]. Acquisitions and Corporate Structure - The company completed its acquisition of SuperX Industries, a Singapore company, on April 29, 2025[39]. - The company acquired a 40% stake in SuperX Digital Power Pte. Ltd., a Singapore company, on September 18, 2025[41]. - The company incorporated SuperX AI Technology USA, a Nevada corporation, on September 24, 2025[41]. - The company has undergone multiple name changes and rebranding, with the latest being on June 2, 2025, to focus on AI data center solutions[35]. - The company has a wholly owned subsidiary, ASPAC AI Computing Pty Ltd, which is an investment holding company with no operations[37]. Regulatory Compliance and Risks - The company is subject to the HFCA Act, which may impact its ability to trade on U.S. exchanges if audit reports are not compliant[61]. - The PCAOB has secured complete access to inspect and investigate registered public accounting firms in mainland China and Hong Kong as of December 15, 2022, vacating previous determinations[66]. - The company does not have any subsidiaries or plans to establish a VIE structure in mainland China, and has received all necessary licenses from Hong Kong and BVI authorities[68]. - The company generates all revenues and profits from its Hong Kong subsidiary, OPS HK, and does not currently operate in mainland China[72]. - The company is not subject to the M&A Rules or the Trial Measures, as it does not have any equity interest in domestic companies within mainland China[72]. - Recent regulatory actions in mainland China may impact companies operating there, but the company does not anticipate these measures affecting its operations in Hong Kong[75]. - The company has not collected or stored personal information of mainland China individuals, thus not falling under the cybersecurity review requirements[75]. - If the company fails to comply with future regulatory requirements from PRC authorities, it may face delisting from U.S. exchanges, significantly affecting the value of its Ordinary Shares[77]. - The company has not applied for any permissions or approvals from the CSRC or other PRC regulatory agencies as of the date of the annual report[72]. - The Basic Law provides Hong Kong with a high degree of autonomy, which currently protects the company from PRC laws affecting its operations[69]. - The company faces uncertainties regarding future regulatory interpretations and implementations that could impact its business operations and listing status[76]. Operational Compliance and Legal Obligations - OPS HK is a Registered Minor Works Contractor (Class II and III) under the Buildings Department, allowing it to perform fit-out services requiring such qualifications[78]. - The Business Registration Ordinance mandates that businesses must register within one month of commencement, with penalties for non-compliance including fines of HK$5,000 and potential imprisonment for one year[79]. - Under the Buildings Ordinance, no building works can commence without approval from the Building Authority, with penalties for violations including fines of HK$400,000 and imprisonment for up to two years[82]. - The Factories and Industrial Undertakings Ordinance imposes a duty on proprietors to ensure health and safety, with penalties for non-compliance reaching up to HK$10,000,000[86]. - The Minimum Wage Ordinance sets the minimum hourly wage at HK$42.1, with penalties for non-payment including fines of HK$350,000 and imprisonment for three years[107][108]. - The Mandatory Provident Fund Schemes Ordinance requires employers to ensure employees join a registered MPF Scheme within 60 days, with penalties for non-compliance including fines up to HK$100,000[103][104]. - The Employees' Compensation Ordinance establishes a no-fault compensation system for work injuries, requiring employers to maintain insurance coverage of at least HK$100,000,000 per event for companies with up to 200 employees[101]. - Employers must provide a safe working environment and comply with various safety regulations, with penalties for violations including fines and imprisonment[88][89]. - The Immigration Ordinance requires construction site controllers to prevent illegal workers from being employed, with penalties for violations including fines of HK$350,000[110]. - OPS HK has made all required contributions under the Mandatory Provident Fund Schemes Ordinance as of the date of the annual report[106]. Taxation and Financial Regulations - The standard profits tax rate in Hong Kong is 8.25% on assessable profits up to $2,000,000 and 16.5% on profits exceeding that amount for corporate taxpayers[113]. - No tax is imposed on capital gains from the sale of shares in Hong Kong, but trading gains may be subject to profits tax[114]. - The Hong Kong stamp duty is currently charged at a rate of 0.1% on the higher of the consideration or market value of shares, resulting in a total of 0.2% payable on typical transactions[115]. - The Central Provident Fund (CPF) contributions are due at the end of each month, with employers required to pay both their share and the employee's share[129]. - The maximum penalty for non-compliance with the CPF Act can reach S$10,000 or imprisonment for up to 12 months for repeat offenders[130]. Market and Operational Risks - The company faces risks related to regulatory actions from the PRC government that may impact its ability to operate profitably and transfer cash from subsidiaries[135]. - OPS HK's total revenue is significantly dependent on a few major customers, indicating that the loss of any major client could adversely impact financial performance[30]. - The interior design business of OPS HK is project-based, leading to fluctuating profitability based on negotiated terms and project specifics[29]. - OPS HK has historically faced fluctuating costs of sales, which could negatively affect gross profit margins if there are significant increases in these costs[29]. - The AI server and infrastructure solutions business is highly capital intensive, requiring substantial upfront investments that may strain liquidity[39]. - Geopolitical tensions and supply chain disruptions could adversely affect the sourcing of components and manufacturing of AI server products[38]. - The company may face risks related to the high energy and cooling demands of AI data centers, which could impact operational costs[32]. - The AI server and infrastructure solutions business is at an early stage of development, with no assurance of future profitability[35]. - The company is exposed to liquidity risk and credit risk from its customers, which could affect financial stability[31]. - The business operations may be adversely affected by increasing interest rates, impacting overall financial performance[31]. - The company relies on dividends from its operating subsidiaries for cash flow, and any restrictions on these payments could materially affect business operations[145]. Regulatory Environment and Future Outlook - The PRC government has initiated regulatory actions affecting business operations in mainland China, including enhanced supervision of companies listed overseas and expanded cybersecurity reviews[148]. - The company has no direct operations or subsidiaries in mainland China and does not intend to establish a VIE structure, mitigating some regulatory risks[152]. - As of the date of the annual report, the company is not subject to the M&A Rules or the Trial Measures, and does not require CSRC approval for its U.S. listing[157]. - The company’s operations are primarily conducted through its subsidiary in Hong Kong, which may still be influenced by PRC laws and regulations[158]. - Recent regulatory changes could significantly limit the company's ability to offer securities and may lead to a decline in the value of its Ordinary Shares[161]. - The company does not currently have any clients from mainland China and does not expect to be impacted by the Measures for Cybersecurity Review[154]. - The Chinese government may impose restrictions on the company's ability to move funds out of Hong Kong, affecting dividend distributions and reinvestments[158]. - The effectiveness and interpretation of new laws and regulations remain uncertain, which could impact the company's business operations[154]. - The company is advised that it does not need permission from Hong Kong authorities to offer registered securities to foreign investors[156]. - Any future regulatory actions by the PRC government could materially affect the company's operations and the value of its securities[159]. Company Classification and Growth - The company is classified as an "emerging growth company" and will remain so until June 30, 2029, or until it meets certain revenue or market value thresholds[165]. - The company has total annual gross revenue of at least $1.235 billion or a market value exceeding $700 million, which would disqualify it from being an emerging growth company[165]. - The company continues to incur significant legal, accounting, and compliance costs as a public entity, which were not present as a private company[165]. - The company is exempt from certain reporting requirements, including auditor attestation under Section 404 of the Sarbanes-Oxley Act, until it no longer qualifies as an emerging growth company[165]. Economic and Political Environment - The company derives all of its revenue from operations in Hong Kong, making it susceptible to local political and economic conditions[175]. - The ongoing protests in Hong Kong have adversely affected various sectors, including airline, retail, and real estate, which may impact the company's operations[176]. - The U.S. government has imposed sanctions under the Hong Kong Autonomy Act, which could affect the company's business operations and financial position[171]. - The enforcement of the Hong Kong National Security Law may materially and adversely affect the company's subsidiary's business operations[170]. - The company faces challenges in legal processes and enforcement of judgments due to its operations being primarily outside the United States[169]. - Changes in the political and legal environment in Hong Kong could pose risks to the company's business and financial stability[178]. Customer and Supplier Dependency - OPS HK's top five customers contributed approximately 84.9%, 80.3%, and 63.9% of total revenue for the fiscal years ended June 30, 2025, 2024, and 2023, respectively[187]. - For the fiscal year ended June 30, 2025, three customers accounted for approximately 30.9%, 28.6%, and 10.2% of total revenue, indicating a high revenue concentration risk[187]. - The largest supplier accounted for approximately 34.6%, 26.7%, and 10.5% of total subcontracting and materials costs for the fiscal years ended June 30, 2025, 2024, and 2023, respectively[191]. - The profitability of OPS HK is project-based and varies significantly from project to project, with no long-term agreements in place[182]. - Any significant increase in costs of sales could materially affect OPS HK's gross profit margin and overall financial performance[185]. - The business is highly competitive, with a low entry barrier, leading to potential challenges from new entrants offering higher quality services at lower prices[181]. - The economic conditions in Hong Kong, including interest rates and property market performance, directly impact the demand for OPS HK's services[189]. - OPS HK's operations are dependent on subcontractors and suppliers, with risks associated with their availability and performance affecting project quality and costs[190]. - The company faces liquidity risk due to potential delays or refusals in customer payments, impacting cash flow predictability[192]. - Negative publicity or damage to reputation could adversely affect OPS HK's ability to secure new projects and maintain existing customer relationships[194]. Compliance and Regulatory Costs - The company faces increasing compliance costs due to intensifying regulatory scrutiny over data and AI technologies, which could materially affect its financial condition and operations[204]. - Significant capital expenditures on AI-ready data centers may not yield anticipated benefits if demand slows or competition intensifies, potentially impacting revenue and margins[206]. - The company’s AI server and infrastructure solutions business is in the early stages of development, with no assurance of profitability or sufficient demand for its products[218]. - Integration risks among components used in AI servers may lead to underperformance or failures, harming the company's reputation and operational results[227]. - The company must effectively manage capital expenditures and expand data center capacity to remain competitive in a rapidly changing technological environment[209]. - Regulatory frameworks for AI technologies are evolving and becoming increasingly complex, which may impact the commercialization of AI solutions and demand for the company's services[216]. - The company is seeking to attract customers requiring high-performance computing for AI and machine learning technologies as part of its growth strategy[211]. - The reliance on a global supply chain for critical components may disrupt operations due to trade restrictions or tariffs, adversely affecting business performance[224]. - The company may incur significant costs and delays in developing new solutions to adapt to the changing AI landscape, impacting its ability to capitalize on market opportunities[213]. - The success of the AI solutions business depends on factors beyond the company's control, including market adoption and competition from established players[219].
Junee Ltd(JUNE) - 2025 Q4 - Annual Report