Business Environment and Competition - The company operates in the competitive content marketing industry, which may hinder the evaluation of future prospects and sustainable profit generation [38]. - The marketing industry is intensely competitive, with numerous companies vying for market share, which may adversely affect the company's financial condition and results of operations [66][67]. - The company must continuously introduce new products and services to meet evolving customer needs and market competition [38]. - The company’s growth rates may decline due to various factors, including decreasing customer demand and increasing competition [37]. Customer and Revenue Dependence - The company faces risks related to maintaining and enlarging its customer base, which is crucial for revenue growth [47]. - The top five customers contributed approximately 52% of revenue for the year ended June 30, 2025, compared to 48% for the year ended June 30, 2024, and 61% for the year ended June 30, 2023 [63]. - The company has invested significantly in customer acquisition and retention, with no long-term agreements in place with top customers, making revenue continuity uncertain [64][65]. - The company is heavily dependent on securing licenses from event organizers, which is critical for business operations and customer base expansion [50]. Financial Condition and Going Concern - There is substantial doubt about the company's ability to continue as a going concern, impacting its financial condition [32]. - The company has substantial doubt about its ability to continue as a going concern and will need to raise additional working capital [83]. - Financial statements have been prepared on a going concern basis, indicating uncertainty about future profitable operations [84]. - The company may need additional capital, which could result in dilution for existing shareholders [39]. Regulatory and Legal Risks - The company must navigate a complex and evolving regulatory environment, particularly in China, which could materially affect its operations [34]. - The company faces legal and operational risks associated with doing business in the PRC, including potential difficulties in distributing dividends and transferring cash outside the PRC [96]. - Changes in the PRC legal system could materially affect the company's operations and the value of its securities [97]. - The company is subject to evolving PRC laws and regulations, which could impose additional compliance costs and affect its business operations [105]. Operational Risks - The company may experience significant liability claims or complaints from customers, which could adversely affect its operations [32]. - The effectiveness of the company's quality control system is vital for maintaining service quality, which directly impacts reputation and financial performance [48][49]. - The company faces risks from potential cybersecurity breaches that could lead to operational disruptions and reputational damage [58][62]. - The company may incur substantial costs due to data protection concerns and potential IT system disruptions, which could impact service delivery [56][57]. Economic and Market Factors - Economic downturns could adversely affect discretionary spending power of customers, potentially depressing order volumes [76]. - Changes in U.S. and international trade policies, particularly regarding tariffs on products manufactured in China, may impact demand for services [77]. - The company has not been adversely affected by international trade policies during the financial year ended June 30, 2025 [77]. Shareholder and Capital Structure - The Class A Ordinary Shares will have 10,850,000 shares outstanding immediately after the IPO, with all shares sold being freely transferable without restriction [168]. - The company does not expect to pay any cash dividends in the foreseeable future, intending to retain available funds for business development and growth [165]. - The company may need additional capital in the future, which could result in dilution of existing shareholders if additional equity securities are sold [169]. Internal Control and Compliance - The company plans to implement measures to improve internal control over financial reporting, including hiring qualified accounting personnel and establishing an audit committee [181]. - The company has engaged a consultant to assist in improving internal controls and compliance with SEC requirements [181]. Revenue Streams and Business Strategy - Revenue from event planning and execution services was RMB55.6 million, RMB72.6 million, and RMB61.4 million for the fiscal years ended June 30, 2023, 2024, and 2025, accounting for 80.5%, 66.7%, and 50.8% of total revenue respectively [218]. - Revenue from online precision marketing services was RMB6.1 million, RMB31.6 million, and RMB56.7 million for the fiscal years ended June 30, 2023, 2024, and 2025, representing 8.9%, 29.0%, and 46.9% of total revenue respectively [221]. - The company aims to develop its own intellectual property for event promotion, moving away from reliance on customer-owned IP [208]. - The company plans to deepen cooperation with existing media channels and explore new business opportunities with new media channels to expand content marketing services [209].
Star Fashion Culture Holdings Ltd(STFS) - 2025 Q4 - Annual Report