Regulatory Environment - The company is permitted to present only two years of audited financial statements and related Management's Discussion and Analysis in SEC filings[7]. - The company is exempt from filing quarterly reports on Form 10-Q and providing current reports on Form 8-K, which may limit transparency for investors[64]. - The company faces risks related to potential regulatory changes in China that could impact its ability to conduct business and accept foreign investments[78]. - The PRC government has indicated an intent to increase oversight over overseas offerings and foreign investments, which may significantly hinder the ability to offer Ordinary Shares and could lead to a decline in their value[80]. - The SEC's HFCAA requires that if an auditor is not inspected by the PCAOB for two consecutive years, trading of the issuer's securities may be prohibited on U.S. exchanges[88]. - The PCAOB has determined it is unable to inspect or investigate public accounting firms in Mainland China and Macau due to positions taken by PRC authorities[99]. - The CSRC and PCAOB signed a Statement of Protocol on August 26, 2022, allowing the PCAOB independent discretion for selecting audits for inspection[100]. - The company has not been informed of any requirement to file for a cybersecurity review, but uncertainties exist regarding the interpretation and enforcement of PRC cybersecurity laws[83]. - The company has received all requisite permissions from Macau authorities to operate its businesses, including business registration certificates[84]. - The company does not expect the Revised Review Measures to materially impact its business or operations[83]. - The potential for changes in PRC laws and regulations could rapidly affect the company's operations and ability to offer securities[86]. - The PCAOB has secured complete access to inspect registered public accounting firms in mainland China and Macau, but future access may be obstructed, potentially leading to delisting of the company's securities[101]. - The Accelerating Holding Foreign Companies Accountable Act mandates that if an issuer's auditor is not subject to PCAOB inspections for two consecutive years, its securities may be prohibited from trading on U.S. exchanges[102]. Financial Performance and Risks - The company does not intend to pay dividends in the near future, which may affect investor returns[75]. - The company may rely on dividends from subsidiaries to fund operations, and any limitations on these payments could adversely affect business[71]. - The company’s financial condition and results of operations could be adversely affected by fluctuations in exchange rates and economic volatility in Macau and China[69]. - Economic conditions in Macau and China are sensitive to global economic conditions, and a prolonged slowdown may negatively impact client confidence and business operations[109]. - The company is exposed to risks associated with customer concentration and dependence on related parties, which could impact revenue stability[69]. - Revenues from the top 5 customers accounted for 98.4% and 95.8% of total revenues for the financial years ended 2025 and 2024, respectively, indicating significant customer concentration risk[131]. - Two clients, Jiangxi Zongjia Haotian Technology Company Ltd. and Jiangxi Muhe Business Services Co., Ltd., accounted for 70.0% of revenues as of September 30, 2025, further highlighting dependence on a limited customer base[131]. - The company is subject to various Macau laws and regulations, including those related to data security and anti-monopoly, which may impact business operations[115][119]. - The company faces significant risks due to prolonged economic downturns, which could adversely affect its business and financial condition[158]. - The performance of the company's consultation services is highly unpredictable and dependent on market conditions and client demands[162]. - The financial condition of clients may deteriorate, leading to slow fee settlements and adversely affecting the company's cash flows[169]. - The company is subject to risks associated with pressure on service fees, which may decrease due to competition or reduced demand[172]. - Economic volatility and market uncertainty may impact demand for industrial properties, potentially affecting revenue streams and profitability[178]. - The company may face scrutiny and negative publicity similar to other U.S.-listed China-based companies, which could harm business operations and reputation[111][112]. Corporate Governance and Structure - The company is classified as a foreign private issuer, allowing it to adopt certain home country governance practices that may provide less protection to shareholders[60]. - The concentration of ownership among directors, officers, and principal shareholders, holding 63.62% of shares, may not align with the interests of other shareholders[193]. - The company is classified as a foreign private issuer, which allows it to follow less detailed reporting requirements compared to U.S. domestic companies[219]. - If the company loses its foreign private issuer status, it would face significant additional legal, accounting, and compliance costs[223]. - The company qualifies as an emerging growth company, allowing it to take advantage of reduced reporting requirements, including exemptions from certain auditor attestation requirements[224]. - The company may not comply with new or revised financial accounting standards until a private company is required to do so, potentially affecting comparability with other public companies[225]. - The board of directors has complete discretion regarding dividend distribution, subject to Cayman Islands law[202]. - Shareholders have limited rights to inspect corporate records under Cayman Islands law, which may hinder their ability to gather necessary information[216]. - The company’s corporate governance practices may differ significantly from Nasdaq standards, potentially affording less protection to shareholders[221]. - There is uncertainty regarding the enforcement of U.S. court judgments in the Cayman Islands and Macau, which could complicate legal recourse for investors[204][205]. Business Strategy and Development - The company plans to develop proprietary fintech solutions and platforms, potentially integrated with AI, through its subsidiary LFT[134]. - By September 30, 2025, LFT had entered into business agreements with four clients to provide ongoing fintech services[151]. - The company has employed two additional technical staff since June 2024 to enhance its fintech development capabilities[151]. - The company is considering future acquisitions and joint ventures as part of its growth strategy, which may introduce new risks and liabilities[152]. - The company has not registered some of its proprietary technology as trademarks or patents, which may adversely affect its business if others claim similar rights[139]. - The company anticipates increased costs related to compliance with Sarbanes-Oxley and SEC regulations after becoming a public company[227]. Market Conditions and Economic Factors - The total investment in real estate development in mainland China was RMB 10,028 billion (US$1,383 billion) in 2024, a decrease of 10.6% compared to the previous year[159]. - Investment in residential housing in mainland China was RMB 7,604 billion (US$1,049 billion), down by 10.5% YoY[159]. - The average unit price per square meter of residential units in Macau decreased by 9% to MOP 84,838 (US$10,605) compared to 2023[159]. - The number of industrial park consultation projects completed by the company dropped to 1 for the year ended September 30, 2025, down from 8 projects in the previous year[164]. - The average prices per square meter for office spaces and industrial units in Macau decreased by 21.7% and 16.9% respectively in 2024[159]. - The company charges approximately one month's rent as a service fee for rental properties and around 2% of the property sales revenue for properties sold[178]. - Fluctuations in interest rates, inflation, or currency exchange rates may impact investment decisions, potentially reducing viable prospects for the company's services[178]. - The market price of the company's Ordinary Shares may be volatile and could decline regardless of operating performance[229]. Currency and Credit Risks - The company is exposed to currency risk due to fluctuations in exchange rates, particularly between MOP and CNY[690]. - The company has not used any instruments or derivatives to manage or hedge its currency risk exposure[692]. - A 1% appreciation of CNY against MOP would increase revenue by US$30,485, while a 1% depreciation would decrease revenue by the same amount[691]. - As of September 30, 2025, the company had receivables from major customers accounting for 96% of total revenue, with Customer A contributing 51%[697]. - The company has not experienced any losses in bank accounts and believes it is not exposed to significant credit risk on cash maintained with banks in Macau[694]. - The allowance for credit losses as of September 30, 2025, was US$7,059, down from US$21,449 in 2024[695].
Zenta(ZGM) - 2025 Q4 - Annual Report