
VIE Structure and Financial Impact - As of December 31, 2022, the VIE accounted for 8.79% of the company's consolidated total assets, 13.04% of total liabilities, and 1.61% of total net revenues[20]. - The VIE accounted for 51.21% of consolidated total assets, 99% of total liabilities, and 100% of total net revenues as of December 31, 2021[20]. - The company relies on VIE Agreements to control and operate the VIE, which may not be as effective as direct ownership[20]. - The VIE provided interest-free loans totaling $6,188,307 to the Company's subsidiaries for the construction costs related to the graphite anode business in 2022[28]. - The VIE provided interest-free loans of $90,000 to the Company for professional fees related to the initial public offering in 2021[28]. - The VIE has been certified as a National High Tech Enterprise, allowing a favorable tax rate of 15% instead of the standard 25%[95]. - The VIE Agreements are subject to significant risks, including potential non-compliance with PRC regulations, which could lead to severe penalties[120]. - The company operates its knowledge sharing and enterprise service platform through a variable interest entity (VIE) under contractual arrangements, treating the VIE's assets and liabilities as its own[121]. - The company's PRC legal counsel has indicated uncertainties regarding the interpretation of current and future PRC laws, which may affect the validity of the VIE structure[122]. - If the VIE's contractual arrangements are deemed illegal, the company may lose the ability to consolidate the VIE's financial results, adversely impacting its financial condition[122]. - The company relies on contractual arrangements with the VIE, which may not provide effective operational control compared to direct ownership[123]. Financial Performance - For the fiscal year ended December 31, 2022, the Company reported net revenues of $38,125,668, a significant increase from $7,409,272 in 2021[38]. - The total cost and operating expenses for the fiscal year 2022 were $56,934,801, leading to a net loss of $23,124,402[38]. - The Company reported a loss from operations of $18,809,133 for the fiscal year ended December 31, 2022[38]. - Net revenue for the year ended December 31, 2022, was $38,125,668, with a net loss of $23,124,402, primarily due to the impact of the COVID-19 pandemic and investments in the new venture, Sunrise Guizhou[73]. - For the year ended December 31, 2021, net revenue was $7,409,272, and the net loss was $8,714,332, compared to a net income of $11,957,287 for the year ended December 31, 2020[73]. - The company reported a significant increase in total assets from $58,695,084 in 2021 to $107,022,374 in 2022, indicating growth in its financial position[42]. Regulatory Environment and Compliance - The company is subject to legal and operational risks associated with being based in the PRC, which could materially affect its operations and securities value[22]. - The company has not been involved in any investigations on cybersecurity review initiated by PRC regulatory authorities as of the date of the annual report[22]. - The company is classified as an Existing Issuer and is not required to complete immediate filing procedures with the CSRC for its current listing[23]. - The company has faced increased regulatory scrutiny in China, particularly regarding anti-monopoly laws, but has not been impacted in its operations[25]. - The company is closely monitoring regulatory developments in China that may impact its business operations and compliance requirements[29]. - The company may face additional compliance requirements due to the Trial Measures and revised Provisions issued by PRC authorities[157]. - The Cybersecurity Review Measures require online platform operators with personal information of at least one million users to apply for a cybersecurity review before listing overseas[153]. - Compliance with PRC regulations on mergers and acquisitions is critical, as failure to obtain necessary approvals may lead to severe penalties[200]. - The PRC tax authorities may scrutinize related party transactions, potentially leading to additional tax liabilities that could reduce consolidated net income[128]. - The Foreign Investment Law, effective January 1, 2020, introduces uncertainties regarding the treatment of VIE agreements as foreign investments[140]. Business Operations and Market Risks - The company faces risks related to its limited operating history and the challenges of managing growth effectively in a development-stage environment[70]. - The company faces increasing competition in the enterprise service and knowledge sharing industries, which could negatively impact revenues and profit margins[79]. - The company must continuously invest in research and development to remain competitive, which can be costly and uncertain[106]. - Any reduction in government support for electric vehicles and renewable energy could adversely affect demand for the company's graphite products[108]. - The company may require additional capital to develop and expand operations, which may not be available when needed[71]. - The company faces risks related to maintaining cooperative relationships with joint venture partners, which are crucial for the success of its graphite anode business[103]. - Sunrise Guizhou's operations depend on the availability and quality of raw materials, with potential adverse effects from price volatility and supply chain disruptions[115]. - The company’s profitability in merchandise sales is dependent on effective inventory management and responding to consumer demand patterns[78]. - A severe or prolonged downturn in the global or Chinese economy could materially and adversely affect the company's business and financial condition[161]. - The company’s operations were significantly disrupted by health epidemics, particularly the COVID-19 pandemic, impacting its business performance[164]. Capital Structure and Shareholder Control - Executive officers, directors, and affiliates own approximately 43.56% of the company's outstanding Ordinary Shares, allowing them to exert significant control over shareholder matters[142]. - The company may need additional capital for business expansion and may face challenges in obtaining financing on acceptable terms[118]. - The company does not expect to be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes in the foreseeable future, but this status could change based on asset composition[217]. Labor and Employment Risks - Increases in labor costs in China are expected to continue, potentially impacting profitability if these costs cannot be passed on to customers[210]. - The company is subject to stricter regulatory requirements regarding labor contracts and employee benefits, which could adversely affect its business operations[212]. - There is a risk of labor disputes or government investigations due to evolving labor-related laws and regulations in China, potentially impacting financial conditions[213]. Foreign Exchange and Taxation - The PRC government imposes controls on the convertibility of Renminbi into foreign currencies, which may affect the company's ability to remit dividends and its financial condition[183]. - Dividends from PRC subsidiaries to offshore holding companies may be subject to a withholding tax rate of 10%, potentially reduced to 5% under certain conditions[179]. - The company is subject to a uniform PRC enterprise income tax rate of 25% if classified as a "resident enterprise," which could adversely affect its effective tax rate and net income[177]. - The PRC government has imposed more restrictive foreign exchange policies, which may affect the company's ability to pay dividends in foreign currencies[187]. Risks from Government Control - The Chinese government has significant control over the economy, which may materially affect the company's operations and financial condition[150]. - The PRC government continues to exercise significant control over economic growth, which may impair the company's ability to operate profitably[165]. - Changes in PRC laws and regulations governing business operations may materially and adversely affect the company's business[167]. - The evolving PRC legal system may lead to inconsistencies in the enforcement of laws and regulations, impacting the company's business[169]. - The company may not be able to complete necessary government registrations or obtain approvals for future loans or capital contributions to its PRC subsidiaries[182]. U.S. Regulatory Environment - The Holding Foreign Companies Accountable Act requires issuers to ensure their auditors are PCAOB inspected, with potential delisting risks if not complied[192]. - The PCAOB has determined it can inspect firms in mainland China and Hong Kong, but future access may be obstructed by PRC authorities[196]. - The Accelerating Holding Foreign Companies Accountable Act reduces the non-inspection period from three years to two years, increasing delisting risks[198]. - The company’s current auditor, MarcumAsia, is PCAOB registered and has been regularly inspected, mitigating immediate delisting risks[199]. - If the company is scrutinized like other U.S.-listed Chinese companies, it may need to expend significant resources to address the situation, harming its operations and reputation[188]. - U.S. listed Chinese companies have faced significant scrutiny, leading to sharp declines in stock value and potential shareholder lawsuits[189]. - The SEC reports are not subject to review by PRC regulatory authorities, creating uncertainties regarding compliance with new PRC regulations[190].