Corporate Structure
Maitong Sunshine Cultural Development Co., Limited (“MGSD”) was incorporated in the State of Nevada on October 26, 2023. Our website address is www.maitongsunshine.com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this Report.
The Company, through its operating subsidiary, which is headquartered in Beijing, China, is engaged in the business of providing cultural tourism (include Education Tours and Family Tours) and distributing Chinese cultural and creative products. During the 2025 fiscal year, the Company expects to expand the scope of its subsidiary’s business to include organizing and managing arts expositions.
At September 30, 2024, the Company’s subsidiaries are:
Maitong Sunshine Cultural Development Co., Limited (“MGSD”) is a publicly-held corporation that was registered in Nevada, USA on October 26, 2023. On November 27, 2023, MGSD issued 60,000,000 shares of its common stock to the original shareholders of Maitong Sunshine Cultural Development Co., Limited (Samoa), in exchange for 100% of the outstanding shares of Maitong Sunshine Cultural Development Co., Limited (Samoa) (the “Share Exchange”).
Maitong Sunshine Cultural Development Co., Limited (Samoa) (“MGSD Samoa”), initially named as Oriental Culture Development Co., Limited (Samoa), was established on September 7, 2023 under the laws of Samoa.
Maitong Sunshine Cultural Development Co., Limited (Hong Kong) (“MGSD HK”), initially named as Oriental Culture Development Co., Limited (Hong Kong), was established on September 13, 2023 under the laws of Hong Kong. MGSD Samoa holds a 100% interest in MGSD HK.
Beijing Tongzhilian Cultural Development Co., Limited (“Tongzhilian”), a privately held Limited Company, was approved on September 13, 2023 and registered on October 11, 2023 in Beijing, China. MGSD HK holds a 100% interest in Tongzhilian.
The equity transactions summarized above are treated in our financial statements as a corporate restructuring (reorganization) of entities under common control, as each of the four entities have at all times been under the control of Ms. Huang Fang. Therefore, in accordance with ASC 805-50-45-5, the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and the entities under common control are presented on a combined basis for all periods. Since all of the subsidiaries were under common control for all periods presented, the results of these subsidiaries are included in the Company’s financial statements for all periods.
Our present corporate structure is as follows:
Our Business
Our CEO, Huang Fang, has over twenty years of experience in marketing, within the PRC, aspects of Chinese culture: culture-oriented tours, cultural expositions and products that reflect Chinese culture. In that time, Huang Fang has forged numerous strong relationships with enterprises engaged in similar marketing. To gain advantage from her relationships, Ms. Huang has founded our operating subsidiary, Tongzhilian, to be a single vehicle for integrated marketing of several aspects of Chinese culture. At present, Tongzhilian is engaged in marketing cultural tours and product sales. In the future Tongzhilian expects to offer its initial arts exposition.
In the long run, by leveraging our CEO’s network of industry contacts to access and expand a large and loyal customer base, we plan to expand the scope of our service offerings and ultimately establish Tongzhilian as a leading cultural tourism service provider in China.
Operating Licenses
Our products and services are subject to regulation by governmental agencies in the PRC and Beijing. Business and company registrations are certified on a regular basis and must be in compliance with the laws and regulations of the PRC and provincial and local governments and industry agencies, which are controlled and monitored through the issuance of licenses. Our licenses include:
Our Strengths
Management believes the following strengths will contribute to our success:
Key components of our growth strategy include the following:
Competition
The travel company industry is fragmented and highly competitive throughout China. Our competitors in the market can be grouped into several broad categories based on size, business model, product offerings, target customers and geographic scope of operations. These include international products suppliers and travel companies with significant competitive services. Our many and powerful competitors will be an obstacle to our ability to achieve profitable operations.
The delivery of arts expositions and the market for Chinese cultural and creative products in China are both highly competitive. The providers compete for customers based on factors including (i) attractiveness of products to customers; (ii) sales and marketing ability; (iii) pricing and diversity of products; (iv) brand awareness and reputation; and (v) experience and expertise of the management team.
Our main competitors include:
In addition, we also face potential competitors, including:
Although some of our major and potential competitors may have greater financial resources or larger customer bases than we do, we believe that our high-quality products, our sales and marketing capability, and strong brand recognition in the industry, will enable us to compete effectively in the fast-evolving markets for Arts exposition and Chinese cultural and creative products.
Suppliers
Since the company began its operations, we have developed a solid and reliable image and reputation with suppliers. We have established supplier relationships with several local companies.
Marketing
The economic contribution of tourism in China has been forecast to continuously increase. The emergence of an affluent middle class and an easing of movement restrictions for locals and foreign visitors to China both support this travel boom. The Chinese tourism market has transformed into one of the world’s most-watched inbound and outbound tourist markets.
China boasts a large number of attractions, such as historical sites and relics, economic hot spots, and a culturally diverse number of minorities. Therefore, the country has become one of the most popular travel destinations for many countries, such as Thailand, Japan, South Korea, Russia, and the United Kingdom.
Several driving forces contribute to the continuous increase in China’s tourism landscape, including:
The core business of Tongzhilian involves the development and marketing of cultural tours in the Chinese market. The distinguishing characteristic of a cultural tour is that the locations visited are either themselves evocative of the culture of China (temples, palaces, historically significant places, etc.) or provide opportunities for cultural education (museums, schools, universities, etc.). We also define many of our tours by their target markets, for example, Family Tours that have youth-oriented content, and Education Tours that are more suitable for older participants.
The marketing network for our tours has been developed from the roster of contacts that our CEO, Huang Fang, has made during her twenty years of experience in marketing aspects of Chinese culture. We plan, going forward, to be a similarly flexible presence in the industry, both looking for and creating opportunities within a network of friendly industry participants.
Tongzhilian also sells product such as tea, alcohol, and gift cards (for redeeming products such as crab and meat). Tongzhilian procures goods from suppliers, and has the suppliers deliver products on behalf of Tongzhilian to its customers. Tongzhilian has attempted to act as a sales agent for distributors of Chinese cultural and creative products. As the business develops, the Company intends to engage one or more professional design companies to design itsown lines of cultural and creative products, to be manufactured by a contractor.
The cultural and creative products market in China, as well as the gift products market, are thriving sectors. The demand for cultural and creative products spans various age groups and cultural backgrounds, with the younger generation and middle class emerging as the main consumer groups. They show a keen interest in products that are rich in cultural content and unique design. There is a rising trend in customized cultural and creative products, including those with regional characteristics, personal sentiment, and brand collaborations. Among the diverse range of cultural and creative products, classic Chinese styles are favored by consumers for their unique cultural flavor and aesthetic appeal.
The exchange of gift boxes, especially during the Chinese New Year, is a deeply rooted cultural tradition that symbolizes respect, gratitude, and good wishes. This tradition has evolved into a booming market, reflecting significant shifts in consumer behavior and preferences. The role of e-commerce in the gift economy is more prominent than ever. Online platforms offer convenience, variety, and competitive pricing, making them a preferred choice for many consumers.
Seasonality
Our cultural tourism and arts expositions business will be seasonal, as our sales will increase during public holidays, which occur during weekend, summer holiday, winter holiday and other public holidays, normally during July to August and January to February. Our sales will typically be lowest from Monday to Friday during the week, which is the studying and working period for most families.
Our products sales are not impacted by seasonality.
The Company will endeavor to reduce seasonality by implementing an innovative development model. For example, we plan to sell paid memberships and prepaid cards year-round to offset the risk of insufficient travel during the off-season.
Insurance
We do not maintain fire, theft, product liability or other insurance of any kind. We bear the economic risk with respect to loss of or damage or destruction to our property and to the interruption of our business as well as liability to third parties for damage or destruction to them or their property that may be caused by our personnel or products.
Income Taxes
United States
MGSD is a Nevada corporation that is subject to U.S. federal tax and state tax. On December 31, 2017 the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal corporate income taxes on dividends from foreign subsidiaries; (4) providing modification to subpart F provisions and new taxes on certain foreign earnings such as Global Intangible Low-Taxed Income (GILTI). Except for the one-time transition tax, most of these provisions went into effect starting January 1, 2018.
MGSD Samoa was incorporated in Samoa and, under the current laws of Samoa, is not subject to income tax.
MGSD HK was incorporated in Hong Kong and is subject to Hong Kong profits tax. MGSD HK is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. The applicable statutory tax rate is 16.5%. The Company did not have any income (loss) subject to the Hong Kong profits tax.
Tongzhilian is subject to a 25% standard enterprise income tax in the PRC.
Employees
As of September 30, 2024, we had 12 employees. None of our employees are represented by a labor union or similar collective bargaining organization.
Item 1A. Risk Factors.
An investment in MGSD’s common stock involves a high degree of risk. You should carefully consider the following risk factors and other information before deciding to invest in MGSD’s common stock. If any of the following risks are actually realized, the Company business, financial condition, results of operations and prospects for growth could be seriously harmed. As a result, the trading price of MGSD’s common stock could decline and you could lose all or part of your investment.