20-F: Golden Heaven Shifts to Lessor Model Amidst Losses & Lawsuits

Golden Heaven Group Holdings Ltd. reported significant net losses and a revenue decline for fiscal year 2025, transitioning its business model from amusement park operator to lessor, while facing multiple shareholder class action lawsuits.

Summary

• Revenue decreased by 31.55% to $15.29 million in fiscal year 2025 from $22.33 million in 2024, and by 29.74% from $31.79 million in 2023 to $22.33 million in 2024.
• Net loss widened significantly to $8.59 million in fiscal year 2025, compared to a net loss of $1.80 million in 2024 and a net income of $6.55 million in 2023.
• The company transitioned its business model from amusement park operator to amusement park lessor in November and December 2024, leasing all parks to Fuzhou Yibang, a third-party operator.
• Sales of in-park recreation plummeted by 84.50% to $2.99 million in 2025, while rental income surged by 300.79% to $12.30 million in 2025, reflecting the business model change.
• Total operating expenses increased by 44.34% to $14.47 million in 2025, primarily due to a $6.60 million increase in general and administrative expenses, including $9.35 million in share-based compensation.
• Cash and cash equivalents increased substantially to $86.00 million as of September 30, 2025, from $19.83 million in 2024, largely due to significant proceeds from stock issuance and warrant exercises.
• Three putative shareholder class action lawsuits were filed in late 2023 and early 2024, alleging false and misleading statements; these matters were not resolved at mediation in August 2025.
• Multiple share capital changes occurred in 2024 and 2025, including reverse stock splits and increases in authorized share capital, retrospectively adjusted in financial statements.
• The company identified material weaknesses in internal control over financial reporting, including insufficient U.S. GAAP/SEC reporting knowledge and ineffective oversight, which remained unremediated as of September 30, 2025.

Sentiment

Score: 3

Explanation: The company reported a significant increase in net loss and a continued decline in overall revenue, despite a strategic shift to a lessor model. While the new model shows increased rental income and improved operating cash flow, the substantial net loss, ongoing legal challenges, and identified material weaknesses in internal controls present significant concerns. The numerous capital raises indicate a need for external funding, and the stock's volatility and dual-class structure add to investor risk.

Positives

• The transition to an amusement park lessor model is expected to reduce operational costs and risks, improve asset utilization, and enhance cash flow stability.
• Rental income significantly increased by 300.79% to $12.30 million in fiscal year 2025, becoming the primary revenue source.
• Net cash provided by operating activities turned positive, reaching $18.96 million in fiscal year 2025, a substantial increase from negative cash flows in prior years.
• Cash and cash equivalents increased significantly to $86.00 million as of September 30, 2025, indicating improved liquidity from financing activities.
• The company is actively developing three new amusement parks, with two expected to commence operations in October 2026 and the second half of 2026, respectively, and one in trial operation since January 2024.
• An internal investigation into allegations from a Hindenburg Research report concluded, with the company reaffirming the accuracy of its reported information.

Negatives

• The company reported a widening net loss of $8.59 million in fiscal year 2025, a significant deterioration from the $1.80 million net loss in 2024 and $6.55 million net income in 2023.
• Total revenue decreased by 31.55% in 2025 and 29.74% in 2024, primarily due to a drastic decline in sales of in-park recreation as parks were leased out.
• General and administrative expenses increased substantially by $6.60 million in 2025, largely due to $9.35 million in share-based compensation expenses.
• Three amusement parks (Mangshi Jinsheng, Yueyang Amusement World, Yunnan Yuxi Jinsheng) are temporarily closed for strategic reasons, electrical maintenance, safety upgrades, or renovation, impacting operational capacity.
• The company is involved in three putative shareholder class action lawsuits alleging false and misleading statements, which were not resolved at mediation and are in early discovery stages.
• The operating entities did not pay social insurance contributions and housing provident fund contributions in full for all employees in 2023, 2024, and 2025, posing a risk of penalties.
• Two amusement parks (Tongling West Lake Amusement World and Yueyang Amusement World) failed to gain approval from the NDRC's provincial counterparts, a non-compliance issue, though city counterparts have confirmed filings and offered assistance.
• The company has identified material weaknesses in its internal control over financial reporting, indicating a risk of financial statement errors.

Risks

• Adverse changes in economic, political, and social conditions in the PRC could materially affect business operations and growth prospects.
• Uncertainties in the evolving PRC legal system may affect the protection afforded to the business and shareholders, including interpretations and enforcement of laws.
• The Chinese government exerts substantial influence and may intervene in business activities, potentially limiting the ability to offer securities or causing a decline in their value.
• Failure to obtain required approvals from NDRC's provincial counterparts for certain theme parks (Tongling West Lake Amusement World and Yueyang Amusement World) could have an adverse effect.
• Uncertainty regarding CSRC approval or filing requirements for overseas offerings and future fundraising activities could hinder capital raising.
• Greater oversight by the Cyberspace Administration of China (CAC) over data security could impact business, especially if new regulations apply or if the company is deemed to possess personal information of over one million users.
• PRC regulations on offshore special purpose companies by PRC residents (SAFE Circular 37) may subject the company to liabilities or limit capital injection and profit distribution.
• Complex PRC procedures for acquisitions of Chinese companies by foreign investors could make future growth through acquisitions more difficult and time-consuming.
• Restrictions on the remittance of Renminbi into and out of China and governmental control of currency conversion may limit the ability to pay dividends and other obligations.
• Fluctuations in exchange rates between Renminbi and the U.S. dollar could result in foreign currency exchange losses.
• Enforcement of PRC Labor Contract Law and other labor-related regulations, including non-compliance with social insurance and housing provident fund contributions, may adversely affect business and results of operations.
• Custodians or authorized users of non-tangible assets (chops and seals) may fail to fulfill responsibilities or misuse assets, disrupting operations.
• Classification as a PRC resident enterprise for tax purposes could result in unfavorable tax consequences for the company and non-PRC shareholders.
• Bankruptcy, dissolution, or liquidation proceedings of operating entities could materially and adversely affect financial condition and results of operations.
• Non-compliance with PRC tax laws and regulations, such as not obtaining VAT invoices for fixed assets, could lead to fines or penalties.
• Intense scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies could harm operations and reputation, potentially leading to a loss of investment.
• Difficulties for overseas regulators to conduct investigations or collect evidence within China may limit the ability of shareholders to protect their interests.
• Difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against the company or management based on foreign laws.
• Inability to maintain or increase the cost-effectiveness of entertainment offerings due to various factors beyond control.
• Declines in discretionary guest spending, guest confidence, or changes in guest tastes and preferences could affect profitability.
• Inability to contract with third-party suppliers for rides and attractions, or construction delays, may impact attraction openings and revenues.
• Risks associated with long-term lease arrangements with Fuzhou Yibang, including tenant default, early termination, or non-compliance with obligations.
• Inability to prevent impairment of leased amusement assets through adequate maintenance, compliance, and modernization may incur significant charges.
• Inability to renew expiring leases or re-lease assets on favorable terms may lead to vacancies, higher capital expenditures, and lower profitability.
• Exposure to legal liability, regulatory actions, and reputational harm from tenant misconduct and non-compliance with safety or regulatory requirements.
• Inability to maintain PRC land-use rights and comply with government leasing policies may require termination of operations and incur significant costs.
• Vulnerability to macroeconomic and cultural tourism demand fluctuations, particularly under revenue-sharing rent structures, may reduce rental income.
• Inability to adapt to technological change and evolving visitor preferences may lead to assets losing competitiveness and reduced rental income.
• Disruptions in third-party supply chains and service providers could delay attraction openings and tenant operations.
• Financial distress of business partners and other contract counterparties could adversely impact operations.
• The high fixed cost structure of park operations can result in significantly lower margins if revenues decline.
• Inability to conduct marketing activities in a cost-effective manner could adversely affect results of operations.
• Operating in a competitive industry with competitors having greater financial resources and ability to adapt more quickly.
• Historical financial and operating results are not indicative of future performance and may fluctuate.
• Inability to fund capital investment in future projects or achieve desired outcomes of growth initiatives.
• Increased labor costs, inability to retain suitable employees, or unfavorable labor relations may adversely affect the business.
• Loss of key personnel could adversely affect the business.
• Inability to renew leases for parks located on leased properties or find suitable alternative premises.
• Infringement of intellectual property rights by third parties or allegations of infringement by the company.
• Failure to maintain and enhance brand recognition could hinder business expansion.
• Incidents or adverse publicity concerning the parks or the amusement park industry could harm brand, reputation, or profitability.
• Adverse litigation judgments or settlements from legal proceedings could reduce profits or negatively affect business operations.
• Bad or extreme weather conditions can reduce park attendance and revenue.
• Significant revenue concentration in Hunan Province, China, makes the business vulnerable to risks affecting that area.
• Inadequate insurance coverage or increased insurance costs.
• Interruptions or failures in information technology systems could adversely affect business.
• Risks related to U.S.-listed Chinese companies, including PCAOB inspection issues and the Accelerating Holding Foreign Companies Accountable Act, could lead to delisting.
• The dual-class share structure concentrates voting control with the Class B shareholder, whose interests may not align with other shareholders.
• Controlled company status under Nasdaq listing rules allows reliance on certain exemptions from corporate governance requirements, potentially affording less protection to public shareholders.
• The trading price of Class A Ordinary Shares is likely to be volatile, potentially resulting in substantial losses.
• Securities class action suits can divert management attention and resources, incur significant expenses, and harm reputation.
• Cessation of research coverage by securities analysts or adverse changes in recommendations could cause stock price decline.
• Substantial future sales or perceived potential sales of Class A Ordinary Shares could cause price decline.
• No expected dividends in the foreseeable future means investors must rely on price appreciation for returns.
• Difficulties in protecting shareholder interests and limited ability to protect rights through U.S. courts due to Cayman Islands incorporation.
• Unenforceability of certain judgments against the company or management due to foreign jurisdiction.
• Potential classification as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes could lead to significant adverse tax consequences for U.S. holders.
• As an emerging growth company and foreign private issuer, the company is exempt from certain reporting and corporate governance requirements, potentially providing less information or protection to investors.
• Requirements of being a public company may strain resources and divert management attention.
• Public disclosure of information may put the company at a disadvantage to private competitors.
• Rapid and substantial volatility in the price of Class A Ordinary Shares due to small capitalization and public float.

Future Outlook

The company expects its revenue to continue to grow and believes its current working capital is sufficient to support operations for at least the next twelve months. It plans to fund future capital expenditures for new park construction primarily through cash flows from operations and, if necessary, additional financing. The company anticipates re-opening Mangshi Jinsheng Amusement Park with a new business model and expects to open additional virtual reality experience halls in all parks. Two new amusement parks, Anshun Qicaihong Amusement Park and Changde Binghe Buluo Amusement Park, are expected to commence operations in October 2026 and the second half of 2026, respectively. Yunnan Yuxi Jinsheng Amusement Park is expected to reopen in approximately six months following renovation, and Yueyang Amusement World in approximately three months following electrical maintenance.

Management Comments

• "The Company believes that by leasing of the Parks, it can reduce operational costs and risks, improve asset utilization, and enhance the stability of cash flows, creating favorable conditions for sustainable development."
• "The Company strongly denies any wrongdoing, and intends to continue to vigorously defend all of the matters [class action lawsuits]."
• "The Company reaffirms the accuracy of its information as reported to investors [regarding the Hindenburg Research report]."
• "We believe our revenue will continue to grow and our current working capital is sufficient to support our operations at least for the next twelve months."
• "We believe that innovative amusement facilities will enable us to maintain the existing guest patronage, attract new guests, and provide guests with better experiences."

Industry Context

The company operates in the Chinese amusement park industry, which is influenced by general economic conditions, travel restrictions, and changing guest spending habits. The industry faces competitive factors such as location, scale, and the variety/quality of attractions. The company notes limited direct competition due to high capital investment requirements, long development lead-times, and regulatory restrictions. The shift to a lessor model reflects a strategic adaptation to potentially reduce operational complexities and risks inherent in direct park management, aligning with a focus on asset utilization and stable rental income in a dynamic market.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess the company's performance against global benchmarks. Therefore, a direct comparison to industry standards is not possible based on the provided information.

Management Changes

Corporate Governance

Legal Proceedings

• Three putative shareholder class action lawsuits were filed on December 8, 2023, December 19, 2023, and January 17, 2024, against the company, its former CEO, CFO, and independent directors.
• The lawsuits allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 11 and 15 of the Securities Exchange Act of 1933, claiming false and misleading statements regarding business operations, management, financial condition, and prospects.
• The two California lawsuits were consolidated on April 11, 2024, under Case No. 2:23-cv-10619-HDV-SK, with Rahul Patange appointed as Lead Plaintiff and Pomerantz LLP as lead counsel.
• On April 15, 2024, Revere Securities, LLC and R.L. Lafferty & Co. (Underwriter Defendants) filed a cross-claim for indemnification in the New York matter.
• Both class actions were mediated on August 21, 2025, but were not resolved.
• The company's motion to dismiss the consolidated California class action was denied, and the company filed its answer on March 18, 2025.
• A second amended complaint was filed in the New York matter on November 10, 2025, and the company filed its answer on December 1, 2025.
• The company denies wrongdoing and intends to vigorously defend all matters; the potential outcome and financial impact are currently unable to be estimated.
• Yueyang Jinsheng Amusement Development Co., Ltd. reached a settlement in 2024 for a contractual dispute with contractors, with RMB3,700,000 due, of which RMB2.2 million is still outstanding as of the date of this report (due June 30, 2026).
• Changde Jinsheng Amusement Development Co., Ltd. settled an information network transmission rights infringement dispute in 2023 without compensation liability.
• Nanping Golden Heaven Amusement Park Management Co., Ltd. was involved in a contract dispute as a third party in 2023, with no legal liability required; no judgment has been entered as of the date of this report.

Related Party Transactions

• As of September 30, 2025, $46,300 was due to Yitong Asia Investment Ptd. Ltd. (a shareholder) for audit fees paid on behalf of the company; this amount is now nil.
• As of September 30, 2024, $5,000 was due to certain shareholders from the full redemption and cancellation of 50,000,000 ordinary shares on October 5, 2022; this amount is now nil.

Stakeholder Impact

• **Shareholders:** Face significant risks due to widening net losses, ongoing class action lawsuits, and potential stock price volatility. The dual-class voting structure concentrates power with the Class B shareholder, potentially limiting influence for Class A holders. Dilution from numerous share issuances and warrant exercises is a concern. The lack of expected dividends means returns depend solely on price appreciation.
• **Employees:** The transition to a lessor model has drastically reduced the number of full-time employees from 650 in 2023 to 86 in 2025, indicating significant job losses. Non-compliance with social insurance and housing provident fund contributions for employees in prior years poses a risk of future liabilities and potential impact on employee benefits.
• **Customers (Park Guests):** The temporary closure of several parks for maintenance, upgrades, or strategic decisions will disrupt guest experiences. The shift to a lessor model means the company no longer directly manages park operations, potentially impacting service quality or offerings depending on the third-party operator, Fuzhou Yibang.
• **Suppliers/Contractors:** The company has outstanding capital expenditure commitments of $22.48 million for construction projects and an outstanding settlement payment of RMB2.2 million to contractors, indicating ongoing financial obligations to these parties.
• **Creditors:** The company has a short-term bank loan outstanding and has provided a loan facility to a third party, exposing it to interest rate and credit risks. The overall financial performance and legal proceedings could impact the company's creditworthiness.

Next Steps

• Continue to vigorously defend against the three putative shareholder class action lawsuits.
• Implement and strengthen internal controls to remediate identified material weaknesses in financial reporting.
• Finalize detailed plans for the re-opening of Mangshi Jinsheng Amusement Park with a new business model.
• Complete renovation and upgrading of Yunnan Yuxi Jinsheng Amusement Park, with expected reopening in approximately six months.
• Complete electrical maintenance and safety upgrades for Yueyang Amusement World, with expected reopening in approximately three months.
• Continue construction of Anshun Qicaihong Amusement Park, with expected operations in October 2026.
• Complete core component upgrades, production, installation, and commissioning for Changde Binghe Buluo Amusement Park, with expected operations in the second half of 2026.
• Introduce additional virtual reality experience halls in all parks.
• Monitor and comply with evolving PRC laws and regulations, including those related to data security and overseas listings.
• Negotiate amicably with HENGRUI INVESTMENT HOLDING LTD. regarding compensation if the target investment amount of $100 million is not met.
• Magic Golden Heaven Management Ltd. (new BVI subsidiary) incorporation process to be completed.

Key Dates

Recommendation

The company's financial performance shows a concerning trend with widening net losses and declining revenue from its core business segments, despite a strategic shift to a lessor model. While the new model has increased rental income and improved operating cash flow, the substantial increase in net loss for fiscal year 2025, coupled with significant general and administrative expenses (including share-based compensation), raises red flags about profitability and cost management. The ongoing shareholder class action lawsuits introduce considerable legal and reputational risk, with uncertain financial outcomes. Furthermore, the identified material weaknesses in internal controls over financial reporting indicate a lack of robust financial governance, which is a serious concern for investors. The dual-class share structure concentrates voting power, limiting the influence of public shareholders. Given these significant financial, legal, and governance challenges, the stock presents a high-risk profile with limited clear upside in the near term.

Keywords

Amusement Parks, Theme Parks, China, Lessor Model, SEC Filing, Form 20-F, Financial Results, Net Loss, Revenue Decline, Capital Raise, Shareholder Lawsuits, Corporate Governance, Internal Controls, PRC Regulations, GDHG, Nasdaq, Tourism, Entertainment Industry, Share Consolidation, Warrants