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Item 1. Business

2026-10-13 compared with 2025-10-08 · 358 added, 2153 removed, 10 unchanged (100% of the section changed)

Overview and Recent Developments

We are a holding company incorporated

in the State of Nevada.

We operate through Advanced Biomed Taiwan and Advanced Biomed HK.

Advanced Biomed Taiwan is responsible for the

main operation and the design and development of the company’s primary technologies and products.

Since our establishment in 2014,

we have been focusing on the integration of multiple interdisciplinary technologies and established our own microfluidic technology platform.

Utilizing the physical and molecular biological characteristics of tumor cells, we have developed various advanced and original research

through the joint application of semiconductor technology and biotechnology.

This includes complex precision structures, dielectric detection,

functional microfluidic biochips, microfluidic integrated semiconductor sensors, related application modules, and key components of medical

testing equipment.

We have also developed a series of medical testing equipment and related products by integrating various functions

of microfluidic modules, automation software, and hardware.

Our technologies and products can be used for early screening and detection,

diagnosis and staging, and treatment of cancer through the detection of circulating tumor cells and related tumor markers in blood samples,

capture of single circulating tumor cells, and single-cell sorting and determination.

These products provide assistance in treatment selection

and patient prognosis intervention once the required licenses and approvals have been obtained.

Advanced Biotech HK is our first localized

operation company, mainly responsible for market operation and management in China, localized production, product registration, and future

local market sales of our products in accordance with relevant local regulations in China.

Our Shanghai subsidiary owns some of our R&D

equipment and patents and will be responsible for operations related to clinical trials in Mainland China through CROs.

In the future,

we also plan to establish operation centers in countries and regions in North America and Europe.

Our devices, A + Pre,

AC-1000, A + CellScan, and A + SCDrop, and three corresponding microfluidic biochips, A + Pre Chip and AC-1000

CTC Enrichment Chip and A + CellScan Chip, are designed to provide rapid and affordable assay products and services to cancer

Among them, A + Pre is mainly used to reduce the viscosity of blood samples, and AC-1000 is used to complete the separation

and enrichment of circulating tumor cells (“CTCs”) and tumor-related targeted cells in blood samples.

The A + CellScan

is mainly used for fluorescent labeling and automatic scanning judgment of targeted cells while A + SCDrop preserves the original

viability of single cells.

A+PerfusC™ system, our latest development, is a compact, all in one perfusion-based 3D cell culture incubator

engineered to replicate human physiological conditions to form 3D tumor spheroids/organoids in vitro.

The system supports up to 12 days

of continuous, hands-free culture, reducing the risk of human error and contamination.

By maintaining uniform nutrient delivery and preventing

waste accumulation, the platform promotes tumor spheroid and organoid formation, enhancing cell viability, growth, and drug response predictability.

Additionally, we have finished the research and

development stage for four matching immunostaining kits, A + CTCE, A + CTCM, A + EMT and A + CM, and

submitted registration applications in China.

The immunostaining kit use antibodies combined with fluorescent groups of different colors

to bind to specific proteins on the cell surface or inside the cells.

The presence and intensity of fluorescent signals can be observed

through a separate fluorescent imaging system, and the expression of the target protein and the cell type can be judged and determined

Different cell types can be distinguished using multiplexed combined staining with different antibodies.

kit is mainly used to identify epithelial circulating tumor cells, the A + CTCM kit is used to identify mesenchymal circulating

tumor cells, the A + EMT kit is mainly used to identify epithelial-to-mesenchymal circulating tumor cells, and the A + CM

kit is used to identify tumor-associated macrophages (cancer-associated macrophage-like cells).

We also developed a product

for early screening of lung cancer, the A + LCGuard Lung Cancer Early Screening Kit (“A + LCGuard”), which

is used to assist in the determination of benign and malignant pulmonary nodules.

From August 2020 to September 2022, we finalized the

research, design, and development of A + LCGuard.

A + LCGuard is a Class III medical device and is required to conduct

clinical trials before completing the registration process, and we plan to begin A+LCGuard’s clinical research in November 2025.

We believe clinical research serves as the foundation for clinical trials, bridging the gap between preclinical studies and large-scale

clinical trials.

We believe clinical trials enables an understanding of subject recruitment, facilitates the development of appropriate

inclusion and exclusion criteria for later stages, and helps verify trial procedures.

Additionally, we believe it increases familiarity

with the trial products.

In June 2025, the Company and the CRO began collaborating on drafting the clinical research protocol and started

preparing the necessary equipment, consumables, reagent kits, and other materials for the study.

We expect that the clinical research

protocol may pass ethical review and receive ethics committee approval by the end of October 2025.

Thereafter, we plan to initiate the

trial stage of the clinical research, with completion anticipated within six months of November 2025.

We believe the results of the clinical

research will inform the work plan for future large-scale clinical trials, minimizing waste from an excessively large sample size or insufficient

statistical power due to a sample size that is too small.

We recognize that the clinical research results may differ from expectations

and may not support our expected progression to clinical trials.

If so, we plan to promptly optimize the product, adjust participant group

selection, and modify the final protocol for large-scale clinical trials.

However, we cannot guarantee that any clinical research or trial

will meet our anticipated outcomes.

Furthermore, delays in obtaining ethical approval or recruiting participants could prevent the clinical

research from being completed on schedule.

Such delays could subsequently postpone the large-scale clinical trial and ultimately the product

All of our products must go

through three steps to receive the required clearance from the NMPA before they can be sold to customers.

The three steps are research

and development, registration application, and registration review, which must be done in that order.

At the registration application

stage, we have to assemble all the required application materials, complete clinical trials (if required by NMPA), and work with an NMPA

accredited third-party organization to examine our products in accordance with NMPA rules.

NMPA will review our application during the

registration review period and may request additional information before officially approving or denying our applications.

A + Pre and AC-1000 and their corresponding chips have been cleared by the NMPA;

A + SCDrop, A + CellScan,

A + CellScan Chip, and A + LCGuard are at the registration application stage;

the four matching immunostaining kits

are under registration review.

A + LCGuard is a Class III medical device and is required to conduct clinical trials before completing

the registration process.

As of the date of this Report, we have not applied for similar clearances from other jurisdictions.

We participated in a scientific

research project at Shanghai Pulmonary Hospital from July 17, 2019 to December 2021, and completed a total of 123 case studies to test

A+Pre, AC-1000 and A + LCGuard.

In the study, we selected 123 individuals, and among them, 75 were surgical patients with nodular

changes or shadows in the lungs reported by imaging studies and 48 healthy patients without lung nodules reported by imaging studies.

7ml blood samples were taken from test subjects either before the clinical operation (for cancer patients) or after the physical examination

(for healthy individuals), and A + Pre, AC-1000, and A + LCGuard kits were used to determine whether there were circulating

tumor cells and other tumor markers in the blood samples.

Finally, the pathological and physical examination results of the tested individuals

were compared with the test results of our products.

Our test results achieved 96% sensitivity and 99.9% specificity, which provides the

research and development basis for our products.

Specifically, A+Pre and AC-1000 were at the research and development stage, and we completed

their effectiveness and performance indicators testing through this project.

At the same time, A + LCGuard finished its feasibility

and functional verification testing.

All three products were tested together throughout the entire project.

All of our products must be

approved by applicable regulatory authorities before being sold to customers.

A + Pre and A + CellScan can work with

third-party products to achieve their designed objectives.

AC-1000 and A + SCDrop may be used together with other devices according

to different application scenarios below.

For the A + LCGuard early screening kit, it has to be used in combination with A + Pre

Our four staining kits, A + CTCE, A + CM, A + CTCM, and A + EMT, can be used independently

or with third-party products.

A + Pre, AC-1000, and A + CellScan require the use of our supporting microfluidic chips.

For the analysis of high-viscosity blood samples:

A + Pre can be independently used for pretreatment, retaining the original cell activity while preventing blood samples from clogging the equipment pipeline after entering the detection equipment.

For the identification and counting application of circulating tumor cells:

blood samples are diluted with A + Pre, and then AC-1000 is used to separate and enrich circulating tumor cells and related tumor markers.

The enriched samples are stained, calibrated, and finally identified and counted.

We can provide this service to the public if using third-party staining reagents already on the market in China.

However, we plan to officially roll out this service once our in-house developed staining reagents, A + CTCE, A + CTCM, A + EMT and A + CM, complete the registration process.

The identification and counting of circulating tumor cells and related tumor marker cells can provide auxiliary references for relevant clinical applications.

The capture of circulating tumor cells:

we follow the same process as the identification of circulating tumor cells to obtain enriched samples with A + Pre and AC-1000, and then the samples are captured and separated by A + SCDrop to isolate single circulating tumor cells.

This service can provide tumor cells with high purity and high activity.

For early screening of lung cancer:

peripheral blood samples of the subjects are first obtained, and the target cells are enriched and captured sequentially by A + Pre and AC-1000.

After that, A + LCGuard performs cell fluorescence staining on the enriched samples to determine the number of targeted cells, and finally makes a judgment.

Due to the different regulatory

requirements for the marketing of medical device products and in-vitro diagnostics (“IVD”) products in various regions/countries,

it is necessary to complete the registration application and obtain the corresponding license in accordance with the local regulations

before engaging in commercial activities in the respective regions/countries (“localization registration”).

Afterward, marketing

and sales can be carried out.

We follow the principle of modularization when design and develop all of our products and equipment so that

products and equipment can be produced locally to meet different regulatory requirements.

Based on the current development of the early

tumor screening and preventive treatment industry and the characteristics of the products we are planning to register and apply in the

future, we have adopted the operation model of centralized research and development and localized management.

We have started the registration

process with the NMPA in China for all of our products.

Later on, the Company may establish subsidiaries in the United States and Europe

to produce products and carry out product registration.

To achieve that, our products must be cleared by the United States Food and Drug

Administration and go through the conformity assessment process to obtain the Conformite Europeenne marking (“CE marking”)

from competent authority in each European Union member state.

We are looking for suitable

locations in the states of California and Washington for our planned expansion to the North America market.

We aim to complete site selection

and personnel recruitment in the United States by the end of December 2025 and start product registration, testing and production afterward.

Our US subsidiary will be responsible for the production and registration of our equipment and related products in the US.

testing, and clinical trials in our US market will be conducted in accordance with US regulations, and clinical data from trials conducted

in China will not be used to establish product standards.

In addition, we plan to break into the European market in 2025 and conduct localized

management and operations in accordance with European regulations.

In 2025, we also plan to start the localized registration of our IVD

products in Europe.

As of the date of this Report, we have not conducted any clinical trials for our products.

However, as of the date of

this Report, we have not commenced sales of our products nor have any revenue-generating products and do not expect sales of revenue-generating

product candidates until we have completed clinical development, submitted regulatory filings, and received applicable regulatory approvals

for candidate products.

Due to differences in regulatory and clinical registration requirements, we may not be able to obtain device and

product approvals or provide product service on time.

We expect to be in a state of continuous loss for the next two to three years.

Nasdaq Notification Letter s

On July 18, 2025, we received

a written notification from the Nasdaq Stock Market LLC (“Nasdaq”) notifying us that we were not in compliance with the minimum

bid price requirement set forth in Nasdaq rules for continued listing on the Nasdaq, and we were provided 180 calendar days, or until

January 14, 2026, to regain compliance (the “Compliance Period”).

If we do not regain compliance by the end of the Compliance

Period, we may be eligible for an additional 180 calendar day compliance period, provided that we meet the continued listing requirement

for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market (except for the bid price

requirement), and provides written notice to Nasdaq of its intent to cure the deficiency during the second compliance period, including,

if necessary, by effecting a reverse stock split.

We intend to monitor the closing bid price of our common stock and will consider all

available options to regain compliance with the Minimum Bid Price Requirement within the Compliance Period.

Registration Statement

On July 23, 2025, we filed

with the SEC a registration statement on Form S-1 (File No.

333-288907) to register under the Securities Act an aggregate of up to 40,000,000

shares of our common stock, par value $0.001 per share (the “Common Stock”), which represents the shares available for issuance

under the ELOC Agreement (as defined below).

Entry into A Material Agreement

On June 6, 2025, we entered

into a purchase agreement (the “ELOC Agreement”) with HELENA GLOBAL INVESTMENT OPPORTUNITIES I LTD.

(the “Investor”

or “Selling Stockholder”), pursuant to which we have the right to issue and sell to the Investor, from time to time as provided

therein, and the Investor is obligated to purchase from us, up to Twenty-Five Million United States Dollars ($25,000,000) of our Common

Stock, subject to terms and conditions set forth in the ELOC Agreement.

We are a holding company incorporated in the State of Nevada.

In April 2026, we acquired 100% of equity interests of Acellent Technologies (Hong Kong) Co.

Limited (“Acellent”), which develops and operates the FinTruth Financial Verification Agent Platform (“FinTruth”), an enterprise AI financial verification platform designed to compare and verify financial analysis and AI-generated financial content against underlying source documents and financial rules, and to produce source-traceable and auditable results.

In December 2025 and June 2026, respectively, we sold Advanced Biomed HK (together with its subsidiary, Shanghai Sglcell) and Advanced Biomed Taiwan, thereby disposing of our biomedical operations, and have since fully shifted our focus towards developing our AI application through FinTruth.

Prior to our shift to developing our AI application through FinTruth, we were focused on developing lab devices and chemicals in order to find and study cancer cells in a patient’s blood, with the eventual goal of helping doctors detect and monitor cancer through simple blood tests.

Our products included A+Pre, a device that prepares blood samples for testing;

the AC-1000, a device that separates cancer cells from the rest of the blood;

the A+SCDrop, a device that isolates individual cells;

and the A+CellScan, a device that stains and automatically counts cancer cells.

We also developed dye kits used to identify different types of cancer cells.

With the exception of the A+Pre and AC-1000 devices, most of our products were awaiting regulatory approval from the PRC government.

As of the date of this Report, we have terminated our biomedical business and stopped all research in the biomedical field, product development, regulatory approval efforts, manufacturing and sales activities related to our lab devices and their operating chips, and lab chemicals for cancer research purposes.

Our shift to becoming an AI financial verification company is driven by what we believe are the following key drivers of demand for AI financial verification:

(1) the wide use of large language models and AI agents by financial institutions in credit analysis, investment research, risk assessment and compliance review;

(2) the risk that AI output contains errors from fabricated or miscalculated figures, confused entities, incorrect dates for event sequences, logical contradictions, incorrect policy or regulation citations, and overly optimistic or pessimistic assessments which in turn can lead to poor rating inaccuracies, poor credit decisions, compliance and legal risk;

(3) increasing regulatory focus on the explainability, accountability, and accuracy of AI used by regulated financial institutions;

and (4) audit and internal-control requirements for documented review and audit trails of the analysis used in decisions and disclosures.

The market for AI verification remains at an early stage, and adoption will depend on financial institutions’ technology budgets, regulatory requirements, model performance, integration costs, data availability and users’ willingness to add automated verification to existing workflows.

As such, since our transition from a business focused on biomedical operations to a technology company focused primarily on enterprise AI applications, we have shifted our focus to financial verification and other professional, regulated-use cases.

Our AI technology operations currently include:

(a) continued development and operation of FinTruth;

(b) development of financial verification algorithms, financial rules and related data and knowledge infrastructure;

(d) enterprise product testing, deployment and customer implementation;

(e) discussions, demonstrations and commercial engagement with prospective financial-institution and technology customers;

and (f) development of commercial models including enterprise subscriptions, usage-based application programming interface (“API”) fees and integrated solutions.

Following the disposition of our biomedical operations, we have maintained a lean, technology-focused operating structure, with personnel primarily engaged in AI research and algorithm engineering, product and software engineering, data and knowledge engineering, customer implementation and commercialization, supported by the finance, legal and corporate functions necessary for a Nasdaq-listed company.

We currently do not own any data centers, and the SaaS version of FinTruth runs on rented infrastructure from multiple international public cloud providers.

On-premises deployments of FinTruth run on the customer’s own infrastructure.

We are subject to the Hong Kong Personal Data (Privacy) Ordinance.

For on-premises deployments, customer data remains within the customer’s own environment and is subject to the customer’s security controls.

Our objective is to develop recurring and usage-based enterprise revenue from our AI technology operations while maintaining an operating structure in which product development, hiring and commercial expansion are aligned with customer adoption, revenue generation and available financial resources.

As such, we are actively engaging in discussions regarding product deployment, business models and pricing with prospective customers and strategic partners, including financial IT companies, MaaS and AI distribution platforms, and fintech subsidiaries of large financial institutions.

Target customers include commercial banks, securities firms, insurance companies, asset managers, auditing and professional-services firms, and financial technology companies.

During the fiscal year ended June 30, 2026, we generated approximately $127,637 (HK$1,000,000) in revenue from our operations related to FinTruth.

We expect to finance the continued operation and commercialization of FinTruth through a combination of operating revenues, proceeds from the disposition of Advanced Biomed Inc.

(Taiwan), and future capital-raising activities.

Recent Developments

The ELOC Agreement and the Termination thereof .

On June 6, 2025, we entered into a purchase agreement (the “ELOC Agreement”) with HELENA GLOBAL INVESTMENT OPPORTUNITIES I LTD.

(the “Investor”), pursua nt to which we have the right to issue and sell to the Investor, from time to time as provided therein, and the Investor is obligated to purchase from us, up to Twenty-Five Million United States Dollars ($25,000,000) of our Common Stock, subject to terms and conditions set forth in the ELOC Agreement.

On July 23, 2025, we filed with the SEC a registration statement on Form S-1 (File No.

333-288907) to register under the Securities Act an aggregate of up to 40,000,000 shares of our Common Stock, which represents the shares available for issuance under the ELOC Agreement (as defined below).

The registration statement was never declared effective.

On July 20, 2026, we filed with the SEC an application for the withdrawal of the registration statement pursuant to Rule 477 under the Securities Act, as we determined not to proceed with the offering registered thereunder.

No securities were sold under the registration statement.

On January 30, 2026, we issued 1,650,710 shares of Common Stock (82,536 shares as adjusted for the Reverse Stock Split) to the Investor as commitment fee shares under the ELOC Agreement, valued at $500,000.

On July 14, 2026, we delivered to the Investor a notice of termination of the ELOC Agreement pursuant to Section 11.02(b) thereof, and the ELOC Agreement terminated effective July 21, 2026.

No advances were made under the ELOC Agreement prior to its termination.

Disposition of Advanced Biomed HK and Shanghai Sglcell.

On December 23, 2025, we entered into a spin-off agreement with Wei Ha Hui, an unrelated third party, pursuant to which we sold 100% of the equity interests of Advanced Biomed HK, which wholly owned Shanghai Sglcell, for a purchase price of US$23,000, determined based on a valuation report commissioned by us.

All intellectual property owned by Advanced Biomed HK and Shanghai Sglcell was transferred to the buyer at closing.

On January 26, 2026, we entered into a supplemental agreement with Advanced Biomed HK and Wei Ha Hui, pursuant to which Advanced Biomed HK acknowledged that it was indebted to us in the aggregate amount of $6,925,549 and irrevocably agreed to repay such amount in full on or before January 26, 2027.

Nasdaq Compliance.

On July 18, 2025, we received a written notification from Nasdaq notifying us that we were not in compliance with the minimum bid price requirement set forth in Nasdaq rules for continued listing on the Nasdaq, and we were provided 180 calendar days, or until January 14, 2026, to regain compliance.

On January 16, 2026, we were notified by Nasdaq that our securities would be scheduled for delisting from the Nasdaq Capital market at the opening of business on January 27, 2026 as our common stock had closed below the minimum $1.00 per share as required by Nasdaq Listing Rule 5550(a)(2), unless we requested an appeal of this determination by January 23, 2026 before a Hearings Panel (the “Panel”).

Accordingly, on January 21, 2026, we appealed the Staff’s delisting determination by submitting a hearing request to the Panel, which stayed the suspension of our delisting.

On January 12, 2026, holders of approximately 79.92% of our outstanding voting power approved, by written consent, a reverse stock split at a ratio of between 1-for-2 and 1-for-100, as determined by our board of directors.

On January 30, 2026, our board of directors approved a ratio of 1-for-20, and we filed a Certificate of Amendment to our Articles of Incorporation with the Nevada Secretary of State on February 3, 2026.

The Reverse Stock Split became effective on February 13, 2026, and our Common Stock began trading on a split-adjusted basis on the Nasdaq Capital Market at market open on February 20, 2026 under the new CUSIP number 00752P203.

On March 12, 2026, we received a written decision from the Panel stating that the Company had regained compliance with Nasdaq Listing Rule 5550(a)(2) following the completion of the Reverse Stock Split on February 20, 2026.

Private Placement.

On January 28, 2026, we entered into a securities purchase agreement with certain investors, pursuant to which we issued and sold an aggregate of 4,000,000 shares of Common Stock (200,000 shares as adjusted for the Reverse Stock Split) at a purchase price of $0.062 per share (pre-Reverse Stock Split), for aggregate gross proceeds of $248,000.

The transaction closed on January 29, 2026.

The shares were issued in reliance on the exemptions from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation S promulgated thereunder.

Reverse Stock Split.

On February 20, 2026, we effected a reverse stock split of the Company’s common stock, at a ratio of 1-for-20.

The Company subsequently began trading on a post-split basis on the Nasdaq Capital Market at market open on February 20, 2026 under the new CUSIP number 00752P203.

Changes in Management.

Effective March 25, 2026, Dr.

Steven I-Fang Cheng resigned as our director and Chief Technology Officer, and Mingze Yin, our Chief Financial Officer, was appointed as a director.

Effective April 28, 2026, Dr.

Yi Lu ceased to serve as our Chief Executive Officer, director and Chairman of the board of directors pursuant to a termination agreement, and Dr.

Xiaomin Chen was appointed as our Chief Executive Officer, director and Chairman of the board of directors.

Acquisition of Acellent.

On April 2, 2026, we entered into a share purchase agreement with Acellent and Xiaomin Chen, the sole shareholder of Acellent, pursuant to which we agreed to acquire 100% of the equity interests of Acellent in exchange for 270,000 shares of Common Stock, valued at an estimated $4.00 per share, or $1,080,000 in the aggregate.

The acquisition closed on April 30, 2026, and the 270,000 shares were issued to Mr.

Chen in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.

Loan Agreement.

On April 13, 2026, we entered into a loan agreement with Jie Wang, pursuant to which Mr.

Wang agreed to lend us US$600,000 for operating purposes.

The loan is unsecured and bears an interest rate of 10% per annum and matures six months after disbursement, subject to extension for an additional six months by mutual written agreement.

Disposition of Advanced Biomed Taiwan.

On June 30, 2026, we entered into a share purchase agreement with Miaozhu Zhao, an unrelated third party, pursuant to which we agreed to sell 100% of the equity interests of Advanced Biomed Inc.

(Taiwan), which operates our A+PerfusC integrated perfusion 3D cell culture platform business, for an aggregate epurchase price of US$490,000.

Corporate History and Corporate Structure

We were incorporated in Nevada

in July 2021 as a holding company.

We started operations in 2014 through Advanced Biomed Taiwan as a research and development center for

technology research and product development.

In August 2021, we established Advanced Biomed HK as the wholly owned subsidiary of Advanced

Biomed Taiwan to integrate market development and commercialization in the PRC.

On January 1, 2022, Advanced Biomed HK acquired 100% equity

interest of Shanghai Sglcell from its stockholders for a consideration of RMB12 million.

In March 2022, Advanced Biomed HK established

Sglcell (Huangshan) Biotech Co., Ltd.

In July 2022, we consummated

a reorganization pursuant to which we acquired 100% equity interest of Advanced Biomed Taiwan, making it our wholly owned subsidiary.

We were incorporated in Nevada in July 2021 as a holding company.

We started operations in 2014 through Advanced Biomed Taiwan as a research and development center for technology research and product development.

In August 2021, we established Advanced Biomed HK as the wholly owned subsidiary of Advanced Biomed Taiwan to integrate market development and commercialization in the PRC.

On January 1, 2022, Advanced Biomed HK acquired 100% equity interest of Shanghai Sglcell from its stockholders for a consideration of RMB12 million.

In March 2022, Advanced Biomed HK established Sglcell (Huangshan) Biotech Co., Ltd.

In July 2022, we consummated a reorganization pursuant to which we acquired 100% equity interest of Advanced Biomed Taiwan, making it our wholly owned subsidiary.

On November 7, 2022, we obtained the approval of Taiwan Investment Commission for the reorganization, the Issue No.

of which is “經審一字第11100116890號”.

Additionally, the Bureau of Economic Development of Tainan City Government has also approved the reorganization in accordance with the

Taiwan Company Act on December 26, 2022.

On June 8, 2023, pursuant

to the Share Transfer Agreement entered into by Ting Wang and Haifeng Zhang, who are independent third-party individuals, and Shanghai

Sglcell on June 2, 2023, Shanghai Sglcell transferred its wholly owned subsidiary, Nanjing Yitian Biotech Co., Ltd.

and its subsidiary,

Beijing Yitan Jiarui Technology Co., Ltd., to Ting Wang and Haifeng Zhang at aggregate consideration of RMB500,000 (approximately US$72,780)

without any other obligations arising from the transfers.

On June 9, 2023, pursuant

to the Share Transfer Agreement entered into by Ting Wang and Haifeng Zhang, who are independent third-party individuals, and Shanghai

Sglcell on May 31, 2023, Shanghai Sglcell transferred its wholly owned subsidiary, Shandong Sglcell Medical Devices Co., Ltd., to Ting

Wang and Haifeng Zhang at zero consideration without any other obligations arising from the transfers.

On June 15, 2023, pursuant

to the Share Transfer Agreement entered into by Quantum Capital (Hong Kong) Limited, who is an independent third-party corporation, and

Advanced Biomed HK on June 9, 2023, Advanced Biomed HK transferred its wholly owned subsidiary, Sglcell (Huangshan) Biotech Co., Ltd.,

to Quantum Capital (Hong Kong) Limited at zero consideration without any other obligations arising from the transfers.

As of the date of this Report,

our Shanghai subsidiary is the only operating entity we have in the PRC and owns all of our patents and some of our R&D equipment

while the rest of our R&D equipment are owned by Advanced Biomed Taiwan.

Our Shanghai subsidiary will also be responsible for operations

related to clinical trials in Mainland China through CROs.

The chart below depicts the

corporate structure of the Company as of the date of this Report.

The SEC maintains a website

at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically

with the SEC using its EDGAR system.

Our Oncology Detection Solutions

The current market uses positive

antibody-labeling selection to capture CTCs out of the blood by a specific epithelial cell adhesion molecule (EpCAM).

This method could

detect tumor cells in the patient’s blood for diagnosing lung, prostate, pancreatic, and breast cancers.

However, this technology

costs approximately $1,000 per chip, and the processing time per patient is up to 12 hours.

Besides, antibody-based methods such as immunomagnetic

methods are highly dependent on antigen expression of CTC.

Some CTCs may show low or no EpCAM expression on the cell membrane, and thus

cannot be effectively captured using the proposed biomarkers and makes it difficult to detect cancer in the early stage.

More importantly,

the capture of dying or dead CTCs cannot provide meaningful information to doctors for diagnosis or treatment.

Our products use pure physical

mechanisms (antigen-independent) and can effectively enrich and detect the CTCs with high or low antigen expressions with high viability.

Among them, A + Pre is mainly used to reduce the viscosity of blood samples, and AC-1000 is used to complete the separation and

enrichment of circulating tumor cells (“CTCs”) and tumor-related targeted cells in blood samples.

The A + CellScan

is mainly used for fluorescent labeling and automatic scanning judgment of targeted cells while A + SCDrop preserves the original

viability of single cells.

For three corresponding microfluidic

biochips, A + Pre Chip and AC-1000 CTC Enrichment Chip have been cleared by NMPA and can be mass-produced and sold to customers.

A + CellScan Chip is expected to start the registration application by the end of 2025.

The A + CellScan Chip and A + CellScan

will enrich our product chain by upgrading our immunochromogenic kits to tumor cell assay equipment.

Specifically, A + CellScan,

together with A + Pre and AC-1000, can serve as a liquid biopsy IVD product to accelerate downstream assay and reduce the amount

of labor required for assaying tumor cells.

We use our own product features

combined with different application scenarios to achieve the corresponding work objectives.

To identify CTCs in liquid biopsy, blood samples

are first diluted through equipment A + Pre, then AC-1000 is used to separate and enrich circulating tumor cells, and then the

obtained cells are stained for identification and counting.

We have been cleared by NMPA to provide this service to customers in China

and plan to do so once our matching immunostaining kits pass the NMPA’s registration review.

The counting of circulating tumor cells

can provide auxiliary reference for clinical diagnosis, treatment evaluation, prognosis evaluation, recurrence, and metastasis detection,

In the future, we can also use our A + LCGuard early screening kit combined with two devices, A + Pre and AC-1000,

for early screening of lung cancer.

In addition, we use A + SCDrop together with A + Pre and AC-1000 to complete the

capture of a single circulating tumor cell, which retains the original activity of the cell and can provide high-purity, high-activity

tumor cells for relevant clinical applications.

It can be applied to various applications such as single-cell sequencing, whole gene sequencing,

protein sequencing, new drug development, cancer biomarker research, individualized diagnosis, and individualized drug sensitivity testing.

The above product applications need to be approved by the local regulatory authorities before they can be provided to customers.

A + Pre is a fully

automated sample preparation system that enables to pre-concentrate diluted blood sample and it is able to deplete approximately 90 %

blood cells in 10 minutes and reduce sample volume with a lower blood cell density (hematocrit approximately 4%).

A + Pre provides

dual channels to simultaneously process two patients’ samples per run, and 8 samples could be done in an hour.

is easy to operate with two simple steps:

(1) dilute the samples by 10-fold;

(2) insert the samples and A + Pre chips into A + Pre

system and press “START.” Our A + Pre sample-pretreatment could provide clotting-free and clogging-free samples for

downstream microfluidic applications.

Blood sample includes several

billions blood cells and millions white blood cells with a hematocrit of approximately 45% (“Hct”).

The high-density blood

cells in microfluidic chip typically induces clotting or clogging in microchannel and microstructs, causing trail failure or unstable

Sample dilution can effectively reduce the clotting and clogging.

However, dilution may increase sample volume and prolong the

processing time for downstream precise separation and makes analysis more difficult.

A + Pre chip utilizes

microfluidic inertial forces to rapidly pre-enrich (deplete approximately 90% blood cells) and pre-concentrate (reduce over 90% sample

volume) the diluted blood sample in 10 minutes.

We can dilute a 5ml blood sample with approximately 45% by a factor of 10 and obtain a

50ml blood sample.

After concentration and enrichment using the A + Pre chip, the total volume of the 50ml blood sample can be

reduced by 10-13 times to around 4 ml while maintaining low red blood cell density (Hct approximately 4.5%), and we can recover more than

90% of the targeted tumor cells.

It reduces blood cell density of oncology patients to make it possible for clotting-free downstream precise

separation, A + Pre treated sample provide AC-1000 with high purity rare tumor cells in 20 minutes (12 mL/hour).

chip plays an important role to reduce sample volume and density to make downstream applications much faster and more stable.

AC-1000 is a rare cell enrichment

device to solve the problem of detection of hypercoagulable state samples of tumor patients.

Our rare cell enrichment system uses semiconductor

fabrication method to implant high-aspect-ratio functional microstructures inside the microchannel and patented microfluidic chip technology

to separate rare cells with complete cell activity.

The system is convenient and efficient.

We take 5 mL of blood from a patient and the

whole process takes only 20 minutes.

Compatible to A + Pre, AC-1000 also provides dual channels to simultaneously process two

patients’ samples per run, and 8 samples could be done with high-purity enrichment of tumor cells in one and half hours.

The blood sample enriched

by AC-1000 can maintain the capture rate of 76-90% of the targeted cells, and the isolated product after blood sample separation can achieve

a leukocyte removal rate of 99.9%, which is convenient for downstream detection.

Because the rare cell enrichment system is non-destructive,

highly active and label-free, it can carry out pure physical and high-purity enrichment, completely maintain the original characteristics

of the desired target cells and improve accuracy.

What we get is highly active cells, which can be used for different applications in

the future, and can be used for tumor screening, auxiliary diagnosis, treatment evaluation, prognosis evaluation, recurrence and metastasis

detection, individualized medication guidance, and companion diagnosis.

Our rare cell enrichment system is low-cost, and the cost will

be further reduced after mass production.

It has great potential to be applied to routine liquid biopsy and companion diagnostic platforms

in the future.

AC-1000 CTC Enrichment Chip

AC-1000 chip utilizes a hybrid

mechanism with microfluidics induced lateral displacement to combine the difference in cell deformability and to remove all of red blood

cells (“RBCs”) and deplete over three logs White Blood Cell (“WBCs”).

The remaining cells, including few WBCs

and rare cell-based cancer biomarkers, are all sorted out.

A + SCDrop is a CTCs

single cell capture device.

It preserves the original viability of single cells.

The polymer microfluidic chip combines the cell dielectric

sensing technology, without the need for antibody fluorescence calibration and image recognition.

CTC sorting combined with AC-1000 achieves

tandem for complete label-free live cell sorting.

A + SCDrop can sort single circulating tumor cells into nanoliter droplet collection

samples while maintaining single cell biological activity:

Precise counting of CTCs while separating and capturing single cells;

In vitro culture and expansion of non-destructive Single-CTC;

drug sensitivity test;

Single-CTC encapsulated in oil droplets, single-cell

sequencing or genetic screening d.

Single CTCs were independently sorted into 96-well plates in suspension liquid mode for CTC proteomic

Currently, A + CellScan

are developed as an analyzer with immunostaining chip for reducing hands-on time, manual discrimination, and accelerating immunostaining/analysis

of the AC-1000 product.

A + CellScan provides a novel approach for rapid on-chip immunofluorescence staining, which may take

approximately 30 minutes, and artificial intelligence analysis of enriched sample for detecting, identification, and counting of rare

CTCs/clusters from white blood cells with four color immune-fluorescent images.

The prototype we designed can (a) autofocus for capturing

and analyzing images of four colors fluoresces in A + CellScan chip, (b) perform on-chip immunostaining, and (c)

automatically count tumor cells and labeling them on each image.

We also completed A + CellScan’s performance

study, which examine (i) its autofocus ability and precision for automatically capturing and analyzing cell images, (ii) whether it can

detect and analyze 3-1000 cancer cells in <106 WBCs, and (iii) its maximum on-chip immunostaining ability.

Performance study (i) to

(iii) were completed in December 2022, January 2023, and March 2023, respectively.

During the performance study, we have thoroughly evaluated

A + CellScan’s autofocus precision in capturing cell images.

Out of 6,400 cell pictures that were captured

through a non-stop and fully automated process, less than 2 pictures were found to be out-of-focus.

We also analyzed the presence of 3-1,000

cancer cells stained with fluorescence within samples containing 104, 105, and 106 WBCs, resulting in reliable detection of cancer cells.

We have optimized the antibody concentrations for CK+, DAPI, and CD14/45 combination, resulting in a maximum on-chip immunostaining ability

with high specificity.

A + CellScan Chip

Conventional immuno-staining

is labor-intensive with multiple processes, and its reaction is based on diffusion-dominated mechanism, thus causing a long operating

time (about 4-5 hours per sample).

A + CellScan chip consists of fluid device and 5 μm micro-pores membrane that is used as

a filter to trap nucleated cells on the membrane surface form the through-flow.

Only fluid and RBCs are allowed to pass through the pores.

Captured cells are kept in wells during flowing staining and washing.

The active through-flow plays two important roles:

carrying antibodies

to cells rapidly, thus accelerating the reaction rate of specific binding between reporting antibody and cells;

simplifying the operation

processes in reagent spiking and repeated washing steps.

A + CellScan chip stains rare cells such as CTCs and CTC clusters without

cell loss during fixation, permeabilization, blocking, incubation and washing.

The device provides flexibility to process up to eight

samples per run.

On-chip immunostaining only need 30 minutes for one sample, and batch process for eight samples can be completed in one

and half hours.

After cell staining, A + CellScan and A + CellScan chips automatically captures cell images and analyses

the stained cells in 30 minutes.

Compared to conventional methods, A + CellScan chip significantly reduces the total detection

time by 4-5 hours per 1 sample.

The following diagrams illustrate

the procedures using our devices for diagnostic detection of blood samples from oncology patients:

A + Pre reduces blood

density of oncology patients.

For the analysis of high-viscosity

blood samples, the A + Pre equipment can be used for pretreatment, retaining the original cell activity while preventing blood

samples from clogging the equipment pipeline after entering the detection equipment.

AC-1000 completes targeted cell

enrichment work.

A + Pre and AC-1000

equipment can be combined for the identification and counting application of circulating tumor cells purposes.

First, blood samples are

diluted with A + Pre, and then AC-1000 is used to separate and enrich circulating tumor cells and related tumor markers.

enriched samples are stained, calibrated, and finally identified and counted.

A + Pre combined with AC-1000 provide the purified

solution of cell-based cancer biomarkers, which can be easily identified, analyzed and tested.

The total purification process can be completed

in only 40 minutes.

A + Pre combined with AC-1000 capture multi-cell-based cancer markers simultaneously with a high recovery

rate (76~90%), and therefore making it possible to diagnose cancer and predict cancer progression in very early stage.

This application

service can already be commercialized in the Chinese market.

Calibration and staining currently use staining reagents that are already

on the market.

Once our products are registered, we will start using our own developed reagents.

The identification and counting of circulating

tumor cells and related tumor marker cells can provide auxiliary reference for relevant clinical applications.

A + SCDrop completes

single targeted cell capture.

The capture of circulating

tumor cells requires the use of A + Pre, AC-1000, and A + SCDrop in combination.

First, the user needs to follow the

same process as the identification of circulating tumor cells to obtain enriched samples, and then the samples are captured and separated

by A + SCDrop equipment to isolate single circulating tumor cells.

This combined application can provide tumor cells with high

purity and high activity.

Four Immunochromogenic Kits

The four immunochromogenic

kits, A + CTCE, A + CM, A + CTCM and A + EMT, are currently under NMPA registration review.

For the four immunochromogenic

kits, the basic principle is to use antibodies combined with different colored fluorophores to bind to specific proteins on the cell surface

or inside the cells and observe the presence or absence of fluorescent signals through a fluorescent imaging system (to be obtained separately).

Afterwards, the expression of the target protein can be examined, and the cell type can be determined accordingly.

Different cell types

can be distinguished using multiplexed combined staining with different antibodies.

The A + CTCE kit is mainly used to identify

epithelial circulating tumor cells, and is determined by immunochromogenicity of EpCAM, CK (pan), CD45, and CD14 antibodies.

kit is used to identify mesenchymal circulating tumor cells based on the immunochromogenicity of Vimentin, CD45, and CD14 antibodies.

A + EMT is mainly used to identify epithelial-to-mesenchymal circulating tumor cells, which are determined by immunochromogenicity

of Cell-Surface Vimentin (CSV), CD45 antibody, and CD14 antibody.

A + CM is used to identify tumor-associated macrophages (cancer-associated

macrophage-like cells) based on immunochromogenicity of PD-L1, CD45, and CD14 antibodies.

With the assistance of the

four kits, targets are stained using antibodies conjugated with different fluorophores that specifically bind to antigens in cells.

immunohistochemical reaction or in situ hybridization reaction, it is combined with the primary antigen antibody, and the target is marked

It is suitable for the staining of blood cells enriched by A + Pre and AC-1000 hemocytometer.

We transfer the cell

suspension separated and obtained by A + Pre and AC-1000 into a centrifuge tube, use the kits to stain the cell suspension, and

observe and count the fluorescently stained cells under a fluorescence microscope or a fluorescence scanner.

Observed under a fluorescence

microscope, all nuclei are stained blue, and the cell membrane of leukocytes is red, and the color of the cell membrane we observe under

the fluorescence microscope is the marked color, which is the target cell we want to obtain.

Our 3D Cell Culture Platform

Conventional cell culture

equipment is bulky and requires frequent manual intervention.

In addition, in static culture, nutrients are unevenly distributed and waste

products from cell metabolism tend to accumulate.

This can negatively affect cell growth, viability, and experimental consistency.

addition, unlike 2D cultures, 3D cell culture better mimics the structural and functional complexity of human tissues.

It enables more

physiologically relevant cell-cell and cell-matrix interactions, leading to improved accuracy in drug response prediction and disease

Notably, in certain high-density culture scenarios, particularly within multi-microwell 3D culture devices, metabolic waste

can rapidly accumulate inside the micro-grooves.

Our A+PerfusC ™

is a compact All-in-One 3D cell culture system that integrates automated perfusion with environmental control in a compact format.

ensures a more uniform supply of nutrients while simultaneously removing metabolic waste, thereby reducing cellular stress and enhancing

viability over extended periods, providing more accurate drug response and disease modeling.

A+PerfusC ™ System

an automatic perfusion 3D cell culture system revolutionizes in vitro 3D cell culture by integrating automated perfusion and environmental

control to closely replicate human physiological conditions.

This system ensures uniform nutrient delivery, prevents waste accumulation,

and promotes spheroid/organoid formation, significantly enhancing cell viability, growth, and drug response predictability.

designed to mount directly onto a microscope for real-time observation, it supports up to 12 days of hands-free culture, reducing human

error and contamination risks.

The system is characterized and proved by:

● 8 independent channel/patient source per plate

● 600 tumor spheroids per row for one patient

● 4,800 tumor spheroids per plate

● Easy to transfer into 96 or 384 well plate for high-throughput drug screening

● Easy to mount on microscopy platforms for real-time analysis

A+PerfusC ™ system

and its perfusion-based 3D culture plate (consumable) have passed internal testing and validation with design finalized.

are advancing its mass-production development.

The commercialization can be achieved following mass-production development finalized,

quality control standards established, and system electrical safety verification (IEC 61010-1).

Product in the Pipeline

Our A + LCGuard was

designed for early screening of lung cancer.

In order to detect lung cancer, peripheral blood samples of the subjects are first obtained,

and the target cells are enriched and captured sequentially by A + Pre and AC-1000.

Then, A + LCGuard performs cell

fluorescence staining on the enriched samples to determine the number of targeted cells, and finally makes a judgment.

We completed A + LCGuard’s

research and development in China between August 2020 and September 2022.

A + LCGuard is a Class III medical device and is required

to conduct clinical trials before completing the registration process.

We plan to begin A+LCGuard’s clinical research in November

Specifically, in June 2025, the Company and the CRO began collaborating on drafting the clinical research protocol and started preparing

the necessary equipment, consumables, reagent kits, and other materials for the study.

We expect that the clinical research protocol may

pass ethical review and receive ethics committee approval by the end of October 2025.

Thereafter, we plan to initiate the trial stage

of the clinical research, with completion anticipated within six months of November 2025.

Based on the results of clinical research, we

plan to formulate a work plan for large-scale clinical trials and proceed with the clinical trial.

We believe the registration declaration

will be made after we complete the clinical trials.

The following diagrams illustrate

the procedures using our detection solutions for CTC enriched samples:

We participated in scientific

research projects at Shanghai Pulmonary Hospital from July 17, 2019 to December 2021, and completed a total of 123 case studies.

study, we selected 123 individuals, and among them, 75 were surgical patients with nodular changes or shadows in the lungs reported by

imaging studies and 48 healthy patients without lung nodules reported by imaging studies.

7ml blood samples were taken from test subjects

either before the clinical operation (for cancer patients) or after the physical examination (for healthy individuals), and A + Pre,

AC-1000, and A + LCGuard kits were used to determine whether there were circulating tumor cells and other tumor markers in the

blood samples.

Finally, the pathological and physical examination results of the tested individuals were compared with the test results

of our products.

Our test results achieved 96% sensitivity and 99.9% specificity, which provides the research and development basis for

our kit products.

Below are two comparable blood

testing methods in the current market.

We have not tested the sensitivity of our products against these two comparable blood testing products

in head-to-head comparisons.

Universal Diagnostics (UDX),

a Spanish vitro diagnostic company, announced the preliminary research data of its liquid biopsy method for early detection of lung cancer

at the International Association for the Study of Lung Cancer 2020 World Conference.

In a preliminary study, UDX detected 37 lung cancer

patients and 71 asymptomatic control subjects with a panel of 10 methylation sites.

The results showed that lung cancer patients could

be detected with a sensitivity of 73% (27/37) with 90% (64/71) specificity.

The “Aifeiming”

gene methylation detection kit (P)R-fluorescent probe method) by Beijing Akron Medical Technology Co., Ltd.

won the NMPA Class III certification.

The clinical sensitivity of this product is 86.83%.

Quality Control System

We have established quality

control system in accordance with the following regulations:

Medical Device Quality Management System for Regulatory Requirements

Quality Management System Requirements

Regulations on the Supervision and Administration of Medical Devices

Measures for the Supervision and Administration of Medical Device Production

Appendix of Good Manufacturing Practice for Medical Devices In Vitro Diagnostic Reagents

Guiding Principles for Clinical Trial of In Vitro Diagnostic Reagents

Our quality control system

includes quality manuals specifically designed for each product, procedure documents, supporting documents and quality records.

We implement,

maintain and improve the quality control system to ensure that product quality can be effectively and compliantly controlled throughout

the entire process of procurement, production, formation and realization.

Specifically, our quality control team (“QC”) consists

of three members who are responsible to examine the entire production process from raw materials to finished products.

QC also collaborate

with various internal departments of the Company to conduct periodic review on all aspects of our research, development, and production

process and provide their recommendations to the management to ensure our products and processes adhere to the regulations apply to us.

Commercialization Preparation

We are committed to the development

of microfluidic chips, reagents and detectors for capturing circulating tumor cells in blood.

We have integrated various complex precision

structures, dielectric detection and functional microfluidic biochips.

Our devices include a variety of expensive semiconductor manufacturing

and precision micro-manufacturing related equipment.

We signed a research project equipment use contract with TSRI and used their semiconductor

manufacturing equipment and precision micro-nano processing equipment for chip technology research and development such as concept presentation

of each R&D process, cross-scale composite structure production, rapid wafer trial production, material testing, and thin film production.

The contract between Advanced

Biomed Taiwan and TSRI was executed on August 1, 2022 and expired on July 31, 2023.

The total cost of the study, including tax, is NTD

Advanced Biomed Taiwan will pay the research fee to the National Institute of Experimental Research in two installments.

first installment of NTD 650,000 was paid on September 23, 2022, and the second installment of NTD650,000 was paid on April 18, 2023.

The agreement can be unilaterally terminated only if a party fails to fulfil its obligations, if Advanced Biomed Taiwan declares bankruptcy,

or if its business activities are disrupted by the government.

The agreement can only be terminated by mutual agreement in all other circumstances.

The parties agree to take the Taiwan Taipei District Court as the jurisdiction court of first instance for any disputes arising from the

execution of this agreement, which shall be subject to the laws of Taiwan.

As for the designed microfluidic

detector, since 2020, we have developed various functional microfluidic biomedical testing devices for microfluidic modules, automation

software, and hardware.

We also designed, manufactured and processed an increasing number of key components of our testing devices.

of our products must go through three steps to receive the required clearance from the NMPA before they can be sold to customers.

three steps are research and development, registration application, and registration review, which must be done in that order.

registration application stage, we have to assemble all the required application materials, complete clinical trials (if required by NMPA),

and work with an NMPA accredited third-party organization to examine our products in accordance with NMPA rules.

NMPA will review our

application during the registration review period and may request additional information before officially approving or denying our applications.

Currently, A + Pre and AC-1000 and their corresponding chips have been cleared by the NMPA;

A + SCDrop, A + CellScan,

A + CellScan Chip, and A + LCGuard are at the registration application stage;

the four matching immunostaining kits

are under registration review.

A + LCGuard is a Class III medical device and is required to conduct clinical trials before completing

the registration process.

As of the date of this Report, we have not applied for similar clearances from other jurisdictions.

Although none of the chips

has been mass produced as of the date of this Report, we have been cooperating with the injection molding machine manufacturer Riva and

the mold manufacturer Unimold to conduct pre-mass production trial test for our A + Pre Chip and AC-1000 Enrichment Chip.

the mass production trial test, we examine the following factors:

whether the tested chip can work with its corresponding product, and

whether chips’ flatness, roughness, water leakage, critical size and thickness match the original design.

A Chip is ready for mass-production

if each individual production line can produce at least 2,500 pieces per month and pass the quality control examination.

During the quality

control examination, one chip out of every 48 chips will be randomly selected for verification and must achieve designed objectives when

working with their corresponding products and meet all the product specifications to pass the examination.

The product specifications

are listed in the table below.

No Water leakage

Critical size

compared with

original design

ΔR<1.5 um /mm 2

AC-1000 Enrichment Chip

ΔR < 1.5 um/mm 2

Upon completion of the pre-mass

production trial test, all of the randomly selected A + Pre Chips and AC-1000 Enrichment Chips can work with their corresponding

A + Pre and AC-1000 products and meet or exceed the production specifications.

One of every 48 chips was

randomly selected and tested for performance verification by using A549 lung cancer cells spiked into human blood.

In May 2023, a total

of 20 A+Pre chips were tested, with a result of average tumor cell recovery rate of 94%, which exceeded the target rate of 90%, with the

highest and lowest rates of 99% and 91.6%, respectively.

The liquid and blood cells removal rate by A+Pre chip was between 90-92.5%, which

is in line with the target rate of 90-94%.

A total of 12 AC-1000 chips were examined and the average recovery rate is 79.5%, which exceeded

the target rate of 75%, with the highest and lowest recovery rates of 88.6% and 76.8%, respectively.

The blood cells depletion rate was

>2.5 logs, exceeding the target rate of 2 logs, with the highest and lowest rate of 4 and 2.5 logs, respectively.

The specifications of the

randomly selected A + Pre and AC-1000 chips produced during the pre-mass production trial test can be found in the table below:

No Water leakage

Critical size

compared with

original design

ΔR<1.5 um /mm 2

AC-1000 Enrichment Chip

ΔR < 1 um/mm 2

Riva is a mold manufacturing

and injection molding machine manufacturer.

We have purchased a Riva injection molding machine at the end of October 2022 and completed

the mass production trial test for AC-1000 chips, and the production samples met our product specifications.

The special structure mold

core we made combined with the Riva injection molding machine has repeatedly produced hundreds of pieces of AC-1000 chips.

of the products is consistent and meet the product specifications of the microstructure characteristics.

The operation on the equipment

has achieved the expected efficiency and cell enrichment efficiency.

Each equipment is expected to produce 2,000 pieces AC-1000 chips

Unimold is a mold manufacturer

and an ISO9001 plastic injection molding foundry.

We cooperate with Unimold to embed our specially manufactured mold core for A+Pre Chip

into the mold cavity, which will be employed at our future production facility.

Although there is no formal cooperation agreement between

Unimold and us, Unimold produces custom-made molds for us on a make-to-order basis.

Each time, we first discuss the mold specification

with a Unimold representative, then receive an offer from Unimold with the price, and Unimold will produce the customized mold for us

To protect our intellectual property, Unimold and us entered into a Non-Disclosure Agreement (the “NDA”) with a term

of three years.

The NDA prohibits both parties from disclosing confidential information without authorization and hiring the other party’s

employees during the term of the NDA or within two years of the termination of the NDA.

The NDA is governed by the laws of Taiwan, and

any disputes arising from the NDA must be resolved before Taiwan Tainan District Court.

The chips produced by Unimold’s mold have

met the specifications set by us, and a batch of small-scale trial production of 5,000 pieces was carried out in October 2022.

is operating to expected efficacy and performance specifications using the in-house produced A + Pre Chip.

One injection-type

production equipment is expected to produce 50,000 pieces of A + Pre Chip per month.

We have built our microfluidic

technology platform to integrate research and development, design, and manufacture of biochips and microfluidic chips.

The platform combines

our patented chip technology and will enable localized operations of a variety of microfluidic chips, biosensors made by semiconductor

fabrication technology, and integrated application patented technology.

Each geographic territory will establish clean rooms for chip

production in compliance with local regulations to meet local market demand.

While performing its designed duties, our microfluidic technology

platform can provide customized services to third parties for a fee.

We envision providing services such as OEM production of microfluidic

chips, micro-electromechanical components, biochips, sensors, and other components, customized product design, and commissioned development

and research services to customers.

Different from the general IC wafer OEM production, our production is based on our micro-nano manufacturing

technology platform developed by professionals in various fields that integrates cross-field knowledge, including Micro Electro Mechanical

Systems (MEMS), lithography-assisted micromachining (LIGA), semiconductor process, and soft materials such as silicone gel and polydimethylsiloxane.

We boast the ability to develop, design, and manufacture micro-electromechanical components and sensors, including three-dimensional microstructures

or micro-optical-electromechanical integrated components.

The material of the microstructure can be multi-layer stacking of alloys and

insulating materials, which may be used in a wide range of fields, such as pressure or environment detection, MEMS oscillators, optical

actuators, biomedical components, passive components, silicon optical integration platforms, and microfluidic structures.

The platform integrates our

AC-1000 and A + SCDrop devices.

Our rare cell enrichment device AC-1000 integrates the A + Pre chip and AC-1000 CTC

enrichment chip.

AC-1000 uses semiconductor nano ultra-sensitive biosensors and patented microfluidic chip technology to isolate rare

cells with complete cell activity.

It has great potential to be applied to routine liquid biopsy and companion diagnosis in the future.

AC-1000 can satisfy different applications with corresponding special chip products.

Our products also have the potential to provide application

services in tumor screening, auxiliary diagnosis, treatment evaluation, prognosis evaluation, recurrence and metastasis detection, individualized

medication guidance, and companion diagnosis.

In terms of tumor screening, we have developed a complete set of service models for early

screening of lung cancer, and plan to begin the clinical research in November 2025.

Our application services for the identification of

CTCs have matured, and the identification of CTCs can be used for tumor screening, auxiliary diagnosis, and treatment evaluation, etc.

Our CTCs single cell capture device A + SCDrop is used in combination with A + Pre and AC-1000.

It preserves the original

activity of single cells and polymer microfluidic chips combined with cell dielectric sensing technology.

With the technical advantages

combined with our IVD kit products, A + SCDrop can be used in a variety of applications, such as single-cell sequencing, whole

gene sequencing, protein sequencing, new drug development, cancer biomarker research, individualized diagnosis, individualized drug susceptibility

testing, and other aspects of individualized precision medicine.

We are also working on prognosis assessment, recurrence and metastasis

detection, individualized medicine, and companion diagnosis.

Although no services have

been provided to customers yet, we believe the application services using our products and devices will be an essential part of our future

Competitive Strengths

Although we have not received

any regulatory approvals necessary to commercialize our products, we believe that the following competitive strengths enable us to compete

effectively in and capitalize on the growing oncology detection market:

Our Microfluidic Technology Platform.

We can quickly complete the product development and improvement we need on our own platform.

Proprietary Ultra-Sensitive Biosensor Technology.

Our self-developed proprietary semiconductor nano ultra-sensitive biosensor technology integrates various composite precision structures, dielectric detection and functional microfluidic biochips to complete the microfluidic chips and reagents for capturing circulating tumor cells in a patient’s blood.

Our technology also enables a fast and inexpensive method for early cancer diagnosis because we mainly rely on self-developed equipment and products, including the microfluidic chips and the related reagents.

Specifically, with the start and expansion of mass-production, the cost and price of microfluidic chips will drop multiple times.

Also, since we estimate that we will enrich all the targeted cells, the amount of reagents required in the process will decrease correspondingly.

Additionally, we are able to complete the detection and analysis in a short period of time while ensuring the accuracy of the results and reducing the death number of targeted cells throughout the process because we have a complete microfluidic technology platform, which uses self-developed microfluidic chips to separate and detect CTCs.

By using automatic and efficient microfluidic chips, we can reduce human errors when capturing, releasing, counting, and detecting CTCs.

For example, AC-1000 and its corresponding chip can achieve high throughput (800-1000 drops/s) and high flow rate (>0.7ml/hr) while completely removing red blood cells in peripheral blood samples within 30 minutes.

Due to the non-destructive nature of the rare cell enrichment system, it can maintain the original characteristics of the desired target cells through purely physical and high-purity enrichment processes, improving the accuracy of the results and reducing the number of target cells that die during the entire process.

On Track to Commercialization.

All of our products must go through three steps to receive the required clearance from NMPA before they can be sold to customers.

The three steps are research and development, registration application, and registration review, which must be done in that order.

Currently, A+Pre and AC-1000 and their corresponding chips have been cleared by the NMPA;

A+SCDrop, A+CellScan, A+CellScan Chip, and A+LCGuard are at the registration application stage;

the four matching immunostaining kits are under registration review.

We expect to submit the A+CellScan, and A+CellScan Chip’s registrations to the NMPA in December 2024 while completing preliminary works for A+SCDrop’s application.

We have been cooperating with the injection molding machine manufacturer Riva Machinery Co., Ltd.

(“Riva”) and the mold manufacturer Unimold Technology Inc.

(“Unimold”) to conduct mass production mode testing and trial production.

Although none of the chips has been mass-produced as of the date of this Report, we have purchased a Riva injection molding machine at the end of October 2022 and completed the mass production trial test of AC-1000 CTC Enrichment chip.

We also cooperate with Unimold to embed our specially manufactured mold core for A+Pre Chip into the mold cavity made by Unimold.

The chips produced have met the specifications set by us, and a batch of small-scale trial production of 5,000 pieces has been carried out in October 2022.

Our equipment is operating to expected efficacy and performance specifications using in-house produced chips.

Moreover, the prototype of A+CellScan and its corresponding chip have completed the performance study.

You can find more information on page 8 under the heading “A+CellScan.” We are refining the production method of A+CellScan chip and have submitted the results of our medical device safety test to a third party for independent evaluation.

In addition, we have completed the mass production trial test using the mold manufactured by Unimold in December 2023, and an independent third-party is evaluating the test result.

The A+CellScan and its corresponding chip will enrich our product chain by upgrading our immunochromogenic kits to tumor cell assay equipment.

Specifically, A+CellScan, together with A+Pre and AC-1000, can serve as a liquid biopsy IVD product to accelerate downstream assay time and reduce the amount of labor required for assaying tumor cells.

In addition, we are actively carrying out registration application for our A+LCGuard kit products, as well as work related to research programs.

Multi-Disciplinary Management Team.

We have a multi-disciplinary management team, an R&D team and strategic cooperation units composed of interdisciplinary and cross-field professionals and well-known experts.

The R&D team has the ability to combine semiconductor/integrated circuits and biomedical expertise.

Our team has accumulated valuable experience from chip development and design, manufacturing, mass production, design and development of detectors, research and development of system modules, and the operation of clinical laboratory personnel.

Additionally, the Bureau of Economic Development of Tainan City Government has also approved the reorganization in accordance with the Taiwan Company Act on December 26, 2022.

On June 8, 2023, pursuant to the Share Transfer Agreement entered into by Ting Wang and Haifeng Zhang, who are independent third-party individuals, and Shanghai Sglcell on June 2, 2023, Shanghai Sglcell transferred its wholly owned subsidiary, Nanjing Yitian Biotech Co., Ltd.

and its subsidiary, Beijing Yitan Jiarui Technology Co., Ltd., to Ting Wang and Haifeng Zhang at aggregate consideration of RMB500,000 (approximately US$72,780) without any other obligations arising from the transfers.

On June 9, 2023, pursuant to the Share Transfer Agreement entered into by Ting Wang and Haifeng Zhang, who are independent third-party individuals, and Shanghai Sglcell on May 31, 2023, Shanghai Sglcell transferred its wholly owned subsidiary, Shandong Sglcell Medical Devices Co., Ltd., to Ting Wang and Haifeng Zhang at zero consideration without any other obligations arising from the transfers.

On June 15, 2023, pursuant to the Share Transfer Agreement entered into by Quantum Capital (Hong Kong) Limited, who is an independent third-party corporation, and Advanced Biomed HK on June 9, 2023, Advanced Biomed HK transferred its wholly owned subsidiary, Sglcell (Huangshan) Biotech Co., Ltd., to Quantum Capital (Hong Kong) Limited at zero consideration without any other obligations arising from the transfers.

On December 23, 2025, we entered into agreement to sell Advanced Biomed HK (together with its subsidiary, Shanghai Sglcell) to Wei Ha Hui, an unrelated third party, for US$23,000.

On April 2, 2026, we acquired 100% of equity interests of Acellent Technologies (Hong Kong) Co.

Limited (“Acellent”), who develops and operates the FinTruth Financial Verification Agent Platform (“FinTruth”).

On June 30, 2026, we entered into an agreement to sell Advanced Biomed Taiwan to Miaozhu Zhao, an unrelated third party, for US$490,000.

As a result, we have exited our biomedical operations and have since fully shifted our focus towards developing AI application through FinTruth.

The chart below depicts the corporate structure of the Company as of the date of this Report.

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system.

About FinTruth

FinTruth is our primary AI platform and the sole product offered to our customers.

The product operates as a rule-based and model-based check platform, with research and development and engineering activities conducted by our employees, who are based primarily in Hong Kong.

Its reasoning core, Smith RM, is a proprietary financial reasoning model developed and owned by Acellent.

Smith RM is owned by Acellent and is not subject to any third-party license restrictions.

The platform is model-agnostic, meaning that, at a customer’s request, it can be configured to work with third-party or open-source large language models specified by the customer.

FinTruth can also verify the output of third-party AI financial reasoning systems.

Our AI research and algorithm engineering team is responsible for Smith RM, the verification algorithms, model evaluation, hallucination detection, AI safety mechanisms and related model-improvement work.

Meanwhile, implementation, configuration, proof-of-concept support, system integration, testing and technical support are handled by our client solutions and commercialization function, which is supported by our product and software engineering team.

The platform currently supports verification and user interface in English and Chinese.

It does not support cross-language verification.

In other words, FinTruth only verifies English-language reports against English-language source documents, and Chinese-language reports against Chinese-language source documents.

The platform is currently delivered in three ways:

(1) a browser-based SaaS workspace hosted on international public cloud infrastructure provided by multiple cloud providers;

(2) APIs, including a step-by-step verification API that allows verification checkpoints to be embedded in a customer’s or partner’s AI financial-analysis workflow;

and (3) on-premises deployment within the customer’s own environment.

Our commercial models also include integrated or bundled solutions offered through foundation-model providers, enterprise technology providers, financial IT platforms, and strategic technology partners.

The platform currently supports, in production, credit and credit-rating analysis reports, research reports, and financial statements and annual reports.

Source materials include financial statements, credit reports, business registration information, judicial information and industry data.

Notably, FinTruth is designed to operate as a verification and audit layer, not as a replacement for the underlying AI model or for the professional judgment of analysts, auditors and compliance personnel.

It consists of five principal components:

(i) data ingestion layer – ingests corporate credit information, financial statements, business registration information, judicial information and industry data, as well as the AI-generated report and source documents uploaded by the user;

(ii) Smith RM reasoning core– a proprietary financial reasoning model developed by Acellent, which provides step-by-step verification through an API and includes a self-repair mechanism, so that issues identified during verification can be fed back for correction;

(iii) formal verification engine (“FV Engine”) consisting of four verification modules:

numerical, logical, ontology and narrative consistency verifiers;

(iv) financial rules knowledge base consisting of accounting standards, banking regulations and industry benchmarks;

and (v) output layer – report rendering, format conversion and audit logs.

Our knowledge base covers PRC Accounting Standards for Business Enterprises, International Financial Reporting Standards (IFRS) and Hong Kong Financial Reporting Standards (HKFRS), and U.S.

FinTruth is supported by our technology and data assets, which include proprietary financial datasets accumulated over approximately three years;

internal financial rules and knowledge structures (including a financial ontology and a rules knowledge base of accounting standards covering PRC, IFRS/HKFRS and U.S.

GAAP standards, banking regulations and industry benchmarks);

and proprietary training and evaluation datasets developed through expert annotation, human feedback and product-use feedback.

Our datasets are derived from data generated internally by Acellent.

Because these datasets are generated internally, they are not purchased or licensed from third parties.

As such, these datasets are owned by Acellent, which has the right to use them commercially and for model training.

We believe these data are crucial to FinTruth’s functioning, as they support FinTruth’s verification, reasoning, evidence-tracing and model-evaluation capabilities.

Our data pipelines, datasets, ontology construction, evidence-chain processing, knowledge-base maintenance and data-quality control are managed by our data and knowledge engineering function.

FinTruth currently provides three principal capabilities:

(i) document and source comparison, allowing AI-generated financial analysis to be checked against underlying source documents;

(ii) source-level evidence tracing, allowing statements and numerical values to be traced to supporting evidence;

and (iii) verification and audit reporting, including consistency checks, confidence indicators and audit trails.

In document and source comparison, FinTruth provides a side-by-side comparison of the AI-generated report and source files, with automatic highlighting of differences to identify data deviations and factual conflicts.

In the detailed analysis view, a claim list, the AI report and the source materials are linked in three panels.

In source-level evidence tracing, FinTruth traces claims and numbers back to their specific location in the source files.

By selecting a claim, the reviewer is taken to the corresponding paragraph in the source materials, allowing the reviewer to check the evidence supporting each conclusion.

Lastly, in verification and audit reporting, FinTruth produces a report overview with an overall pass score, counts of passed, suspect and erroneous claims, chapter-level quality scores, review suggestions and operating metrics (processing time, token usage and retry counts).

Audit reports contain conclusions and evidence and can be exported in PDF and Word formats.

In general, the platform uses numerical, logical, ontology and narrative verification functions to identify inconsistencies in financial data, relationships, reasoning and narrative content.

Through FinTruth’s task creation interface, users can upload an AI-generated report and the corresponding source documents for review against these capabilities.

Following the continued development, refinement and commercialization of FinTruth, we plan to deploy the AI application to financial institutions, financial technology companies and other enterprise customers.

FinTruth supports two modes of use:

(1) standalone verification of a completed report and (2) embedded verification checkpoints.

Under standalone verification, the user uploads the AI-generated report and the corresponding source documents.

The platform then extracts the claims in the report, traces each claim to the source documents, runs the verification modules and produces a report overview and a detailed claim-by-claim analysis, which can be exported as an audit report and kept in “History.” Under embedded verification checkpoints, FinTruth is integrated into an AI-financial analysis workflow, and verification is performed at each stage—data collection, fundamental analysis, risk identification, rating recommendation and report generation.

Under both modes, FinTruth provides a verification report with confidence scores and an audit trail.

Additionally, FinTruth provides confidence indicators to our users.

In verification and audit reporting, confidence is presented at three levels:

Claim level - each claim is classified as “pass,” “suspect” or “error.” A claim is classified as “error” when it contradicts the source documents or violates a hard constraint (e.g., an accounting identity that does not hold).

It is classified as “suspect” when the source documents do not contain sufficient evidence to support it, but no contradiction is found.

Soft-constraint checks (e.g., industry benchmark alignment, narrative–sentiment consistency) produce confidence scores where deviations are tolerated.

Report level (“detection pass rate”) – a score is given out of 100, calculated as the number of passed claims divided by the total number of claims checked.

Suspect and erroneous claims are not counted as passed.

Chapter level – each chapter receives a separate score across dimensions such as content completeness and data accuracy.

Low-scoring chapters and identified numerical-extraction and calculation errors generate review suggestions.

The classifications and scores are tested periodically against our proprietary evaluation datasets, which are annotated by our internal staff and external financial experts.

We also provide opportunities for customer feedback on production use to identify and correct any possible misclassifications.

However, automated verification may produce false positives or false negatives, and the confidence indicators do not guarantee the accuracy of any report or claim.

We plan to generate revenue through multiple channels:

(1) usage-based API fees, including token- or transaction-based metering;

(2) enterprise subscription revenue through annual or periodic arrangements;

and (3) integrated or bundled solutions offered through collaboration with foundation-model providers.

Usage-based fees:

charged to financial institutions, financial IT companies and other enterprise customers on a per-report or per-task basis, for both web and API use

Enterprise subscriptions and on-premises licenses:

recurring annual or periodic subscription fees;

for on-premises deployments, a one-time license fee plus an annual maintenance fee

Integrated or bundled solutions:

offered in collaboration with foundation-model providers, enterprise technology providers and financial IT platforms, with pricing negotiated with each partner

FinTruth Interface

A typical standalone verification task proceeds as follows:

Upload – The user creates a new task, uploads the AI-generated report and the source documents, names the task and clicks “Start.”

Ingestion – The files are received in the data ingestion layer and a task record is created.

For on-premises deployments, documents remain within the customer’s own environment.

Parsing – Text, tables and numerical values are extracted from the report and source documents, with page and paragraph locations kept for evidence tracing.

Claim extraction – Statements and numerical values in the AI-generated report are identified as individual claims.

Matching – Each claim is linked to the relevant location in the source documents to form an evidence chain.

Verification – The FV Engine applies the numerical, logical, ontology and narrative verifiers under the three-layer framework (hard constraints, logical consistency, soft constraints), using the financial rules knowledge base.

Each claim is classified as pass, suspect or error and assigned to an issue type (e.g., numerical conflict, factual inconsistency, unsupported citation).

Report Output – The platform produces the report overview (detection pass rate, chapter scores, review suggestions, operating metrics) and the three-panel detailed analysis, and the user can export an audit report containing conclusions and evidence in PDF or Word format.

A typical report is processed in a few minutes.

Below are sample screenshots from our platform:

FinTruth intelligent report generation platform user task creation interface.

Through this initial interface, users are prompted to upload an AI-generated report and the corresponding source documents for review.

FinTruth History Interface

Sales and Marketing

We plan to engage directly with prospective financial-institution and technology customers and product demonstrations through pilot or proof-of-concept activities.

Meanwhile, we plan to distribute our product indirectly through financial IT companies, MaaS, AI distribution platforms, foundation-model providers and other strategic technology partners through integrated or bundled offerings.

As part of our indirect approach, we recently entered into an agreement with Quantum Capital (Hong Kong) Ltd as our marketing partner to promote and market FinTruth to prospective customers.

Based on future customer demand and available financial resources, we intend to expand distribution through additional strategic technology partners and by adding business-development personnel.

FinTruth’s competitors include large financial technology companies, AI model providers, enterprise software companies, and financial institutions developing internal verification systems.

We believe our competitive strengths include:

(i) FinTruth’s design as an independent verification layer that evaluates AI output against source evidence, financial constraints and domain-specific rules, rather than relying only on improvements in the underlying generative model;

(ii) Smith RM, our proprietary financial reasoning model, and the platform’s ability to work with models specified by customers;

(iii) the combination of four verification modules (numerical, logical, ontology and narrative) in a three-layer framework, with a financial rules knowledge base covering PRC, IFRS/HKFRS and U.S.

GAAP accounting standards;

(iv) claim-level, source-level evidence tracing with a three-panel linked review interface and exportable audit trails;

(v) flexible deployment through SaaS, API or on-premises, so that customer data can stay within the customer’s environment;

and (vi) our proprietary financial datasets and expert-annotated evaluation datasets.

However, we are at an early commercial stage, with a limited operating history, a relatively small customer base, a small team compared with large technology and financial-data companies, limited cash resources and limited brand recognition among large financial institutions.

AI model providers or financial institutions may also build similar verification capabilities into their own products.

In addition, we do not currently hold ISO/IEC 27001, SOC 2 or other security certifications or attestations, which some large financial institutions require of their vendors.

Growth Strategy

We will strive to be a leading

provider of precision oncology detection solutions by the following growth strategies:

Increase the market penetration of our oncology auxiliary products and expand our product portfolio to actively focus on in vitro early diagnosis, rapid evaluation of chemotherapy drugs, individualized treatment including clinical screening of drugs, detection of drug resistance, and monitoring of tumor recurrences.

Develop cancer screening market in China and further expand to other regions.

We plan to initially focus on developing our cancer screening market in China.

We also plan to expand to North American and European market by setting up subsidiaries and localize production and operation to meet specific market demand and compliance requirements in the relevant market.

Expand our R&D to strength and develop pipeline products.

In the future, we will actively promote the research and development, application and registration of other cancer early screening products.

We have adopted a twelve-month business and marketing plan running from July 1, 2026 to June 30, 2027.

Our objectives include plans to commercially deploy FinTruth to twenty institutional customers;

conversion of ten pilot engagements into commercial contracts;

growth from twelve to approximately eighteen full-time employees, and maintaining sufficient liquidity to fund planned operations.

There can be no assurance that we will achieve these objectives within the anticipated timeframe, or at all.

Specifically, our twelve-month plan consists of three stages:

Stage I – Product Enhancement and Commercial Readiness (months 0-3;

We enhanced document comparison, source-level evidence tracing, numerical and logical consistency verification, ontology and entity verification and audit-report generation;

improved enterprise deployment, including on-premises deployment;

refined our financial datasets and rules;

established our pricing models (per-report usage fees, subscriptions, and on-premises license and maintenance fees);

and held demonstrations and started pilot and proof-of-concept engagements with prospective customers.

Stage II – Initial Commercial Deployment and Recurring Revenue (months 3-6;

in progress):

FinTruth is set to be in commercial use by paying customers, including commercial banks and financial IT and fintech companies.

Between five and ten pilot or proof-of-concept engagements are underway or under discussion, and we are working to convert them into paying customers and recurring revenue.

Stage III – Commercial Scaling and Product Expansion (months 6-12;

not yet started):

this stage is set to begin in approximately January 2027.

As part of our twelve-month plan for developing and promoting FinTruth, we intend to possibly extend FinTruth’s functionality with additional verification modules, including additional financial-report verification functions and increased compatibility with additional financial documents and AI-output verification applications.

We also intend to improve our automated customer onboarding experience and integration capabilities.

We are currently in discussions regarding the potential acquisition of a legal AI agent designed to assist with the preparation, review and analysis of disclosure documents relating to U.S.

capital markets transactions (due diligence, document analysis, disclosure drafting, document categorization and information collection), which could potentially expand FinTruth’s customer base.

Its target users include law firms, public companies, investment banks, financial advisors, accounting firms and other participants in U.S.

securities offerings and capital markets transactions.

However, we have not yet entered into any binding or definitive agreement with respect to this potential acquisition, and there is no assurance that any transaction will be completed.

We believe that the combination of an established operating platform, advanced technology and data assets, a dedicated technical support team, a defined commercial pipeline, and potential access to capital markets as a public company provides a strong foundation for the continued growth and commercialization of our AI-driven technology business.

Intellectual Property

As of June 30, 2025 we had

registered or applied with China Patent and Trademark Office 8 patents on novel separation technologies for antibody-free and label-free

enrichment of rare cell-based cancer biomarkers (such as CTC, CTC cluster, tumor marker expressed cells) from very dense blood cells,

6 patents on high throughput droplet microfluidic chips for nano-liter scale reagent preparation and single-cell, 3 patents for the device

of water phase single-cell isolation and capturing for single cell applications, 6 patents on single-CTC detection/discrimination and

delivery for single-CTC sorting and downstream single-CTC analysis, and 3 patents on target cells pre-concentration and enrichment.

we also applied 2 of abovementioned patents with PCT and 2 of abovementioned patents with the U.S., and one of the U.S.

application has

been granted on October 11, 2022.

As of June 30, 2025, we own a total of 20 patents and an additional patent application is pending.

smart and key chip fabrication techniques/methods with mass production level are protected by commercial confidential to reduce exposed

Our commercial success depends

in part on our ability to obtain and maintain proprietary or intellectual property protection for our detection solutions and other commercially

important products, technologies, invention and know-how, to operate without infringing, misappropriating or otherwise violating

the proprietary or intellectual property rights of others and to prevent others from infringing, misappropriating or otherwise violating

our proprietary or intellectual property rights.

Our patent strategy is focused on seeking coverage for our core technologies and specific follow-on applications,

implementations for detecting and monitoring cancer by determining genomic alterations and evaluating the status of specific biomarkers

in liquid biopsy or tissue samples.

In addition, we file for patent protection on our on-going research and development, particularly

into early-stage cancer screening.

We also rely on trade secrets, know-how and

continuing technological innovation to develop and maintain our proprietary and intellectual property position.

We generally require our

R&D personnel to enter into confidentiality agreements.

These agreements provide that all confidential information developed or made

known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed

to third parties except under specific circumstances.

In the case of our R&D personnel, the agreements provide that all of the technology

which is conceived by the individual during the course of employment is our exclusive intellectual property.

Furthermore, as a matter

of company policy, our R&D personnel have entered into agreements that generally require disclosure and assignment to us of ideas,

developments, discoveries and inventions made by them which relate to their employment with us.

Patent Number

Patent Description

ZL201821544689.4

Utility Models

Target cells pre-concentration and enrichment

ZL201811418768.5

Target cells pre-concentration and enrichment

ZL201811098975.7

Target cells pre-concentration and enrichment

PCT/CN2018/103116

Single-CTC detection/discrimination

International

A + SCDrop chip

US11467081B216/639,117

Single-CTC detection/discrimination

A + SCDrop chip

ZL201821544716.8

Utility Models

Single-CTC detection/discrimination

A + SCDrop chip

ZL201821544498.8

Utility Models

Single-CTC detection/discrimination

A + SCDrop chip

PCT/CN2018/103171

Separation technologies

International

US20200086320A1

Separation technologies

ZL201821544718.7

Utility Models

Separation technologies

ZL201821544717.2

Utility Models

Separation technologies

ZL201810169100.5

Separation technologies

ZL201810381143.X

Single-CTC detection/discrimination

A + SCDrop chip

ZL201921425592.6

Utility Models

Droplet microfluidics

ZL201910807870.2

Droplet microfluidics

ZL201821961715.3

Utility Models

Droplet microfluidics

A + CellScan Chip & A + SCDrop

ZL201821544526.6

Utility Models

Droplet microfluidics

ZL201811470094.3

Droplet microfluidics

A + SCDrop chip

ZL201811099052.3

Droplet microfluidics

ZL201821562851.5

Utility Models

Single-cell isolation and capturing

A + Pre Chip, AC-1000 CTC Enrichment Chip, and A + CellScan Chip

202310325582.X

Separation technologies

A + CellScan reagent

Chinese Patent Law defines three different types of patents for protecting invention-creation:

invention, utility model, and design.

“Invention” means any new technical solution proposed for a product, a process or the improvement thereof.

“Utility Model” means any new technical solution proposed for the shape, the structure, or their combination, of a product, which is fit for practical use.

“Design” means, with respect to an overall or partial product, any new design of the shape, the pattern, or their combination, or the combination of the colour with shape or pattern, which is rich in an aesthetic appeal and is fit for industrial application.

As of June 30, 2025, we had

registered 12 trademarks in China, including 欣戈赛

We also own 1 registered domain

name in China.

www.advanbiomed.com

As of June 30, 2025, we had 31 employees.

The following table sets

forth the number of our employees by function as of June 30, 2025.

As of June 30,

Technology, Research and Development

Medical Affairs

Operations and Quality Assurance

Sales and Marketing

General and Administration

We own 1 registered domain name in the United States.

Item Domain Name

As of the date of this Report, we had 12 employees.

The following table sets forth the number of our employees by function as of the date of this Report.

Number % of Total

Executive & Product Leadership 2 17 %

AI Research & Algorithm Engineering 3 25 %

Product & Software Engineering 2 17 %

Data & Knowledge Engineering 1 8 %

Client Solutions & Commercialization 1 8 %

Finance & Accounting 2 17 %

Legal & Corporate Operations 1 8 %

Total number of employees 12 100.0 %

Our R&D personnel are

imperative to our technological development.

They are responsible for the early stage of biochip design and production, design improvement

and optimization, self-developed microfluidic system, design and development of biomedical testing instruments, and establishment of biochip

mass production mode.

They also test the electrical safety of our medical devices, assist us to prepare FDA medical device regulatory

certification and registration application documents.

The R&D personnel are also responsible for the training of clinical laboratory

personnel, the training of assembly, testing and maintenance of medical equipment production line personnel, and future chip mass production

and packaging production.

Our Shanghai subsidiary is

required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical

insurance, unemployment insurance and other statutory benefits and a housing provident fund.

Our Shanghai subsidiary also enters into

standard labor contracts with its employees.

The labor contract typically includes a confidentiality covenant that requires employees

to protect the company confidential information during their employment.

In addition, employees are prohibited from entering into another

employment relationship with a third party, which may adversely affect our business.

Advisors and Industry-Academia Cooperation

We focus on the research and

development of various advanced and original microfluidic biochips and strive to provide tumor precision diagnosis and treatment technology

and early cancer detection service.

In order to strengthen our strategic development and research, we have worked with the following advisors

(“Advisors”) and the National Taiwan University (the “NTU”) pursuant to certain advisory agreements and industry-academia

cooperation agreements:

Lin Jianhuang

is currently President of Taipei Medical University, Director of National Applied Research Laboratory, Director of Biotechnology and Pharmaceutical

Industry Research Institute, Executive Director of Taiwan Pharmacological Society, and Director of International Cooperation Foundation.

Lin is mainly engaged in the field of molecular pharmacology signal transduction new drug development.

Director of the Institute of Oncology, Tongji University School of Medicine, Director of the Department of Oncology.

Director of Oncology

Department of Shanghai Pulmonary Hospital, Director of Lung Cancer Immunology Research Office, Director of Clinical Pharmacology Institute.

Mainly engaged in early diagnosis of lung cancer, comprehensive treatment, targeted therapy and individualized therapy, molecular imaging

of tumor, phage vaccine.

The Advisors attend quarterly

meetings and provide professional advice to the Company.

Advisors make recommendations and offer guidance on the Company’s long-term

development strategy and major decisions, including providing consultation and suggestions on the Company’s development plans, research

directions, scientific partnerships, and academic exchanges based on their abundant clinical experience to help the Company stay on the

For example, we used to focus on counting tumor cells, and our Advisors suggested to capture active single cells for further

clinical application.

Based on the suggestion, we eventually developed A + SCDrop.

Furthermore, our Advisors suggested that we

adopt the method of taking blood samples at multiple times, as the number of targeted cells contained in samples at different times is

different, so as to ensure the accuracy of the obtained results.

Accordingly, we adjusted our clinical plan regarding our prospective

clinical trials.

Below are the material terms

of the advisory agreements (the “Advisory Agreement”):

Agreement for Mr.

Lin Jianhuang went into effect on November 1, 2022, and will end on October 31, 2025, unless terminated earlier in accordance

with the provisions of the Advisory Agreement.

The Advisory Agreement for Mr.

Lin Jianhuang may be renewed if the parties start the renewal

process three months prior to the end of this agreement and agree on the terms and conditions of the new agreement.

The Advisory Agreement

Zhou Caicun went into effect on July 1, 2022, and was originally scheduled to end on June 30, 2025.

On June 20, 2025, we renewed

the Advisory Agreement with Mr.

Zhou under the same terms and conditions, with a new expiration date of June 19, 2026.

The Advisory Agreement

may be renewed again if the parties initiate the renewal process at least one month prior to the expiration date and agree on the terms

and conditions of the new agreement.

Advisor is hired by us as its advisor (“Advisor”) and provide consulting service to us regarding our development plans and

Compensation .

We will reimburse Mr.

Zhou Caicun any work-related expenses.

We will reimburse Mr.

Lin Jianhuang any work-related expenses and we agreed

Lin 0.5% of the total number of shares of the Initial Public Offering.

The Common Stock will be distributed evenly among

Lin’s three years of service.

Termination .

This Advisory Agreement can only be modified by both parties’ written consents and will remain in effect if either Party does not

agree on the proposed modification.

This Advisory Agreement is terminated once the end date has been reached or in accordance with the

terms and conditions of this Advisory Agreement.

Industry-Academia Cooperation

Advanced Biomed Taiwan entered

into two industry-academia cooperation agreements with the National Taiwan University under identical terms and conditions for identifying

novel biomarkers for early detection of lung cancer (together the “Cooperation Agreements”).

Advanced Biomed Taiwan renewed

one of the two Cooperation Agreements on November 30, 2024 (the “Renewed Cooperation Agreement”).

Below are the material terms

of the Cooperation Agreements and the Renewed Cooperation Agreement:

The Cooperation

Agreements went into effect on April 15, 2023 and expired on October 14, 2024.

The Renewed Cooperation Agreement went into effect on December

1, 2024 and will expire on November 30, 2025.

and development works stipulated in the Cooperation Agreements and the Renewed Cooperation Agreement focus on improving the accuracy of

early lung cancer detection and exploring more novel biomarkers in that regard.

the Cooperation Agreements, Advanced Biomed Taiwan is required to pay the NTU NTD 6 million in two equal installments, with the first

one been paid on April 24, 2023.

The second installment of NTD 3 million was paid in February 2024.

Under the Renewed Cooperation Agreement,

Advanced Biomed Taiwan is required to pay the NTU NTD 3 million in two installments, with the first one due on December 15, 2024.

the required invoice from the NTU for the first installment and made the payment on January 24, 2025.

The second installment of NTD 1.5

million was paid on June 23, 2025.

parties recognize that the services provided by the advisor are advisory and consulting in nature and do not involve actual research activities.

The NTU shall own the copyrights of any and all reports and works produced under the Cooperation Agreements, while Advanced Biomed Taiwan

has the license to use any and all reports and works produced under the Cooperation Agreements freely.

The Renewed Cooperation Agreement

does not permit Advanced Biomed Taiwan to use any results or products under that agreement directly for profit.

We do not believe this

negatively impacts the development and commercialization of our products because this agreement focuses on studying the effect of certain

proteins, unrelated to our products.

Instead, the purpose of our involvement under the Renewed Cooperation Agreement is to support the

NTU with funds and equipment for the separation and enrichment of target cells.

Our participation under the Renewed Cooperation Agreement

is aimed at demonstrating a potential application of our product to other research institutions, who could be our customers in the future.

Therefore, the results of this research under the Renewed Cooperation Agreement and the patentability and commercialization of such proteins,

do not affect the commercialization of our products.

Termination .

Either party to the Cooperation Agreements and the Renewed Cooperation Agreement has the power to terminate such agreement if the NTU

cannot perform its duties and obligations due to force majeure events or if Advanced Biomed Taiwan cannot perform its duties and obligations,

provided that the NTU shall refund Advanced Biomed Taiwan any portion of the payment to the extent not actually spent.

Licenses and Approvals

The following table sets forth

licenses and approvals that our subsidiaries are required to obtain for our operations in Taiwan and China as of the date of this Report:

PRC and Taiwan Regulatory

Expiration Date

Advanced Biomed Taiwan

Business Registration Certificate

Tainan City Government

Advanced Biomed HK

Certificate of Incorporation

Registrar of Companies, Hong Kong Special Administrative

Business Registration Certificate

Registrar of Companies, Hong Kong Special

Administrative Region

August 9, 2026

Shanghai Sglcell

Business License

Shanghai Administration for Market Regulation

We and our subsidiaries do

not currently maintain any commercial insurance.

The following table sets forth licenses and approvals that our subsidiaries are required to obtain for our operations in Hong Kong as of the date of this Report:

Name Licenses and

Approvals PRC and Taiwan Regulatory

Authority Expiration Date

Acellent Technologies Certificate of Incorporation Registrar of Companies, Hong Kong Special Administrative Region indefinite

Acellent Technologies Business Registration Certificate Registrar of Companies, Hong Kong Special Administrative Region July 8, 2027

We and our subsidiaries do not currently maintain any commercial insurance.

As such, we are susceptible to losses including property damage, accidents, or liabilities.

In the event that such damages are substantial, we may experience materially negative impact on our business operations, financial condition,

and results of operations.

In the event that such damages are substantial, we may experience materially negative impact on our business operations, financial condition, and results of operations.

Government Regulation

This section summarizes the

principal Taiwan and PRC laws, rules and regulations related to our business and operations.

Regulations in Taiwan

Regulations Relating to Taiwan Companies

Going to The Mainland to Engage in Technical Cooperation

On March 1, 1993, the Ministry

of Economic Affairs promulgated the Regulations Governing the Examination of Investment or Technical Cooperation in Mainland China (“Examination

of Investment or Technical Cooperation”) which became effective immediately.

The regulations were amended and took effect on December

On March 1, 1993, the Ministry of Economic Affairs also promulgated the Regulations Governing the Approval of Investment or

Technical Cooperation in Mainland China (“Approval of Investment or Technical Cooperation”).

The regulations were amended

and took effect on April 21, 2020.

If a Taiwan company intends

to go to Mainland China for technical cooperation, in principle, it must submit an application to the Taiwan Investment Commission in

According to the instructions of the Taiwan Investment Commission, the average review time for each case is 15-30 days.

the review, the competent authority will consider factors such as the impact on the core competitiveness of other Taiwanese companies,

the layout of R&D and innovation, and the infringement of intellectual property rights of other companies to comprehensively determine

whether to approve or not.

If a Taiwan company and a Chinese company engage in technical cooperation without permission, the competent

authority may impose a fine of not less than NTD 50,000 but not more than NTD 25,000,000 in accordance with Paragraph 1 of Article 86

of the Taiwan -Mainland People’s Relations Act, and may terminate it within a time limit, or require the companies to make corrections.

Those who do not comply or make corrections within the time limit may be punished continuously.

However, if a Taiwan company goes to Mainland

China to engage in technical cooperation that does not involve substantial technology outflow, for example, if the Chinese company has

no substantial involvement in product design and related R&D processes, it is not necessary to apply to the Investment Review Committee

The competent authority may make alterations to the general and prohibited technical cooperation projects either by conducting

regular reviews annually or by conducting special reviews on a case-by-case basis.

Regulations Relating to Exchange Control

or Currency Regulations or any Registration Requirements Under Anti-Money Laundering Laws

On October 23, 1996, the Ministry

of Justice promulgated the Money Laundering Control Act (the “Act”), which became effective on April 23, 1997.

amended and became effective on November 7, 2018.

The Act is enacted to prevent money laundering activities and combat-related crimes;

bolster anti-money laundering systems;

maintain financial stability;

increase transparency in money flows;

and strengthen international

Pursuant to the Act, inward

and outward remittances involving currency exchange between NTD and another foreign currency are subject to an annual ceiling of:

5 million for individuals and USD 50 million for businesses.

Any total annual remittance exceeding these thresholds requires approval

by the Central Bank of the Republic of China (CBC).

Individual foreign exchange transactions over NTD 500,000 must be reported to the

There are no other foreign

exchange controls on trade, insurance, and authorized investment transactions, and no limit on repatriation of capital or profits from

portfolio investments.

There are also no registration requirements under anti-money laundering laws.

Regulations Relating to Anti-bribery or

Bribery and corruption of

public officials in Taiwan are mainly regulated by the Anti-Corruption Act.

The Anti-Corruption Act was promulgated by the Ministry of

Justice and took effect on July 15, 1963.

It was later amended on June 22, 2016 and became effective on July 1, 2016.

The Anti-Corruption

Act lists various behaviors that constitute bribery of public officials.

Public officials who commit bribery may be punished by up to

life imprisonment together with a fine of up to NTD 100 million.

Any private individual who commits bribery of public officials may be

punished by up to seven years of imprisonment together with a fine of up to NTD 3 million.

Hospitality accepted by a

public official is only allowed under limited circumstances specified in the Integrity and Ethics Directions for Civil Servants.

of gifts received by a public official cannot exceed NTD500.

Gifts received due to visits to companies cannot exceed NTD 3,000.

value of gifts received from the same source in one year cannot exceed NTD 10,000.

The Ethical Corporate Management

Best Practice Principles were promulgated by the Taipei Exchange and became effective on September 3, 2010.

The principles were amended

and took effect on May 23, 2019.

These principles are applicable to companies, their subsidiaries, any foundation to which the companies’

direct or indirect contribution of funds exceeds 50 percent of the total funds received, and other institutions or juridical persons which

are substantially controlled by such companies.

The purpose of the principles is to foster a corporate culture of ethical management and

sound development and offer a reference framework for establishing good commercial practices.

Regulations Relating to employment relationships

The Employment Service Act

was promulgated by the Ministry of Labor and became effective on May 8, 1992.

It was amended and became effective on November 28, 2018.

The Act is enacted to promote the employment of nationals with a view to enhance social and economic development.

Labor Standards Act was promulgated

by the Ministry of Labor and became effective on July 30, 1984.

It was amended and took effect on June 10, 2020.

The Act is enacted to

provide minimum standards for working conditions, protect workers’ rights and interests, strengthen employee-employer relationships

and promote social and economic development.

Regulations Relating to Intellectual Property

The Patent Act was promulgated

by the Ministry of Economic Affairs and took effect on May 29, 1944.

It was amended and took effect on May 4, 2022.

The Patent Act is

formulated to encourage, protect and utilize the creations of invention, utility model and design in order to promote industrial development.

The Trademark Act was promulgated

by the Ministry of Economic Affairs and became effective on May 6, 1930.

Articles 68, 70, 95, 96 and 97 were amended on May 4, 2022, which

shall take effect on the date designated by Executive Yuan.

This Act is enacted for protection of the rights of trademark, certification

mark, collective membership mark, collective trademark and the interests of consumers, maintenance of fair competition, and promotion

of development of the industry and commerce.

The Copyright Act was promulgated

by the Ministry of Economic Affairs and took effect on May 14, 1928.

It was amended and took effect on June 15, 2022.

This Act is specifically

enacted for the purposes of protecting the rights and interests of authors with respect to their works, balancing different interests

for the common good of society, and promoting the development of national culture.

Matters not provided for herein shall be governed by

the provisions of other acts.

Trade Secrets

The Trade Secrets Act was

promulgated by the Ministry of Economic Affairs and became effective on January 17, 1996.

It was amended and took effect on January 15,

This Act is enacted to protect trade secrets, maintain industrial ethics and order in competition, and balance societal and public

Matters not provided for in this Act shall be governed by other laws.

Regulations Relating to Data Protection

The Personal Data Protection

Act was promulgated by the National Development Council on August 11, 1995 and became effective on January 17, 1996.

It was amended on

December 30, 2015, and became effective on March 15, 2016.

The Personal Data Protection Act (hereinafter, the “PDPA”) is enacted

to regulate the collection, processing and use of personal data so as to prevent harm on personality rights, and to facilitate the proper

use of personal data.

Regulations on Taxation

The Income Tax Act was promulgated

by the Ministry of Finance and became effective on February 17, 1943.

It was amended on April 28, 2021 and became effective on July 1,

Income tax is classified into consolidated income tax and profit-seeking enterprise income tax.

For any individual having income

from sources in the Republic of China, consolidated income tax shall be levied in accordance with this Act on his income derived from

sources in the Republic of China.

The Tax Collection Act was

promulgated by the Ministry of Finance and became effective on October 22, 1976.

It was amended on December 17, 2021 and became effective

on January 1, 2022.

Collection of taxes shall be governed by this Act.

Where a profit-seeking enterprise ceases to exist after a merger,

the surviving or newly incorporated profit-seeking enterprise shall pay in full the taxes originally payable by the dissolved enterprise

prior to the merger.

Major taxes on corporations include:

Corporate income tax (“CIT”)

If the total taxable income

of a profit-seeking enterprise is NTD120,000 or less, the profit-seeking enterprise is exempt from tax.

If the total taxable income of

a profit-seeking enterprise is more than NTD120,000 but not more than NTD 200,000, the income tax payable is computed based on the following

(Profit-NTD120,000) x 50%.

As for a profit-seeking enterprise with the total taxable income of more than NTD200,000, the income

tax rate shall be:

Profit x 20%.

Profit retention tax

An additional profit retention

tax of 5% is imposed on any current earnings of a corporation that remain undistributed by the end of the following year.

Regulations Relating to Bio Industry in

Act for the Development of Biotech and

Pharmaceutical Industry

In 2007, Act for the Development

of Biotech and Pharmaceutical Industry (the “Statute”) was enacted in order to promote the development of the biotech and

pharmaceutical industry in Taiwan so that it can bring about changes in the economic structure of the country.

By 2022, the scope of the

Statute covers industries that deals in new drugs, new dosage forms, high-risk medical devices, regenerative medicine, precision medicine,

digital medicine, innovative technology platforms dedicated to biotech and pharmaceutical industry and other strategic biotech and pharmaceutical

products used by human beings, animals and plants.

The Statute permits biotech

and new pharmaceutical companies to offset up to 30% of their expenses for personnel training and R&D against enterprise income tax

over a period of five years.

Up to five percent (5%) of the annual investment amount may be credited against the profit-seeking enterprise

income tax payable by it in the then current year from the first year the biotech and pharmaceutical company has payable profit-seeking

or up to three percent (3%) of the annual investment amount may be credited against the profit-seeking enterprise’s

income tax payable in each of the three years from the first year the biotech and pharmaceutical company has payable profit-seeking income

In addition, based on Article 5, up to 25% of the research and development investment of the biotech companies that engage in research,

development, and manufacturing may be deducted from the amount of profit-seeking enterprise income tax payable for each year within five

years from the year in which the payable profit-seeking enterprise income tax is incurred with the annual deduction capped at 50% of the

The Statute provides for tax

incentives to high-level professionals and technology investors to participate in company operations and R&D (Art.

7), to elaborate,

up to 20% of the price paid for the shares may be deducted from the payable profit-seeking enterprise income tax for each year within

five years from the year a payable profit-seeking enterprise income tax is incurred with the annual deduction capped at 50% of the tax.

Moreover, if the senior professional staff or technology investors of the biotech companies receive newly issued stock or stock options

as a result of reward or due to technology invested as capital stock and have held shares or stock options, been employed, or provided

technical services cumulatively for two years, they may choose to be taxed at the lower of the “transfer price” or the “current

price or price at which the stock was acquired.”

Finally, researchers of schools

and institutions who are the main technology providers of the start-up biotech companies are exempted from the prohibitions against business

operation and part-time employment and the restrictions on shareholding percentage under Article 34 of the Act Governing the Appointment

of Educators and Articles 13 and 14 of the Civil Servants Work Act.

This section summarizes the principal Hong Kong and PRC laws, rules and regulations related to our business and operations.

Regulations in Hong Kong

Advanced Biomed Inc.

is a Nevada corporation with its operating business located in Hong Kong.

As such, the patent holding company, Advanced Biomed Inc.

is subject to the laws and regulations of the United States of America while our operating business is subject to the laws and regulations of Hong Kong, as applicable, including labor, occupational safety and health, contracts, tort and intellectual property laws.

Furthermore, because our server is located in Hong Kong, we need to comply with the rules and regulations of Hong Kong governing the data usage and regular terms of service applicable to our potential customers or clients.

As the information of our potential customers or clients is preserved in Hong Kong, we need to comply with the Hong Kong Personal Data (Privacy) Ordinance, which regulates the collection, holding, processing and use of personal data by “data users.” A data user is any person who, alone or jointly with others, controls the collection, holding, processing or use of personal data.

“Personal data” means a data relating directly or indirectly to a living individual from which it is practicable to ascertain the individual’s identity and which is in a form in which access to or processing of the data is practicable.

If PRC authorities reinterpret PRC laws to apply to Hong Kong companies, we may become subject to the laws and regulations of China governing businesses in general, including labor, occupational safety and health, contracts, torts and intellectual property.

We may also become subject to foreign exchange regulations that might limit our ability to convert foreign currency into RMB, acquire any other PRC companies, establish variable interest entities in the PRC, or make dividend payments from any future wholly foreign owned entities to us.

Privacy and Protection of User Data

We and our subsidiaries are subject to a number of laws, rules, directives, and regulations relating to the collection, use, retention, security, processing, and transfer of personally identifiable information about our customers and employees in the countries where we operate.

Our business will involve the processing of personal data in many jurisdictions and the movement of data across national borders.

As a result, much of the personal data that we process, which may include certain financial information associated with individuals, is regulated by multiple privacy and data protection laws and, in some cases, the privacy and data protection laws of multiple jurisdictions.

In many cases, these laws apply not only to third-party transactions, but also to transfers of information between or among us, our subsidiaries, and other parties with which we have commercial relationships.

Employment Ordinance

The Employment Ordinance is the main piece of legislation governing conditions of employment in Hong Kong since 1968.

It covers a comprehensive range of employment protection and benefits for employees, including Wage Protection, Rest Days, Holidays with Pay, Paid Annual Leave, Sickness Allowance, Maternity Protection, Statutory Paternity Leave, Severance Payment, Long Service Payment, Employment Protection, Termination of Employment Contract, Protection Against Anti-Union Discrimination.

In addition, every employer must take out employees’ compensation insurance to protect the claims made by employees in respect of accidents occurred during the course of their employment.

An employer must also comply with all legal obligations under the Mandatory Provident Fund Schemes Ordinance, (CAP485).

These include enrolling all qualifying employees in MPF schemes and making MPF contributions for them.

Except for exempt persons, employer should enroll both full-time and part-time employees who are at least 18 but under 65 years of age in an MPF scheme within the first 60 days of employment.

The 60-dayemployment rule does not apply to casual employees in the construction and catering industries.

Pursuant to the said Ordinance, we are required to make MPF contributions for our Hong Kong employees once every contribution period(generally the wage period within 1 month).

Employers and employees are each required to make regular mandatory contributions of 5% of the employee’s relevant income to an MPF scheme, subject to the minimum and maximum relevant income levels.

For a monthly-paid employee, the minimum and maximum relevant income levels are HKD$7,100 and HKD$30,000 respectively.

Regulations Relating to National Security

Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region.

On June 30, 2020, the Standing Committee of the National People’s Congress of the PRC adopted the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”).

The law was added to Annex III of the Basic Law of the Hong Kong Special Administrative Region (the “Basic Law”), was promulgated for application in Hong Kong, and took effect on the same day.

The Hong Kong National Security Law establishes four categories of offenses:

secession, subversion of state power, terrorist activities, and collusion with a foreign country or with external elements to endanger national security.

The most serious offenses are punishable by up to life imprisonment.

Corporate entities convicted of an offense may be fined, and their operations may be suspended or their licenses or business permits revoked.

The law also has extraterritorial reach, as it applies to offenses committed from outside Hong Kong by persons who are not permanent residents of Hong Kong.

It established the Committee for Safeguarding National Security of the Hong Kong Special Administrative Region and the Office for Safeguarding National Security of the Central People’s Government in Hong Kong, and provides that, in specified circumstances, the Office may exercise jurisdiction over a case.

In addition, the Implementation Rules for Article 43 of the Hong Kong National Security Law, which took effect on July 7, 2020, give the Hong Kong Police Force investigative powers relating to national security offenses.

These include the power to search premises and electronic devices, to require service providers to remove electronic messages that are likely to constitute a national security offense, to restrict access to platforms or services, and to require service providers and other persons to provide information and assistance.

Service providers that fail to comply with these requirements may be subject to fines and imprisonment.

Safeguarding National Security Ordinance.

Article 23 of the Basic Law requires Hong Kong to enact its own laws to prohibit treason, secession, sedition, subversion against the Central People’s Government, and theft of state secrets, among other acts.

To implement Article 23, the Legislative Council of Hong Kong passed the Safeguarding National Security Ordinance (the “SNSO”) on March 19, 2024, and the SNSO took effect on March 23, 2024.

The SNSO complements the Hong Kong National Security Law and covers the following categories of offenses:

insurrection;

offenses relating to state secrets and espionage;

sabotage endangering national security;

external interference;

and offenses involving seditious intention.

Regulations in the PRC

Regulations Relating to Medical Devices

Regulations Relating to Classification

of Medical Devices

Pursuant to the Regulations

on the Supervision and Administration of Medical Devices promulgated on January 4, 2000, effective on June 1, 2014, amended by the State

Council on May 4, 2017 and now effective, and then amended on February 9, 2021 but not yet effective until June 1, 2021 (“Regulation

on Supervision and Administration of Medical Devices”), the China Food and Drug Administration (“CFDA”) of the State

Council shall be responsible for the national administration and supervision of medical devices of the PRC and its local counterparts

take charge of the local administration and supervision of medical devices of the PRC.

Under this regulation, medical

devices have been classified into three categories based on the degree of risk.

Class I medical devices shall refer to those devices with

low level of risks and whose safety and effectiveness can be ensured through routine administration.

Class II medical devices shall refer

to those devices with moderate risks that must be strictly controlled and regulated to ensure their safety and effectiveness.

medical devices shall refer to those devices with relatively high risks that must be strictly controlled and regulated through special

measures to ensure their safety and effectiveness.

Currently, the products we

are approved by NMPA to manufacture and sell are Class I medical device.

Registration and Filings of Medical Devices

Pursuant to the Regulations

on the Supervision and Administration of Medical Devices (“the Supervision and Administration of Medical Devices”), which

was amended and came into effect on May 4, 2017.

Then it was amended on February 9, 2021 and came into effect on June 1, 2021, Class I

medical devices are subject to filing administration, and Class II and Class III medical devices are subject to pre-approval registration

administration.

A registration certificate for Class II and Class III medical devices are issued upon approval, which is valid for five

years and may be renewed six months prior to its expiration date.

In addition, a registrant or record-filing party of medical devices

may manufacture medical devices on its own or entrust enterprises that meet the provisions hereof and have corresponding conditions to

manufacture medical devices.

In the event of entrusted manufacture of medical devices, the registrant or record-filing party of medical

devices shall be responsible for the quality of medical devices manufactured under entrustment, and strengthen management of the manufacturing

activities of the entrusted manufacturers to ensure that they carry out manufacturing in accordance with statutory requirements.

The registrant

or record-filing party of medical devices shall enter into an entrustment agreement with the entrusted manufacturer to specify the rights,

obligations and responsibilities of both parties.

The entrusted manufacturer shall organize manufacture of medical devices in accordance

with laws and regulations, GMP, compulsory standards, product technical requirements and the entrustment agreement, be responsible for

the manufacturing activities and accept the supervision of the entrusting party.

Clinical trials are not required

for the filing of the Class I medical devices, but necessary for the registration of Class II and Class III medical device with certain

Among our products, A + Pre

and AC-1000 are Class I medical devices and have passed NMPA registration review.

A + CellScan, A + CellScan Chip, and

A + SCDrop are Class II medical devices but do not need to conduct clinical trials.

A + LCGuard is Class III medical

device and is required to conduct clinical trials before completing the registration process.

We have already started the registration

process and plan to begin the clinical research in November 2025.

Specifically, in June 2025, the Company and the CRO began collaborating

on drafting the clinical research protocol and started preparing the necessary equipment, consumables, reagent kits, and other materials

for the study.

We expect that the clinical research protocol may pass ethical review and receive ethics committee approval by the end

of October 2025.

Thereafter, we plan to initiate the trial stage of the clinical research, with completion anticipated within six months

of November 2025.

Based on the results of clinical research, we plan to formulate a work plan for large-scale clinical trials and proceed

with the clinical trial.

We anticipate that we will obtain the required registration certificate by October 2027.

Production License for Medical Devices

Pursuant to the Regulation

on the Supervision and Administration of Medical Devices promulgated on July 30, 2014 and came into effect on October 1, 2014, as amended

in 2017 and came into effect on May 4, 2017 (amended on February 9, 2021, came into effect on June 1, 2021), and the Administrative Measures

on the Production Supervision of Medical Devices promulgated on July 30, 2014 and came into effect on October 1, 2014, as amended in March

10, 2022 and came into effect on May 1, 2022, manufacturers engaged in the manufacturing of Class I medical devices are subject to production

filing administration and receive production filing certificates upon satisfaction of filing requirements;

while those engaged in the

manufacturing of Class II and Class III medical devices are subject to pre-approval licensing administration and receive medical device

production licenses upon receipt of approval for licensing.

A medical device production license is valid for five years and may be renewed

six months prior to its expiration date.

Before obtaining production

licenses from local government authorities, our product must pass NMPA’s registration review.

Among our products, A + Pre

and AC-1000 and their corresponding chips have passed NMPA registration review, A + CellScan, A + CellScan Chip, and

A + SCDrop are at the registration application stage, the four matching immunostaining kits are under NMPA registration review.

A + LCGuard is required to conduct clinical trials before completing the registration process.

We have already started the registration

process and plan to begin clinical research in November 2025.

Specifically, in June 2025, the Company and the CRO began collaborating

on drafting the clinical research protocol and started preparing the necessary equipment, consumables, reagent kits, and other materials

for the study.

We expect that the clinical research protocol may pass ethical review and receive ethics committee approval by the end

of October 2025.

Thereafter, we plan to initiate the trial stage of the clinical research, with completion anticipated within six months

of November 2025.

Based on the results of clinical research, we plan to formulate a work plan for large-scale clinical trials and proceed

with the clinical trial.

We anticipate that we will obtain the required registration certificate by October 2027.

In addition, a manufacturer

of medical devices shall satisfy the following conditions:

possessing production sites, environmental conditions, production equipment and professional technicians that are suitable for such medical device produced;

possessing organizations or professional examination staff and examination equipment that carry out quality examination for such medical device produced;

formulating a management system which ensures the quality of such medical device;

having capability of after-sale services that is suitable for such medical device produced;

satisfying the requirements as prescribed in production R&D and production technique documents.

As of the date of this Report,

we have obtained the license for the production of the Class I medical device.

Production and Quality Management of

Medical Devices

Pursuant to the Administrative

Measures on the Supervision of the Production of Medical Devices promulgated on December 29, 2014 and came into effect on March 1, 2015,

as amended in March 10, 2022 and came into effect on May 1, 2022, and the Standards on Production and Quality Management of Medical Devices

promulgated by the CFDA on December 29, 2014 and came into effect on March 1, 2015, an enterprise engaged in the production of medical

devices shall establish and effectively maintain a quality control system in accordance to the requirements of the Standards on Production

and Quality Management of Medical Devices.

The enterprise engaged in the production of medical devices shall regularly conduct comprehensive

self-inspection on the operation of quality management system and submit this report to the local food and drug supervision and administration

authorities before the end of every year.

The enterprise shall also establish its procurement control procedure and assess its suppliers

by establishing an examination system to ensure the purchased products are in compliance with the statutory requirements.

The enterprise

shall apply risk management to the whole process of design and development, production, sales and after-sale services.

Pursuant to The Notice of

Four Guidelines including On-site Inspection Guidelines for the standards on Production and Quality Management of Medical Devices promulgated

by the CFDA on September 25, 2015 and came into effect on September 25, 2015, during the course of on-site verification of the registration

of medical devices and on-site inspection of production license t(including change production license), the inspection team shall, in

accordance with the guidelines, issue recommended conclusions for on-site inspections, which shall be divided into “Passed,”

“Failed” and “Reassessment after rectification.” During the supervision and inspection, if it is found that the

requirements of the key items or ordinary items that may have direct impact on product quality are not satisfied, the enterprise shall

suspend production and go through rectification.

If it is found that the requirements of the ordinary items are not satisfied, and it

does not directly affect product quality, the enterprise shall rectify in a prescribed time.

The regulatory authorities will examine and

verify the recommended conclusions and on-site inspection materials submitted by the inspection group and issue the final inspection results.

Good Clinical Practice for Medical Devices

On March 24, 2022, the CFDA

and the National Health and Family Planning Commission jointly promulgated the Good Clinical Practice for Medical Devices, which became

effective as of May 1, 2022.

The regulation includes full procedures of clinical trial of medical devices, including, among others, the

protocol design, conduction, monitoring, verification, inspection, and data collection, recording, analysis and conclusion and reporting

procedure of a clinical trial.

For conducting clinical trials

of medical devices, an applicant shall organize to formulate scientific and reasonable clinical trial protocol based on the categories,

risks and intended use of the medical devices for the clinical study.

The applicant shall be responsible for organizing to develop and

revise of the researcher’s manual, clinical trial protocol, informed consent form, case report form, relevant standard operating

procedures and other relevant documents, and shall be responsible for organizing necessary trainings for the clinical trials.

The applicant

shall select the clinical trial institutions and its researchers from the qualified medical device clinical trial institutions according

to the characteristics of the medical devices to be used in the clinical study.

As an applicant for clinical

trials of medical devices, we are responsible for initiating, applying, organizing and monitoring such clinical trials, and shall be responsible

for the authenticity and reliability of the clinical trials.

Operation License for Medical Device

Pursuant to the Supervision

and Administration of Medical Devices, filing and licensing are not required for the operation of Class I medical devices.

Operators engaged

in the operation of Class II medical devices are subject to filing administration and will receive medical device operation filing certificate

upon satisfaction of filing requirement, while operators engaged in the operation of Class III medical devices are subject to pre-approval

licensing administration and will receive medical device operation license upon receipt of approval for licensing.

A medical device operation

license is valid for five years and may be renewed six months prior to its expiration date

To engage in business operations

of medical devices, the following requirements shall be met:

Having a quality control institution or staff corresponding to the business scope and scale, and the staff shall have relevant education or professional titles certified by the state;

Having an operation and storage premises corresponding to the business scope and scale;

Having storage conditions corresponding to the business scope and scale;

warehouses are not required if all storage is commissioned to other operators of medical devices;

Having a quality control system corresponding to the medical devices concerned;

Possessing the capability of professional guidance, technical training and after-sale service corresponding to the medical devices it operates;

or it has come into an agreement on technical support with a relevant institution.

An enterprise to be engaged

in business operations of Category III medical devices shall also have a computerized information management system compliant with quality

standards to ensure traceability of products.

An enterprise to be engaged in business operations of Category I or Category II medical

devices is encouraged to set up such a system.

Special Procedures for Examination and

Approval of Innovative Medical Devices

On October 2017, the General

Office of the CPC Central Committee and the General Office of the State Council issued the Opinions on Deepening the Reform of the Evaluation

and Approval Systems and Encouraging Innovation on Drugs and Medical Devices, which aims to encourage the innovation for medical devices.

Pursuant to the Opinions,

the priority review and approval will be applicable to innovative medical devices supported by the National Science and Technology Major

Projects and the National Key R&D Program of China, and the clinical trials of which having been conducted by the National Clinical

Research Center and approved by the management department of National Clinical Research Center.

Pursuant to the Special Procedures for

Examination and Approval of Innovative Medical Devices which were promulgated by the NMPA on November 2, 2018 and came into effect on

December 1, 2018, special procedures shall be applicable to the examination and approval for medical devices in the following circumstances:

if the applicant legally owns the invention patent of the core technology of the product through its technological innovation activities in the PRC, or legally obtained the invention patent or the right of use thereof through transfer in the PRC, and that the interval between the date of application for the special examination and approval of innovative medical devices to the date of authorized publication should not exceed five years;

or the patent administration department of the State Council has disclosed the application for the invention patent of the core technology and the Patent Search and Consultation Center of the National Intellectual Property Administration of the PRC has issued the patent search report setting out the novelty and innovation of the core technology solution of the product;

the applicant has developed the prototype product and completed the preliminary research under a true and controllable process that generated complete and traceable data;

the product has major working mechanism or mechanism of action which is the first of its kind in the PRC, has fundamental improvement in product performance or safety compared with similar products, is of an internationally leading standard in terms of techniques and has significant clinical value.

The Center for Medical Device Evaluation of the NMPA should give priority to the innovative medical devices in their technical review upon receiving the registration application, after which the NMPA will give priority to the product in their administrative approval.

Advertisements of Medical Devices

Pursuant to the Regulations

on Tentative Measures for the Censorship of Advertisement for Drugs, Medical Devices, Dietary Supplements, Food Formula for Special Medical

Purpose promulgated by SAMR on December 24, 2019 and came into effect on March 1, 2020, the State Administration for Market Regulation

is responsible for organizing and guiding the review of advertisements for drugs, medical devices, health foods and formula foods for

special medical purposes.

The administrations for market regulation and drug administrations (hereinafter referred to as the “advertisement

review authorities”) of all provinces, autonomous regions and centrally administered municipalities shall be responsible for the

review of advertisements for drugs, medical devices, health food and formula food for special medical purposes, and may entrust other

administrative authorities to implement review of advertisements pursuant to the law.

The validity period of the

advertisement approval number for drugs, medical devices, health food and formula food for special medical purposes shall be consistent

with the shortest validity period of the product registration certificate, filing certificate or production license.

If no valid period

is prescribed in the product registration certificate, filing certificate or production license, the valid period of the advertisement

approval number shall be two years.

Advertisements for drugs,

medical devices, health food and formula food for special medical purposes shall be true and legitimate and shall not contain any false

or misleading contents.

Advertisers shall be responsible for the veracity and legitimacy of the contents of advertisements for drugs,

medical devices, health food and formula food for special medical purposes.

National Medical Insurance Program

The National Medical Insurance

Program (NMIP) was adopted pursuant to the Decision of the State Council on the Establishment of the Urban Employee Basic Medical Insurance

Program issued by the State Council on December 14, 1998, under which all employers in urban cities are required to enroll their employees

in the Urban Employee Basic Medical Insurance Program and the insurance premium is jointly contributed by the employers and employees.

Pursuant to the Opinions on the Establishment of the New Rural Cooperative Medical System forwarded by the General Office of the State

Council on January 16, 2003, China launched the New Rural Cooperative Medical System to provide medical insurance for rural residents

in selected areas which has since spread to the whole nation.

The State Council promulgated the Guiding Opinions of the State Council

about the Pilot Urban Resident Basic Medical Insurance on July 10, 2007, under which urban residents of the pilot district, rather than

urban employees, may voluntarily join Urban Resident Basic Medical Insurance.

In 2015, the PRC government announced the Outline for the

Planning of the National Medical and Health Service System (2015-2020) which aims to establish a basic medical and health care system

that covers both rural and urban citizens by 2020.

On January 3, 2016, the State Council issued the Opinions on Integrating the Basic

Medical Insurance Systems for Urban and Rural Residents to integrate the Urban Resident Basic Medical Insurance and the New Rural Cooperative

Medical System and the establishment of a unified Basic Medical Insurance for Urban and Rural Residents, which will cover all urban and

rural non-working residents expect for rural migrant workers and persons in flexible employment arrangements who participate in the basic

medical insurance for urban employees.

The National Healthcare Security Administration (NHSA) is the responsible agency that makes the

final determination on whether a product may be covered by the NMIP.

With regard to reimbursement

for medical devices and diagnostic tests, the Notice of Opinion on the Diagnosis and Treatment Management, Scope and Payment Standards

of Medical Service Facilities Covered by the National Urban Employees Basic Medical Insurance Scheme (Lao She Bu Fa [1999] No.

22) prescribes

the coverage of diagnostic and treatment devices and diagnostic tests where part of the fees is paid through the basic medical insurance

It also includes a negative list that precludes certain devices and medical services from governmental reimbursement, which includes

(i) examination and treatment items by applying large medical devices such as positron emission tomography (PET), electron beam CT, ophthalmic

excimer laser therapy instruments, etc.;

(ii) rehabilitation appliances such as spectacles, artificial dentures, artificial eyes, artificial

limbs and hearing aids, etc.;

(iii) medical devices for health care, massage, physical examination and treatment for own use;

disposable materials for medical use that cannot be charged separately as stipulated by price authorities of all provinces.

Detailed reimbursement

coverage and rate for medical devices and medical services (including diagnostic tests and kits) are subject to each province’s

local policies.

Therefore, every covered individual

is eligible to request reimbursement from the NMIP for medical expenses, but the reimbursement rate and coverage are determined on a case-by-case

Based on our understanding of applicable PRC laws and regulations, the reimbursement rate and coverage for certain products are

different for each individual and are subject to the following factors:

Whether the product is covered by the NMIP or whether the product is part of a procedure or service that is covered by the NMIP.

If not covered, the NMIP may deny the request for reimbursement or reduce the reimbursement rate and coverage;

The region and status of individuals seeking reimbursement.

NMIP varies in different regions and types, leading to different reimbursement ratios.

For instance, the basic medical insurance for urban employees generally covers around 50% to 80% of basic medical expenses, while the rural resident medical insurance typically covers around 60% to 80%;

Hospital level.

The reimbursement ratio of NMIP is related to the level and grade of hospitals performing services.

For example, a level 3 hospital’s service is generally more expensive than primary healthcare institutions, and the reimbursement ratio for level 3 hospitals is lower than for primary healthcare institutions.

Typically, an individual who received services from a primary care provider can get a relatively high reimbursement rate and coverage for medical expenses;

Individual payment status.

The reimbursement ratio of NMIP is also related to the individual payment status.

If an individual contributes more and for a longer period of time, the reimbursement ratio will correspondingly increase;

Special diseases or major illnesses.

For certain special diseases or major illnesses, the reimbursement ratio of medical insurance may be correspondingly increased, or special medical subsidies or assistance may be provided to alleviate the financial burden on patients by NHSA.

As of the date of this Report,

our products are not covered by any national or provincial medical insurance programs.

Currently, A+LCGuard is the only product we are

applying for NMIP coverage.

There is no fixed timeline to get a product covered by NMIP, as the application process involves multiple

procedures and interactions with NHSA that are beyond the applicant’s control.

To our knowledge, the application process may take

one to two years to complete.

Currently, A+LCGuard is the only product we are applying for NMIP coverage.

Although we strive to make our

products covered by the NMIP in the future, there is no guarantee that the NHSA will approve our applications.

Export Registration

Pursuant to Administrative

Measures on the Supervision of the Production of Medical Devices promulgated on December 29, 2014 and came into effect on March 1, 2015,

as amended in March 10, 2022 and came into effect on May 1, 2022, in accordance with the spirit of the Notice of Guo Ban Fa [94] No.

of the State Council, conducts inspections of safety and legality of the exported products manufactured by domestic enterprises, grants

legitimate production license in China (if these products are sold within Chinese territory) and files the relevant product information

by its branches at the level of a districted city for recordation.

In accordance with international practice, the quality of exported

medical devices is mainly supervised by the importing countries.

However, some importing countries/regions may require exporting enterprises

to provide Medical Device Product Export Sales Certificates issued by the CFDA.

Pursuant to Announcement on Issuing the Provisions on

the Administration of Medical Device Product Export Sales Certificates, promulgated by the CFDA and effective on September 1, 2015, such

exporting enterprises may apply to the provincial departments of the CFDA at the places where enterprises are located for Medical Device

Product Export Sales Certificates.

The premise of obtaining Medical

Device Product Export Sales Certificates is that the relevant production enterprises have obtained medical device product registration

certificates and production licenses or have undergone the formalities for recordation and production recordation of medical device products

The valid period of Medical Device Product Export Sales Certificates, except being specified for one time use, shall not expire

after the earliest deadline of any certificate among various certificates submitted by the enterprise amid the application materials,

and shall be no longer than two years.

Where the relevant materials submitted by an enterprise change, the enterprise shall report to

the certificate issuing department in a timely manner.

Where the relevant materials change, or the Medical Device Product Export Sales

Certificate still needs to be used after its expiration, the enterprise shall apply for a new Medical Device Product Export Sales Certificate.

Where the CFDA find that any relevant enterprises fail to meet the requirements of relevant regulations on production, they shall downgrade

the credit ratings of such enterprises to lower levels;

or, when any enterprises are considered failing to meet the requirements for issuance

of certificates anymore, or the relevant materials submitted by the enterprises change, the provincial CFDA departments shall notify the

relevant information in a timely manner.

Regulations Relating to M&A Rules and

Overseas Listings

On August 8, 2006, six PRC

regulatory agencies, including the China Securities Regulatory Commission, or the CSRC, adopted the Regulations on Mergers of Domestic

Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and was amended on June 22, 2009.

Foreign investors shall comply with the M&A Rules when they purchase equity interests of a domestic company or subscribe the increased

capital of a domestic company, thus changing the nature of the domestic company into a foreign-invested enterprise;

or when the foreign

investors establish a foreign-invested enterprise in the PRC, purchase the assets of a domestic company and operate the assets;

the foreign investors purchase the asset of a domestic company, establish a foreign-invested enterprise by injecting such assets and operate

The M&A Rules purport, among other things, to require offshore special purpose vehicles formed for overseas listing purposes

through acquisitions of PRC domestic companies and controlled by PRC companies or individuals, to obtain the approval of the CSRC prior

to publicly listing their securities on an overseas stock exchange.

According to the Anti-Monopoly

Law which took effect as of August 1, 2008, where the concentration of business operators reaches the filing thresholds stipulated by

the State Council, business operators shall file a declaration with the SAMR, and no concentration shall be implemented until the SAMR

clears the anti-monopoly filing.

Pursuant to the Notice of the General Office of the State Council on the Establishment of the Security

Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors and the Security Review Rules issued by the General

Office of the State Council on February 3, 2011 and became effective on March 3, 2011, mergers and acquisitions by foreign investors that

raise “national defense and security” concerns, and mergers and acquisitions through which foreign investors may acquire de

facto control over domestic enterprises that raise “national security” concerns, are subject to strict review by the PRC government

On August 25, 2011, the MOFCOM issued the Provisions of the Ministry of Commerce for the Implementation of the Security Review

System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which provides that if a foreign investor’s merger

or acquisition of a domestic enterprise falls within the scope of security review specified in the Notice of the General Office of the

State Council on the Establishment of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors,

the foreign investor shall file an application with MOFCOM for security review.

Whether a foreign investor’s merger or acquisition

of a domestic enterprise falls within the scope of security review or not shall be determined based on the substance and actual influence

of the merger or acquisition transaction.

No foreign investor is allowed to substantially avoid the security review in any way, including

but not limited to, holding shares on behalf of others, trust arrangements, multi-level reinvestment, leasing, loans, contractual control,

or overseas transactions.

On February 17, 2023, the

CSRC released Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”)

which came into effect on March 31, 2023.

Pursuant to Trial Measures, a PRC domestic company that seeks to offer and list securities in

overseas markets, either in direct or indirect overseas offering, shall fulfil the filing procedure with the CSRC per requirement of the

Trial Measures, submit relevant materials that contain a filing report and a legal opinion, and provide truthful, accurate and complete

information on the shareholder and etc.

Direct overseas offering and listing by domestic companies refers to such overseas offering and

listing by a joint-stock company incorporated domestically.

Any overseas offering and listing made by an issuer that meets both the following

conditions will be determined as indirect offering and listing in overseas market and, therefore, be subject to filing requirement:

50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated

financial statements for the most recent accounting year is accounted for by domestic companies;

and (ii) the main parts of the issuer’s

business activities are conducted in the Mainland China, or its main places of business are located in the Mainland China, or the senior

managers in charge of its business operation and management are mostly Chinese citizens or domiciled in the Mainland China.

The determination

as to whether or not an overseas offering and listing by domestic companies is indirect, shall be made on substance over form basis.

addition, initial public offerings or listings in overseas markets or subsequent securities offerings and listing of an issuer in overseas

market other than where it has offered and listed shall be filed with the CSRC within 3 working days after the relevant application is

submitted overseas.

Subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed

securities shall be filed with the CSRC within 3 working days after such offering is completed.

A PRC domestic company that seeks to directly

or indirectly list its domestic assets in overseas markets through single or multiple acquisitions, share swaps, transfers of shares or

other means, shall also fulfil the filing procedure as prescribed above.

Furthermore, upon the occurrence of any of the material events

specified below after an issuer has offered and listed securities in an overseas market, the issuer shall submit a report thereof to CSRC

within 3 working days after the occurrence and public disclosure of the event:

(i) change of control;

(ii) investigations or sanctions

imposed by overseas securities regulatory agencies or other relevant competent authorities;

(iii) change of listing status or transfer

of listing segment;

(iv) voluntary or mandatory delisting.

Where an issuer’s main business undergoes material changes after overseas

offering and listing, and is therefore beyond the scope of business stated in the filing documents, such issuer shall submit to the CSRC

an ad hoc report and a relevant legal opinion issued by a domestic law firm within 3 working days after occurrence of the changes.

the PRC Companies already listed overseas before effectiveness of Trial Measures are not required to submit any records with the CSRC

until they have successive refinancing demand or other filing requirement.

A six-month transition will be given to PRC domestic enterprises

that have obtained the approval of overseas regulatory bodies or exchanges since implementation date of the Trial Measure but have not

completed the overseas listing.

If they fail to complete the overseas listing within six months, they should file records with CSRC according

to the requirements.

The Trial Measure further stipulate that CSRC may order rectification, issue warnings, and impose a fine between

RMB1 million and RMB10 million if an applicant fails to fulfill the filing requirements with the CSRC or conducts an overseas offering

or listing in violation of the Trial Measure.

On February 24, 2023, the

CSRC, together with other PRC government authorities, released the Provisions on Strengthening the Confidentiality and Archives Administration

Related to the Overseas Securities Offering and Listing by Domestic Enterprises (the “Confidentiality and Archives Administration

Provisions”), which came into effect on March 31, 2023.

The Confidentiality and Archives Administration Provisions require, among

others, that PRC domestic enterprises seeking to offer and list securities in overseas markets, either directly or indirectly, shall establish

the confidentiality and archives system, and shall complete approval and filing procedures with competent authorities, if such PRC domestic

enterprises or their overseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets

of PRC government agencies to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities

and individuals.

It further stipulates that providing or publicly disclosing documents and materials which may adversely affect national

security or public interests, and accounting files or copies of important preservation value to the state and society shall be subject

to corresponding procedures in accordance with relevant laws and regulations.

Regulations Relating to Foreign Investment

Investment activities in the

PRC by foreign investors are principally governed by the Industry Guidelines of Encouraged Foreign Investment, or the Industry Guidelines,

effective on January 27, 2021, and the Special Administrative Measures for Entrance of Foreign Investment (Negative List), or the Negative

List, most recently amended on April 8, 2024 and effective on September 6, 2024, and together with the PRC Foreign Investment Law, which

took effect on January 1, 2020, and its respective implementation rules and ancillary regulations.

The Industry Guidelines and the Negative

List lay out the basic framework for foreign investments in China, classifying businesses into three categories with regard to foreign

“encouraged”, “restricted” and “prohibited”.

Industries not listed in the Industry Guidelines

or the Negative List are generally deemed as falling into a fourth category “permitted” unless specifically restricted by

other PRC laws.

The Negative List specifies that Investment in Internet news service, Internet publishing service, Internet audio-visual

program service, cyber culture operation (except for music) and Internet information dissemination service (except for contents opened

up in China’s WTO commitments) shall be prohibited.

According to the PRC Foreign

Investment Law, foreign investments shall enjoy pre-entry national treatment, except for those foreign-invested entities that operate

in industries deemed to be either “restricted” or “prohibited” in the “negative list.” While foreign

investors shall refrain from investing in any of the foreign “prohibited” industries, foreign-invested entities operating

in foreign “restricted” industries shall require market entry clearance and other approvals from relevant PRC governmental

Furthermore, the PRC Foreign Investment Law provides that foreign-invested enterprises that have been established before

the implementation of PRC Foreign Investment Law according to the then existing laws regulating foreign investments may maintain their

structure and corporate governance within five years after the implementation of the PRC Foreign Investment Law.

On December 19, 2020, MOFCOM

and NDRC released the Measures for the Security Review of Foreign Investments, which took effect on January 18, 2021.

For foreign investments

within the following scope, foreign investors or the relevant parties in China (hereinafter referred to collectively as the “parties

concerned”) shall take the initiative to declare to the office of the working mechanism prior to implementation of the investments:…(II)

investments in important agricultural products, important energy and resources, important equipment manufacturing, important infrastructure,

important transport services, important cultural products and services, important information technology and Internet products and services,

important financial services, key technologies and other important fields relating to national security, and obtaining the actual controlling

stake in the investee enterprise.

Prior to a decision made by the office of the working mechanism, the parties concerned shall not make

the investment.

The parties concerned shall not make the investment unless the office of the working mechanism decides that security review

is not required.

Where the declared foreign investment affects national security, a decision on prohibiting the investment shall be made.

Foreign-invested entities of the group have businesses that conduct Internet services, but not related to national security within the

scope of the regulations above.

On December 26, 2019, the

State Council promulgated the Regulations for Implementing the PRC Foreign Investment Law, which took effect on January 1, 2020.

The implementation

regulations further clarified that the State encourages and promotes foreign investments, protects the lawful rights and interests of

foreign investors, regulates foreign investment administration, continues to optimize foreign investment environment, and advances a higher-level

On December 30, 2019, MOFCOM

and SAMR jointly promulgated the Measures for Information Reporting on Foreign Investment, which became effective on January 1, 2020.

Pursuant to the Measures for Information Reporting on Foreign Investment, where a foreign investor carries out investment activities in

China directly or indirectly, the foreign investor or the foreign-invested enterprise shall submit the investment information to the competent

commerce department.

Regulations relating to Anti-Monopoly and

On September 11, 2020, the

Anti-Monopoly Commission of the State Council issued Anti-Monopoly Compliance Guideline for Business Operators, which requires business

operators to establish anti-monopoly compliance management systems under the PRC Anti-Monopoly Law to manage anti-monopoly compliance

On August 17, 2021, the State

Administration for Market Regulation, or the SAMR, issued a discussion draft of Provisions on the Prohibition of Unfair Competition on

the Internet, under which business operators should not use data or algorithms to hijack traffic or influence users’ choices, or

use technical means to illegally capture or use other business operators’ data.

Furthermore, business operators are not allowed

to (i) fabricate or spread misleading information to damage the reputation of competitors, or (ii) employ marketing practices

such as fake reviews or use coupons or “red envelopes” to entice positive ratings.

On February 7, 2021, the Anti-Monopoly

Commission of the State Council published Anti-Monopoly Guidelines for the Internet Platform Economy Sector that specified circumstances

where an activity of an internet platform will be identified as monopolistic act as well as concentration filing procedures for business

According to the PRC Anti-Monopoly Law, if a business operator carries out a concentration in violation of the law, the relevant

authority shall order the business operator to terminate the concentration, dispose of the shares or assets or transfer the business within

a specified time limit, or take other measures to restore the pre-concentration status, and impose a fine of up to RMB500,000.

On October 23, 2021, the Standing

Committee of the National People’s Congress issued a discussion draft of the amended Anti-Monopoly Law, which proposes to increase

the fines for illegal concentration of business operators to no more than ten percent of its last year’s sales revenue

if the concentration of business operator has or may have an effect of excluding or limiting competitions, or a fine of up to RMB5 million

if the concentration of business operator does not have an effect of excluding or limiting competition.

The draft also proposes that the

relevant authority shall investigate a transaction where there is any evidence that the concentration has or may have the effect of eliminating

or restricting competitions, even if such concentration does not reach the filing threshold.

Regulations Relating to Cybersecurity and

Privacy Protection

The PRC Constitution states

that PRC law protects the freedom and privacy of communications of citizens and prohibits infringement of these rights.

In recent years,

PRC government authorities have enacted legislation on the Internet use to protect personal information from any unauthorized disclosure.

Under the Several Provisions on Regulating the Market Order of Internet Information Services which was promulgated by MIIT on December

29, 2011, an Internet content service operator may not collect any user personal information or provide any such information to third

parties without the consent of a user, unless otherwise stipulated by laws and administrative regulations.

An Internet content service

operator must expressly inform the users of the method, content and purpose of the collection and processing of such user personal information

and may only collect such information necessary for the provision of its services.

An Internet content service operator is also required

to properly keep the user personal information, and in case of any leak or likely leak of the user personal information, the Internet

content service operator must take immediate remedial measures and, in severe circumstances, to make an immediate report to the telecommunication

regulatory authority.

In addition, the Decision

on Strengthening Network Information Protection, which was promulgated by the Standing Committee of NPC on December 28, 2012, provides

that electronic information that is able to identify personal identities of citizens or is concerned with personal privacy of citizens

is protected by law and shall not be unlawfully obtained or provided.

Internet content service operators collecting or using personal

electronic information of citizens shall specify purposes, manners and scopes of information collection and use, obtain the consent of

citizens concerned, and strictly keep confidential personal information collected.

Internet content service operators are prohibited from

disclosing, tampering with, damaging, selling or illegally providing others with personal information collected.

Technical and other measures

are required to be taken by Internet content service operators to prevent personal information collected from unauthorized disclosure,

damage or being lost.

Internet content service operators are subject to legal liability, including warnings, fines, confiscation of illegal

gains, revocation of licenses or filings, closing of websites concerned, public security administration punishment, criminal liabilities,

or civil liabilities, if they violate relevant provisions on Internet privacy.

Pursuant to the Order for

the Protection of Telecommunication and Internet User Personal Information which was promulgated by MIIT on July 16, 2013, any collection

and use of users’ personal information must be subject to the consent of the users, abide by the principles of legality, rationality

and necessity and be within the specified purposes, methods and scopes.

Pursuant to the Ninth Amendment to the Criminal Law which was

issued by the Standing Committee of NPC on August 29, 2015 and became effective on November 1, 2015, any Internet service provider that

fails to fulfil obligations to manage information and network security as required by applicable laws and refuses to rectify upon orders

from government authorities, will be subject to the criminal penalty if such failure (i) causes dissemination of illegal information in

(ii) causes user information leaks resulting in severe consequences;

(iii) causes serious loss of evidence to criminal investigations;

or (iv) implicates other severe circumstances.

Moreover, any individual or entity that (i) sells or provides personal information to others

in violation of applicable laws, or (ii) steals or illegally obtains any personal information, in either case implicating severe circumstances,

will be subject to the criminal penalty.

The PRC government, however, has the power and authority to order Internet content service operators

to turn over personal information if an Internet user posts any prohibited content or engages in illegal activities on the Internet.

To further regulate cybersecurity

and privacy protection, the PRC Cybersecurity Law which was promulgated by the Standing Committee of NPC on November 7, 2016 and took

effect on June 1, 2017, provides that:

subject to certain exceptions, (i) to collect and use personal information, network operators must

follow the principles of legitimacy, rightfulness, and necessity, disclose their rules of data collection and use, clearly express the

purposes, means, and scope of collecting and using the information, and obtain the consent of the persons whose data is gathered;

network operators can neither gather personal information unrelated to the services they provide, nor gather or use personal information

in violation of the provisions of laws and administrative regulations or the scopes of consent given by the persons whose data is gathered,

and must dispose of personal information they have saved in accordance with the provisions of laws and administrative regulations and

agreements reached with users;

(iii) network operators cannot divulge, tamper with, or damage the personal information they have collected,

and cannot provide the personal information to others without the consent of persons whose data is collected.

According to the PRC Cybersecurity

Law, personal information refers to all kinds of information that are recorded electronically or that can otherwise be used to independently

identify or be combined with other information to identify natural persons’ personal information, including but not limited to natural

persons’ names, dates of birth, identification numbers, biologically identified personal information, addresses, and telephone numbers.

Any Internet information services provider that violates these privacy protection requirements under the PRC Cybersecurity Law and related

laws and regulations may be ordered to turn in illegal gains generated from unlawful operations and pay a fine of no less than one but

no more than ten times of the illegal gains and may be ordered to cease the relevant business operations when the violation is serious.

On June 28, 2016, the CAC

issued the Administrative Provisions on Mobile Internet Applications Information Services, which became effective on August 1, 2016, to

further strengthen the regulation of the mobile app information services.

Pursuant to these provisions, owners or operators of mobile

apps that provide information services are required to be responsible for information security management, establish and improve the protective

mechanism for user information, observe the principles of legality, rightfulness and necessity, and expressly state the purpose, method

and scope of, and obtain user consent to, the collection and use of users’ personal information.

On May 8, 2017, the Supreme

People’s Court and the Supreme People’s Procuratorate issued the Interpretations of the Supreme People’s Court and the

Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement

of Citizens’ Personal Information, or the Personal Information Interpretations, which became effective on June 1, 2017.

Information Interpretations provides more practical conviction and sentencing criteria for the infringement of citizens’ personal

On January 23, 2019, the PRC

Office of the Central Cyberspace Affairs Commission and other three authorities jointly issued the Circular on the Special Campaign of

Correcting Unlawful Collection and Usage of Personal Information via Apps.

Pursuant to this circular, (i) app operators are prohibited

from collecting any personal information irrelevant to their services;

(ii) information collection and usage policy should be presented

in a simple and clear way, and such policy should be consented by the users voluntarily, and;

(iii) authorization from users should not

be obtained by coercing users with default or bundling clauses or making consent a condition of service.

App operators violating these

rules can be ordered by authorities to correct their noncompliance within a given period of time, be publicly reported, or ordered to

quit its operation or cancel its business license or operational permits.

On April 10, 2019, the Ministry

of Public Security promulgated the Guidelines for Internet Personal Information Security Protection, which establishes the management

mechanism, security technical measures and business workflows for personal information security protection.

On August 22, 2019, the CAC

promulgated the Provisions on the Cyber Protection of Children’s Personal Information which requires, among others, that network

operators who collect, store, use, transfer and disclose personal information of children under the age of 14 shall establish special

rules and user agreements for the protection of children’s personal information, inform the children’s guardians in a noticeable

and clear manner, and shall obtain the consent of the children’s guardians.

On November 28, 2019, the

CAC, MIIT, the Ministry of Public Security and SAMR jointly promulgated the Measures for the Determination of the Collection and Use of

Personal Information by Apps in Violation of Laws and Regulations, which provides guidance for the regulatory authorities to identify

the illegal collection and use of personal information through mobile apps, and for the app operators to conduct self-examination and

self-correction and social supervision by citizens.

On May 28, 2020, the NPC approved

the Civil Code of the PRC or the Civil Code, which came into effect on January 1, 2021.

Pursuant to the Civil Code, the personal information

of a natural person shall be protected by the law.

Any organization or individual that needs to obtain personal information of others

shall obtain such information legally and ensure the safety of such information, and shall not illegally collect, use, process or transmit

personal information of others, or illegally purchase or sell, provide or make public personal information of others.

Furthermore, information

processors shall not divulge or tamper with personal information collected or stored by them;

without the consent of a natural person,

information processors shall not illegally provide personal information of such person to others, except for information that has been

processed so that specific persons cannot be identified and that cannot be restored.

In addition, an information processor shall take

technical measures and other necessary measures to ensure the security of the personal information that is collected and stored and to

prevent the information from being divulged, tampered with or lost;

where personal information has been or may be divulged, tampered with

or lost, the information processor shall take remedial measures in a timely manner, inform the natural person concerned in accordance

with the provisions and report the case to the relevant competent department.

On August 20, 2021, the SCNPC

adopted the Personal Information Security Law, which took effect on November 1, 2021.

The Personal Information Protection Law includes

the basic rules for personal information processing, the rules for cross-border provision of personal information, the rights of individuals

in personal information processing activities, the obligations of personal information processors, and the legal responsibilities for

illegal collection, processing, and use of personal information.

As the first systematic and comprehensive law specifically for the protection

of personal information in the PRC, the Personal Information Protection Law provides, among others, that (i) an individual’s consent

shall be obtained to use sensitive personal information, such as biometric characteristics and individual location tracking, (ii) personal

information operators using sensitive personal information shall notify individuals of the necessity of such use and impact on the individual’s

rights, and (iii) where personal information operators reject an individual’s request to exercise his or her rights, the individual

may file a lawsuit with a People’s Court.

On November 14, 2021, the

CAC published the Regulations of Internet Data Security Management (Draft for Comments), which further regulate the internet data processing

activities and emphasize the supervision and management of network data security, and further stipulate the obligations of internet platform

operators, such as to establish a system for disclosure of platform rules, privacy policies and algorithmic strategies related to data.

Specifically, the draft regulations require data processors to, among others, (i) adopt immediate remediation measures when finding that

network products and services they use or provide have security defects and vulnerabilities, or threaten national security or endanger

public interest, and (ii) follow a series of detailed requirements with respect to processing of personal information, management of important

data and proposed overseas transfer of data.

In addition, the draft regulations require data processors handling important data or the

data processors to be listed overseas to complete an annual data security assessment and file a data security assessment report to applicable

Such annual assessment, as required by the draft regulations, would encompass areas including, but not limited to, the status

of important data processing, data security risks identified and the measures adopted, the effectiveness of data protection measures,

the implementation of national data security laws and regulations, data security incidents that occurred and their handling, and a security

assessment with respect to sharing and provision of important data overseas.

As of the date of this Report, the draft regulations have

been released for public comment only and have not been formally adopted.

The final provisions and the timeline for its adoption are subject

to changes and uncertainties.

Currently, our business does not involve the collection of user data,

implicate cybersecurity, or involve any other type of foreign investment restricted industry.

Regulations Relating to Intellectual Property

Patents in the PRC are principally

protected under the Patent Law of the PRC.

The duration of a patent right is either 10 years or 15 year or 20 years from the date of application,

depending on the type of patent right.

The Patent Law of the PRC and its implementation rules provide for three types of patents, namely,

“invention”, “utility model” and “design”.

Invention patents are valid for twenty years, utility model

patents are valid for fifteen years, while design patents are valid for ten years, from the date of application.

The Chinese patent system

adopts a “first-to-file” principle, which means that where more than one person files a patent application for the same invention,

a patent will be granted to the person who files the application first.

To be patentable, invention or utility models must meet three

novelty, inventiveness and practicability.

A third party must obtain consent or a proper license from the patent owner to use

Otherwise, the use constitutes an infringement of the patent rights.

copyrighted software, is principally protected under the Copyright Law of the PRC and related rules and regulations.

Under the Copyright

Law, promulgated in September 1990, implemented in June 1991, amended in October 2001, February 2010 and November 2020, and effective

on June 1, 2021 the term of protection for copyrighted software is 50 years.

The Regulation on the Protection of the Right to Communicate

Works to the Public over Information Networks, as most recently amended on January 30, 2013, provides specific rules on fair use, statutory

license, and a safe harbor for use of copyrights and copyright management technology and specifies the liabilities of various entities

for violations, including copyright holders, libraries and Internet service providers.

Registered Trademarks are

protected by the PRC Trademark Law which was adopted by the Standing Committee of NPC on August 23, 1982 and most recently amended on

April 23, 2019 as well as the Implementation Regulation of the PRC Trademark Law which was adopted by the State Council on August 3, 2002

and amended on April 29, 2014.

The Trademark Office of the National Intellectual Property Administration under SAMR handles trademark

registrations and grants a term of ten years to registered trademarks which may be renewed for consecutive ten-year periods upon request

by the trademark owner.

For licensed use of a registered trademark, the licensor shall file record of the licensing of the said trademark

with the Trademark Office, otherwise it may not defend against a bona fide third party.

The PRC Trademark Law has adopted a “first-to-file”

principle with respect to trademark registration.

Where a trademark for which a registration has been made is identical or similar to

another trademark which has already been registered or been subject to a preliminary examination and approval for use on the same kind

of or similar commodities or services, the application for registration of such trademark may be rejected.

Any person applying for the

registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark

that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s

Under PRC law, any of the

following acts will be deemed as an infringement to the exclusive right to use a registered trademark:

(i) use of a trademark that is

the same as or similar to a registered trademark for identical or similar goods without the permission of the trademark registrant;

sale of any goods that have infringed the exclusive right to use any registered trademark;

(iii) counterfeit or unauthorized production

of the label of another’s registered trademark, or sale of any such label that is counterfeited or produced without authorization;

(iv) change of any trademark of a registrant without the registrant’s consent, and selling goods bearing such replaced trademark

on the market;

or (v) other acts that have caused any other damage to another’s exclusive right to use a registered trademark.

According to the PRC Trademark

Law, in the event of any of the foregoing acts, the infringing party will be ordered to stop the infringement immediately and may be imposed

the counterfeit goods will be confiscated.

The infringing party may also be held liable for the right holder’s damages,

which will be equal to the losses suffered by the right holder as a result of the infringement, including reasonable expenses incurred

by the right holder for stopping the infringement, or the gains obtained by the infringing party if the losses are difficult to be ascertained.

If both gains and losses are difficult to be ascertained, the damages may be determined by referring to the amount of royalties for the

license of such trademarks, which will be one to five times of the royalties in the case of any serious infringement with malicious intent.

If the gains, losses and royalties are all difficult to be ascertained, the court may render a judgment awarding damages no more than

RMB5 million.

Notwithstanding the above, if a distributor does not know that the goods it sells infringe another’s registered trademark,

it will not be liable for infringement provided that the seller shall prove that the goods are lawfully obtained and identify its supplier.

Domain names are protected

under the Administrative Measures on Internet Domain Names promulgated by the MIIT on August 24, 2017 and effective as of November 1,

Domain name registrations are handled through domain name service agencies established under the relevant regulations, and applicants

become domain name holders upon successful registration.

Regulations on Foreign Currency Exchange

The principal regulations

governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, most recently amended on August 5, 2008.

Under PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments and trade and

service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the State Administration

of Foreign Exchange, or SAFE, by complying with certain procedural requirements.

By contrast, approval from or registration with appropriate

government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital account

items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments and investments in securities

outside of China.

On November 19, 2012, SAFE

promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, or

Circular 59, which substantially amends and simplifies the current foreign exchange procedure.

Pursuant to Circular 59, the opening of

various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and

guarantee accounts, the reinvestment of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign exchange profits

and dividends by a foreign-invested enterprise to its foreign stockholders no longer require the approval or verification of SAFE, and

multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously.

In 2013, SAFE specified

that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must be conducted by way

of registration and banks must process foreign exchange business relating to the direct investment in the PRC based on the registration

information provided by SAFE and its branches.

In February 2015, SAFE promulgated the Notice on Further Simplifying and Improving the

Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13.

Instead of applying for approvals regarding foreign

exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such

foreign exchange registrations from qualified banks.

The qualified banks, under the supervision of SAFE, may directly review the applications

and conduct the registration.

In March 2015, SAFE promulgated

the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise,

or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested

enterprises nationwide.

Circular 19 replaced both the Circular of the SAFE on Issues Relating to the Improvement of Business Operations

with Respect to the Administration of Foreign Exchange Capital Payment and Settlement of Foreign-invested Enterprises, or Circular 142,

and the Circular of the SAFE on Issues concerning the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign

Exchange Capitals of Foreign-invested Enterprises in Certain Areas, or Circular 36.

Circular 19 allows all foreign-invested enterprises

established in the PRC to settle their foreign exchange capital on a discretionary basis according to the actual needs of their business

operation, provides the procedures for foreign invested companies to use RMB converted from foreign currency-denominated capital for equity

investments and removes certain other restrictions that had been provided in Circular 142.

However, Circular 19 continues to prohibit

foreign-invested enterprises from, among other things, using RMB funds converted from their foreign exchange capital for expenditure beyond

their business scope and providing entrusted loans or repaying loans between non-financial enterprises.

SAFE promulgated the Notice of

the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital

Account, or Circular 16, effective June 2016, which reiterates some of the rules set forth in Circular 19.

Circular 16 provides that discretionary

foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds,

and the corresponding RMB capital converted from foreign exchange may be used to extend loans to related parties or repay inter-company

loans (including advances by third parties).

However, there are substantial uncertainties with respect to Circular 16’s interpretation

and implementation in practice.

Circular 19 or Circular 16 may delay or limit us from using the proceeds of offshore offerings to make

additional capital contributions to our Shanghai subsidiary and any violations of these circulars could result in severe monetary or other

In January 2017, SAFE promulgated

the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or

Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profits from domestic entities

to offshore entities, including (i) banks must check whether the transaction is genuine by reviewing board resolutions regarding profit

distribution, original copies of tax filing records and audited financial statements, and (ii) domestic entities must retain income to

account for previous years’ losses before remitting any profits.

Moreover, pursuant to Circular 3, domestic entities must explain

in detail the sources of capital and how the capital will be used, and provide board resolutions, contracts and other proof as a part

of the registration procedure for outbound investment.

On October 23, 2019, SAFE

issued Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment,

or the Circular 28, which took effect on the same day.

Circular 28 allows non-investment foreign-invested enterprises to use their capital

funds to make equity investments in China, provided that such investments do not violate the effective special entry management measures

for foreign investment (negative list) and the target investment projects are genuine and in compliance with laws.

Regulation on Foreign Debt

A loan made by a foreign entity

as direct or indirect shareholder in a FIE is considered to be foreign debt in China and is regulated by various laws and regulations,

including the Regulation of the People’s Republic of China on Foreign Exchange Administration, the Interim Provisions on the Management

of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions, the Detailed Rules for the Implementation of Provisional

Regulations on Statistics and Supervision of External Debt, and the Administrative Measures for Registration of Foreign Debts.

rules and regulations, a shareholder loan in the form of foreign debt made to a PRC entity does not require the prior approval of SAFE.

However, such foreign debt must be registered with and recorded by SAFE or its local branches within fifteen (15) business days after

entering into the foreign debt contract.

Pursuant to these rules and regulations, the maximum amount of the aggregate of (i) the outstanding

balance of foreign debts with a term not longer than one year, and (ii) the accumulated amount of foreign debts with a term longer than

one year, of a FIE shall not exceed the difference between its registered total investment and its registered capital, or Total Investment

and Registered Capital Balance.

On January 12, 2017, the People’s

Bank of China, or PBOC, promulgated the Notice of the People’s Bank of China on Matters concerning the Macro-Prudential Management

of Full-Covered Cross-Border Financing, or PBOC Circular 9, which sets forth an upper limit for PRC entities, including FIEs and domestic

enterprises, regarding their foreign debts.

Pursuant to PBOC Circular 9, the outstanding cross-border financing of an enterprise (the

outstanding balance drawn, here and below) shall be calculated using a risk-weighted approach, or Risk-Weighted Approach, and shall not

exceed the specified upper limit, namely:

risk-weighted outstanding cross-border financing £ the upper limit of risk-weighted outstanding

cross-border financing.

Risk-weighted outstanding cross-border financing =∑ outstanding amount of RMB and foreign currency denominated

cross-border financing * maturity risk conversion factor * type risk conversion factor +∑ outstanding foreign currency denominated

cross-border financing * exchange rate risk conversion factor.

Maturity risk conversion factor shall be 1 for medium- and long-term cross-border

financing with a term of more than one year and 1.5 for short-term cross-border financing with a term of one year or less than one year.

Type risk conversion factor shall be 1 for on-balance-sheet financing and 1 for off-balance-sheet financing (contingent liabilities) for

the time being.

Exchange rate risk conversion factor shall be 0.5.

The PBOC Circular 9 further provides that the upper limit of risk-weighted

outstanding cross-border financing for enterprises, or Net Asset Limits, shall be 200% of its net assets.

The PBOC Circular 9 does not

supersede the Interim Provisions on the Management of Foreign Debts, but rather serves as a supplement to it.

PBOC Circular 9 provided

for a one-year transitional period, or the Transitional Period, from its promulgation date for FIEs, during which period FIEs could choose

to calculate their maximum amount of foreign debt based on either (i) the Total Investment and Registered Capital Balance, or (ii) the

Risk-Weighted Approach and the Net Asset Limits.

Under the PBOC Circular 9, after the Transitional Period ends on January 11, 2018, the

PBOC and SAFE will determine the cross-border financing administration mechanism for the foreign-invested enterprises after evaluating

the overall implementation of PBOC Circular 9.

In addition, according to PBOC Circular 9, a foreign loan must be filed with SAFE through

the online filing system of SAFE after the loan agreement is signed and at least three business days prior to the borrower withdraws any

amount from such foreign loan.

Regulations Relating to Dividend Distributions

According to the PRC Company

Law and Foreign Investment Law, each of our Shanghai subsidiary, as a foreign invested enterprise, or FIE, is required to draw 10% of

its after-tax profits each year, if any, to fund a common reserve, which may stop drawing its after-tax profits if the aggregate balance

of the common reserve has already accounted for over 50% of its registered capital.

These reserves are not distributable as cash dividends.

Furthermore, under the EIT Law, which became effective in January 2008, the maximum tax rate for the withholding tax imposed on dividend

payments from PRC foreign invested companies to their overseas investors that are not regarded as “resident” for tax purposes

The rate was reduced to 10% under the Implementing Regulations for the EIT Law issued by the State Council.

However, a lower withholding

tax rate might be applied if there is a tax treaty between China and the jurisdiction of the foreign holding companies, such as tax rate

of 5% in the case of Hong Kong companies that holds at least 25% of the equity interests in the foreign-invested enterprise, and certain

requirements specified by PRC tax authorities are satisfied.

Regulations Relating to Employment, Social

Insurance and housing fund

The Labor Law and The Labor

Contract Law provide requirements concerning employment contracts between an employer and its employees.

If an employer fails to enter

into a written employment contract with an employee within one year from the date on which the employment relationship is established,

the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the

employee’s salary for the period from the day following the lapse of one month from the date of establishment of the employment

relationship to the day prior to the execution of the written employment contract.

All employers must comply with local minimum wage standards.

The Labor Contract Law and its implementation rules also require compensation to be paid upon certain terminations, which significantly

affects the cost of reducing workforce for employers.

In addition, if an employer intends to enforce a non-compete provision with an employee

in an employment contract or non-competition agreement, it has to compensate the employee on a monthly basis during the term of the restriction

period after the termination or ending of the labor contract.

Employers in most cases are also required to provide a severance payment

to their employees after their employment relationship are terminated.

Violations of the PRC Labor Contract Law and the PRC Labor Law

may result in the imposition of fines and other administrative and criminal liability in the case of serious violations.

Enterprises in China are required

by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan,

a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing

provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances,

of the employees as specified by the local government from time to time at locations where they operate their businesses or where they

According to the Social Insurance Law, an employer that fails to make social insurance contributions may be ordered to pay

the required contributions within a stipulated deadline and be subject to a late fee.

If the employer still fails to rectify the failure

to make social insurance contributions within the stipulated deadline, it may be subject to a fine ranging from one to three times the

amount overdue.

According to the Regulations on Management of Housing Fund, an enterprise that fails to make housing fund contributions

may be ordered to rectify the noncompliance and pay the required contributions within a stipulated deadline;

otherwise, an application

may be made to a local court for compulsory enforcement.

Regulations on Taxes

Enterprise Income Tax

Under the Enterprise Income

Tax Law of the PRC, or the EIT Law, which became effective on January 1, 2008 and was subsequently amended on February 24, 2017 and December

29, 2018, and its implementing rules, enterprises are classified as resident enterprises and non-resident enterprises.

PRC resident enterprises

typically pay an enterprise income tax at the rate of 25% while non-PRC resident enterprises without any branches in the PRC should pay

an enterprise income tax in connection with their income from the PRC at the tax rate of 10%.

An enterprise established outside of the

PRC with its “de facto management bodies” located within the PRC is considered a “resident enterprise,” meaning

that it can be treated in a manner similar to a PRC domestic enterprise for enterprise income tax purposes.

The implementing rules of

the EIT Law define a de facto management body as a managing body that in practice exercises “substantial and overall management

and control over the production and operations, personnel, accounting, and properties” of the enterprise.

Enterprises qualified

as “High and New Technology Enterprises” are entitled to a 15% enterprise income tax rate rather than the 25% uniform statutory

The preferential tax treatment continues as long as an enterprise can retain its “High and New Technology Enterprise”

The EIT Law and the implementation

rules provide that an income tax rate of 10% should normally be applicable to dividends payable to investors that are “non-resident

enterprises,” and gains derived by such investors, which (a) do not have an establishment or place of business in the PRC or (b)

have an establishment or place of business in the PRC, but the relevant income is not effectively connected with the establishment or

place of business to the extent such dividends and gains are derived from sources within the PRC.

Such income tax on the dividends may

be reduced pursuant to a tax treaty between China and other jurisdictions.

Pursuant to the Arrangement Between the Mainland of China and

the Hong Kong Special Administrative Region for the Avoidance of Double Taxation on Income, or the Double Tax Avoidance Arrangement, and

other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant

conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends

the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5% upon receiving approval from in-charge

tax authority.

However, based on the Notice on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties issued

on February 20, 2009 by the SAT, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such

reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential

tax treatment;

and based on the Announcement on Relevant Issues Concerning the “Beneficial Owners” in Tax Treaties issued

on February 3, 2018 by the SAT and effective from April 1, 2018, which replaces the Notice on the Interpretation and Recognition of Beneficial

Owners in Tax Treaties and the Announcement on the Recognition of Beneficial Owners in Tax Treaties by the SAT, comprehensive analysis

based on the stipulated factor therein and actual circumstances shall be adopted when recognizing the “beneficial owner” and

agents and designated wire beneficiaries are specifically excluded from being recognized as “beneficial owners.”

On January 17, 2019, the State

Taxation Administration issued the notice on the scope of small-scale and low-profit corporate income tax preferential policies of the

Ministry of Finance and the State Administration of Taxation (“MOF and SAT”), [2019] No.

13 for small-scale and low-profit

enterprises whose annual taxable income is less than RMB1,000,000 (including RMB1,000,000), approximately $142,209, their income is reduced

by 25% to the taxable income, and enterprise income tax is paid at 20% tax rate, which is essentially resulting in a favorable income

tax rate of 5%.

While for the portion of annual taxable income exceeding RMB1,000,000, approximately $142,209, but not more than RMB3,000,000,

approximately $426,627, the income is reduced by 50% to the taxable income, and enterprise income tax is paid at 20% tax rate, which is

essentially resulting in a favorable income tax rate of 10%.

On April 9, 2021, MOF and SAT issued [2021] No.12 which provides an enterprise

income tax rate of 2.5% on a small-scale and low-profit enterprises whose annual taxable income less than RMB1,000,000, approximately

$142,209, from January 1, 2021 to December 31, 2022.

MOF and SAT [2022] No.13, issued on May 29, 2023, also provides an enterprise income

tax rate of 5% on a small-scale and low-profit enterprises whose annual taxable income more than RMB1,000,000, approximately $142,209,

but not more than RMB3,000,000, approximately $426,627, from January 1, 2022 to December 31, 2024.

The qualifications of small-scale and

low-profit enterprises were examined annually by the Tax Bureau.

All of the Company’s Shanghai subsidiary met the criteria of small-scale

and low-profit enterprises.

Value-added Tax

Pursuant to applicable PRC

tax regulations, any entity or individual conducting business in the service industry used to be generally required to pay a business

tax at the rate of 5% on the revenues generated from providing such services.

However, if the services provided are related to technology

development and transfer, such business tax may be exempted subject to approval by the relevant tax authorities.

Whereas, pursuant to

the Provisional Regulations on Value-Added Tax of the PRC and its implementation regulations, unless otherwise specified by relevant laws

and regulations, any entity or individual engaged in the sales of goods, provision of processing, repairs and replacement services and

importation of goods into China is generally required to pay a value-added tax, or VAT, for revenues generated from sales of products,

while qualified input VAT paid on taxable purchase can be offset against such output VAT.

In November 2011, the Ministry

of Finance and the State Administration of Taxation promulgated the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax.

In March 2016, the Ministry of Finance and the State Administration of Taxation further promulgated the Notice on Fully Promoting the

Pilot Plan for Replacing Business Tax by Value-Added Tax, which became effective on May 1, 2016.

Pursuant to the pilot plan and relevant

notices, VAT is generally imposed in lieu of business tax in the modern service industries, including the VATS, on a nationwide basis.

VAT of a rate of 6% applies to revenue derived from the provision of some modern services.

Certain small taxpayers under PRC law are subject

to reduced value-added tax at a rate of 3%.

Unlike business tax, a taxpayer is allowed to offset the qualified input VAT paid on taxable

purchases against the output VAT chargeable on the modern services provided.

On April 4, 2018, the Ministry

of Finance and the State Administration of Taxation issued the Notice on Adjustment of VAT Rates, which came into effect on May 1, 2018.

According to the abovementioned notice, the taxable goods previously subject to VAT rates of 17% and 11%, respectively, become subject

to lower VAT rates of 16% and 10%, respectively, starting from May 1, 2018.

Furthermore, according to the Announcement on Relevant Policies

for Deepening Value-added Tax Reform jointly promulgated by the Ministry of Finance, the State Administration of Taxation and the General

Administration of Customs, which became effective on April 1, 2019, the taxable goods previously subject to VAT rates of 16% and 10%,

respectively, become subject to lower VAT rates of 13% and 9%, respectively, starting from April 1, 2019.

Under Provisional Regulations

of the People’s Republic of China on Value-added Tax, amended and effective on November 19, 2017, for entities that are VAT small

taxpayers, VAT is levied at a levy rate of 3%.

On February 29, 2020, the State Administration of Taxation issued the Announcement on Taxation

Matters to Support Individual Businesses in Resumption of Business, during the COVID-19, the small taxpayers are allowed to enjoy the

preferred tax policy, tax rate from 3% to 1% for the period from March 1, 2020 to December 31, 2021.

Regulations Relating to Artificial Intelligence

The PRC has adopted a series of regulations that govern the provision of algorithm-based, deep synthesis and generative artificial intelligence (“AI”) services to the public within the PRC.

These regulations are administered principally by the Cyberspace Administration of China (the “CAC”), together with other authorities.

They supplement the general framework established by the PRC Cybersecurity Law, the PRC Data Security Law and the PRC Personal Information Protection Law.

The principal AI-specific regulations are summarized below.

Provisions on the Administration of Algorithm Recommendation for Internet Information Services.

On December 31, 2021, the CAC, the Ministry of Industry and Information Technology (the “MIIT”), the Ministry of Public Security (the “MPS”) and the State Administration for Market Regulation jointly issued the Provisions on the Administration of Algorithm Recommendation for Internet Information Services (the “Algorithm Recommendation Provisions”), which became effective on March 1, 2022.

The Algorithm Recommendation Provisions apply to the use of algorithm recommendation technologies to provide internet information services within the PRC.

These technologies include generation and synthesis, personalized push, sorting and selection, search and filtering, and dispatching and decision-making algorithms.

Service providers must, among other things, assume primary responsibility for algorithm security;

establish management systems for algorithm review, data security, personal information protection and emergency response;

regularly review and evaluate their algorithm mechanisms, models, data and outcomes;

and refrain from using algorithms to generate false information or to manipulate rankings or search results.

Providers must also disclose the basic principles, purposes and main operating mechanisms of their algorithm recommendation services and allow users to turn off personalized recommendations.

Providers of services with “public opinion attributes or social mobilization capabilities” must file their algorithms with the CAC through its algorithm filing system within ten working days after they begin providing services, and must conduct security assessments in accordance with relevant regulations.

Violations may result in warnings, orders to rectify, suspension of information updates and fines.

Provisions on the Administration of Deep Synthesis of Internet Information Services.

On November 25, 2022, the CAC, the MIIT and the MPS jointly issued the Provisions on the Administration of Deep Synthesis of Internet Information Services (the “Deep Synthesis Provisions”), which became effective on January 10, 2023.

“Deep synthesis technology” refers to technologies that use deep learning, virtual reality and other generative synthesis algorithms to produce text, images, audio, video, virtual scenes and other network information.

The Deep Synthesis Provisions impose obligations on deep synthesis service providers, technical supporters and users.

Service providers must, among other things, verify users’ real identities;

establish systems for content review, data security, personal information protection and the prevention of fraud;

strengthen the management of training data and ensure its security;

and review and evaluate their generation and synthesis models and algorithms.

Where a service provides editing functions for biometric information such as faces or voices, providers must notify users and obtain consent from the individuals whose information is edited.

Content generated or edited using deep synthesis services must be labeled in a manner that does not affect use, and content that may cause public confusion or misidentification must carry a prominent label.

Deep synthesis service providers and technical supporters are also subject to the algorithm filing requirements of the Algorithm Recommendation Provisions.

Interim Measures for the Management of Generative Artificial Intelligence Services.

On July 10, 2023, the CAC, together with the National Development and Reform Commission, the Ministry of Education, the Ministry of Science and Technology, the MIIT, the MPS and the National Radio and Television Administration (the “NRTA”), jointly issued the Interim Measures for the Management of Generative Artificial Intelligence Services (the “Generative AI Measures”), which became effective on August 15, 2023.

The Generative AI Measures apply to the use of generative AI technologies to provide services that generate text, images, audio, video and other content to the public within the PRC.

They do not apply to industry organizations, enterprises, academic and research institutions or public cultural institutions that research, develop and apply generative AI technologies without providing generative AI services to the public within the PRC.

Under the Generative AI Measures, providers must, among other things, use training data and foundation models from lawful sources;

refrain from infringing the intellectual property rights of others;

obtain consent or have another lawful basis for processing personal information;

and take effective measures to improve the quality of training data, including its truthfulness, accuracy, objectivity and diversity.

Providers bear responsibility as producers of online information content, must enter into service agreements with users, must label generated content in accordance with the Deep Synthesis Provisions, and must establish mechanisms to handle complaints and to promptly address illegal content.

Providers of generative AI services with public opinion attributes or social mobilization capabilities must conduct security assessments and complete algorithm filings.

Where generative AI services provided from outside the PRC to the public within the PRC do not comply with PRC laws and regulations, the CAC may notify the relevant authorities to take technical and other necessary measures.

Violations are punishable under the PRC Cybersecurity Law, the PRC Data Security Law, the PRC Personal Information Protection Law and other applicable laws.

Measures for Labeling Artificial Intelligence-Generated Synthetic Content.

In March 2025, the CAC, the MIIT, the MPS and the NRTA jointly issued the Measures for Labeling Artificial Intelligence-Generated Synthetic Content (the “Labeling Measures”), which became effective on September 1, 2025.

A related mandatory national standard, Cybersecurity Technology – Labeling Method for Content Generated by Artificial Intelligence (GB 45438-2025), took effect on the same date.

The Labeling Measures require providers of internet information services that generate or synthesize text, images, audio, video, virtual scenes and other content to add explicit labels to such content where required.

Explicit labels are labels, such as text, audio or graphics, that users can readily perceive.

Providers must also add implicit labels, such as metadata identifying the content as AI-generated and identifying the provider, to the files of generated content.

Online content distribution platforms must take measures to detect and verify such labels and to alert the public to content that is or may be AI-generated.

Providers may not delete, alter, falsify or conceal required labels.

Providers must also specify labeling requirements in their user service agreements and must provide labeling-related materials when completing algorithm filings or security assessments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business