What changed in this filing

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Item 1A. Risk Factors

2026-06-05 compared with 2025-04-14 · 161 added, 202 removed, 604 unchanged (38% of the section changed)

Risk Factors.

are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information

under this item.

We reserve the right not to provide risk factors in our future filings.

investment in our common stock involves a high degree of risk.

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stock to decline, resulting in a loss of all or part of your investment.

RELATD TO OUR BUSINESS

RELATED TO OUR BUSINESS

INDEPENDENT ACCOUNTANTS HAVE ISSUED A GOING CONCERN OPINION AND IF WE CANNOT OBTAIN ADDITIONAL FINANCING AND/OR REDUCE OUR OPERATING

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and liquidation of liabilities in the normal course of business.

The Company had a total stockholder’s equity of $2,938,502

and a deficit working capital of $3,240,008 and an accumulated deficit of $27,443,231 as of December 31, 2024, and used $3,560,950

in net cash from operating activities for the year ended December 31, 2024.

The Company had a total stockholder’s equity of $6,246,597 and

a working capital of $260,863 and an accumulated deficit of $35,299,999 as of December 31, 2025, and used $7,922,347 in net cash from

operating activities for the year ended December 31, 2025.

the fiscal year ending December 31, 2025, our company reported a net loss of $6,808,895 compared to a net loss of $4,550,296 for the

The reduction in net loss for 2024 is primarily attributed to several key factors, including our strategic expansion into

higher-margin waste-to-energy business unit, also a reduction in interest and financing fees compared to the previous year.

persistently high interest rates, we are actively exploring more cost-effective financing options moving forward.

year 2024 (Restated).

The increase in net loss during 2025 was primarily attributable to non-cash and non-operating items, including

losses related to debt settlement and write down, changes in derivative liabilities, and higher interest and financing-related expenses.

the increase in net loss, the Company improved its operating performance, with loss from operations decreasing from approximately $3.33

million in 2024 to approximately $2.50 million in 2025.

The improvement was primarily driven by continued strategic expansion into higher-margin

waste-to-energy opportunities, improved operational efficiencies, and reduced operating expenses in certain categories.

Company continues to evaluate more cost-effective financing alternatives and strategic capital solutions moving forward.

our financial statements have been prepared under the assumption that we would continue our operations as a going concern, there is substantial

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FOR WORKING CAPITAL, CAPITAL EXPENDITURES AND TO MEET OUR DEBT SERVICE OBLIGATIONS.

of December 31, 2024, we had current liabilities of $6,438,099 and total current assets of $3,198,091.

As of December 31, 2025, we had current liabilities of $5,995,088 and total

current assets of $6,255,951.

debt could limit our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, or

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payments, or if we fail to comply with covenants in our revolving lines of credit, we will be in default.

MAY ONCE AGAIN IN THE FUTURE RELY ON CONTRACTUAL ARRANGEMENTS TO OBTAIN CONTROL OF A VIE, WHICH MAY NOT BE AS EFFECTIVE IN PROVIDING

OPERATIONAL CONTROL AS DIRECT OWNERSHIP.

January 1, 2023, we entered into the CAA with SSET and Xiangyueheng, two other shareholders of Shuya, wherein the three parties agreed

to vote in unison at the shareholders’ meeting of Shuya to consolidate the controlling position of the three parties in Shuya.

We relied on such contractual arrangement to gain effective control of Shuya and consolidated Shuya into our consolidated financial statements

effective on or after January 1, 2023.

After the termination of such contractual arrangements on January 1, 2024, we no longer consolidate

Shuya into our consolidated financial statements.

See “ Prospectus Summary – Corporate Information ” for details.

However, in the event that we once again employ a similar VIE structure in the future, you should be aware that a controlling financial

interest through contractual arrangements is not considered as equal to equity interest and this structure involves unique risks to investors.

If we had more than 50% equity ownership of the VIE, we would be able to exercise our rights as a shareholder to effect changes in the

board of directors of the VIE, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management

and operational level.

However, under the contractual arrangement, we relied on the performance by the other external parties of their

obligations under the contract to exercise control over the VIE.

The other parties may not perform their obligations under the contract.

All of such contractual arrangements are governed by and interpreted in accordance with PRC laws, and disputes arising from these contractual

arrangements will be resolved through arbitration or litigation in the PRC.

However, the legal system in the PRC is not as developed

as in other jurisdictions, such as the United States.

There remain significant uncertainties regarding the outcome of arbitration or

These uncertainties could limit our ability to enforce the contractual arrangement.

In the event we are unable to enforce

the terms of contractual arrangement or we experience significant delays or other obstacles in the process of enforcing such agreement,

we may not be able to exert control over the VIE and may lose control over the assets owned by the VIE.

Our financial performance may

be materially and adversely affected as a result and we may not be eligible to consolidate the financial results of the VIE into our

consolidated financial results.

ARE NOT CURRENTLY IN COMPLIANCE WITH NASDAQ’S MINIMUM BID PRICE LISTING REQUIREMENT OR NASDAQ’S ANNUAL SHAREHOLDER MEETING

LISTING REQUIREMENT;

IF WE ARE NOT ABLE TO REGAIN COMPLIANCE WITH THOSE REQUIREMENTS WITHIN THE TIME PERIODS PERMITTED BY NASDAQ, OUR

COMMON STOCK MAY BE DELISTED, WHICH WOULD LIKELY IMPAIR OUR ABILITY TO RAISE CAPITAL AND COULD CONSTITUTE AN EVENT OF DEFAULT UNDER OUR

OUTSTANDING PROMISSORY NOTES.

have previously received Nasdaq deficiency notices, and future non-compliance with Nasdaq listing requirements could result in delisting;

if we are not able to regain compliance with those requirements within the time periods permitted by Nasdaq, our common stock may be

delisted, which would likely impair our ability to raise capital and could constitute an event of default under our outstanding promissory

November 5, 2024, the Company received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”)

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stock for the prior 30 consecutive business days, the Company no longer met this requirement.

The Nasdaq rules provided the Company a

compliance period of 180 calendar days from the date of the notice (or until May 5, 2025) in which to regain compliance with the Minimum

Bid Price Requirement.

The Nasdaq rules initially provided the

Company a compliance period of 180 calendar days from the date of the notice (or until May 5, 2025) in which to regain compliance with

the Minimum Bid Price Requirement.

On May 7, 2025, Nasdaq granted the Company an additional 180-day extension (or until November 3, 2025)

to regain compliance with the Minimum Bid Price Requirement.

assist in regaining compliance with the Minimum Bid Price Requirement, the Company effected a 1-for-15 reverse stock split of its issued

and outstanding common stock on October 6, 2025.

As a result of the reverse stock split and the subsequent increase in the market price

of the Company’s common stock, the Company regained compliance with the Minimum Bid Price Requirement.

Nasdaq subsequently notified the

Company on October 20, 2025 that it had regained compliance with Nasdaq Listing Rule 5550(a)(2), and the matter was closed.

January 8, 2025, the Company received a written notice from Nasdaq indicating that the Company was not in compliance with Nasdaq’s

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an extension of until June 3, 2025, to regain compliance with the Annual Shareholder Meeting Requirement.

is no guarantee that the Company will be able to regain compliance with either the Minimum Bid Price Requirement or the Annual Shareholder

Meeting Requirement.

If the Company’s common stock ultimately were to be delisted for any reason, including because the Company

cannot regain compliance with the Minimum Bid Price Requirement or the Annual Shareholder Meeting Requirement, it could negatively impact

the Company by (i) reducing the liquidity and market price of the Company’s common stock;

(ii) reducing the number of investors

willing to hold or acquire the Company’s common stock, which could negatively impact the Company’s ability to raise equity

(iii) limiting the Company’s ability to use a registration statement to offer and sell freely tradable securities, thereby

preventing the Company from accessing the public capital markets;

and (iv) impairing the Company’s ability to provide equity incentives

to its employees.

Additionally, delisting of the Company’s common stock from the Nasdaq Capital Market could constitute an event

of default under its outstanding convertible promissory notes, resulting in those notes becoming immediately due and payable, and resulting

in default penalties being applied to those notes.

On April 30, 2025, the Company

held its annual meeting of shareholders, and the Company regained compliance with the Annual Shareholder Meeting Requirement.

There is no assurance that the Company will continue to satisfy Nasdaq’s continued listing requirements in

If the Company’s common

stock ultimately were to be delisted for any reason, including because the Company cannot regain compliance with the Minimum Bid Price

Requirement, it could negatively impact the Company by (i) reducing the liquidity and market price of the Company’s common stock;

(ii) reducing the number of investors willing to hold or acquire the Company’s common stock, which could negatively impact the

Company’s ability to raise equity financing;

(iii) limiting the Company’s ability to use a registration statement to offer

and sell freely tradable securities, thereby preventing the Company from accessing the public capital markets;

and (iv) impairing the

Company’s ability to provide equity incentives to its employees.

Additionally, delisting of the Company’s common stock from

the Nasdaq Capital Market could constitute an event of default under its outstanding convertible promissory notes, resulting in those

notes becoming immediately due and payable, and resulting in default penalties being applied to those notes.

BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION MAY BE ADVERSELY AFFECTED BY PUBLIC HEALTH EPIDEMICS.

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DEMAND FOR THE PRODUCTS AND SERVICES THAT THE COMPANY OFFERS SLOWS, OUR BUSINESS WOULD BE MATERIALLY AFFECTED.

for products which it intends to sell depends on many factors, including:

economy, and in periods of rapidly declining economic conditions, customers may defer purchases or may choose alternate products;

for products which the company intends to sell depends on many factors, including:

economy, and in periods of rapidly declining economic conditions, customers may defer purchases

or may choose alternate products;

cost of oil, gas and solar energy;

competitive environment in the heat to power sectors may force us to reduce prices below our desired pricing level or increase promotional

ability to maintain efficient, timely and cost-effective production and delivery of the products and services;

of these factors could result in immediate and longer term declines in the demand for the products and services that we offer, which

could adversely affect our sales, cash flows and overall financial condition.

competitive environment in the heat to power sectors may force us to reduce prices below

our desired pricing level or increase promotional spending or both;

ability to maintain efficient, timely and cost-effective production and delivery of the products

and services;

of these factors could result in immediate and longer term declines in the demand for the

products and services that we offer, which could adversely affect our sales, cash flows and

overall financial condition.

OPERATE IN A HIGHLY COMPETITIVE MARKET.

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technologies, both existing at the current time and in the future.

If this happens, our sales and revenues will decline, or fail to develop

If this happens, our sales and revenues may decline, or fail to develop

In addition, our current and potential competitors may establish cooperative relationships with larger companies to gain access

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and export license requirements, tariffs, taxes and other barriers;

of customizing products for foreign countries;

costs of customizing products for foreign countries;

difficulty in managing inventory;

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and costs of staffing and managing foreign operations.

or all of these factors could adversely affect our ability to execute any geographic expansion strategies or have a material adverse

effect on our business and results of operations.

or all of these factors could adversely affect our ability to execute any geographic expansion strategies or could have a material

adverse effect on our business and results of operations.

PRODUCTS MAY BE DISPLACED BY NEWER TECHNOLOGY.

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Accordingly, our success will depend, in part, on our ability to respond quickly to technological changes.

We may, however,

not have the resources to do this.

MUST HIRE QUALIFIED ENGINEERING, DEVELOPMENT AND PROFESSIONAL SERVICES PERSONNEL.

cannot be certain that we can attract or retain a sufficient number of highly qualified mechanical engineers, industrial technology and

manufacturing process developers and professional services personnel.

To deploy our products quickly and efficiently, and effectively

maintain and enhance them, we will require an increasing number of technology developers.

We expect customers that license our technology

will typically engage our professional engineering staff to assist with support, training, consulting and implementation.

that growth in sales depends on our ability to provide our customers with these services and to attract and educate third-party consultants

to provide similar services.

As a result, we plan to hire professional services personnel to meet these needs.

New technical and professional

services personnel will require training and education and it will take time for them to reach full productivity.

To meet our needs for

engineers and professional services personnel, we also may use costlier third-party contractors and consultants to supplement our own

Competition for qualified personnel is intense, particularly because our technology is specialized and only a limited number of

individuals have acquired the needed skills.

Additionally, we will rely on third-party implementation providers for these services.

business may be harmed if we are unable to establish and maintain relationships with third-party implementation providers.

cannot be certain that we can attract or retain a sufficient number of highly qualified mechanical engineers, industrial technology

and manufacturing process developers and professional services personnel.

To deploy our products quickly and efficiently, and

effectively maintain and enhance them, we will require an increasing number of technology developers.

We expect customers that

license our technology will typically engage our professional engineering staff to assist with support, training, consulting and

implementation.

We believe that growth in sales depends on our ability to provide our customers with these services and to attract

and educate third-party consultants to provide similar services.

As a result, we plan to hire professional services personnel to

meet these needs.

New technical and professional services personnel will require training and education, and it will take time for

them to reach full productivity.

To meet our needs for engineers and professional services personnel, we also may use costlier

third-party contractors and consultants to supplement our own staff.

Competition for qualified personnel is intense, particularly

because our technology is specialized and only a limited number of individuals have acquired the needed skills.

Additionally, we

will rely on third-party implementation providers for these services.

Our business may be harmed if we are unable to establish and

maintain relationships with third-party implementation providers.

MAY BE ADVERSELY AFFECTED BY SHORTAGES OF REQUIRED COMPONENTS.

IN ADDITION, WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS TO PROCURE OUR

PARTS FOR PRODUCTION WHICH IF AVAILABILITY OF PRODUCTS BECOMES COMPROMISED IT COULD ADD TO OUR COST OF GOODS SOLD AND AFFECT OUR REVENUE

PARTS FOR PRODUCTION WHICH IF AVAILABILITY OF PRODUCTS BECOMES COMPROMISED, COULD ADD TO OUR COST OF GOODS SOLD AND AFFECT OUR REVENUE

various times, there have been shortages of some of the components that we use, as a result of strong demand for those components or

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OUR SHAREHOLDERS.

principal shareholders, directors and executive officers in the aggregate, beneficially own more than 50% our outstanding

common stock on a fully diluted basis as of the date of the filing of this annual report.

These shareholders, if acting together, will be able to exert substantial influence over all

matters requiring approval of our shareholders, including amendments to our Articles of Incorporation, fundamental corporate

transactions such as mergers, acquisitions, the sale of the company, and other matters involving the direction of our business and

affairs and specifically the ability to determine the members of our board of directors.

(See “Security Ownership of Certain

Beneficial Owners and Managements”).

principal shareholders, directors and executive officers in the aggregate, beneficially own more than 50% of our outstanding common

stock on a fully diluted basis as of the date of the filing of this annual report.

These shareholders, if acting together, will be

able to exert substantial influence over all matters requiring approval of our shareholders, including amendments to our Articles of

Incorporation, fundamental corporate transactions such as mergers, acquisitions, the sale of the company, and other matters

involving the direction of our business and affairs and specifically the ability to determine the members of our board of directors.

(See “Security Ownership of Certain Beneficial Owners and Managements”).

WE LOSE KEY SENIOR MANAGEMENT PERSONNEL, OUR BUSINESS COULD BE NEGATIVELY AFFECTED.

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AND PROFITABILITY IN A PARTICULAR QUARTER.

timing of our sales and related customer contract fulfillment is difficult to predict.

timing of our sales and related customer contract fulfillment are difficult to predict.

Many of our customers are large enterprises, whose

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things, the cost of our products, gross margins, operating results, financial condition, and cash flows.

SALES AND PROFITABLITY OF OPERATIONS IN THE UNITED STATES AND IN THE PRC ARE DEPENDANT ON THE PRICE OF OIL AND NATURAL GAS.

SALES AND PROFITABLITY OF OPERATIONS IN THE UNITED STATES AND IN THE PRC ARE DEPENDENT ON THE PRICE OF OIL AND NATURAL GAS.

Waste Heat Recovery products and Waste Recovery products are dependent on the prices of traditional energy sources.

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As the price of energy increases, the economic justification for our products increases.

At the same time, as the price for traditional fuel decreases, there is less incentive for customers to purchase our products and it

may impair our ability to sell our products.

THE SPOT PRICE OF NG IN CHINA DROPS BELIOW THE PURCHASE PRICE OUR TRADERS NETOTIATE WITH OUR SUPPLIERS, WE MAY NOT BE ABLE TO SELL OUR

At the same time, as the price for traditional fuel decreases, there is less incentive for customers to purchase our products and may impair our ability to sell our products.

THE SPOT PRICE OF NG IN CHINA DROPS BELOW THE PURCHASE PRICE OUR TRADERS NEGOTIATE WITH OUR SUPPLIERS, WE MAY NOT BE ABLE TO SELL OUR

LNG OR MAY HAVE TO SELL IT AT A LOSS.

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sufficient funds, we may not be able to conduct trading operations.

WASTE TO ENERGY PRODUCTS FROM ENEX HAVE NOT BEEN TESTED IN THE UNITED STATES AND DEPEND ON DATA OBTAINED FROM OPERATIONS IN THE UKRAINE

HTAP 5 and 10 have not been installed in the United States.

In order to commence sales, our purchasers will need to accept data from

Russia or the Ukraine that they may not deem reliable.

We cannot give any assurances that we will be able to finance the bonds or find

an EPC willing to guaranty performance.

IMPLEMENTAION OF OUR WASTE TO ENERGY JOINT VENTURES DEPENDS ON US FINDING FUNDING FO THE PROJECTS.

order to implement the ENEX system in our waste to energy joint ventures, we will need to finance directly or obtain third party financing

WASTE TO ENERGY PRODUCTS FROM UKRAINE AND RUSSIA HAVE NOT BEEN TESTED IN THE UNITED STATES AND DEPEND ON DATA OBTAINED FROM

OPERATIONS IN THE UKRAINE AND RUSSIA.

5 and 10 have not been installed in the United States.

In order to commence sales, our purchasers will need to accept data from Russia

or the Ukraine that they may not deem reliable.

We cannot give any assurances that we will be able to finance the bonds or find an EPC

willing to guarantee performance.

IMPLEMENTATION OF OUR WASTE TO ENERGY JOINT VENTURES DEPENDS ON US FINDING FUNDING FOR THE PROJECTS.

order to implement the HTAP system in our waste to energy joint ventures, we will need to finance directly or obtain third party financing

for these projects.

We cannot give any assurances that we will be able to directly finance these projects or be able to find a third

party to provide financing to them.

party to provide financing for them.

If we are not able to finance the projects, we will not be able to implement our business plan in

IN EXCHANGE RATES COULD HAVE A AN EFFECT ON THE RESULTS OF OPERATIONS OF OUR HONG KONG AND CHINA SUBSIDIARIES.

IN EXCHANGE RATES COULD HAVE AN EFFECT ON THE RESULTS OF OPERATIONS OF OUR HONG KONG AND CHINA SUBSIDIARIES.

value of the Renminbi against the U.S.

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In the fourth quarter of 2016, the Renminbi has depreciated significantly

in the backdrop of a surging U.S.

dollar and persistent capital outflows of China.

against the backdrop of a surging U.S.

dollar and persistent capital outflows from China.

This depreciation halted in 2017, and the RMB appreciated

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also have indirect consequences such as increases in the costs of insurance if they result in significant loss of property or other insurable

HAVE ISSUED A SUBSTANTIAL AMOUNT OF CONVERTIBLE SECURITIES WHICH IF CONVERTED WILL SUBSTANTIALLY DILUTE ALL OF OUR STOCKHOLDERS.

HAVE ISSUED A SUBSTANTIAL NUMBER OF CONVERTIBLE SECURITIES WHICH IF CONVERTED WILL SUBSTANTIALLY DILUTE ALL OF OUR STOCKHOLDERS.

have issued a substantial number of convertible securities which, if converted, would result in substantial dilution to our stockholders.

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Convertible Notes - and Approximate common share equivalents

Series E preferred shares

Warrants and Common Stock equivalent’s

Warrants and Common Stock equivalents

Total Convertible Common Stock equivalents

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expect to issue additional capital stock in the future that will result in dilution to all other stockholders.

We expect to grant equity

awards to employees, directors, and consultants under our equity incentive plans.

We may also raise capital through equity financings

in the future.

As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies,

and issue equity securities to pay for any such acquisition or investment.

Any such issuances of additional capital stock may cause stockholders

to experience significant dilution of their ownership interests and the per share value of our common stock to decline.

We expect to grant

equity awards to employees, directors, and consultants under our equity incentive plans.

We may also raise capital through equity

financings in the future.

As part of our business strategy, we may acquire or make investments in complementary companies, products,

or technologies, and issue equity securities to pay for any such acquisition or investment.

Any such issuances of additional capital

stock may cause stockholders to experience significant dilution of their ownership interests and may cause the per share value of

our common stock to decline.

MAY MAKE ACQUISITIONS THAT ARE DILUTIVE TO EXISTING STOCKHOLDERS.

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Our business operations

are subject to all government regulations normally incident to conducting business (e.g., occupational safety and health acts, workmen’s

are subject to all government regulations normally incident to conducting business (e.g., occupational safety and health acts, workers’

compensation statutes, unemployment insurance legislation, income tax, and social security laws and regulations, environmental laws and

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business concerns, which could seriously harm our business.

Our common stock is listed on

the Nasdaq Capital Market, which requires us to maintain a minimum bid price of $1.00 per share .

If our stock trades below this

threshold for 30 consecutive trading days , we may receive a non-compliance notice from Nasdaq.

Failure to regain compliance

within the specified grace period could result in delisting , which may negatively impact our liquidity and ability to raise capital.

Additionally, Nasdaq listing requirements

mandate that we hold an annual shareholder meeting to maintain compliance with corporate governance rules.

Failure to do so may

also result in delisting proceedings .

We are actively working to address these issues and remain in good standing with Nasdaq.

CETY faces the risk of Nasdaq

delisting due to a price deficiency , meaning its stock price has fallen below the minimum bid requirement.

To maintain compliance,

the company must regain the required price threshold within the allotted grace period.

Additionally, successfully holding an annual

shareholder meeting is crucial to meeting Nasdaq’s corporate governance requirements and maintaining its listing status.

faces the risk of Nasdaq delisting due to the Company’s failure to hold an annual meeting within 12 months of the end of

the Company’s fiscal year ended December 31, 2023.

As a result, as of January 8, 2025, the Company has 45 calendar days, or until

February 24, 2025, to submit a plan to Nasdaq to regain compliance.

Company intends to hold its annual meeting as soon as practicable.

In that regard, the Company plans to complete and file its Form 10-K

for the fiscal year ended December 31, 2024, on or about by the end of March 2025.

Subsequently, the Company plans to file a preliminary

proxy on about April 17, 2025 and hold its annual meeting before June 3, 2025.

As such, Staff has determined to grant the Company an

extension until June 3, 2025, to regain compliance with the Rule.

RELATED TO DOING BUSINESS IN CHINA

to our operations in China, we face various legal and operational risks and uncertainties related to being based in and having significant

We face various legal and operational risks and uncertainties related to being based in and having significant

operations in China, and therefore are subject to risks associated with doing business in China generally.

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The inability of the PCAOB to conduct inspections of auditors in PRC makes it more difficult to evaluate the effectiveness

of these accounting firm’s audit procedures or quality control procedures as compared to auditors outside of PRC that are subject

of these accounting firms’ audit procedures or quality control procedures as compared to auditors outside of PRC that are subject

to the PCAOB inspections, which could cause investors and potential investors in our Common stock to lose confidence in our audit procedures

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the exchange on which our common stock is currently listed.

recent developments would add uncertainties to our offering and we cannot assure you whether Nasdaq or regulatory authorities would apply

recent developments would add uncertainties to our offering and we cannot predict whether Nasdaq or regulatory authorities would apply

additional and more stringent criteria to us.

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information of more than one million users which seek to list on a foreign stock exchange are subject to prior cybersecurity review.

November 14, 2021, the Cyberspace Administration of China (the “CAC”) published the Draft Regulations on the Network Data

Security Administration (Draft for Comments) (the “Security Administration Draft”), which provides that data processing operators

engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the relevant

Cyberspace Administration of the PRC.

According to the Security Administration Draft, data processing operators shall apply for a cybersecurity

review by the relevant Cyberspace Administration of the PRC under certain circumstances, such as (i) mergers, restructurings, and divisions

of Internet platform operators that hold large amount of data relating to national security, economic development, or public interest

which affects or may affect the national security, (ii) overseas listings of data processors that process personal data for more than

one million individuals, (iii) Hong Kong listings of data processors that affect or may affect national security, and (iv) other data

processing activities that affect or may affect the national security.

The deadline for public comments on the Security Administration

Draft was December 13, 2021.

November 14, 2021, the Cyberspace Administration of China (the “CAC”) published the Draft Regulations on the Network

Data Security Administration (Draft for Comments) (the “Security Administration Draft”), which provides that data

processing operators engaging in data processing activities that affect or may affect national security must be subject to

cybersecurity review by the relevant Cyberspace Administration of the PRC.

According to the Security Administration Draft, data

processing operators shall apply for a cybersecurity review by the relevant Cyberspace Administration of the PRC under certain

circumstances, such as (i) mergers, restructurings, and divisions of Internet platform operators that hold a large amount of data

relating to national security, economic development, or public interest which affects or may affect the national security, (ii)

overseas listings of data processors that process personal data for more than one million individuals, (iii) Hong Kong listings of

data processors that affect or may affect national security, and (iv) other data processing activities that affect or may affect the

national security.

The deadline for public comments on the Security Administration Draft was December 13, 2021.

PRC Data Security Law, which was promulgated by the Standing Committee of the National People’s Congress (the “SCNPC”)

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filing requirements under the Trial Measures may result in rectification, warnings, and a fine between RMB 1 million and RMB 10 million

on our PRC Subsidiaries or Shuya, which could adversely and materially affect our business operations and financial outlook and could

cause the value of our common stock to significantly decline or, in extreme cases, become worthless.

on our PRC subsidiaries, which could adversely and materially affect our business operations and financial outlook and could cause the

value of our common stock to significantly decline or, in extreme cases, become worthless.

February 24, 2023, the CSRC, together with other PRC government authorities, released the Provisions on Strengthening the Confidentiality

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acquisitions would as such be materially and adversely affected.

PRC SUBSIDIARIES AND SHUYA ARE SUBJECT TO RESTRICTIONS ON PAYING DIVIDENDS OR MAKING OTHER PAYMENTS TO US, WHICH MAY RESTRICT OUR ABILITY

TO SATISFY OUR LIQUIDITY REQUIREMENTS IN THE FUTURE.

may need dividends and other distributions on equity from our PRC Subsidiaries or Shuya to satisfy our liquidity requirements.

PRC regulations permit our PRC Subsidiaries and Shuya to pay dividends to their respective shareholders only out of their accumulated

profits, if any, determined in accordance with PRC accounting standards and regulations.

In addition, such companies are required to

set aside at least 10% of their accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside

reaches 50% of its registered capital.

Our PRC Subsidiaries or Shuya may also, at the respective subsidiary’s discretion, allocate

a portion of its after-tax profits based on its articles of association and PRC accounting standards to certain reserve funds.

reserves are not distributable as cash dividends.

Furthermore, if our PRC Subsidiaries or Shuya incur debt on their own behalf in the

future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.

Any limitation on

the ability of our PRC Subsidiaries or Shuya to distribute dividends or to make payments to us may restrict our ability to satisfy our

future liquidity requirements.

PRC SUBSIDIARIES ARE SUBJECT TO RESTRICTIONS ON PAYING DIVIDENDS OR MAKING OTHER PAYMENTS TO US, WHICH MAY RESTRICT OUR ABILITY TO SATISFY

OUR LIQUIDITY REQUIREMENTS IN THE FUTURE.

may need dividends and other distributions on equity from our PRC Subsidiaries to satisfy our liquidity requirements.

Current PRC regulations

permit our PRC Subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined

in accordance with PRC accounting standards and regulations.

In addition, such companies are required to set aside at least 10% of their

accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital.

Our PRC Subsidiaries may also, at the respective subsidiary’s discretion, allocate a portion of its after-tax profits based on

its articles of association and PRC accounting standards to certain reserve funds.

These reserves are not distributable as cash dividends.

Furthermore, if our PRC Subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their

ability to pay dividends or make other payments to us.

Any limitation on the ability of our PRC Subsidiaries to distribute dividends

or to make payments to us may restrict our ability to satisfy our future liquidity requirements.

addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable

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REGULATION OF LOANS TO AND DIRECT INVESTMENT IN PRC ENTITIES BY OFFSHORE HOLDING COMPANIES AND GOVERNMENTAL CONTROL OF CURRENCY CONVERSION

MAY DELAY OR PREVENT US FROM MAKING LOANS OR ADDITIONAL CAPITAL CONTRIBUTIONS TO OUR PRC SUBSIDIARIES OR SHUYA.

MAY DELAY OR PREVENT US FROM MAKING LOANS OR ADDITIONAL CAPITAL CONTRIBUTIONS TO OUR PRC SUBSIDIARIES.

based company conducting a portion of our operations in China.

We may make loans to our PRC subsidiaries or Shuya subject

to the approval, registration, and filing with governmental authorities and limitation of amount, or we may make additional capital contributions

to our subsidiaries in China and Hong Kong.

Any loans to our wholly foreign-owned subsidiaries in mainland China, which are treated as

foreign-invested enterprises under PRC law, are subject to foreign exchange loan registrations.

In light of the various requirements

imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that

we will be able to complete the necessary government registrations or obtain the necessary government approvals or filings on a timely

basis, if at all, with respect to future loans by us to our PRC Subsidiaries and Shuya or with respect to future capital contributions

by us to our PRC Subsidiaries and Shuya.

If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds

from securities offering and to capitalize or otherwise fund our Chinese operations may be negatively affected.

IN EXCHANGE RATES COULD HAVE AN EFFECT ON THE RESULTS OF OPERATIONS OF OUR PRC SUBSIDIARIES AND SHUYA.

We may make loans to our PRC subsidiaries subject to the approval,

registration, and filing with governmental authorities and limitation of amount, or we may make additional capital contributions to our

subsidiaries in China and Hong Kong.

Any loans to our wholly foreign-owned subsidiaries in mainland China, which are treated as foreign-invested

enterprises under PRC law, are subject to foreign exchange loan registrations.

In light of the various requirements imposed by PRC regulations

on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete

the necessary government registrations or obtain the necessary government approvals or filings on a timely basis, if at all, with respect

to future loans by us to our PRC Subsidiaries or with respect to future capital contributions by us to our PRC Subsidiaries.

to complete such registrations or obtain such approvals, our ability to use the proceeds from securities offerings and to capitalize or

otherwise fund our Chinese operations may be negatively affected.

IN EXCHANGE RATES COULD HAVE AN EFFECT ON THE RESULTS OF OPERATIONS OF OUR PRC SUBSIDIARIES.

value of the Renminbi against the U.S.

8 unchanged sentences

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 1A. Risk Factors