Item 1A. Risk Factors
Item 1A. Risk Factors
As a smaller reporting company, we are not required to provide the information required by this item. You are encouraged to read the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 20, 2026. In addition, during the quarterly period ended March 31, 2026, the risks described below have newly arisen or become material, and you are encouraged read them together with the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.
Our investment in a PRC venture capital fund may cause us to be deemed an investment company under the Investment Company Act of 1940, which could materially and adversely affect our business, financial condition and results of operations.
On January 6, 2026, Naiside entered into a partnership agreement with Shanghai Kesheng Investment Management Co., Ltd., as general partner and executive partner, in connection with Naiside’s participation as a limited partner in a venture capital investment fund in the PRC. Pursuant to the partnership agreement, Naiside subscribed for a 7.0% limited partnership interest and made a capital commitment of approximately US$40.0 million to the venture capital fund. On January 29, 2026, Naiside made a capital contribution of US$40,131,287 to the venture capital fund in accordance with the partnership agreement. The venture capital fund is intended to invest primarily in China-based companies engaged in logistics technology, compliance technology, and supply chain technology and services, particularly companies that provide products or services to customers in the United States and European markets. The venture capital fund will focus primarily on companies at venture capital stages, with each individual portfolio investment generally ranging from approximately US$0.7 million to US$7.0 million. The general partner is responsible for the execution of the partnership’s affairs.
As a result of this investment, a significant portion of our assets may consist of securities or interests in a venture capital fund. We do not intend to become an “investment company” as defined under the Investment Company Act of 1940, as amended. However, depending on the composition and value of our assets, including the value of our limited partnership interest in the venture capital fund, and the manner in which our business and investment activities are conducted, we may be deemed to be an investment company under the Investment Company Act. In particular, if our investment securities were to exceed applicable thresholds under the Investment Company Act and we were unable to rely on an available exemption, exclusion or other relief, we could be required to register as an investment company.
Registration as an investment company would subject us to a comprehensive regulatory regime that is inconsistent with our intended business strategy and operations, including restrictions on our capital structure, leverage, issuance of securities, transactions with affiliates, custody of assets, governance, reporting obligations, and the manner in which we conduct our business. Compliance with these requirements could be costly and burdensome and could require us to materially alter our business strategy, dispose of certain assets, restructure or unwind our investment in the venture capital fund, or limit our ability to pursue strategic transactions or other business opportunities. If we were deemed to be an investment company and failed to register or qualify for an exemption, exclusion or other relief, we could be subject to regulatory enforcement actions, monetary penalties, restrictions on our operations and adverse consequences with respect to our contracts and securities offerings. Any of the foregoing could materially and adversely affect our business, financial condition, results of operations and the market price of our securities.
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