What changed in this filing

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Item 1A. Risk Factors

2026-09-30 compared with 2026-08-28 · 550 added, 365 removed, 26 unchanged (97% of the section changed)

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

Before you invest you should carefully review our Management’s Discussion and Analysis of Financial Condition and Results of Operations

set forth in Item 2 of Part I of this Quarterly Report on Form 10-Q, our consolidated financial statements and related notes included

in Item 1 of Part I of this Quarterly Report on Form 10-Q and our consolidated financial statements and related notes, as well as our

Management’s Discussion and Analysis of Financial Condition and Results of Operations and the other information in our Annual Report

on Form 10-K for the fiscal year ended December 31, 2025.

Readers should carefully review risks described in other documents we file from

time to time with the Securities and Exchange Commission.

If we are unable to comply with the applicable continued listing

requirements or standards of Nasdaq, there is a possibility that our common stock could be delisted.

At present, we are not in compliance

with certain Nasdaq continued listing requirements.

Should we be unable to regain compliance, our securities may be subject to delisting,

which could impact the market price and liquidity of our common stock and potentially limit our access to capital.

We have received a determination from

Nasdaq regarding potential delisting and, while we have effected a reverse stock split and timely appealed against such determination.

While these actions reflect our commitment to maintaining our listing, there can be no assurance that we will regain or maintain compliance

with Nasdaq’s continued listing requirements.

A delisting could have implications for the trading and liquidity of our common stock,

as well as our capital-raising efforts.

On November 4, 2025, we received a letter

from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that we had not regained compliance

with Nasdaq Listing Rule 5550(a)(2) (“Minimum Bid Price Requirement”) by the November 3, 2025 deadline.

As a result, our securities

would be scheduled for trading suspension.

On November 7, 2025, we promptly appealed the Staff’s determination to the Nasdaq Hearings

Panel (the “Panel”) a hearing before the Panel has been scheduled on December 9, 2025.

We are actively

evaluating a range of available strategic and corporate actions that may assist in regaining compliance with the Minimum Bid Price Requirement.

Apart from the reverse stock split which we have already implemented, we also intend to enhance investor engagement and pursue operational

improvements, subject to board and shareholder approval.

While we are making every effort to address

the listing requirements, there can be no assurance that the Panel will determine that we have achieved compliance with Listing Rule 5550(a)(2)

within the prescribed period or that we will qualify for any additional compliance period that may be available or that we will ultimately

satisfy all applicable Nasdaq listing standards.

If our common stock is delisted, it could result in:

• limited availability of market quotations for our securities;

• reduced liquidity for the Company’s securities;

• a determination that the Company’s common stock is a “penny stock” which may impose additional trading restrictions;

• a limited amount of news and analyst coverage;

• challenges in raising capital or issuing additional securities in the future.

There can also be no assurance that the market price of the

Company’s common stock will maintain the Minimum Bid Price Requirement.

The Chinese government exerts substantial

influence over the manner in which we must conduct our business activities.

We are currently not required to obtain approval from Chinese

authorities to list on U.S exchanges, however, if our holding company or subsidiaries were required to obtain approval or filing in the

future and were denied permission from Chinese authorities to list on U.S.

in our common stock involves a high degree of risk.

Before you invest you should carefully review our Management’s Discussion and

Analysis of Financial Condition and Results of Operations set forth in Item 2 of Part I of this Quarterly Report on Form 10-Q, our consolidated

financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and our consolidated financial

statements and related notes, as well as our Management’s Discussion and Analysis of Financial Condition and Results of Operations

and the other information in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Readers should carefully review

risks described in other documents we file from time to time with the Securities and Exchange Commission.

failure to timely file periodic reports has resulted in non-compliance with Nasdaq Listing Rule 5250(c)(1), and our common stock may

be subject to delisting.

failed to timely file our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and our Quarterly Report on Form 10-Q

for the quarter ended March 31, 2026.

As a result, Nasdaq notified us that we were not in compliance with Nasdaq Listing Rule 5250(c)(1),

which requires the timely filing of periodic financial reports with the Securities and Exchange Commission.

filed our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 on August 17, 2026 and our Quarterly Report on Form

10-Q for the quarter ended March 31, 2026 on August 28, 2026.

However, because we had not filed this Quarterly Report on Form 10-Q for

the quarter ended June 30, 2026, Nasdaq notified us that we had incurred an additional delinquency.

Nasdaq granted us an exception period

requiring us to file this Quarterly Report on or before October 12, 2026.

we filed this Quarterly Report within the exception period granted by Nasdaq, there can be no assurance that Nasdaq will determine that

we have regained compliance with Nasdaq Listing Rule 5250(c)(1), or that we will satisfy all other applicable Nasdaq continued listing

requirements.

If Nasdaq determines that our securities are subject to delisting, we may be required to appeal the determination to a

Nasdaq Hearings Panel.

There can be no assurance that any appeal would be successful or that Nasdaq would continue the listing of our

common stock during the appeal process.

delisting of our common stock from Nasdaq could materially reduce the liquidity and market price of our common stock, limit the availability

of market quotations, result in our common stock being treated as a “penny stock,” increase transaction costs for investors,

limit our ability to raise capital and adversely affect our business and financial condition.

Related to Doing Business in China

all of our operations are in China, our business is subject to the complex and rapidly evolving laws and regulations there.

government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations

at any time, which could result in a material change in our operations and/or the value of our common stock.

a business operating in China, we are subject to the laws and regulations of the PRC, which can be complex and evolve rapidly.

government has the power to exercise significant oversight and discretion over the conduct of our business, and the regulations to which

we are subject may change rapidly and with little notice to us or our shareholders.

As a result, the application, interpretation, and

enforcement of new and existing laws and regulations in the PRC are often uncertain.

In addition, these laws and regulations may be interpreted

and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices.

regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries

or investigations or any other government actions may:

or impede our development;

in negative publicity or increase our operating costs;

significant management time and attention;

us to remedies, administrative penalties and even criminal liabilities that may harm our

business, including fines assessed for our current or historical operations, or demands or

orders that we modify or even cease our business practices.

promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise

unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business

to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses,

permits, approvals or certificates, or subject us to additional liabilities.

To the extent any new or more stringent measures are required

to be implemented, our business, financial condition and results of operations could be adversely affected as well as materially decrease

the value of our Common Stock.

Chinese government exerts substantial influence over the manner in which we must conduct our business activities.

We are currently

not required to obtain approval from Chinese authorities to list on U.S exchanges, however, if our holding company or subsidiaries

were required to obtain approval or filing in the future and were denied permission from Chinese authorities to list on U.S.

exchanges, we will not be able to continue listing on U.S.

exchange, which would materially affect the interest of the investors.

The Chinese government has exercised and can continue

to exercise substantial control to intervene on virtually every sector of the Chinese economy through regulation and state ownership,

and as a result, it can influence the manner in which we must conduct our business activities and effect material changes in our operations

or the value of the common stock we are registering in this resale.

Under the current government leadership, the government of the PRC

has been pursuing reform policies which have adversely affected China-based operating companies whose securities are listed in the U.S.,

with significant policies changes being made from time to time without notice.

There are substantial uncertainties regarding the interpretation

and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement

and performance of our contractual arrangements with borrowers in the event of the imposition of statutory liens, death, bankruptcy or

criminal proceedings.

Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to

taxation, environmental regulations, land use rights, property and other matters.

The central or local governments of these jurisdictions

may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts

on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including

any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local

variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions

thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.

Given recent statements by the Chinese government

indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based

issuers, any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors

and cause the value of such securities to significantly decline or become worthless.

Recently, the General Office of the Central Committee

of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severely Cracking Down on Illegal

Securities Activities According to Law, or the Opinions, which was made available to the public on July 6, 2021.

The Opinions emphasized

the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas

listings by Chinese companies.

Effective measures, such as promoting the construction of relevant regulatory systems, will be taken to

deal with the risks and incidents of China-concept overseas listed companies.

As of the date hereof, we have not received any inquiry,

notice, warning, or sanctions from PRC government authorities in connection with the Opinions.

On June 10, 2021, the Standing Committee of the

National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law, which took effect in September 2021.

PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces

a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree

of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when

such data is tampered with, destroyed, leaked, illegally acquired or used.

The PRC Data Security Law also provides for a national security

review procedure for data activities that may affect national security and imposes export restrictions on certain data an information.

In early July 2021, regulatory authorities in

China launched cybersecurity investigations with regard to several China-based companies that are listed in the United States.

cybersecurity regulator announced on July 2 that it had begun an investigation of Didi Global Inc.

DIDI) and two days later ordered

that the Company’s app be removed from smartphone app stores.

On July 5, 2021, the Chinese cybersecurity regulator launched the

same investigation on two other Internet platforms, China’s Full Truck Alliance of Full Truck Alliance Co.

Boss of KANZHUN LIMITED (Nasdaq:

On July 24, 2021, the General Office of the Communist Party of China Central Committee and the General

Office of the State Council jointly released the Guidelines for Further Easing the Burden of Excessive Homework and Off-campus Tutoring

for Students at the Stage of Compulsory Education, pursuant to which foreign investment in such firms via mergers and acquisitions, franchise

development, and variable interest entities are banned from this sector.

On August 17, 2021, the State Council promulgated

the Regulations on the Protection of the Security of Critical Information Infrastructure, or the Regulations, which took effect on September

The Regulations supplement and specify the provisions on the security of critical information infrastructure as stated in the

Cybersecurity Review Measures.

The Regulations provide, among others, that protection department of certain industry or sector shall notify

the operator of the critical information infrastructure in time after the identification of certain critical information infrastructure.

On August 20, 2021, the SCNPC promulgated the

Personal Information Protection Law of the PRC, or the Personal Information Protection Law, which took effect in November 2021.

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.

As such, the Company’s business segments

may be subject to various government and regulatory interference in the provinces in which they operate.

The Company could be subject

to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions.

The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure

Additionally, the governmental and regulatory interference could significantly limit or completely hinder our ability to offer

or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Furthermore, it is uncertain when and whether

the Company will be required to obtain permission from the PRC government to list on U.S.

exchanges in the future, and even when such

permission is obtained, whether it will be denied or rescinded.

Although the Company is currently not required to obtain permission from

any of the PRC federal or local government to obtain such permission and has not received any denial to list on the U.S.

exchange, our

operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or

On February 17, 2023, the CSRC promulgated Trial

Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the “Overseas Listing Trial Measures”)

and five relevant guidelines, which became effective on March 31, 2023.According to the Overseas Listing Trial Measures, PRC domestic

companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the

filing procedure with the CSRC and report relevant information.

The Overseas Listing Trial Measures provides that an overseas listing

or offering is explicitly prohibited, if any of the following:

(1) such securities offering and listing is explicitly prohibited by provisions

in laws, administrative regulations and relevant state rules;

(2) the intended securities offering and listing may endanger national security

as reviewed and determined by competent authorities under the State Council in accordance with law;

(3) the domestic company intending

to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed relevant crimes

such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during

the latest three years;

(4) the domestic company intending to make the securities offering and listing is currently under investigations

for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof;

are material ownership disputes over equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s)

that are controlled by the controlling shareholder(s) and/or actual controller.

The Overseas Listing Trial Measures also provides

that if the issuer meets both the following criteria, the overseas securities offering and listing conducted by such issuer will be deemed

as indirect overseas offering by PRC domestic companies:

(1) 50% or more of any of the issuer’s operating revenue, total profit,

total assets or net assets as documented in its unaudited consolidated financial statements for the most recent fiscal year is accounted

for by domestic companies;

and (2) the issuer’s main business activities are conducted in China, or its main place(s) of business

are located in China, or the majority of senior management staff in charge of its business operations and management are PRC citizens

or have their usual place(s) of residence located in China.

Where an issuer submits an application for initial public offering to competent

overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted.

the Overseas Listing Trial Measures provide that the direct or indirect overseas listings of the assets of domestic companies through

one or more acquisitions, share swaps, transfers or other transaction arrangements shall be subject to filing procedures in accordance

with the Overseas Listing Trial Measures.

The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC

on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings

and listings.

At a press conference held for these new regulations

(“Press Conference”), officials from the CSRC clarified that the domestic companies that have already been listed overseas

on or before March 31, 2023 shall be deemed as existing issuers (the “Existing Issuers”).

Existing Issuers are not required

to complete the filling procedures immediately, and they shall be required to file with the CSRC upon occurrences of certain subsequent

matters such as follow-on offerings of securities.

According to the Overseas Listing Trial Measures and the Press Conference, the existing

domestic companies that have completed overseas offering and listing before March 31, 2023, such as us, shall not be required to perform

filing procedures for the completed overseas securities issuance and listing.

However, from the effective date of the regulation, any

of our subsequent securities offering in the same overseas market or subsequent securities offering and listing in other overseas markets

shall be subject to the filing requirement with the CSRC within three working days after the offering is completed or after the relevant

application is submitted to the relevant overseas authorities, respectively.

If it is determined that any approval, filing or other administrative

procedures from other PRC governmental authorities is required for any future offering or listing, we cannot assure you that we can obtain

the required approval or accomplish the required filings or other regulatory procedures in a timely manner, or at all.

If we fail to fulfill

filing procedure as stipulated by the Trial Measures or offer and list securities in an overseas market in violation of the Trial Measures,

the CSRC may order rectification, issue warnings to us, and impose a fine of between RMB1,000,000 and RMB10,000,000.

Persons-in-charge

and other persons that are directly liable for such failure shall be warned and each imposed a fine from RMB500,000 to RMB5,000,000.

shareholders and actual controlling persons of us that organize or instruct such violations shall be imposed a fine from RMB1,000,000

and RMB10,000,000.

On February 24, 2023, the CSRC published the Provisions

on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises

(the “Provisions on Confidentiality and Archives Administration”), which came into effect on March 31, 2023.

The Provisions

on Confidentiality and Archives Administration requires that, in the process of overseas issuance and listing of securities by domestic

entities, the domestic entities, and securities companies and securities service institutions that provide relevant securities service

shall strictly implement the provisions of relevant laws and regulations and the requirements of these provisions, establish and improve

rules on confidentiality and archives administration.

Where the domestic entities provide with or publicly disclose documents, materials

or other items related to the state secrets and government work secrets to the relevant securities companies, securities service institutions,

overseas regulatory authorities, or other entities or individuals, the companies shall apply for approval of competent departments with

the authority of examination and approval in accordance with law and report the matter to the secrecy administrative departments at the

same level for record filing.

Where there is unclear or controversial whether or not the concerned materials are related to state secrets,

the materials shall be reported to the relevant secrecy administrative departments for determination.

However, there remain uncertainties

regarding the further interpretation and implementation of the Provisions on Confidentiality and Archives Administration.

As of the date of this report, we and our

PRC subsidiaries have obtain the requisite licenses and permits from the PRC government authorities that are material for the business

operations of our PRC subsidiaries.

In addition, as of the date of this report, we and our PRC subsidiaries are not required to

obtain approval or permission from the CSRC or the CAC or any other entity that is required to approve our PRC subsidiaries’ operations

or required for us to offer securities to foreign investors under any currently effective PRC laws, regulations, and regulatory rules.

exchange, which would materially affect the interest of the

Chinese government has exercised and can continue to exercise substantial control to intervene on virtually every sector of the Chinese

economy through regulation and state ownership, and as a result, it can influence the manner in which we must conduct our business activities

and effect material changes in our operations or the value of the common stock we are registering in this resale.

Under the current government

leadership, the government of the PRC has been pursuing reform policies which have adversely affected China-based operating companies

whose securities are listed in the U.S., with significant policies changes being made from time to time without notice.

There are substantial

uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations

governing our business, or the enforcement and performance of our contractual arrangements with borrowers in the event of the imposition

of statutory liens, death, bankruptcy or criminal proceedings.

Our ability to operate in China may be harmed by changes in its laws and

regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters.

or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would

require additional expenditure and efforts on our part to ensure our compliance with such regulations or interpretations.

government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally

planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic

conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.

recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted

overseas and/or foreign investment in China-based issuers, any such action could significantly limit or completely hinder our ability

to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.

the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued

the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the Opinions, which was made available to

the public on July 6, 2021.

The Opinions emphasized the need to strengthen the administration over illegal securities activities, and

the need to strengthen the supervision over overseas listings by Chinese companies.

Effective measures, such as promoting the construction

of relevant regulatory systems, will be taken to deal with the risks and incidents of China-concept overseas listed companies.

the date hereof, we have not received any inquiry, notice, warning, or sanctions from PRC government authorities in connection with the

June 10, 2021, the Standing Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security

Law, which took effect in September 2021.

The PRC Data Security Law imposes data security and privacy obligations on entities and individuals

carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data

in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights

and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used.

Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes

export restrictions on certain data an information.

early July 2021, regulatory authorities in China launched cybersecurity investigations with regard to several China-based companies that

are listed in the United States.

The Chinese cybersecurity regulator announced on July 2 that it had begun an investigation of Didi Global

DIDI) and two days later ordered that the Company’s app be removed from smartphone app stores.

On July 5, 2021, the

Chinese cybersecurity regulator launched the same investigation on two other Internet platforms, China’s Full Truck Alliance of

Full Truck Alliance Co.

YMM) and Boss of KANZHUN LIMITED (Nasdaq:

On July 24, 2021, the General Office of the Communist

Party of China Central Committee and the General Office of the State Council jointly released the Guidelines for Further Easing the Burden

of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education, pursuant to which foreign investment

in such firms via mergers and acquisitions, franchise development, and variable interest entities are banned from this sector.

August 17, 2021, the State Council promulgated the Regulations on the Protection of the Security of Critical Information Infrastructure,

or the Regulations, which took effect on September 1, 2021.

The Regulations supplement and specify the provisions on the security of

critical information infrastructure as stated in the Cybersecurity Review Measures.

The Regulations provide, among others, that protection

department of certain industry or sector shall notify the operator of the critical information infrastructure in time after the identification

of certain critical information infrastructure.

August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC, or the Personal Information Protection Law,

which took effect in November 2021.

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.

such, the Company’s business segments may be subject to various government and regulatory interference in the provinces in which

they operate.

The Company could be subject to regulation by various political and regulatory entities, including various local and municipal

agencies and government sub-divisions.

The Company may incur increased costs necessary to comply with existing and newly adopted laws

and regulations or penalties for any failure to comply.

Additionally, the governmental and regulatory interference could significantly

limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to

significantly decline or be worthless.

it is uncertain when and whether the Company will be required to obtain permission from the PRC government to list on

exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded.

Although the Company is currently

not required to obtain permission from any of the PRC federal or local government to obtain such permission and has not received any

denial to list on the U.S.

exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and

regulations relating to its business or industry.

February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies

(the “Overseas Listing Trial Measures”) and five relevant guidelines, which became effective on March 31, 2023.According

to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either in

direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information.

The Overseas Listing

Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following:

(1) such securities offering

and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules;

(2) the intended securities

offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance

(3) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s) and the actual

controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the

order of the socialist market economy during the latest three years;

(4) the domestic company intending to make the securities offering

and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no

conclusion has yet been made thereof;

or (5) there are material ownership disputes over equity held by the domestic company’s controlling

shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.

Overseas Listing Trial Measures also provides that if the issuer meets both the following criteria, the overseas securities offering

and listing conducted by such issuer will be deemed as indirect overseas offering by PRC domestic companies:

(1) 50% or more of any of

the issuer’s operating revenue, total profit, total assets or net assets as documented in its unaudited consolidated financial

statements for the most recent fiscal year is accounted for by domestic companies;

and (2) the issuer’s main business activities

are conducted in China, or its main place(s) of business are located in China, or the majority of senior management staff in charge of

its business operations and management are PRC citizens or have their usual place(s) of residence located in China.

Where an issuer submits

an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business

days after such application is submitted.

In addition, the Overseas Listing Trial Measures provide that the direct or indirect overseas

listings of the assets of domestic companies through one or more acquisitions, share swaps, transfers or other transaction arrangements

shall be subject to filing procedures in accordance with the Overseas Listing Trial Measures.

The Overseas Listing Trial Measures also

requires subsequent reports to be filed with the CSRC on material events, such as change of control or voluntary or forced delisting

of the issuer(s) who have completed overseas offerings and listings.

a press conference held for these new regulations (“Press Conference”), officials from the CSRC clarified that the domestic

companies that have already been listed overseas on or before March 31, 2023 shall be deemed as existing issuers (the “Existing

Existing Issuers are not required to complete the filling procedures immediately, and they shall be required to file

with the CSRC upon occurrences of certain subsequent matters such as follow-on offerings of securities.

According to the Overseas Listing

Trial Measures and the Press Conference, the existing domestic companies that have completed overseas offering and listing before March

31, 2023, such as us, shall not be required to perform filing procedures for the completed overseas securities issuance and listing.

However, from the effective date of the regulation, any of our subsequent securities offering in the same overseas market or subsequent

securities offering and listing in other overseas markets shall be subject to the filing requirement with the CSRC within three working

days after the offering is completed or after the relevant application is submitted to the relevant overseas authorities, respectively.

If it is determined that any approval, filing or other administrative procedures from other PRC governmental authorities is required

for any future offering or listing, we cannot assure you that we can obtain the required approval or accomplish the required filings

or other regulatory procedures in a timely manner, or at all.

If we fail to fulfill filing procedure as stipulated by the Trial Measures

or offer and list securities in an overseas market in violation of the Trial Measures, the CSRC may order rectification, issue warnings

to us, and impose a fine of between RMB1,000,000 and RMB10,000,000.

Persons-in-charge and other persons that are directly liable for

such failure shall be warned and each imposed a fine from RMB500,000 to RMB5,000,000.

Controlling shareholders and actual controlling

persons of us that organize or instruct such violations shall be imposed a fine from RMB1,000,000 and RMB10,000,000.

February 24, 2023, the CSRC published the Provisions on Strengthening the Confidentiality and Archives Administration Related to the

Overseas Securities Offering and Listing by Domestic Enterprises (the “Provisions on Confidentiality and Archives Administration”),

which came into effect on March 31, 2023.

The Provisions on Confidentiality and Archives Administration requires that, in the process

of overseas issuance and listing of securities by domestic entities, the domestic entities, and securities companies and securities service

institutions that provide relevant securities service shall strictly implement the provisions of relevant laws and regulations and the

requirements of these provisions, establish and improve rules on confidentiality and archives administration.

Where the domestic entities

provide with or publicly disclose documents, materials or other items related to the state secrets and government work secrets to the

relevant securities companies, securities service institutions, overseas regulatory authorities, or other entities or individuals, the

companies shall apply for approval of competent departments with the authority of examination and approval in accordance with law and

report the matter to the secrecy administrative departments at the same level for record filing.

Where there is unclear or controversial

whether or not the concerned materials are related to state secrets, the materials shall be reported to the relevant secrecy administrative

departments for determination.

However, there remain uncertainties regarding the further interpretation and implementation of the Provisions

on Confidentiality and Archives Administration.

of the date of this report, we and our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities

that are material for the business operations of our PRC subsidiaries.

In addition, as of the date of this report, we and our PRC subsidiaries

are not required to obtain approval or permission from the CSRC or the CAC or any other entity that is required to approve our PRC subsidiaries’

operations or required for us to offer securities to foreign investors under any currently effective PRC laws, regulations, and regulatory

If it is determined that we are subject to filing requirements imposed by the CSRC under the Overseas Listing Regulations or approvals

from other PRC regulatory authorities or other procedures, including the cybersecurity review under the revised Cybersecurity Review Measures,

for our future offshore offerings, it would be uncertain whether we can or how long it will take us to complete such procedures or obtain

such approval and any such approval could be rescinded.

Any failure to obtain or delay in completing such procedures or obtaining such

approval for our offshore offerings, or a rescission of any such approval if obtained by us, would subject us to sanctions by the CSRC

or other PRC regulatory authorities for failure to file with the CSRC or failure to seek approval from other government authorization

from other PRC regulatory authorities or other procedures, including the cybersecurity review under the revised Cybersecurity Review

Measures, for our future offshore offerings, it would be uncertain whether we can or how long it will take us to complete such procedures

or obtain such approval and any such approval could be rescinded.

Any failure to obtain or delay in completing such procedures or obtaining

such approval for our offshore offerings, or a rescission of any such approval if obtained by us, would subject us to sanctions by the

CSRC or other PRC regulatory authorities for failure to file with the CSRC or failure to seek approval from other government authorization

for our offshore offerings.

13 unchanged sentences

our business, prospects, financial condition, reputation, and the trading price of our common stock.

In addition, on December 28, 2021, the CAC, the

National Development and Reform Commission (“NDRC”), and several other administrations jointly issued the revised Measures

for Cybersecurity Review, or the Revised Review Measures, which became effective and has replaced the existing Measures for Cybersecurity

Review on February 15, 2022.

According to the Revised Review Measures, if an “online platform operator” that is in possession

of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review.

on a set of Q&A published on the official website of the State Cipher Code Administration in connection with the issuance of the Revised

Review Measures, an official of the said administration indicated that an online platform operator should apply for a cybersecurity review

prior to the submission of its listing application with non-PRC securities regulators.

Given the recency of the issuance of the Revised

Review Measures and their pending effectiveness, there is a general lack of guidance and substantial uncertainties exist with respect

to their interpretation and implementation.

For example, it is unclear whether the requirement of cybersecurity review applies to follow-on

offerings by an “online platform operator” that is in possession of personal data of more than one million users where the

offshore holding company of such operator is already listed overseas.

Furthermore, the CAC released the draft of the Regulations on Network

Data Security Management in November 2021 for public consultation, which among other things, stipulates that a data processor listed overseas

must conduct an annual data security review by itself or by engaging a data security service provider and submit the annual data security

review report for a given year to the municipal cybersecurity department before January 31 of the following year.

If the draft Regulations

on Network Data Security Management are enacted in the current form, we, as an overseas listed company, will be required to carry out

an annual data security review and comply with the relevant reporting obligations.

Because the majority of our operations are

in mainland China and our auditor has been located in mainland China, a jurisdiction where the U.S.

Public Company Accounting Oversight

Board (“PCAOB”) is currently unable to conduct inspections without the approval of Chinese authorities, there have been concerns

regarding oversight of the audits of our financial statements filed with the SEC.

If the PCAOB continues to be unable to inspect our audit

firm in the PRC for three consecutive years, the HFCAA requires the SEC to prohibit the trading of our securities on a national securities

exchange, including Nasdaq, or on over-the-counter markets in the United States.

In addition, the U.S.

addition, on December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other administrations

jointly issued the revised Measures for Cybersecurity Review, or the Revised Review Measures, which became effective and has replaced

the existing Measures for Cybersecurity Review on February 15, 2022.

According to the Revised Review Measures, if an “online platform

operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply

for a cybersecurity review.

Based on a set of Q&A published on the official website of the State Cipher Code Administration in connection

with the issuance of the Revised Review Measures, an official of the said administration indicated that an online platform operator should

apply for a cybersecurity review prior to the submission of its listing application with non-PRC securities regulators.

Given the recency

of the issuance of the Revised Review Measures and their pending effectiveness, there is a general lack of guidance and substantial uncertainties

exist with respect to their interpretation and implementation.

For example, it is unclear whether the requirement of cybersecurity review

applies to follow-on offerings by an “online platform operator” that is in possession of personal data of more than one million

users where the offshore holding company of such operator is already listed overseas.

Furthermore, the CAC released the draft of the

Regulations on Network Data Security Management in November 2021 for public consultation, which among other things, stipulates that a

data processor listed overseas must conduct an annual data security review by itself or by engaging a data security service provider

and submit the annual data security review report for a given year to the municipal cybersecurity department before January 31 of the

following year.

If the draft Regulations on Network Data Security Management are enacted in the current form, we, as an overseas listed

company, will be required to carry out an annual data security review and comply with the relevant reporting obligations.

the Chinese government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment

in China-based issuers, such action could significantly limit or completely hinder our ability to offer or continue to offer securities

to investors and cause the value of such securities to significantly decline or be worthless.

statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas

and/or foreign investments in China based issuers.

PRC has recently proposed new rules that would require companies collecting or holding

large amounts of data to undergo a cybersecurity review prior to listing in foreign countries, a move that would significantly tighten

oversight over China-based internet giants.

On January 4, 2022, the Cyberspace Administration of China, or CAC, issued the revised Measures

on Cyberspace Security Review (the “Revised Measures”), which came into effect on February 15, 2022.

Under the Revised Measures,

any “network platform operator” controlling personal information of no less than one million users which seeks to list in

a foreign stock exchange should also be subject to cybersecurity review.

Pursuant to the Revised Measures, companies holding data on

more than 1 million users must now apply for cybersecurity approval when seeking listings in other nations due to the risk that such

data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.”

business belongs to the chemical industry in China, which does not involve the collection of user data, implicate cybersecurity, or involve

any other type of restricted industry.

Based on the advice of PRC counsel and our understanding of currently applicable PRC laws and

regulations, listing of our common stock in the U.S.

is not subject to the review or prior approval of the Cyberspace Administration

of China (the “CAC”) or the China Securities Regulatory Commission (the “CRSC”).

Uncertainties still exist, however,

due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future.

Any future action by the PRC

government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CRSC

or the CAC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could

cause the value of such securities to significantly decline or be worthless.

occurrence of security breaches and cyber-attacks could negatively impact our business.

technology systems are important to our business and operations.

We are subject to attempts to compromise our security and information

systems, including denial of service attacks, viruses, malicious software or ransomware, and exploitations of system flaws or weaknesses.

Error or malfeasance or other irregularities may also result in the failure of our or our third-party service providers’ cybersecurity

measures and may give rise to a cybersecurity incident.

The techniques used to conduct security breaches and cyber-attacks, as well as

the sources and targets of these attacks, change frequently and may not be recognized until launched against us or our third-party service

We or our third-party service providers may not have the resources or technical sophistication to anticipate or prevent rapidly

evolving types of cyber-attacks.

The primary risks that could directly result from the occurrence of security breaches and cyber-attacks

include operational interruption, financial losses, personal information leakage and non-compliance.

The occurrence of such incidents

could negatively impact our business operations and our relationships with customers and employees, and damage our reputation.

or our third-party service providers are unable to avert security breaches and cyber- attacks, we could incur significantly higher costs,

including remediation costs to repair damage caused by the breach, costs to deploy additional personnel and network protection technologies,

train employees and engage third-party experts and consultants, as well as litigation costs resulting from the incident.

which could be material, could adversely impact our results of operations in the period in which they are incurred and may not meaningfully

limit the success of future attempts to breach our information technology systems.

Uncertainties

with respect to the PRC legal system could adversely affect us.

PRC legal system is a civil law system based on written statutes.

Unlike the common law system, prior court decisions under the civil

law system may be cited for reference but have limited precedential value.

1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters generally.

overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign

investments in the PRC.

However, the PRC has not developed a fully integrated legal system, and recently enacted laws and regulations

may not sufficiently cover all aspects of economic activities in the PRC.

In particular, the interpretation and enforcement of these

laws and regulations involve uncertainties.

Since PRC administrative and court authorities have significant discretion in interpreting

and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court

proceedings and the level of legal protection we enjoy.

These uncertainties may affect our judgment on the relevance of legal requirements

and our ability to enforce our contractual rights or tort claims.

In addition, these regulatory uncertainties may be exploited through

unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or

at all and may have a retroactive effect.

As a result, we may not be aware of our violation of any of these policies and rules until

some time after the violation.

In addition, any administrative and court proceedings in the PRC may be protracted, resulting in substantial

costs and diversion of resources and management attention.

the Chinese government were to impose new requirements for approval from the PRC Authorities to issue our common stock to foreign investors

or list on a foreign exchange, such action could significantly limit or completely hinder our ability to offer or continue to offer securities

to investors and cause the value of such securities to significantly decline or be worthless.

face various legal and operational risks and uncertainties associated with having our operations in China and the complex and evolving

PRC laws and regulations.

The PRC government has significant authority in regulating our operations and may intervene or influence our

operations at any time, which could result in a material adverse change in our operations and the value of our securities.

The PRC government

has recently indicated its intent to exert more oversight and control over offerings that are conducted overseas and foreign investment

in China-based issuers.

Such actions could significantly limit or completely hinder our ability to offer or continue to offer securities

to investors and cause the value of such securities to significantly decline or be worthless.

The General Office of the Central Committee

of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down

on Illegal Securities Activities According to Law,” or the Opinions, which were made available to the public on July 6, 2021.

Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision

over overseas listings by Chinese companies.

Given the current PRC regulatory environment, it is uncertain when and whether we or our

PRC subsidiaries, will be required to obtain permission from the PRC government to list on U.S.

exchanges in the future, and even when

such permission is obtained, whether it will be denied or rescinded.

We have been closely monitoring regulatory developments in China

regarding any necessary approvals from the CSRC or other PRC governmental authorities required for overseas listings.

As of the date

of this annual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection to listing on U.S.

from the CSRC or other PRC governmental authorities.

However, there remains significant uncertainty as to the enactment, interpretation

and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities.

details, see “ Item 1A.

Risk Factors - Risks Related to Doing Business in China ”

February 17, 2023, the CSRC released the Trial Administrative Measures for Administration of Overseas Securities Offerings and Listings

by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which came into effect on March 31, 2023.

to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill

the filing procedures and report relevant information to the CSRC.

If a domestic company fails to complete the filing procedures or conceals

any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties

by the CSRC, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in

charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

Currently, we and

our PRC subsidiaries are not required to file for a cybersecurity review by the Cyberspace Administration of China, or the CAC, for our

past issuance of securities to investors and maintaining our listing status on the Nasdaq, since our company already listed on Nasdaq

before promulgation of the Trial Measures is not required to file for a cybersecurity review by the CAC to maintain our listing status

on the Nasdaq Stock Market LLC, or the Nasdaq on which our securities have been listed.

Even though we are not required to complete the

filing procedures with the CSRC for our historical issuance of securities, we may be required by the Trial Measures to file with the

CSRC in connection with future securities offerings and listings outside of mainland China, including follow-on offerings, issuance of

convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities.

There remain substantial

uncertainties about the interpretation, application and implementation of the laws and regulations relating to the CSRC filing and CAC

cybersecurity review.

If we fail to obtain any requisite approvals with respect to future offerings ofour equity securities to foreign

investors, or if we inadvertently conclude that such permissions or approvals are not required, or if the applicable laws, regulations

or interpretations thereof change and we become subject to the requirement of additional permissions or approvals in the future, our

ability to execute our financing and equity offering plans may be significantly limited or completely hindered.

Any lack of or failure

to maintain requisite approvals, licenses or permits applicable to us or our PRC subsidiaries may have a material adverse impact on our

business, results of operations, financial condition and prospects, significantly limit or completely hinder our ability to offer or

continue to offer securities to investors, and cause the value of our securities to significantly decline or become worthless.

common stock may be delisted from the Nasdaq under the Holding Foreign Companies Accountable Act if the PCAOB is unable to adequately

inspect audit documentation located in China.

The delisting of our common stock, or the threat of their being delisted, may materially

and adversely affect the value of your investment.

Holding Foreign Companies Accountable Act, or HFCAA, was enacted on December 18, 2020, as amended by the Consolidated Appropriations

The HFCAA states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm

that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such ordinary

shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.

Holding Foreign Companies Accountable Act, or HFCAA, was enacted on December 18, 2020, as amended by the Consolidated Appropriations

The HFCAA states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm

that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such ordinary

shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.

March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements

of the HFCAA.

A company will be required to comply with these rules if the SEC identifies it as having a “non inspection”

year under a process to be subsequently established by the SEC.

Furthermore, on June 22, 2021, the U.S.

Senate passed the Accelerating

Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amends the HFCAA and requires the SEC to prohibit

an issuer’s securities from trading on any U.S.

stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive

years instead of three.

of the date of this annual report, the PCAOB has not issued any new determination that it is unable to inspect or investigate completely

registered public accounting firms headquartered in any jurisdiction.

As a result, we do not expect to be identified as a “Commission-Identified

Issuer” under the HFCAA for the fiscal year ended December 31, 2024, after we filed our annual report on Form 10-K for such fiscal

On December 29, 2022, the Consolidated Appropriations Act, 2023, was signed into law, which amended the HFCAA (i) to reduce the

number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two, and (ii)

so that any foreign jurisdiction could be the reason why the PCAOB does not have complete access to inspect or investigate a company’s

As it was originally enacted, the HFCAA applied only if the PCAOB’s inability to inspect or investigate because of a

position taken by an authority in the foreign jurisdiction where the relevant public accounting firm is located.

As a result of the Consolidated

Appropriations Act2023, the HFCAA now also applies if the PCAOB’s inability to inspect or investigate the relevant accounting firm

is due to a position taken by an authority in any foreign jurisdiction.

The denying jurisdiction does not need to be where the accounting

firm is located.

However, whether the PCAOB will be able to continue to conduct inspections and investigations completely to its satisfaction

of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong are subject to uncertainty and depends on a

number of factors out of our, and our auditor’s, control, including positions taken by authorities of the PRC.

Each year, the PCAOB

will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.

If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland

China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on

our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual

report on Form 10-K for the relevant fiscal year.

There can be no assurance that we would not be identified as a Commission-Identified

Issuer for any future fiscal year, and if we were identified for two consecutive years, we would become subject to the prohibition on

trading under the HFCAA.

auditor, GGF CPA LTD, Certified Public Accountants, the independent registered public accounting firm that issued the audit report included

in our annual report, an auditor of companies that are traded publicly in the United States and a China-based accounting firm registered

with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance

with the applicable professional standards.

Our auditor is based in the China and is subject to inspection by the PCAOB on a regular

our auditor’s working papers related to us and our subsidiaries are located in China.

If our auditor is not permitted to provide

requested audit work papers located in China to the PCAOB, investors would be deprived of the benefits of PCAOB’s oversight of

our auditor through such inspections which could result in limitation or restriction to our access to the U.S.

capital markets, and trading

of our securities may be prohibited under the HFCAA, which would result in the delisting of our securities from the Nasdaq.

the majority of our operations are in mainland China and our auditor has been located in mainland China, a jurisdiction where the U.S.

Public Company Accounting Oversight Board (“PCAOB”) is currently unable to conduct inspections without the approval of Chinese

authorities, there have been concerns regarding oversight of the audits of our financial statements filed with the SEC.

continues to be unable to inspect our audit firm in the PRC for three consecutive years, the HFCAA requires the SEC to prohibit the trading

of our securities on a national securities exchange, including Nasdaq, or on over-the- counter markets in the United States.

addition, the U.S.

Senate and U.S.

Representatives have each passed bills, which, if enacted, would decrease the number of non-inspection years from three consecutive years

to two, thus reducing the time period before our securities may be prohibited from trading on a U.S.

securities exchange or delisted from

The foregoing could adversely affect the market price of our securities and our ability to raise capital effectively.

Auditors of companies that are registered with

the SEC and traded publicly in the United States, including our independent registered public accounting firm, are required to be registered

with the PCAOB and to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and applicable

professional standards.

Because our current auditor is located in mainland China, a jurisdiction where the PCAOB is currently unable to

conduct inspections without the approval of Chinese authorities, our auditor is not currently inspected by the PCAOB.

PCAOB inspections of auditors located outside

of mainland China and Hong Kong have at times identified deficiencies in those auditors’ audit procedures and quality control procedures,

which may be addressed as part of the PCAOB’s inspection process to improve future audit quality.

The lack of PCAOB inspections

of audit work undertaken in mainland China and Hong Kong prevents the PCAOB from regularly evaluating our auditor’s audits and its

quality control procedures.

As a result, investors are deprived of the benefits of PCAOB inspections, which could result in limitations

or restrictions on our access to the U.S.

House of Representatives have each passed bills, which, if enacted, would decrease the number of non-inspection

years from three consecutive years to two, thus reducing the time period before our securities may be prohibited from trading on a U.S.

securities exchange or delisted from Nasdaq.

The foregoing could adversely affect the market price of our securities and our ability

to raise capital effectively.

of companies that are registered with the SEC and traded publicly in the United States, including our independent registered public accounting

firm, are required to be registered with the PCAOB and to undergo regular inspections by the PCAOB to assess their compliance with the

laws of the United States and applicable professional standards.

Because our current auditor is located in mainland China, a jurisdiction

where the PCAOB is currently unable to conduct inspections without the approval of Chinese authorities, our auditor is not currently

inspected by the PCAOB.

inspections of auditors located outside of mainland China and Hong Kong have at times identified deficiencies in those auditors’

audit procedures and quality control procedures, which may be addressed as part of the PCAOB’s inspection process to improve future

audit quality.

The lack of PCAOB inspections of audit work undertaken in mainland China and Hong Kong prevents the PCAOB from regularly

evaluating our auditor’s audits and its quality control procedures.

As a result, investors are deprived of the benefits of PCAOB

inspections, which could result in limitations or restrictions on our access to the U.S.

capital markets.

Furthermore, in recent years, the U.S.

and regulatory authorities have continued to express concerns about challenges in their oversight of financial statement audits of U.S.-listed

companies with significant operations in China.

As part of this continued focus on access to audit and other information currently protected

by national law, in particular under Chinese law, the United States enacted the HFCAA in December 2020.

The HFCAA requires the SEC to

identify issuers that have filed an annual report with an audit report issued by a registered public accounting firm that is located in

a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a restriction imposed

by a non-U.S.

authority in the auditor’s local jurisdiction (a “Commission-Identified Issuer”).

Under the HFCAA, if

the SEC conclusively identifies an issuer as a Commission-Identified Issuer for three consecutive years, the SEC is required to prohibit

the trading of the issuer’s securities on a national securities exchange or through any other method that is within the jurisdiction

of the SEC to regulate, including over-the counter markets in the United States.

Our securities may be prohibited from trading on the

Nasdaq or other U.S.

stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, and this ultimately could

result in our securities being delisted.

Furthermore, in June 2021, the U.S.

Senate passed

the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”),which, if enacted, would amend the HFCAA and require

the SEC to prohibit an issuer’s securities from trading on any U.S.

stock exchanges if its auditor is not subject to PCAOB inspections

for two consecutive years (as opposed to the three years under the HFCAA).

In February 2022, the U.S.

House of Representatives passed

the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (COMPETES) Act of 2022 (the “America

COMPETES Act”), which similarly would amend the HFCAA to shorten the number of non-inspection years from three years to two years.

The America COMPETES Act, however, includes a broader range of legislation than the AHFCA Act in response to the U.S.

Innovation and Competition

Act passed by the U.S.

in recent years, the U.S.

Congress and regulatory authorities have continued to express concerns about challenges in their oversight

of financial statement audits of U.S.-listed companies with significant operations in China.

As part of this continued focus on access

to audit and other information currently protected by national law, in particular under Chinese law, the United States enacted the HFCAA

in December 2020.

The HFCAA requires the SEC to identify issuers that have filed an annual report with an audit report issued by a registered

public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate

completely because of a restriction imposed by a non-U.S.

authority in the auditor’s local jurisdiction (a “Commission-Identified

Under the HFCAA, if the SEC conclusively identifies an issuer as a Commission-Identified Issuer for three consecutive

years, the SEC is required to prohibit the trading of the issuer’s securities on a national securities exchange or through any

other method that is within the jurisdiction of the SEC to regulate, including over-the counter markets in the United States.

Our securities

may be prohibited from trading on the Nasdaq or other U.S.

stock exchanges if our auditor is not inspected by the PCAOB for three consecutive

years, and this ultimately could result in our securities being delisted.

in June 2021, the U.S.

Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”),which, if enacted,

would amend the HFCAA and require the SEC to prohibit an issuer’s securities from trading on any U.S.

stock exchanges if its auditor

is not subject to PCAOB inspections for two consecutive years (as opposed to the three years under the HFCAA).

In February 2022, the

House of Representatives passed the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength

(COMPETES) Act of 2022 (the “America COMPETES Act”), which similarly would amend the HFCAA to shorten the number of non-inspection

years from three years to two years.

The America COMPETES Act, however, includes a broader range of legislation than the AHFCA Act in

response to the U.S.

Innovation and Competition Act passed by the U.S.

Senate in 2021.

House of Representatives and the U.S.

Senate will need to agree on amendments to these

respective bills to allow the legislature to pass their amended bills before the President can sign the bill into law.

It is unclear if

or when either of these bills will be signed into law.

In September 2021, the PCAOB adopted PCAOB Rule

6100, Board Determinations Under the Holding Foreign Companies Accountable Act, which provides a framework for the PCAOB to use when determining

whether the PCAOB is unable to inspect or investigate completely a registered public accounting firm located in a foreign jurisdiction

because of a position taken by one or more authorities in that jurisdiction for the purposes of the HFCAA.

PCAOB Rule 6100 establishes

the manner of the PCAOB’s determinations; the factors the PCAOB will evaluate and the documents and information it will consider

when assessing whether a determination is warranted; the form, public availability, effective date, and duration of such determinations;

Senate will need to agree on amendments to these respective bills to allow the legislature to pass their amended bills before the President

can sign the bill into law.

It is unclear if or when either of these bills will be signed into law.

September 2021, the PCAOB adopted PCAOB Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act, which provides

a framework for the PCAOB to use when determining whether the PCAOB is unable to inspect or investigate completely a registered public

accounting firm located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction for the

purposes of the HFCAA.

PCAOB Rule 6100 establishes the manner of the PCAOB’s determinations;

the factors the PCAOB will evaluate

and the documents and information it will consider when assessing whether a determination is warranted;

the form, public availability,

effective date, and duration of such determinations;

and the process by which the PCAOB will reaffirm, modify or vacate any such determinations.

In November 2021, the SEC announced that it

had approved Rule6100.

In December 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements

int he HFCAA for Commission-Identified Issuers, which became effective on January 10, 2022.

In addition, the PCAOB issued a Determination

Report, pursuant to PCAOB Rule 6100, which found that the PCAOB is unable to inspect or investigate completely registered public accounting

firms headquartered in mainland China and Hong Kong because of positions taken by Chinese authorities in those jurisdictions.

began to identify Commission- Identified Issuers for fiscal years beginning after December 18, 2020.

A Commission-Identified Issuer will

be required to comply with the submission and disclosure requirements in the annual report for each year in which it was so identified.

If an issuer is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended December 31, 2021, the

issuer will be required to comply with the submission or disclosure requirements in its annual report for the fiscal year ended December

If we are identified as a Commission-Identified Issuer that uses an auditor not subject to PCAOB inspection for three consecutive

years, or, if the AHFCAA or the America COMPETES Act is passed, two consecutive years, our securities may be delisted from Nasdaq as a

Delisting of our securities would force holders of our securities to sell their securities.

Further, we may be prohibited from

listing our securities on another U.S.

securities exchange, making our shares harder to trade for the investors, potentially reducing

demand and lowering our share price.

The market price of our securities could be adversely affected as a result of anticipated negative

impacts of such legislative or executive actions upon, as well as negative investor sentiment toward, companies with significant operations

in mainland China and Hong Kong that are listed in the United States, regardless of whether such actions are implemented and regardless

of our actual operating performance.

Our auditor, GGF CPA LTD., Certified Public Accountants,

is a China-based accounting firm registered with the PCAOB, and is subject to laws in the United States pursuant to which the PCAOB conducts

regular inspections to assess its compliance with the applicable professional standards.

Our auditor is headquartered in the China and

is subject to inspection by the PCAOB on a regular basis.

On August 26, 2022, the PCAOB signed the Protocol with the CSRC and the MOF

of the People’s Republic of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong.

In November 2021, the SEC announced that it had approved Rule6100.

In December 2021, the SEC adopted amendments to finalize rules implementing

the submission and disclosure requirements int he HFCAA for Commission-Identified Issuers, which became effective on January 10, 2022.

In addition, the PCAOB issued a Determination Report, pursuant to PCAOB Rule 6100, which found that the PCAOB is unable to inspect or

investigate completely registered public accounting firms headquartered in mainland China and Hong Kong because of positions taken by

Chinese authorities in those jurisdictions.

The SEC began to identify Commission- Identified Issuers for fiscal years beginning after

December 18, 2020.

A Commission-Identified Issuer will be required to comply with the submission and disclosure requirements in the annual

report for each year in which it was so identified.

If an issuer is identified as a Commission-Identified Issuer based on its annual

report for the fiscal year ended December 31, 2021, the issuer will be required to comply with the submission or disclosure requirements

in its annual report for the fiscal year ended December 31, 2022.

If we are identified as a Commission-Identified Issuer that uses an

auditor not subject to PCAOB inspection for three consecutive years, or, if the AHFCAA or the America COMPETES Act is passed, two consecutive

years, our securities may be delisted from Nasdaq as a result.

Delisting of our securities would force holders of our securities to sell

their securities.

Further, we may be prohibited from listing our securities on another U.S.

securities exchange, making our shares harder

to trade for the investors, potentially reducing demand and lowering our share price.

The market price of our securities could be adversely

affected as a result of anticipated negative impacts of such legislative or executive actions upon, as well as negative investor sentiment

toward, companies with significant operations in mainland China and Hong Kong that are listed in the United States, regardless of whether

such actions are implemented and regardless of our actual operating performance.

auditor, GGF CPA LTD., Certified Public Accountants, is a China-based accounting firm registered with the PCAOB, and is subject to laws

in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional

Our auditor is headquartered in the China and is subject to inspection by the PCAOB on a regular basis.

On August 26, 2022,

the PCAOB signed the Protocol with the CSRC and the MOF of the People’s Republic of China, governing inspections and investigations

of audit firms based in mainland China and Hong Kong.

The Protocol remains unpublished and is subject to further explanation and implementation.

Pursuant to the fact sheet with respect to

the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation

and the unfettered ability to transfer information to the SEC.

On December 15, 2022, the PCAOB announced that it was able to secure complete

access to inspect and investigate PCAOB registered public accounting firms headquartered in China mainland and Hong Kong completely in

The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered

public accounting firms headquartered in China mainland and Hong Kong.

However, whether the PCAOB will continue to be able to satisfactorily

conduct inspections of PCAOB-registered public accounting firms headquartered in China mainland and Hong Kong is subject to uncertainty

and depends on a number of factors out of our, and our auditor’s control.

The PCAOB is continuing to demand complete access in China

mainland and Hong Kong moving forward and was already making plans to resume regular inspections in early 2023 and beyond, as well as

to continue pursuing ongoing investigations and initiate new investigations as needed.

The PCAOB has indicated that it will act immediately

to consider the need to issue new determinations with the HFCAA if needed.

Therefore, the PCAOB in the future may determine that it is

unable to inspect or investigate completely registered public accounting firms in mainland China and Hong Kong.

Our auditor’s working

papers related to us and our subsidiaries are located in China.

If our auditor is not permitted to provide requested audit work papers

located in China to the PCAOB, investors would be deprived of the benefits of PCAOB’s oversight of our auditor through such inspections

which could result in limitation or restriction to our access to the U.S.

capital markets and trading of our securities may be prohibited

under the HFCAA, which would result in the delisting of our securities from the Nasdaq.

Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any

issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.

On December 15, 2022, the

PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB registered public accounting firms headquartered

in China mainland and Hong Kong completely in 2022.

The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable

to inspect or investigate completely registered public accounting firms headquartered in China mainland and Hong Kong.

However, whether

the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in

China mainland and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s control.

The PCAOB is continuing to demand complete access in China mainland and Hong Kong moving forward and was already making plans to resume

regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations

The PCAOB has indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.

Therefore, the PCAOB in the future may determine that it is unable to inspect or investigate completely registered public accounting

firms in mainland China and Hong Kong.

Our auditor’s working papers related to us and our subsidiaries are located in China.

our auditor is not permitted to provide requested audit work papers located in China to the PCAOB, investors would be deprived of the

benefits of PCAOB’s oversight of our auditor through such inspections which could result in limitation or restriction to our access

capital markets and trading of our securities may be prohibited under the HFCAA, which would result in the delisting of our

securities from the Nasdaq.

Unregistered Sale of Equity Securities and Use of Proceeds

1 unchanged sentence

Mine Safety Disclosures

Not applicable.

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-Q

Item 1A. Risk Factors