What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-03-27 compared with 2024-04-15 · 1039 added, 820 removed, 21 unchanged (99% of the section changed)

NEXT TECHNOLOGY HOLDING INC (Formerly known as “WeTrade Group, Inc”) (the “Company”) was incorporated in the State of

Wyoming on March 28, 2019.

As of December 31, 2023, the Company pursue two corporate strategies.

One business strategy is to continue

providing software development services, and the other strategy is to acquire and hold bitcoin.

provide AI-enabled software development services to our customers, which included developing, designing, and implementing various SAAS

software solutions for businesses of all types, including industrial and other businesses.

Acquisition Strategy

bitcoin acquisition strategy generally involves acquiring bitcoin with our liquid assets that exceed working capital requirements, and

from time to time, subject to market conditions, issuing debt or equity securities or engaging in other capital raising transactions

with the objective of using the proceeds to purchase bitcoin.

view our bitcoin holdings as long-term holdings and expect to continue to accumulate bitcoin.

We have not set any specific target for

the amount of bitcoin we seek to hold, and we will continue to monitor market conditions in determining whether to engage in additional

financings to purchase additional bitcoin.

overall strategy also contemplates that we may (i) periodically sell bitcoin for general corporate purposes, including to generate cash

for treasury management or in connection with strategies that generate tax benefits in accordance with applicable law, (ii) enter into

additional capital raising transactions that are collateralized by our bitcoin holdings, and (iii) consider pursuing additional strategies

to create income streams or otherwise generate funds using our bitcoin holdings.

believe that, due to its limited supply, bitcoin offers the opportunity for appreciation in value if its adoption increases and has the

potential to serve as a hedge against inflation in the long-term.

following table presents a roll-forward of our bitcoin holdings, including additional information related to our bitcoin purchases, and

digital asset impairment losses during the period:

asset original cost basis

asset gain / (losses)

asset market value

number of Bitcoin held

Balance at December 31, 2022

Next Technology Holding Inc (Formerly known as

“WeTrade Group, Inc”) (the “Company”) was incorporated in the State of Wyoming on March 28, 2019.

As of December

31, 2024, the Company pursue two corporate strategies.

One business strategy is to continue providing software development services, and

the other strategy is to acquire and hold Bitcoin.

Software development

We provide AI-enabled software development services

to our customers, which include developing, designing, and implementing various SAAS software solutions for businesses of all types, including

industrial and other businesses.

Bitcoin Acquisition Strategy

Our Bitcoin acquisition strategy generally involves

acquiring Bitcoin with our liquid assets that exceed working capital requirements, and from time to time, subject to market conditions,

issuing debt or equity securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase

We view our Bitcoin holdings as being held for

trading and expect to continue to accumulate Bitcoin.

We have not set any specific target for the amount of Bitcoin we seek to hold, and

we will continue to monitor market conditions in determining whether to engage in additional financing to purchase additional Bitcoin.

This overall strategy also contemplates that we

may (i) periodically sell Bitcoin for general corporate purposes, including to generate cash for treasury management or in connection

with strategies that generate tax benefits in accordance with applicable law, (ii) enter into additional capital raising transactions

that are collateralized by our Bitcoin holdings, and (iii) consider pursuing additional strategies to create income streams or otherwise

generate funds using our Bitcoin holdings.

We believe that, due to its limited supply, Bitcoin

offers the opportunity for appreciation in value if its adoption increases and has the potential to serve as a hedge against inflation

in the long term.

The following table presents a roll-forward of

our Bitcoin holdings, including additional information related to our Bitcoin purchases, fair value change in digital asset and number

of Bitcoin held during the year:

Digital asset

asset gain/ (loss)

at December 31, 2023

Permissions and Developments

counsel as to PRC law has advised us that the laws and regulations of the PRC do not currently have any material impact on our business,

financial condition or results of operations.

However, there is no assurance that there will not be any changes in the economic, political

and legal environment in Hong Kong in the future.

If there is a significant change to current political arrangements between mainland

China and Hong Kong, companies operating in Hong Kong such as us may face similar regulatory risks as those operated in PRC, including

their ability to offer securities to investors, list their securities on a U.S.

or other foreign exchange, conduct their business or

accept foreign investment.

In light of China’s recent expansion of authority in Hong Kong, there are risks and uncertainties which

we cannot foresee for the time being, and rules and regulations in China can change quickly with little or no advance notice.

government may intervene or influence our current and future operations in Hong Kong at any time, or may exert more control over offerings

conducted overseas and/or foreign investment in issuers likes ourselves.

are aware that the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain

areas in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision

over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity

reviews, and expanding the efforts in anti-monopoly enforcement.

example, on June 10, 2021, the Standing Committee of the National People’s Congress enacted the PRC Data Security Law, which took

effect on September 1, 2021.

The law requires data collection to be conducted in a legitimate and proper manner, and stipulates that,

for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection

system for data security.

July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly

issued a document to crack down on certain activities in the securities markets and promote the high-quality development of the capital

markets, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement

and judicial cooperation, to enhance supervision over Chinese-based companies listed overseas, and to establish and improve the system

of extraterritorial application of the PRC securities laws.

August 20, 2021, the 30th meeting of the Standing Committee of the 13th National People’s Congress voted and passed the “Personal

Information Protection Law of the People’s Republic of China,” or “PRC Personal Information Protection Law,”

which became effective on November 1, 2021.

The PRC Personal Information Protection Law applies to the processing of personal information

of natural persons within the territory of China that is carried out outside of China where (i) such processing is for the purpose of

providing products or services for natural persons within China, (ii) such processing is to analyze or evaluate the behavior of natural

persons within China, or (iii) there are any other circumstances stipulated by related laws and administrative regulations.

December 28, 2021, the Cyberspace Administration of China (the “CAC”) jointly with the relevant authorities formally published

Measures for Cybersecurity Review (2021) which took effect on February 15, 2022, replacing the former Measures for Cybersecurity Review

(2020) issued on July 10, 2021.

Measures for Cybersecurity Review (2021) stipulates that operators of critical information infrastructure

purchasing network products and services, and online platform operators (together with the operators of critical information infrastructure,

the “Operators”) carrying out data processing activities that affect or may affect national security, shall conduct a cybersecurity

review, and any online platform operator who controls more than one million users’ personal information must undergo a cybersecurity.

February 17, 2023, with the approval of the State Council, the China Securities Regulatory Commission (the “CSRC”) promulgated

the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five

supporting guidelines, which came into effect on March 31, 2023.

Pursuant to the Trial Measures, (i) domestic companies that seek to

offer or list securities overseas, both directly and indirectly, shall complete filing procedures with the CSRC pursuant to the requirements

of the Trial Measures within three working days following their submission of initial public offerings or listing applications.

domestic company fails to complete the required 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, such as an order to rectify, warnings and 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;

(ii) if the issuer meets both of the following criteria, the overseas offering

and listing conducted by such issuer shall be deemed an indirect overseas offering and listing by a PRC domestic company:

more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated

financial statements for the most recent fiscal year were derived from PRC domestic companies;

and (B) the majority of the issuer’s

business activities are carried out in mainland China, or its main place(s) of business are located in mainland China, or the majority

of its senior management team in charge of its business operations and management are PRC citizens or have their usual place(s) of residence

located in mainland China.

In such circumstances, where a PRC domestic company is seeking an indirect overseas offering and listing in

an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC,

and where an issuer makes an application for an initial public offering or listing in an overseas market, the issuer shall submit filings

with the CSRC within three business days after such application is submitted.

February 24, 2023, the CSRC, together with the MOF, National Administration of State Secrets Protection and National Archives Administration

of China, revised the Provisions issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration

of China in 2009.

The revised Provisions were issued under the title the “Provisions on Strengthening Confidentiality and Archives

Administration of Overseas Securities Offering and Listing by Domestic Companies,” and became effective on March 31, 2023 together

with the Trial Measures.

One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas

offering and listing, as is consistent with the Trial Measures.

The revised Provisions require that, among other things, (a) a domestic

company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals

or entities, including securities companies, securities service providers, and overseas regulators, any documents and materials that

contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to

law, and file with the secrecy administrative department at the same level;

and (b) a domestic company that plans to, either directly

or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities, including securities

companies, securities service providers, and overseas regulators, any other documents and materials that, if leaked, will be detrimental

to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations.

of the date of this Report, the revised Provisions have come into effect.

Any failure or perceived failure by our Company or our subsidiaries

to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and

regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ

to be investigated for criminal liability if suspected of committing a crime.

for the Basic Law, national laws of the PRC do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied

locally by promulgation or local legislation.

National laws that may be listed in Annex III are currently limited under the Basic Law

to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong

National laws and regulations relating to data protection, cybersecurity and anti-monopoly have not been listed in Annex III and

do not apply directly to Hong Kong and, as such, we are advised by our counsel as to PRC law that that the CAC and CSRC do not currently

have jurisdiction over companies operating in Hong Kong.

counsel as to PRC law has advised us that that we are not currently required to obtain any permission or approval from the CSRC, the

CAC or any other regulatory authority in the PRC for our operations, the trading of our securities on the OTCQB and the offering of our

securities to foreign investors.

The business of our subsidiary is not subject to cybersecurity review with the CAC, given that PRC laws

on data protection and cybersecurity do not currently apply to Hong Kong.

To the extent that if we become subject to such PRC laws in

the future, we do not believe we are required to conduct a cybersecurity review because (i) we do not possess a large amount of personal

information in our business operations;

and (ii) data processed in our business does not have a bearing on national security and thus

may not be classified as core or important data by the authorities.

In addition, we are not subject to merger control review by China’s

anti-monopoly enforcement agency as such PRC enforcement agency does not currently have jurisdiction over our Hong Kong operating subsidiary.

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

business or industry, if we inadvertently conclude that such approvals are not required when they are, or applicable laws, regulations,

or interpretations change and we are required to obtain approval in the future.

We may be subject to penalties and sanctions imposed

by the PRC regulatory agencies, including the CSRC, if we fail to comply with such rules and regulations, which could adversely affect

the ability of the Company’s securities to continue to trade on the OTCQB, which may cause the value of our securities to significantly

decline or become worthless.

addition, in light of the recent statements and regulatory actions by the PRC government, such as those related to Hong Kong’s

national security, the promulgation of regulations prohibiting foreign ownership of Chinese companies operating in certain industries,

which are constantly evolving, and anti-monopoly concerns, we may be subject to the risks of uncertainty of any future actions of the

PRC government in this regard including the risk that the PRC government could disallow our holding company structure, which may result

in a material change in our operations, including our ability to continue our existing holding company structure, carry on our current

business, accept foreign investments, and offer or continue to offer securities to our investors.

These adverse actions could cause the

value of our securities to significantly decline or become worthless.

may be prominent risks associated with our operations being in Hong Kong.

For example, as a U.S.-listed public company operating primarily

in Hong Kong, we may face heightened scrutiny, criticism and negative publicity, which could result in a material change in our operations

and the value of our common stock.

Additionally, we are subject to certain legal and operational risks associated with our business operations

in Hong Kong, which is subject to political and economic influence from China.

PRC laws and regulations governing our current business

operations are sometimes vague and uncertain, and we may face the risk that changes in the policies of the PRC government could have

a significant impact upon the business we may be able to conduct in Hong Kong and the profitability of such business.

Therefore, these

risks associated with being based in or having the majority of our operations in Hong Kong could likely cause the value of our securities

to significantly decline or be worthless.

Furthermore, these risks would likely result in a material change in our business operations

or a complete hinderance of our ability to offer or continue to offer our securities to investors.

Furthermore, changes in Chinese internal

regulatory mandates, such as the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A

Rules”), the Anti-Monopoly Law, the Cybersecurity Law and the Data Security Law, may target the Company’s corporate structure

and impact our ability to conduct business in Hong Kong, accept foreign investments, or list on an U.S.

original cost basis

Fair value change in digital asset

Digital asset

Balance on December 31, 2022

Digital asset purchase

Fair value gain on digital asset

Balance on December 31, 2023

Fair value gain on digital asset

Balance on December 31, 2024

Regulatory Permissions and Developments

Our counsel as to PRC law has advised us that

the laws and regulations of the PRC do not currently have any material impact on our business, financial condition or results of operations.

However, there is no assurance that there will not be any changes in the economic, political and legal environment in Hong Kong in the

If there is a significant change to current political arrangements between mainland China and Hong Kong, companies operating in

Hong Kong such as us may face similar regulatory risks as those operated in the PRC, including their ability to offer securities to investors,

list their securities on a U.S.

or other foreign exchange, conduct their business or accept foreign investment.

In light of China’s

recent expansion of authority in Hong Kong, there are risks and uncertainties which we cannot foresee for the time being, and rules and

regulations in China can change quickly with little or no advance notice.

The Chinese government may intervene or influence our current

and future operations in Hong Kong at any time, or may exert more control over offerings conducted overseas and/or foreign investment

in issuers like ourselves.

We are aware that the PRC government initiated

a series of regulatory actions and statements to regulate business operations in certain areas in China with little advance notice, including

cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable

interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly

For example, on June 10, 2021, the Standing Committee

of the National People’s Congress enacted the PRC Data Security Law, which took effect on September 1, 2021.

The law requires data

collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing

activities must be conducted based on data classification and a hierarchical protection system for data security.

On July 6, 2021, the General Office of the Communist

Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on certain activities

in the securities markets and promote the high-quality development of the capital markets, which, among other things, requires the relevant

governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over

Chinese-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities

On August 20, 2021, the 30th meeting of the Standing

Committee of the 13th National People’s Congress voted and passed the “Personal Information Protection Law of the People’s

Republic of China,” or “PRC Personal Information Protection Law,” which became effective on November 1, 2021.

Personal Information Protection Law applies to the processing of personal information of natural persons within the territory of China

that is carried out outside of China where (i) such processing is for the purpose of providing products or services for natural persons

within China, (ii) such processing is to analyze or evaluate the behavior of natural persons within China, or (iii) there are any other

circumstances stipulated by related laws and administrative regulations.

On December 28, 2021, the Cyberspace Administration

of China (the “CAC”) jointly with the relevant authorities formally published Measures for Cybersecurity Review (2021) which

took effect on February 15, 2022, replacing the former Measures for Cybersecurity Review (2020) issued on July 10, 2021.

Cybersecurity Review (2021) stipulates that operators of critical information infrastructure purchasing network products and services,

and online platform operators (together with the operators of critical information infrastructure, the “Operators”) carrying

out data processing activities that affect or may affect national security, shall conduct a cybersecurity review, and any online platform

operator who controls more than one million users’ personal information must undergo a cybersecurity review by the cybersecurity

review office if it seeks to be listed in a foreign country.

On February 17, 2023, with the approval of the

State Council, the China Securities Regulatory Commission (the “CSRC”) promulgated the Trial Administrative Measures of Overseas

Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which came into effect on

March 31, 2023.

Pursuant to the Trial Measures, (i) domestic companies that seek to offer or list securities overseas, both directly and

indirectly, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days

following their submission of initial public offerings or listing applications.

If a domestic company fails to complete the required 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, such as an order to rectify, warnings and 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;

(ii) if the issuer meets both of the following criteria, the overseas offering and listing conducted by such issuer shall be deemed an

indirect overseas offering and listing by a PRC domestic company:

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

profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year were

derived from PRC domestic companies;

and (B) the majority of the issuer’s business activities are carried out in mainland China,

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

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

In such circumstances,

where a PRC domestic company is seeking an indirect overseas offering and listing in an overseas market, the issuer shall designate a

major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for an initial

public offering or listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such

application is submitted.

On February 24, 2023, the CSRC, together with

the MOF, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions issued

by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009.

Provisions were issued under the title the “Provisions on Strengthening Confidentiality and Archives Administration of Overseas

Securities Offering and Listing by Domestic Companies,” and became effective on March 31, 2023 together with the Trial Measures.

One of the major revisions to the revised Provisions is to expand their application to cover indirect overseas offering and listing, as

is consistent with the Trial Measures.

The revised Provisions require that, among other things, (a) a domestic company that plans to,

either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities, including

securities companies, securities service providers, and overseas regulators, any documents and materials that contain state secrets or

working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy

administrative department at the same level;

and (b) a domestic company that plans to, either directly or indirectly through its overseas

listed entity, publicly disclose or provide to relevant individuals and entities, including securities companies, securities service providers,

and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest,

shall strictly fulfill relevant procedures stipulated by applicable national regulations.

As of the date of this Report, the revised Provisions

have come into effect.

Any failure or perceived failure by our Company or our subsidiaries to comply with the above confidentiality and

archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities

being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected

of committing a crime.

Except for the Basic Law, national laws

of the PRC do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local

National laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope

of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong.

National laws and regulations

relating to data protection, cybersecurity and anti-monopoly have not been listed in Annex III and do not apply directly to Hong Kong

and, as such, we are advised by our counsel as to PRC law that the CAC and CSRC do not currently have jurisdiction over companies operating

in Hong Kong.

Our counsel as to PRC law has advised us that

we are not currently required to obtain any permission or approval from the CSRC, the CAC or any other regulatory authority in the PRC

for our operations, the trading of our securities on the NASDAQ and the offering of our securities to foreign investors.

of our subsidiary is not subject to cybersecurity review with the CAC, given that PRC laws on data protection and cybersecurity do not

currently apply to Hong Kong.

To the extent that if we become subject to such PRC laws in the future, we do not believe we are required

to conduct a cybersecurity review because (i) we do not possess a large amount of personal information in our business operations;

(ii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data

by the authorities.

In addition, we are not subject to merger control review by China’s anti-monopoly enforcement agency as such

PRC enforcement agency does not currently have jurisdiction over our Hong Kong operating subsidiary.

However, our operations could be

adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry, if we inadvertently

conclude that such approvals are not required when they are, or applicable laws, regulations, or interpretations change and we are required

to obtain approval in the future.

We may be subject to penalties and sanctions imposed by the PRC regulatory agencies, including the CSRC,

if we fail to comply with such rules and regulations, which could adversely affect the ability of the Company’s securities to continue

to trade on the NASDAQ, which may cause the value of our securities to significantly decline or become worthless.

In addition, in light of the recent statements

and regulatory actions by the PRC government, such as those related to Hong Kong’s national security, the promulgation of regulations

prohibiting foreign ownership of Chinese companies operating in certain industries, which are constantly evolving, and anti-monopoly concerns,

we may be subject to the risks of uncertainty of any future actions of the PRC government in this regard including the risk that the PRC

government could disallow our holding company structure, which may result in a material change in our operations, including our ability

to continue our existing holding company structure, carry on our current business, accept foreign investments, and offer or continue to

offer securities to our investors.

These adverse actions could cause the value of our securities to significantly decline or become worthless.

There may be prominent risks associated with our

operations being in Hong Kong.

For example, as a U.S.-listed public company operating primarily in Hong Kong, we may face heightened scrutiny,

criticism and negative publicity, which could result in a material change in our operations and the value of our common stock.

Additionally,

we are subject to certain legal and operational risks associated with our business operations in Hong Kong, which is subject to political

and economic influence from China.

PRC laws and regulations governing our current business operations are sometimes vague and uncertain,

and we may face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be

able to conduct in Hong Kong and the profitability of such business.

Therefore, these risks associated with being based in or having the

majority of our operations in Hong Kong could likely cause the value of our securities to significantly decline or be worthless.

these risks would likely result in a material change in our business operations or a complete hinderance of our ability to offer or continue

to offer our securities to investors.

Furthermore, changes in Chinese internal regulatory mandates, such as the Regulations on Mergers

and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), the Anti-Monopoly Law, the Cybersecurity

Law and the Data Security Law, may target the Company’s corporate structure and impact our ability to conduct business in Hong Kong,

accept foreign investments, or list on a U.S.

or other foreign exchange.

government, including the SEC, has recently made statements and taken certain actions that may lead to significant changes to U.S.

and international relations, and will impact companies with connections to the United States or China (including Hong Kong).

has issued statements primarily focused on companies with significant China-based operations.

For example, on July 30, 2021, Gary Gensler,

Chairman of the SEC, issued a Statement on Investor Protection Related to Recent Developments in China, pursuant to which Chairman Gensler

stated that he has asked the SEC staff to engage in targeted additional reviews of filings for companies with significant China-based

laws and regulations applicable to bitcoin and digital assets are evolving and subject to interpretation and change.

around the world have reacted differently to digital assets;

certain governments have deemed them illegal, and others have allowed their

use and trade without restriction, while in some jurisdictions, such as the U.S., digital assets are subject to overlapping, uncertain

and evolving regulatory requirements.

digital assets have grown in both popularity and market size, the U.S.

government, including the SEC, has recently

made statements and taken certain actions that may lead to significant changes to U.S.

and international relations, and will impact companies

with connections to the United States or China (including Hong Kong).

The SEC has issued statements primarily focused on companies with

significant China-based operations.

For example, on July 30, 2021, Gary Gensler, Chairman of the SEC, issued a Statement on Investor Protection

Related to Recent Developments in China, pursuant to which Chairman Gensler stated that he has asked the SEC staff to engage in targeted

additional reviews of filings for companies with significant China-based operations.

Government Regulation

The laws and regulations applicable to Bitcoin

and digital assets are evolving and subject to interpretation and change.

Governments around the world have reacted differently

to digital assets;

certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while

in some jurisdictions, such as the U.S., digital assets are subject to overlapping, uncertain and evolving regulatory requirements.

As digital assets have grown in both popularity

and market size, the U.S.

Executive Branch, Congress and a number of U.S.

federal and state

agencies, including the Financial Crimes Enforcement Network, the Commodity Futures Trading Commission (“CFTC”), the SEC,

the Financial Industry Regulatory Authority, the Consumer Financial Protection Bureau, the Department of Justice, the Department of Homeland

Security, the Federal Bureau of Investigation, the IRS and state financial regulators, have been examining the operations of digital

asset networks, digital asset users and digital asset exchanges, with particular focus on the extent to which digital assets can be used

to violate state or federal laws, including to facilitate the laundering of proceeds of illegal activities or the funding of criminal

or terrorist enterprises, and the safety and soundness and consumer-protective safeguards of exchanges or other service-providers that

hold, transfer, trade or exchange digital assets for users.

Many of these state and federal agencies have issued consumer advisories

regarding the risks posed by digital assets to investors.

In addition, federal and state agencies, and other countries have issued rules

or guidance regarding the treatment of digital asset transactions and requirements for businesses engaged in activities related to digital

on the regulatory characterization of bitcoin, the markets for bitcoin in general, and our activities in particular, our business and

our bitcoin acquisition strategy may be subject to regulation by one or more regulators in the United States and globally.

future regulatory actions may alter, to a materially adverse extent, the nature of digital assets markets, the participation of industry

participants, including service providers and financial institutions in these markets, and our ability to pursue our bitcoin strategy.

federal and state agencies, including the Financial Crimes Enforcement

Network, the Commodity Futures Trading Commission (“CFTC”), the SEC, the Financial Industry Regulatory Authority, the Consumer

Financial Protection Bureau, the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the

IRS and state financial regulators, have been examining the operations of digital asset networks, digital asset users and digital asset

exchanges, with particular focus on the extent to which digital assets can be used to violate state or federal laws, including to facilitate

the laundering of proceeds of illegal activities or the funding of criminal or terrorist enterprises, and the safety and soundness and

consumer-protective safeguards of exchanges or other service-providers that hold, transfer, trade or exchange digital assets for users.

Many of these state and federal agencies have issued consumer advisories regarding the risks posed by digital assets to investors.

addition, federal and state agencies, and other countries have issued rules or guidance regarding the treatment of digital asset transactions

and requirements for businesses engaged in activities related to digital assets.

Depending on the regulatory characterization of

Bitcoin, the markets for Bitcoin in general, and our activities in particular, our business and our Bitcoin acquisition strategy may be

subject to regulation by one or more regulators in the United States and globally.

Ongoing and future regulatory actions may alter, to

a materially adverse extent, the nature of digital assets markets, the participation of industry participants, including service providers

and financial institutions in these markets, and our ability to pursue our Bitcoin strategy.

Additionally, U.S.

state and federal and foreign regulators and legislatures have taken action against industry participants, including

digital assets businesses, and enacted restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal

activity stemming from digital assets activity.

federal and state energy regulatory authorities are also monitoring the total electricity

consumption of cryptocurrency mining, and the potential impacts of cryptocurrency mining to the supply and dispatch functionality of

the wholesale grid and retail distribution systems.

Many state legislative bodies have passed, or are actively considering, legislation

to address the impact of cryptocurrency mining in their respective states.

CFTC takes the position that some digital assets, including bitcoin, fall within the definition of a “commodity” under the

Commodities Exchange Act of 1936, as amended (the “CEA”).

Under the CEA, the CFTC has broad enforcement authority to police

market manipulation and fraud in spot digital assets markets in which we may transact.

Beyond instances of fraud or manipulation, the

CFTC generally does not oversee cash or spot market exchanges or transactions involving digital asset commodities that do not utilize

margin, leverage, or financing.

In addition, CFTC regulations and CFTC oversight and enforcement authority apply with respect to futures,

swaps, other derivative products and certain retail leveraged commodity transactions involving digital asset commodities, including the

markets on which these products trade.

SEC and its staff have taken the position that certain other digital assets fall within the definition of a “security” under

state and federal and

foreign regulators and legislatures have taken action against industry participants, including digital assets businesses, and enacted

restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity stemming from digital assets

federal and state energy regulatory authorities are also monitoring the total electricity consumption of cryptocurrency

mining, and the potential impacts of cryptocurrency mining to the supply and dispatch functionality of the wholesale grid and retail distribution

Many state legislative bodies have passed, or are actively considering, legislation to address the impact of cryptocurrency mining

in their respective states.

The CFTC takes the position that some digital

assets, including Bitcoin, fall within the definition of a “commodity” under the Commodities Exchange Act of 1936, as amended

Under the CEA, the CFTC has broad enforcement authority to police market manipulation and fraud in spot digital

assets markets in which we may transact.

Beyond instances of fraud or manipulation, the CFTC generally does not oversee cash or spot market

exchanges or transactions involving digital asset commodities that do not utilize margin, leverage, or financing.

In addition, CFTC regulations

and CFTC oversight and enforcement authority apply with respect to futures, swaps, other derivative products and certain retail leveraged

commodity transactions involving digital asset commodities, including the markets on which these products trade.

The SEC and its staff have taken the position

that certain other digital assets fall within the definition of a “security” under the U.S.

federal securities laws.

Public statements made by senior officials and senior members of the staff at the SEC indicate that

the SEC does not consider bitcoin to be a security under the federal securities laws.

However, such statements are not official policy

statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot

be generalized to any other digital assets.

addition, since transactions in bitcoin provide a degree of anonymity, they are susceptible to misuse for criminal activities, such as

money laundering.

This misuse, or the perception of such misuse, could lead to greater regulatory oversight of bitcoin and Bitcoin platforms,

and there is the possibility that law enforcement agencies could close bitcoin platforms or other bitcoin-related infrastructure with

little or no notice and prevent users from accessing or retrieving bitcoin held via such

or infrastructure.

For example, in her January 2021 nomination hearing before the Senate Finance Committee, Treasury Secretary Janet

Yellen noted that cryptocurrencies have the potential to improve the efficiency of the financial system but that they can be used to

finance terrorism, facilitate money laundering, and support activities that threaten U.S.

national security interests and the integrity

statements made by senior officials and senior members of the staff at the SEC indicate that the SEC does not consider Bitcoin to be a

security under the federal securities laws.

However, such statements are not official policy statements by the SEC and reflect only the

speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized to any other digital assets.

In addition, since transactions in Bitcoin provide

a degree of anonymity, they are susceptible to misuse for criminal activities, such as money laundering.

This misuse, or the perception

of such misuse, could lead to greater regulatory oversight of Bitcoin and Bitcoin platforms, and there is the possibility that law enforcement

agencies could close Bitcoin platforms or other Bitcoin-related infrastructure with little or no notice and prevent users from accessing

or retrieving Bitcoin held via such platforms or infrastructure.

For example, in her January 2021 nomination hearing before the Senate

Finance Committee, Treasury Secretary Janet Yellen noted that cryptocurrencies have the potential to improve the efficiency of the financial

system but that they can be used to finance terrorism, facilitate money laundering, and support activities that threaten U.S.

security interests and the integrity of the U.S.

and international financial systems.

Treasury Department’s Office of Foreign Assets Control has issued updated

advisories regarding the use of virtual currencies, added a number of digital asset exchanges and service providers to the Specially

Designated Nationals and Blocked Persons list and engaged in several enforcement actions, including a series of enforcement actions that

have either shut down or significantly curtailed the operations of several smaller digital asset exchanges associated with Russian and/or

North Korean nationals.

noted above, activities involving bitcoin and other digital assets may fall within the jurisdiction of more than one financial regulator

and various courts and such laws and regulations are rapidly evolving and increasing in scope.

On March 9, 2022, President Biden signed

an executive order relating to cryptocurrencies.

While the executive order did not mandate the adoption of any specific regulations,

it instructed various federal agencies to consider potential regulatory measures, including the evaluation of the creation of a U.S.

On September 16, 2022, the White House released a framework for digital asset development, based on reports from various government

agencies, including the U.S.

Department of Treasury, the Department of Justice, and the Department of Commerce.

Among other things, the

framework encourages regulators to pursue enforcement actions, issue guidance and rules to address current and emergent risks, support

the development and use of innovative technologies by payment providers to increase access to instant payments, consider creating a federal

framework to regulate nonbank payment providers, and evaluate whether to call upon Congress to amend the Bank Secrecy Act and laws against

unlicensed money transmission to apply explicitly to digital asset service providers.

There have also been several bills introduced in

Congress that propose to establish additional regulation and oversight of the digital asset markets.

of Holding Foreign Company Accountable Act

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

of the Holding Foreign Company Accountable Act, or the HFCAA.

An identified issuer 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.

In June 2021,

the Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if signed into law, would reduce the time period

for the delisting of foreign companies under the HFCAA to two consecutive years instead of three years.

If our auditor cannot be inspected

by the Public Company Accounting Oversight Board, or the PCAOB, for two consecutive years, the trading of our securities on any U.S.

national securities exchanges, as well as any over-the-counter trading in the U.S., will be prohibited.

On September 22, 2021, the PCAOB

adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under

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

because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, the SEC issued amendments to finalize

rules implementing the submission and disclosure requirements in the HFCAA.

The rules apply to registrants that the SEC identifies as

having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction

and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered

public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions.

On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Statement of Protocol”)

with the China Securities Regulatory Commission and the Ministry of Finance of China.

The terms of the Statement of Protocol would grant

the PCAOB complete access to audit work papers and other information so that it may inspect and investigate PCAOB-registered

accounting firms headquartered in China and Hong Kong.

According to the PCAOB, its December 2021 determinations under the HFCAA

remain in effect.

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 mainland China 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 mainland China and

Under the PCAOB’s rules, a reassessment of a determination under the HFCAA may result in the PCAOB reaffirming,

modifying or vacating the determination.

In the event it is later determined that the PCAOB is unable to inspect or investigate

completely the Company’s auditor because of a position taken by an authority in a foreign

jurisdiction,

then such lack of inspection could cause trading in the Company’s securities to be prohibited under the HFCAA ultimately result

in a determination by a securities exchange to delist the Company’s securities.

of Cash to and from Our Subsidiaries

Treasury Department’s Office of Foreign

Assets Control has issued updated advisories regarding the use of virtual currencies, added a number of digital asset exchanges and service

providers to the Specially Designated Nationals and Blocked Persons list and engaged in several enforcement actions, including a series

of enforcement actions that have either shut down or significantly curtailed the operations of several smaller digital asset exchanges

associated with Russian and/or North Korean nationals.

Our business operations are not currently impacted

by the cryptocurrency restrictions imposed by the Chinese government (collectively, the “PRC Crypto Restrictions”) in any

material respect, even though the Chinese government has adopted an increasingly stringent approach in recent years, as outlined and discussed

On December 3, 2013, the People’s Bank of

China, China’s central bank (“PBoC”), issued the Notice on Preventing Risks Associated with Bitcoin , emphasizing

that Bitcoin should be deemed as a virtual commodity rather than a fiat currency.

This notice prohibits financial and payment institutions

in China from providing Bitcoin-related services, highlighting the potential risks of money-laundering associated with Bitcoin.

Further tightening the regulatory environment,

on September 4, 2017, the PBoC issued the Announcement on Preventing Risks Associated with Financing Activities through ICOs , which

prohibits the initial coin offerings (ICOs) which was characterized as a potentially criminal activity, potentially involving suspected

illegal issuance and sales of tokens and notes, unauthorized public issuance of securities, illegal fundraising, financial fraud, and

Ponzi schemes.

The most recent regulatory measure came on September

24, 2021, when the PBoC, along with nine other Chinese national government bodies, issued the Notice Regarding Further Prevention and

Management of Risks Associated with Cryptocurrency Trading Hype banning overseas cryptocurrency exchanges from providing services

to residents in mainland China.

This notice also prohibits individuals in mainland China from working for overseas exchanges, and restricts

companies and individuals from providing marketing, payment, settlement services or technical support to these exchanges.

A comprehensive

monitoring system was also established to oversee cryptocurrency activities of individuals and companies in mainland China, giving local

authorities extensive authority to monitor their regions and raise early warning flags.

We believe our business operations are not currently

subject to these PRC Crypto Restrictions.

We are not a PRC company, nor do we plan to open or retain any PRC subsidiaries.

a financial or payment institution operating within China either.

We closed our PRC subsidiaries in July 2024 and currently do not conduct

any business activities within China.

We do not engage in any exchange business between fiat currency and cryptocurrency or among cryptocurrencies.

We do not issue digital tokens through ICOs or otherwise, nor do we provide marketing, payment, settlement services or related technical

support for any cryptocurrency exchanges.

Our involvement with Bitcoin is limited to purchasing

and holding Bitcoins, which is not prohibited under the PRC Crypto Restrictions.

Furthermore, the holding of certain executive roles by

Chinese citizens in our company does not violate any PRC Crypto Restrictions.

While our current business operations are not

subject to the PRC Crypto Restrictions, future changes in our business strategies or operations could expose us to these restrictions.

In addition, the PRC Crypto Restrictions are continuously evolving and can be subject to significant changes.

There is a possibility that

the Chinese government may broaden its regulatory scope to include a wider range of cryptocurrency-related activities, potentially impacting

companies operating outside of China.

If new regulations are introduced or if our business evolves to include activities that fall under

the PRC jurisdiction, we could face increased regulatory scrutiny, compliance costs or operational restrictions, which, in turn, could

materially affect our current or anticipated business operations.

As noted above, activities involving Bitcoin and

other digital assets may fall within the jurisdiction of more than one financial regulator and various courts and such laws and regulations

are rapidly evolving and increasing in scope.

federal government, states, regulatory agencies, and foreign countries may also

enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price

of Bitcoin or the ability of individuals or institutions such as us to own or transfer Bitcoin.

March 9, 2022, President Biden signed an executive order relating to cryptocurrencies.

While the executive order did not mandate the

adoption of any specific regulations, it instructed various federal agencies to consider potential regulatory measures, including the

evaluation of the creation of a U.S.

On September 16, 2022, the White House released a framework for digital asset development,

based on reports from various government agencies, including the U.S.

Department of Treasury, the Department of Justice, and the Department

Among other things, the framework encourages regulators to pursue enforcement actions, issue guidance and rules to address

current and emergent risks, support the development and use of innovative technologies by payment providers to increase access to instant

payments, consider creating a federal framework to regulate nonbank payment providers, and evaluate whether to call upon Congress to

amend the Bank Secrecy Act and laws against unlicensed money transmission to apply explicitly to digital asset service providers.

have also been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset

April 4, 2022, SEC Chair Gary Gensler announced that he has asked SEC staff to work (i) to

(ii) with the CFTC

on how to jointly address digital asset platforms that trade both securities and non-securities;

(iii) on segregating out digital asset platforms’ custody of customer assets, if appropriate;

and (iv) on segregating out the market making functions of digital asset platforms, if appropriate.

Similarly, foreign government authorities have recently expanded their efforts to restrict

certain activities related to Bitcoin and other digital assets.

September 8, 2022, the White House Office of Science and Technology Policy issued a report

in coordination with other federal agencies relating to the climate and energy implications

of digital assets, including Bitcoin, in the United States.

Among its finding are that digital

assets are energy intensive and drive significant environmental impacts, and the report recommends

further study of the environmental impact of digital assets and the development of environmental

performance regulations for digital asset miners, which may include limiting or eliminating

digital assets that use high energy intensity consensus mechanisms, including the proof-of-work

consensus mechanisms on which the Bitcoin blockchain is based.

March 1, 2023, the U.S.

Under Secretary for Domestic Finance provided an update on the development

CBDC, indicating that the U.S.

Department of Treasury would be providing an initial

set of findings and recommendations regarding the development and adoption of a U.S.

in the coming months.

April 14, 2023, the SEC reopened the comment period for its proposal to amend the definition

of “exchange” under Exchange Act Rule 3b-16 to encompass trading and communication

protocol systems for digital asset securities and trading systems that use distributed ledger

or blockchain technology, including both so-called “centralized” and “decentralized”

trading systems.

The comment period is now closed.

The SEC may determine whether to adopt

the revised definition after an evaluation of comments provided during the comment period.

If adopted in its proposed form, the new definition would have a sweeping impact on digital

asset trading venues and other digital asset industry participants.

European Union’s Markets in Crypto Assets Regulation (“MiCA”), a comprehensive

digital asset regulatory framework for the issuance and use of digital assets, like Bitcoin,

became effective in June 2023, with various requirements phasing into effect through 2024.

June 5, 2023, the SEC filed a complaint against Binance Holdings Ltd.

and other affiliated

entities in federal district court for the District of Columbia, alleging, among other claims

related to the operation of the affiliates and their platforms, that:

(i) the Binance entities

commingled and diverted customer assets;

(ii) various affiliates of Binance Holdings Ltd.

operated as exchanges, brokers, dealers and clearing agencies without registration under

the Exchange Act;

(iii) Binance Holdings Ltd.

engaged in the unregistered offer and sale

of securities;

(iv) affiliates of Binance Holdings Ltd.

operated in a manner to evade U.S.

federal securities laws, and (v) affiliates of Binance Holdings Ltd.

misled customers and

investors concerning the existence and adequacy of market surveillance and controls to detect

and prevent manipulative trading.

June 6, 2023, the SEC filed a complaint against Coinbase, Inc.

and other affiliated entities

in federal district court in the Southern District of New York, alleging, among other claims:

(i) that Coinbase, Inc.

violated the Exchange Act by failing to register with the SEC as

a national securities exchange, broker-dealer, and clearing agency, in connection with activities

involving certain identified digital assets that the SEC’s complaint alleges are securities,

(ii) that Coinbase, Inc.

violated the Securities Act of 1933, as amended (the “Securities

Act”) by failing to register with the SEC the offer and sale of securities in connection

with its staking program, and (iii) that Coinbase Global Inc.

is jointly and severally liable

as a control person under the Exchange Act for Coinbase Inc.’s violations of the Exchange

Act to the same extent as Coinbase Inc.

the United Kingdom, on June 29, 2023, the Financial Services and Markets Act 2023 (“FSMA

2023”) became law.

FSMA 2023 (i) clarifies that “cryptoassets” are subject

to the regulated activities and financial promotion orders and (ii) establishes that digital

assets firms, including exchanges and custodians, operating in or providing services to the

United Kingdom carrying out certain activities involving “cryptoassets” are performing

a regulated activity that needs to be authorized by the Financial Conduct Authority and may

also be subject to oversight from the Bank of England.

Several additional pieces of proposed

legislation in the United Kingdom, including The Public Offers and Admissions to Trading

Regulations 2023, may subject “cryptoassets” to further regulation.

gave the UK Treasury powers to create financial market infrastructure sandboxes.

The legislative

framework for the UK’s Digital Securities Sandbox will take effect in January 2024.

November 20, 2023, the SEC filed a complaint against Payward Inc.

and Payward Ventures Inc.,

together known as Kraken, alleging, among other claims, that Kraken’s crypto trading

platform was operating as an unregistered securities exchange, broker, dealer, and clearing

The SEC’s complaint also alleges that Kraken’s business practices, deficient

internal controls, and poor recordkeeping practices present a range of risks for its customers.

November 21, 2023, Binance Holdings Ltd.

and its then chief executive officer reached a settlement

with the U.S.

Department of Justice, CFTC, the U.S.

Department of Treasury’s Office

of Foreign Asset Control, and the Financial Crimes Enforcement Network to resolve a multi-year

investigation by the agencies and a civil suit brought by the CFTC, pursuant to which Binance

Holdings Ltd.

agreed to, among other things, pay $4.3 billion in penalties across the four

agencies and to discontinue its operations in the United States.

Binance also acknowledged

that it willfully operated an unlicensed money-transmitting business, pleaded guilty to criminal

charges of not having adequate anti-money laundering protocols in place and committed violations

of the International Emergency Economic Powers Act, and its then chief executive officer

pleaded guilty to failing to maintain an effective anti-money laundering program and resigned

as chief executive officer of Binance.

This settlement does not include any settlement of

the SEC’s complaint against Binance referenced above.

October 10, 2024, the SEC filed a complaint against Cumberland DRW LLC, alleging violations

of Section 15(a) of the Exchange Act (related to regulation of “brokers” and

“dealers”), including references to Cumberland’s activities regarding Bitcoin.

Implications of Holding Foreign Company Accountable

On March 24, 2021, the SEC adopted interim final

rules relating to the implementation of certain disclosure and documentation requirements of the Holding Foreign Company Accountable Act,

or the HFCAA.

An identified issuer 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.

In June 2021, the Senate passed the Accelerating Holding Foreign Companies

Accountable Act, which, if signed into law, would reduce the time period for the delisting of foreign companies under the HFCAA to two

consecutive years instead of three years.

If our auditor cannot be inspected by the Public Company Accounting Oversight Board, or the

PCAOB, for two consecutive years, the trading of our securities on any U.S.

national securities exchanges, as well as any over-the-counter

trading in the U.S., will be prohibited.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides

a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate

completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities

in that jurisdiction.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements

in the HFCAA.

The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a

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

because of a position taken by an authority in foreign jurisdictions.

On December 16, 2021, the PCAOB issued a report on its determinations

that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in

Hong Kong, because of positions taken by PRC authorities in those jurisdictions.

On August 26, 2022, the PCAOB announced that

it had signed a Statement of Protocol (the “Statement of Protocol”) with the China Securities Regulatory Commission and the

Ministry of Finance of China.

The terms of the Statement of Protocol would grant the PCAOB complete access to audit work papers

and other information so that it may inspect and investigate PCAOB-registered accounting firms headquartered in China and Hong Kong.

According to the PCAOB, its December 2021 determinations under the HFCAA remain in effect.

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 mainland

China and Hong Kong completely in 2022.

The PCAOB Board vacated its previous 2021 determination that the PCAOB was unable to inspect or

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

Under the PCAOB’s

rules, a reassessment of a determination under the HFCAA may result in the PCAOB reaffirming, modifying or vacating the determination.

the event it is later determined that the PCAOB is unable to inspect or investigate completely the Company’s auditor because of

a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause trading in the Company’s securities

to be prohibited under the HFCAA ultimately result in a determination by a securities exchange to delist the Company’s securities.

Transfers of Cash to and from Our Subsidiaries

Next Technology Holding Inc.

is a holding company with no operations of its own.

We conduct our operations in Hong Kong and China primarily

through our subsidiaries in both Hong Kong and China.

We may rely on dividends to be paid by our Hong Kong and PRC subsidiaries to fund

our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders,

to service any debt we may incur and to pay our operating expenses.

If our Hong Kong and PRC subsidiaries incur debt on their own behalf

in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

is a holding company.

We conduct our operations in Hong Kong primarily through our subsidiaries in both Hong Kong and BVI.

We may rely on dividends to be paid

by our Hong Kong and BVI subsidiaries to fund our cash and financing requirements, including the funds necessary to pay dividends and

other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses.

If our Hong Kong and

BVI 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 distributions to us.

Next Technology Holding Inc.

is permitted under the Wyoming laws to provide funding to our subsidiaries in Singapore, Hong Kong and PRC through

loans or capital contributions without restrictions on the amount of the funds, subject to satisfaction of applicable government registration,

approval and filing requirements.

Next Technology is also permitted under the laws of Hong Kong to provide funding to Next Technology

through dividend distribution without restrictions on the amount of the funds.

As of the date of this annual report, there

has been no distribution of dividends or assets among the holding company or the subsidiaries.

We currently do not have any cash management

policies in place.

currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not

anticipate declaring or paying any dividends in the foreseeable future.

Any future determination related to our dividend policy will

be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements,

contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions

contained in any future financing instruments.

to the Wyoming Business Corporations Act and our bylaws, our board of directors may authorize and declare a dividend to shareholders

at such time and of such an amount as they think fit if they are satisfied, on reasonable grounds, that immediately following the dividend

the value of our assets will exceed our liabilities and we will be able to pay our debts as they become due.

There is no further Wyoming

statutory restriction on the amount of funds which may be distributed by us by dividend.

the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends

The laws and regulations of the PRC do not currently have any material impact on transfer of cash from NEXT TECHNOLOGY HOLDING INC.

to Hong Kong subsidiaries or from Hong Kong subsidiaries to NEXT TECHNOLOGY HOLDING INC.

There are no restrictions or limitation under

the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong Kong

or across borders and to U.S investors.

PRC regulations permit our PRC subsidiaries to pay dividends to Next Technology only out of their accumulated profits, if any, determined

in accordance with Chinese accounting standards and regulations.

In addition, each of our subsidiaries in China is required to set aside

at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered

Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare

fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors.

Although the statutory

reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings

of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

of Business and Industry

provide AI-enabled software development services to our customers in USA, Hong Kong, China and Singapore, which included developing,

designing and implementing various SAAS software solutions for business of all types, including industrials and other businesses.

analytics market is highly competitive and subject to rapidly changing technology and market conditions.

Our ability to compete successfully

depends on a number of factors within and outside of our control.

is permitted under

the Wyoming laws to provide funding to our subsidiaries in Hong Kong and BVI through loans or capital contributions without restrictions

on the amount of the funds, subject to satisfaction of applicable government registration, approval and filing requirements.

Next Technology

is also permitted under the laws of Hong Kong to provide funding to Next Technology Inc.

through dividend distribution without restrictions

on the amount of the funds.

As of the date of this annual report, there has been no distribution of dividends or assets among the

holding company or the subsidiaries.

We currently do not have any cash management policies in place.

We currently intend to retain all available funds

and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in

the foreseeable future.

Any future determination related to our dividend policy will be made at the discretion of our board of directors

after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and

other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.

Subject to the Wyoming Business Corporations Act

and our bylaws, our board of directors may authorize and declare a dividend to shareholders at such time and of such an amount as they

think fit if they are satisfied, on reasonable grounds, that immediately following the dividend the value of our assets will exceed our

liabilities and we will be able to pay our debts as they become due.

There is no further Wyoming statutory restriction on the amount of

funds which may be distributed by us by dividend.

Under the current practice of the Inland Revenue

Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us.

The laws and regulations of the

PRC do not currently have any material impact on transfer of cash from Next Technology Holding Inc.

to Hong Kong subsidiaries or from

Hong Kong subsidiaries to Next Technology Holding Inc.

There are no restrictions or limitation under the laws of Hong Kong imposed on

the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong Kong or across borders and to U.S investors.

Overview of Business and Industry

Software Development

We provide AI-enabled software development services

to our potential customers in USA, Hong Kong and Singapore, which included developing, designing and implementing various SAAS software

solutions for business of all types, including industrials and other businesses.

The analytics market is highly competitive and

subject to rapidly changing technology and market conditions.

Our ability to compete successfully depends on a number of factors within

and outside of our control.

Some of these factors include software quality, performance and reliability;

the quality of our service and support teams;

the quality of our service and

support teams;

marketing and prospecting effectiveness;

the ability to incorporate artificial intelligence and other technically advanced

and our ability to differentiate our products.

Failure to perform in these or other areas may reduce the demand for our offerings

and materially adversely affect our revenue from both existing and prospective customers.

Bitcoin Holding

We hold substantially all of our Bitcoin in custody

accounts at Japanese based, institutional-grade custodians that have demonstrated records of regulatory compliance and information security.

Our Bitcoin acquisition strategy generally involves acquiring Bitcoin with our liquid assets that exceed working capital requirements,

and from time to time, subject to market conditions, issuing debt or equity securities or engaging in other capital raising transactions

with the objective of using the proceeds to purchase Bitcoin.

We view our Bitcoin holdings as held for trading

and expect to continue to accumulate Bitcoin.

We have not set any specific target for the amount of Bitcoin we seek to hold, and we will

continue to monitor market conditions in determining whether to engage in additional financing to purchase additional Bitcoin.

Bitcoin Industry and Market

Bitcoin is a digital asset that is issued by and

transmitted through an open-source protocol, known as the Bitcoin protocol, collectively maintained by a peer-to-peer network of decentralized

This network hosts a public transaction ledger, known as the Bitcoin blockchain, on which Bitcoin holdings and all validated

transactions that have ever taken place on the Bitcoin network are recorded.

Balances of Bitcoin are stored in individual “wallet”

functions, which associate network public addresses with one or more “private keys” that control the transfer of Bitcoin.

The Bitcoin blockchain can be updated without any single entity owning or operating the network.

Creation of New Bitcoin and Limits on Supply

New Bitcoin is created and allocated by the Bitcoin

protocol through a “mining” process that rewards users that validate transactions in the Bitcoin blockchain.

Validated transactions

are added in “blocks” approximately every 10 minutes.

The mining process serves to validate transactions and secure the Bitcoin

Mining is a competitive and costly operation that requires a large amount of computational power to solve complex mathematical

This expenditure of computing power is known as “proof of work.” To incentivize miners to incur the costs of mining

Bitcoin, the Bitcoin protocol rewards miners that successfully validate a block of transactions with newly generated Bitcoin.

The Bitcoin protocol limits the total number of

Bitcoin that can be generated over time to 21 million.

The current reward for miners that successfully validate a block of transactions

is 3.125 Bitcoin per mined block.

Based on current mining rates, we anticipate the reward will decrease by half to 1.5625 Bitcoin per

mined block sometime in 2028.

This decrease in mining reward is referred to as a Bitcoin halving, and it occurs after every 210,000 blocks

are mined, which has historically occurred approximately every four years.

Modifications to the Bitcoin Protocol

Bitcoin is an open-source network that has no

central authority, so no one person can unilaterally make changes to the software that runs the network.

However, there is a core group

of developers that maintain the code for the Bitcoin protocol, and they can propose changes to the source code and release periodic updates

and other changes.

Unlike most software that has a central entity that can push updates to users, Bitcoin is a peer-to-peer network in

which individual network participants, called nodes, decide whether to upgrade the software and accept the new changes.

As a practical

matter, a modification becomes part of the Bitcoin protocol only if the proposed changes are accepted by participants collectively having

the most processing power, known as hash rate, on the network.

If a certain percentage of the nodes reject the changes, then a “fork”

takes place and participants can choose the version of the software they want to run.

Bitcoin Industry Participants

The primary Bitcoin industry participants are

miners, investors and traders, digital asset exchanges and service providers, including custodians, brokers, payment processors, wallet

providers and financial institutions.

Miners range from Bitcoin enthusiasts

to professional mining operations that design and build dedicated mining machines and data centers, including mining pools, which are

groups of miners that act cohesively and combine their processing power to mine Bitcoin blocks.

Investors and Traders.

Bitcoin investors and traders

include individuals and institutional investors who, directly or indirectly, purchase, hold, and sell Bitcoin or Bitcoin-based derivatives.

On January 10, 2024, the Securities and Exchange Commission (“SEC”) issued an order approving several applications for the

listing and trading of shares of spot Bitcoin exchange-traded products (“ETPs”) on U.S.

national securities exchanges.

the SEC had previously approved exchange-traded funds where the underlying assets were Bitcoin futures contracts, this order represents

the first time the SEC has approved the listing and trading of ETPs that acquire, hold and sell Bitcoin directly.

ETPs can be bought and

sold on a stock exchange like traditional stocks, and provide investors with another means of gaining economic exposure to Bitcoin through

traditional brokerage accounts.

Digital Asset Exchanges.

Digital asset exchanges

provide trading venues for purchases and sales of Bitcoin in exchange for fiat or other digital assets.

Bitcoin can be exchanged for fiat

currencies, such as the U.S.

dollar, at rates of exchange determined by market forces on Bitcoin trading platforms, which are not regulated

in the same manner as traditional securities exchanges.

In addition to these platforms, over-the-counter markets and derivatives markets

for Bitcoin also exist.

The value of Bitcoin within the market is determined, in part, by the supply of and demand for Bitcoin in the

global Bitcoin market, market expectations for the adoption of Bitcoin as a store of value, the number of merchants that accept Bitcoin

as a form of payment, and the volume of peer-to-peer transactions, among other factors.

For a discussion of risks associated with digital

asset exchanges, see “Item 1A.

Risk Factors—Risks Related to Our Bitcoin Acquisition Strategy and Holdings—Due to the

unregulated nature and lack of transparency surrounding the operations of many Bitcoin trading venues, Bitcoin trading venues may experience

greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may

result in a loss of confidence in Bitcoin trading venues and adversely affect the value of our Bitcoin.”

Service providers.

Service providers offer a multitude

of services to other participants in the Bitcoin industry, including custodial and trade execution services, commercial and retail payment

processing, loans secured by Bitcoin collateral, and financial advisory services.

If adoption of the Bitcoin network continues to materially

increase, we anticipate that service providers may expand the currently available range of services and that additional parties will enter

the service sector for the Bitcoin network.

Revenue Model

In the business of providing AI-enabled software

development services and solutions, we derive our revenue from AI-software development and technical supporting services.

The AI-enabled software development market is

highly competitive and subject to rapidly changing technology and market conditions.

Our ability to compete successfully depends on a

number of factors within and outside of our control.

Some of these factors include software quality, performance and reliability;

quality of our service and support teams;

marketing and prospecting effectiveness;

the ability to incorporate artificial intelligence

3 unchanged sentences

reduce the demand for our offerings and materially adversely affect our revenue from both existing and prospective customers.

hold substantially all of our bitcoin in custody accounts at Japanese based, institutional-grade custodians that have demonstrated records

of regulatory compliance and information security.

Our bitcoin acquisition strategy generally involves acquiring bitcoin with our liquid

assets that exceed working capital requirements, and from time to time, subject to market conditions, issuing debt or equity securities

or engaging in other capital raising transactions with the objective of using the proceeds to purchase bitcoin.

view our bitcoin holdings as long-term holdings and expect to continue to accumulate bitcoin.

We have not set any specific target for

the amount of bitcoin we seek to hold, and we will continue to monitor market conditions in determining whether to engage in additional

financings to purchase additional bitcoin.

Industry and Market

is a digital asset that is issued by and transmitted through an open-source protocol, known as the Bitcoin protocol, collectively maintained

by a peer-to-peer network of decentralized user nodes.

This network hosts a public transaction ledger, known as the Bitcoin blockchain,

on which bitcoin holdings and all validated transactions that have ever taken place on the Bitcoin network are recorded.

bitcoin are stored in individual “wallet” functions, which associate network public addresses with one or more “private

keys” that control the transfer of bitcoin.

The Bitcoin blockchain can be updated without any single entity owning or operating

of New Bitcoin and Limits on Supply

bitcoin is created and allocated by the Bitcoin protocol through a “mining” process that rewards users that validate transactions

in the Bitcoin blockchain.

Validated transactions are added in “blocks” approximately every 10 minutes.

The mining process

serves to validate transactions and secure the Bitcoin network.

Mining is a competitive and costly operation that requires a large amount

of computational power to solve complex mathematical algorithms.

This expenditure of computing power is known as “proof of work.”

To incentivize miners to incur the costs of mining bitcoin, the Bitcoin protocol rewards miners that successfully validate a block of

transactions with newly generated bitcoin.

Bitcoin protocol limits the total number of bitcoin that can be generated over time to 21 million.

The current reward for miners that

successfully validate a block of transactions is 6.25 bitcoin per mined block.

Based on current mining rates, we anticipate the reward

will decrease by half to 3.125 bitcoin per mined block sometime in April 2024.

This decrease in mining reward is referred to as a bitcoin

halving, and it occurs after every 210,000 blocks are mined, which has historically occurred approximately every four years.

Modifications

to the Bitcoin Protocol

is an open-source network that has no central authority, so no one person can unilaterally make changes to the software that runs the

However, there is a core group of developers that maintain the code for the Bitcoin protocol, and they can propose changes to

the source code and release periodic updates and other changes.

Unlike most software that has a central entity that can push updates

to users, bitcoin is a peer-to-peer network in which individual network participants, called nodes, decide whether to upgrade the software

and accept the new changes.

As a practical matter, a modification becomes part of the Bitcoin protocol only if the proposed changes are

accepted by participants collectively having the most processing power, known as hash rate, on the network.

If a certain percentage of

the nodes reject the changes, then a “fork” takes place and participants can choose the version of the software they want

Industry Participants

primary Bitcoin industry participants are miners, investors and traders, digital asset exchanges and service providers, including custodians,

brokers, payment processors, wallet providers and financial institutions.

Miners range from bitcoin enthusiasts to professional mining operations that design and build dedicated mining machines and data centers,

including mining pools, which are groups of miners that act cohesively and combine their processing power to mine bitcoin blocks.

Bitcoin investors and traders include individuals and institutional investors who, directly or indirectly, purchase, hold,

and sell bitcoin or bitcoin-based derivatives.

On January 10, 2024, the Securities and Exchange Commission (“SEC”) issued

an order approving several applications for the listing and trading of shares of spot bitcoin exchange-traded products (“ETPs”)

national securities exchanges.

While the SEC had previously approved exchange-traded funds where the underlying assets were bitcoin

futures contracts, this order represents the first time the SEC has approved the listing and trading of ETPs that acquire, hold and sell

bitcoin directly.

ETPs can be bought and sold on a stock exchange like traditional stocks, and provide investors with another means of

gaining economic exposure to bitcoin through traditional brokerage accounts.

Asset Exchanges.

Digital asset exchanges provide trading venues for purchases and sales of bitcoin in exchange for fiat or other digital

Bitcoin can be exchanged for fiat currencies, such as the U.S.

dollar, at rates of exchange determined by market forces on bitcoin

trading platforms, which are not regulated in the same manner as traditional securities exchanges.

In addition to these platforms, over-the-counter

markets and derivatives markets for bitcoin also exist.

The value of bitcoin within the market is determined, in part, by the supply

of and demand for bitcoin in the global bitcoin market, market expectations for the adoption of bitcoin as a store of value, the number

of merchants that accept bitcoin as a form of payment, and the volume of peer-to-peer transactions, among other factors.

For a discussion

of risks associated with digital asset exchanges, see “Item 1A.

Risk Factors—Risks Related to Our Bitcoin Acquisition Strategy

and Holdings—Due to the unregulated nature and lack of transparency surrounding the operations of many bitcoin trading venues,

bitcoin trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for

more established asset classes, which may result in a loss of confidence in bitcoin trading venues and adversely affect the value of

our bitcoin.”

Service providers offer a multitude of services to other participants in the Bitcoin industry, including custodial and trade

execution services, commercial and retail payment processing, loans secured by bitcoin collateral, and financial advisory services.

adoption of the Bitcoin network continues to materially increase, we anticipate that service providers may expand the currently available

range of services and that additional parties will enter the service sector for the Bitcoin network.

the business of providing AI-enable software development services and solutions, we derive our revenue from AI-software development and

technical supporting services.

AI-enable software development market is highly competitive and subject to rapidly changing technology and market conditions.

to compete successfully depends on a number of factors within and outside of our control.

Some of these factors include software quality,

performance and reliability;

the quality of our service and support teams;

marketing and prospecting effectiveness;

the ability to incorporate

artificial intelligence and other technically advanced features;

and our ability to differentiate our products.

Failure to perform in

these or other areas may reduce the demand for our offerings and materially adversely affect our revenue from both existing and prospective

have the right to use the following domain registration issued in the USA:

We have the right to use the following domain

registration issued:

Expiration Date

Registration Agency

wetradegroup.technology

of the date hereof and in the fiscal year 2023, we have, 8 full-time employees.

The following table sets forth the number of our employees

Administrative

provide employee benefits for each employee in accordance with Hong Kong law.

These include pension, medical, unemployment, work

injury and maternity insurance, and a housing provident fund.

employees have not formed any employee union or association.

We believe we maintain a good working relationship with our employees and

have not experienced any difficulty in recruiting staff for our operations.

maintain certain insurance policies to safeguard us against risks and unexpected events.

For example, we provide social security insurance

including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for our employees in compliance

with applicable Hong Kong and PRC laws.

We do not maintain business interruption insurance or product liability insurance, which are

not mandatory under Hong Kong and PRC laws.

We do not maintain key man insurance, insurance policies covering damages to our network

infrastructures or information technology systems nor any insurance policies for our properties.

During the fiscal years 2023 and 2022,

we did not make any material insurance claims in relation to our business.

mid-September 2023, Mr.

Alibaba Cloud Computing Ltd.

Our Employees

As of the date hereof and in the fiscal year 2024,

we have 6 full-time employees.

The following table sets forth the number of our employees by function:

Functional Area

Number of Employees

General and Administrative

Financial Department

We provide employee benefits to each employee

in compliance with the legal requirements of their jurisdiction of residence, including statutory pension, medical insurance, unemployment

insurance, work injury coverage, maternity protection, and a housing provident fund.

Our employees have not formed any employee union

or association.

We believe we maintain a good working relationship with our employees and have not experienced any difficulty in recruiting

staff for our operations.

We maintain certain insurance policies to safeguard

us against risks and unexpected events.

We do not maintain business interruption insurance or product liability insurance, which are not

mandatory under Hong Kong and PRC laws.

We do not maintain key man insurance, insurance policies covering damages to our network infrastructures

or information technology systems nor any insurance policies for our properties.

During the fiscal years 2024 and 2023, we did not make

any material insurance claims in relation to our business.

Legal Proceedings

Since mid-September 2023, Mr.

Zheng Dai, Mr.

Pijun Liu, and certain individuals under their control (the “Unauthorized Persons”)

had been falsely and repeatedly holding themselves out as representing and/or authorized to represent the Company.

For example, the Unauthorized

Persons caused to be filed certain current reports on Forms 8-K dated September 28, 2023 and October 10, 2023, in which they purported

to appoint new officers and directors.

These filings were false and should be disregarded.

On September 28, 2023, a derivative lawsuit was filed

by certain purported shareholders affiliated with the Unauthorized Persons in the United States District Court for the District of Wyoming

against certain officers and directors of the Company, seeking control of the Company.

This case was dismissed without prejudice on

October 18, 2023.

October 18, 2023, the same individuals who filed the above-described derivative suit filed a direct action against the Company in the

Chancery Court of the State of Wyoming (the “Chancery Court”), again seeking control of the Company.

The Company responded

to the lawsuit, sought a temporary restraining order restraining the plaintiff-shareholders and their affiliates (including the Unauthorized

Persons) from claiming be in control of the Company.

November 7, 2023, the Chancery Court issued a temporary restraining order substantially restraining the plaintiff-shareholders and their

affiliates from claiming to act on behalf of the Company.

The lawsuit remains pending as at reporting date.

On November 30, 2023, the Company

responded to plaintiffs’ arguments that they controlled the Company, pointing out that plaintiffs’ case (Mr.

Dai Zheng and

his affiliates) was largely built upon forged signatures and other fabricated materials.

In response, the plaintiffs withdrew their opposition

to the Company’s request for an injunction.

On January 5, 2024, the Chancery

Court entered a preliminary injunction order (attached hereto).

Specifically, the order restrained Mr.

Dai Zheng and his affiliates

from the following conduct:

(i) acting as or holding themselves

out as majority shareholders, directors, executives, or employees of the Company and its affiliates;

(ii) making any attempts to

contact the SEC, Nasdaq, government authorities, or make any filing or press release on behalf of the Company;

(iii) making any attempts to

change the board composition and executive team;

(iv) disseminating false statements

regarding the Company and its leadership;

(v) making any attempts to contact

the Company’s service providers, including auditors, stock transfer agents, and filing agents;

(vi) making any attempts to

issue the Company’s shares.

section sets forth a summary of the principal PRC laws and regulations relevant to our business and operations in China.

on Overseas Listings

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

(the “Trial Measures”), which became effective on March 31, 2023.

On the same date, the CSRC circulated Supporting Guidance

Liu, and certain individuals under their control (the “Unauthorized Persons”) had been falsely and repeatedly holding themselves

out as representing and/or authorized to represent the Company.

For example, the Unauthorized Persons caused to be filed certain current

reports on Forms 8-K dated September 28, 2023 and October 10, 2023, in which they purported to appoint new officers and directors.

filings were false and should be disregarded.

On September 28, 2023, a derivative lawsuit was

filed by certain purported shareholders affiliated with the Unauthorized Persons in the United States District Court for the District

of Wyoming against certain officers and directors of the Company, seeking control of the Company.

This case was dismissed without prejudice

on October 18, 2023.

On October 18, 2023, the same individuals who

previously filed the above-described derivative suit initiated a direct action against the Company in the Chancery Court of the State

of Wyoming (the “Chancery Court”), once again seeking control of the Company.

In response, the Company contested to the lawsuit

and sought a temporary restraining order to prevent the plaintiff-shareholders and their affiliates (including the Unauthorized Persons)

from asserting control over the Company.

On November 7, 2023, the Chancery Court granted

a temporary restraining order substantially restraining Mr.

Zheng Dai and his affiliates from claiming to act on behalf of the Company.

On November 30, 2023, the Company responded to

plaintiffs’ allegations, demonstrating that their claims—brought by Mr.

Zheng Dai and his affiliates—were largely based

upon forged signatures and other fabricated materials.

In response, the plaintiffs withdrew their opposition to the Company’s request

for an injunction.

On January 5, 2024, the Chancery Court issued

a preliminary injunction order (attached hereto), which specifically restrained Mr.

Zheng Dai and his affiliates from the following conduct:

as or holding themselves out as majority shareholders, directors, executives, or employees of the Company and its affiliates;

any attempts to contact the SEC, Nasdaq, government authorities, or make any filing or press release on behalf of the Company;

any attempts to change the board composition and executive team;

(iv) disseminating

false statements regarding the Company and its leadership;

any attempts to contact the Company’s service providers, including auditors, stock transfer agents, and filing agents;

any attempts to issue the Company’s shares.

The Company remains under the control of its current

board of directors, which, as of the reporting date, consists of the following personnel:

Lichen Dong (Chairman of the Board), Tian Yang,

Mahesh Thapaliya, and Jianbo Sun.

On April 8,2024, the Chancery Court dismissed the plaintiffs’

case with prejudice , allowing the Company to reserve its right to seek fees.

The Company’s counterclaims against plaintiffs

were later dismissed without prejudice upon stipulation on June 11, 2024.

On September 6, 2024, the same individuals initiated a new lawsuit

against the Company in the Wyoming State District Court, with a sole cause of action seeking inspection of certain corporate records.

On October 30, 2024, the Company responded the complaint, denying plaintiffs’

allegations and arguing that plaintiffs had failed to satisfy the statutory requirements necessary for corporate records inspection.

On December 9, 2024, one of the plaintiffs, Wenwen Yu, filed a motion

for preliminary injunction to enjoin future share issuances by the Company.

On December 27, 2024, the Company opposed Yu’s motion, asserting

that it was entirely without merit.

The motion is currently set for a hearing on April 9, 2025.

Separately, on May 15, 2024, another lawsuit was filed against the

Company in the New York County Supreme Court (the “NY Court”), seeking repayment of certain loans allegedly guaranteed by

On September 9, 2024, the Company moved to dismiss the case on the

grounds of forum non conveniens and lack of personal jurisdiction, given that the alleged guarantees—signed by Zheng Dai

and Pijun Liu—were unauthorized and, therefore, null and void.

As of the reporting date, the Company’s motion remains pending

before the NY Court.

This section sets forth a summary of the principal

PRC laws and regulations relevant to our business and operations in China.

Regulations on Overseas Listings

On February 17, 2023, CSRC promulgated the Trial

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

became effective on March 31, 2023.

On the same date, the CSRC circulated Supporting Guidance Rules No.

1 through No.

5, Notes on the Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by

Domestic Enterprises and relevant CSRC Answers to Reporter Questions (collectively, the “Guidance Rules and Notice”) on the

CSRC’s official website.

Pursuant to the Trial Measures, PRC domestic enterprises that have submitted valid applications for overseas

offerings and listing but have not obtained the approval from the relevant overseas regulatory authority or overseas stock exchanges

shall complete filings with the CSRC prior to their overseas offerings and listings.

to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies

from the CSRC, or “the CSRC Notice”, the domestic companies that have already been listed overseas before the effective date

of the Trial Measures (namely, March 31, 2023) shall be deemed as existing issuers (the “Existing Issuers”).

Existing Issuers

are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings.

February 24, 2023, the CSRC, together with the MOF, National Administration of State Secrets Protection and National Archives Administration

of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing,

which were issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in

2009, or the “Provisions.” The revised Provisions were issued under the title the “Provisions on Strengthening Confidentiality

and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies”, and came into effect on March 31,

2023 together with the Trial Measures.

One of the major revisions to the revised Provisions is expanding their application to cover indirect

overseas offering and listing, as is consistent with the Trial Measures.

The revised Provisions require that, among other things, (a)

a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant

individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials

that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according

to law, and file with the secrecy administrative department at the same level;

and (b) a domestic company that plans to, either directly

or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities

companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental

to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations.

August 2006, six PRC regulatory authorities, including the CSRC, jointly adopted the Regulations on Mergers and Acquisitions of

Domestic Enterprises by Foreign Investors, or the M&A Rules, amended in June 2009.

The M&A Rules, among other things, require

that if an overseas company established or controlled by PRC companies or individuals, or PRC Citizens, intends to acquire equity interests

or assets of any other PRC domestic company affiliated with the PRC Citizens, such acquisition must be submitted to the MOFCOM for approval.

The M&A Rules also require that an Overseas SPV formed for overseas listing purposes and controlled directly or indirectly by the

PRC Citizens shall obtain the approval of the CSRC prior to overseas listing and trading of such Overseas SPV’s securities on an

overseas stock exchange.

PRC legal counsel, Beijing DOCVIT Law Firm, has advised us that, based on its understanding of the current PRC laws and regulations,

our corporate structure and arrangements are not subject to the M&A Rules.

However, our PRC legal counsel has further advised us

that there are substantial uncertainties as to how the M&A Rules will be interpreted or implemented in the context of an overseas

offering, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations

in any form relating to the M&A Rules.

on Internet Information Security and Privacy Protection

November 2016, the Standing Committee of the National People’s Congress, or the SCNPC, promulgated the Cyber Security Law

of the PRC , or the Cyber Security Law, which became effective on June 1, 2017.

The Cyber Security Law requires that a network operator,

which includes, among others, internet information services providers, take technical measures and other necessary measures in accordance

with applicable laws and regulations and the compulsory requirements of the national and industrial standards to safeguard the safe and

stable operation of its networks.

We are subject to such requirements as we are operating website and mobile application and providing

certain internet services mainly through our mobile application.

The Cyber Security Law further requires internet information service

providers to formulate contingency plans for network security incidents, report to the competent departments immediately upon the occurrence

of any incident endangering cyber security and take corresponding remedial measures.

information service providers are also required to maintain the integrity, confidentiality and availability of network data.

Security Law reaffirms the basic principles and requirements specified in other existing laws and regulations on personal data protection,

such as the requirements on the collection, use, processing, storage and disclosure of personal data, and internet information service

providers being required to take technical and other necessary measures to ensure the security of the personal information they have

collected and prevent the personal information from being divulged, damaged or lost.

Any violation of the Cyber Security Law may subject

the internet information service provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of

filings, shutdown of websites or criminal liabilities.

of the date hereof, the Company is in compliance with the Cyber Security Law.

Laws and Regulations on Foreign Investment

in the PRC by foreign investors and foreign-invested enterprises shall comply with the Catalogue for the Guidance of Foreign Investment

Industries (2020 Revision) (the “Catalogue”), which was last amended and issued by MOFCOM and National Development and Reform

Commission (NDRC) on December 27, 2020 and became effective since January 27, 2021, and the Special Management Measures for Foreign Investment

Access (2019 version), or the Negative List, which came into effect on July 30, 2019.

The Catalogue and the Negative List contains specific

provisions guiding market access for foreign capital and stipulates in detail the industry sectors grouped under the categories of encouraged

industries, restricted industries and prohibited industries.

Any industry not listed on the Negative List is a permitted industry unless

otherwise prohibited or restricted by other PRC laws or regulations.

March 15, 2019, the National People’s Congress approved the Foreign Investment Law of the PRC, or the Foreign Investment Law, which

came into effect on January 1, 2020, repealing simultaneously the Law of the PRC on Sino-foreign Equity Joint Ventures, the Law of the

PRC on Wholly Foreign-owned Enterprises and the Law of the PRC on Sino-foreign Cooperative Joint Ventures.

The Foreign Investment Law

adopts the management system of pre-establishment national treatment and negative list for foreign investment.

Policies in support of

enterprises shall apply equally to foreign-funded enterprises according to laws and regulations.

Foreign investment enterprises shall

be guaranteed that they could equally participate in the setting of standards, and the compulsory standards formulated by the State shall

be equally applied.

Fair competition for foreign investment enterprises to participate in government procurement activities shall be

The Foreign Investment Law also stipulates the protection on intellectual property rights and trade secrets.

The State also

establishes information reporting system and national security review system according to the Foreign Investment Law.

Laws and Regulations on Wholly Foreign-Owned Enterprises

establishment, operation and management of corporate entities in China are governed by the PRC Company Law, which was promulgated by

the SCNPC on December 29, 1993 and became effective on July 1, 1994.

It was last amended on October 26, 2018 and the amendments became

effective on October 26, 2018.

Under the PRC Company Law, companies are generally classified into two categories, namely, limited liability

companies and joint stock limited companies.

The PRC Company Law

also applies to limited liability companies and joint stock limited

companies with foreign investors.

Where there are otherwise different provisions in any law on foreign investment, such provisions shall

Law of the PRC on Wholly Foreign-invested Enterprises was promulgated and became effective on April 12, 1986, and was last amended and

became effective on October 1, 2016.

The Implementing Regulations of the PRC Law on Foreign-invested Enterprises were promulgated by

the State Council on October 28, 1990.

They were last amended on February 19, 2014 and the amendments became effective on March 1, 2014.

The Provisional Measures on Administration of Filing for Establishment and Change of Foreign Investment Enterprises were promulgated

by MOFCOM and became effective on October 8, 2016, and were last amended on July 20, 2017 with immediate effect.

The above-mentioned

laws form the legal framework for the PRC Government to regulate Foreign-invested Enterprises.

These laws and regulations govern the

establishment, modification, including changes to registered capital, shareholders, corporate form, merger and split, dissolution and

termination of Foreign-invested Enterprises.

to the above regulations, a Foreign-invested Enterprise should get approval by MOFCOM before its establishment and operation.

Laws and Regulations on Foreign Exchange

of Foreign Investment Enterprises

to the Notice of State Administration of Foreign Exchange on Promulgation of the Provisions on Foreign Exchange Control on Direct Investments

in China by Foreign Investors promulgated by the SAFE, or the Notice, upon establishment of a foreign investment enterprise pursuant

to the law, registration formalities shall be completed with the foreign exchange bureau.

Upon completion of registration formalities

by the entities involved in direct investments in China, the entities may open accounts for direct investments in China such as preliminary

expense account, capital fund account and asset realization account, etc.

5, Notes on the

Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and relevant CSRC Answers

to Reporter Questions (collectively, the “Guidance Rules and Notice”) on the CSRC’s official website.

Pursuant to the

Trial Measures, PRC domestic enterprises that have submitted valid applications for overseas offerings and listing but have not obtained

the approval from the relevant overseas regulatory authority or overseas stock exchanges shall complete filings with the CSRC prior to

their overseas offerings and listings.

According to the Notice on the Administrative

Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or “the CSRC Notice”,

the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023)

shall be deemed as existing issuers (the “Existing Issuers”).

Existing Issuers are not required to complete the filing procedures

immediately, and they shall be required to file with the CSRC for any subsequent offerings.

On February 24, 2023, the CSRC, together with

the MOF, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions on

Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing, which were issued by the CSRC

and National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the “Provisions.”

The revised Provisions were issued under the title the “Provisions on Strengthening Confidentiality and Archives Administration

of Overseas Securities Offering and Listing by Domestic Companies”, and came into effect on March 31, 2023 together with the Trial

One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and

listing, as is consistent with the Trial Measures.

The revised Provisions require that, among other things, (a) a domestic company that

plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities

including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets

or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the

secrecy administrative department at the same level;

and (b) a domestic company that plans to, either directly or indirectly through its

overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service

providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public

interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations.

In August 2006, six PRC regulatory authorities,

including the CSRC, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or

the M&A Rules, amended in June 2009.

The M&A Rules, among other things, require that if an overseas company established or controlled

by PRC companies or individuals, or PRC Citizens, intends to acquire equity interests or assets of any other PRC domestic company affiliated

with the PRC Citizens, such acquisition must be submitted to the MOFCOM for approval.

The M&A Rules also require that an Overseas

SPV formed for overseas listing purposes and controlled directly or indirectly by the PRC Citizens shall obtain the approval of the CSRC

prior to overseas listing and trading of such Overseas SPV’s securities on an overseas stock exchange.

Regulations on Internet Information Security and Privacy Protection

In November 2016, the Standing Committee of the

National People’s Congress, or the SCNPC, promulgated the Cyber Security Law of the PRC , or the Cyber Security Law,

which became effective on June 1, 2017.

The Cyber Security Law requires that a network operator, which includes, among others, internet

information services providers, take technical measures and other necessary measures in accordance with applicable laws and regulations

and the compulsory requirements of the national and industrial standards to safeguard the safe and stable operation of its networks.

are subject to such requirements as we are operating website and mobile application and providing certain internet services mainly through

our mobile application.

The Cyber Security Law further requires internet information service providers to formulate contingency plans

for network security incidents, report to the competent departments immediately upon the occurrence of any incident endangering cyber

security and take corresponding remedial measures.

Internet information service providers are also

required to maintain the integrity, confidentiality and availability of network data.

The Cyber Security Law reaffirms the basic principles

and requirements specified in other existing laws and regulations on personal data protection, such as the requirements on the collection,

use, processing, storage and disclosure of personal data, and internet information service providers being required to take technical

and other necessary measures to ensure the security of the personal information they have collected and prevent the personal information

from being divulged, damaged or lost.

Any violation of the Cyber Security Law may subject the internet information service provider to

warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, shutdown of websites or criminal liabilities.

As of the date hereof, the Company is in compliance

with the Cyber Security Law.

PRC Laws and Regulations on Foreign Investment

Investment in the PRC by foreign investors and

foreign-invested enterprises shall comply with the Catalogue for the Guidance of Foreign Investment Industries (2020 Revision) (the “Catalogue”),

which was last amended and issued by MOFCOM and National Development and Reform Commission (NDRC) on December 27, 2020 and became effective

since January 27, 2021, and the Special Management Measures for Foreign Investment Access (2019 version), or the Negative List, which

came into effect on July 30, 2019.

The Catalogue and the Negative List contains specific provisions guiding market access for foreign

capital and stipulates in detail the industry sectors grouped under the categories of encouraged industries, restricted industries and

prohibited industries.

Any industry not listed on the Negative List is a permitted industry unless otherwise prohibited or restricted

by other PRC laws or regulations.

On March 15, 2019, the National People’s

Congress approved the Foreign Investment Law of the PRC, or the Foreign Investment Law, which came into effect on January 1, 2020, repealing

simultaneously the Law of the PRC on Sino-foreign Equity Joint Ventures, the Law of the PRC on Wholly Foreign-owned Enterprises and the

Law of the PRC on Sino-foreign Cooperative Joint Ventures.

The Foreign Investment Law adopts the management system of pre-establishment

national treatment and negative list for foreign investment.

Policies in support of enterprises shall apply equally to foreign-funded

enterprises according to laws and regulations.

Foreign investment enterprises shall be guaranteed that they could equally participate

in the setting of standards, and the compulsory standards formulated by the State shall be equally applied.

Fair competition for foreign

investment enterprises to participate in government procurement activities shall be protected.

The Foreign Investment Law also stipulates

the protection on intellectual property rights and trade secrets.

The State also establishes information reporting system and national

security review system according to the Foreign Investment Law.

PRC Laws and Regulations on Wholly Foreign-Owned

The establishment, operation and management of

corporate entities in China are governed by the PRC Company Law, which was promulgated by the SCNPC on December 29, 1993 and became effective

on July 1, 1994.

It was last amended on October 26, 2018 and the amendments became effective on October 26, 2018.

Under the PRC Company

Law, companies are generally classified into two categories, namely, limited liability companies and joint stock limited companies.

PRC Company Law also applies to limited liability companies and joint stock limited companies with foreign investors.

Where there are

otherwise different provisions in any law on foreign investment, such provisions shall prevail.

The Law of the PRC on Wholly Foreign-invested

Enterprises was promulgated and became effective on April 12, 1986, and was last amended and became effective on October 1, 2016.

Implementing Regulations of the PRC Law on Foreign-invested Enterprises were promulgated by the State Council on October 28, 1990.

were last amended on February 19, 2014 and the amendments became effective on March 1, 2014.

The Provisional Measures on Administration

of Filing for Establishment and Change of Foreign Investment Enterprises were promulgated by MOFCOM and became effective on October 8,

2016, and were last amended on July 20, 2017 with immediate effect.

The above-mentioned laws form the legal framework for the PRC Government

to regulate Foreign-invested Enterprises.

These laws and regulations govern the establishment, modification, including changes to registered

capital, shareholders, corporate form, merger and split, dissolution and termination of Foreign-invested Enterprises.

According to the above regulations, a Foreign-invested

Enterprise should get approval by MOFCOM before its establishment and operation.

PRC Laws and Regulations on Foreign Exchange

Registration of Foreign Investment Enterprises

Pursuant to the Notice of State Administration

of Foreign Exchange on Promulgation of the Provisions on Foreign Exchange Control on Direct Investments in China by Foreign Investors

promulgated by the SAFE, or the Notice, upon establishment of a foreign investment enterprise pursuant to the law, registration formalities

shall be completed with the foreign exchange bureau.

Upon completion of registration formalities by the entities involved in direct investments

in China, the entities may open accounts for direct investments in China such as preliminary expense account, capital fund account and

asset realization account, etc.

with the bank based on the actual needs.

Upon completion of

such registration formalities, foreign investment enterprises could also conduct settlement when contributing foreign exchange funds,

and remit funds overseas in the event of capital reduction, liquidation, advance recovery of investment, profit distribution, etc.

Laws and Regulations on Dividend Distribution

principal regulations governing distribution of dividends of foreign-invested enterprises include the Foreign-Invested Enterprise Law,

that became effective on January 1, 2020, and its implementation rules.

Under these laws and regulations, wholly foreign-owned enterprises

in China may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards

and regulations.

In addition, when a wholly foreign-owned enterprise in China distributes its after-tax profits of a fiscal year, it

shall allocate 10% of the profits to the company’s statutory common reserve fund.

If the accumulated amount of the company’s

statutory reserve fund is more than 50% of the company’s registered capital, the company is no longer required to allocate more

funds to the reserve.

Wholly foreign-owned companies may, at their discretion, allocate a portion of their after-tax profits based on

PRC accounting standards to staff welfare and bonus funds.

These reserves are not distributable as cash dividends.

Laws and Regulations on Taxation

Enterprise Income Tax Law of the People’s Republic of China (the “EIT Law”) was promulgated by the Standing Committee

of the National People’s Congress on March 16, 2007 and became effective on January 1, 2008, and was later amended on February

24, 2017 and on December 29, 2018 separately.

The Implementation Rules of the EIT Law (the “Implementation Rules”) were promulgated

by the State Council on December 6, 2007 and became effective on January 1, 2008.

According to the EIT Law and the Implementation Rules,

enterprises are divided into resident enterprises and non-resident enterprises.

Resident enterprises shall pay enterprise income tax

on their incomes obtained in and outside the PRC at the rate of 25%.

Non-resident enterprises setting up institutions in the PRC shall

pay enterprise income tax on the incomes obtained by such institutions in and outside the PRC at the rate of 25%.

Non-resident enterprises

with no institutions in the PRC, and non-resident enterprises whose incomes having no substantial connection with their institutions

in the PRC, shall pay enterprise income tax on their incomes obtained in the PRC at a reduced rate of 10%.

Arrangement between the PRC and Hong Kong Special Administrative Region for the Avoidance of Double Taxation the Prevention of Fiscal

Evasion with respect to Taxes on Income (the “Arrangement”) was promulgated by the State Administration of Taxation (“SAT”)

on August 21, 2006 and came into effect on December 8, 2006.

According to the Arrangement, a company incorporated in Hong Kong will be

subject to withholding tax at the lower rate of 5% on dividends it receives from a company incorporated in the PRC if it holds a 25%

interest or more in the PRC company.

The Notice on the Understanding and Identification of the Beneficial Owners in the Tax Treaty (the

“Notice”) was promulgated by SAT and became effective on October 27, 2009.

According to the Notice, a beneficial ownership

analysis will be used based on a substance-over-form principle to determine whether or not to grant tax treaty benefits.

to the Provisional Regulations on Value-added Tax of the PRC, or the VAT Regulations, which were promulgated by the State Council on

December 13, 1993, took effect on January 1, 1994, and were amended on November 10, 2008, February 6, 2016, and November 19, 2017, respectively,

and the Rules for the Implementation of the Provisional Regulations on Value-added Tax of the PRC, which were promulgated by the MOF

on December 25, 1993, and were amended on December 15, 2008, and October 28, 2011, respectively, entities and individuals that sell goods

or labor services of processing, repair or replacement, sell services, intangible assets, or immovables, or import goods within the territory

of the People’s Republic of China are taxpayers of value-added tax.

The VAT rate is 17% for taxpayers selling goods, labor services,

or tangible movable property leasing services or importing goods, except otherwise specified;

11% for taxpayers selling services of transportation,

postal, basic telecommunications, construction and lease of immovable, selling immovable, transferring land use rights, selling and importing

other specified goods including fertilizers;

Upon completion of such registration formalities, foreign investment

enterprises could also conduct settlement when contributing foreign exchange funds, and remit funds overseas in the event of capital reduction,

liquidation, advance recovery of investment, profit distribution, etc.

PRC Laws and Regulations on Dividend Distribution

The principal regulations governing distribution

of dividends of foreign-invested enterprises include the Foreign-Invested Enterprise Law, that became effective on January 1, 2020, and

its implementation rules.

Under these laws and regulations, wholly foreign-owned enterprises in China may pay dividends only out of their

accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations.

In addition, when a wholly

foreign-owned enterprise in China distributes its after-tax profits of a fiscal year, it shall allocate 10% of the profits to the company’s

statutory common reserve fund.

If the accumulated amount of the company’s statutory reserve fund is more than 50% of the company’s

registered capital, the company is no longer required to allocate more funds to the reserve.

Wholly foreign-owned companies may, at their

discretion, allocate a portion of their after-tax profits based on PRC accounting standards to staff welfare and bonus funds.

These reserves

are not distributable as cash dividends.

PRC Laws and Regulations on Taxation

Enterprise Income Tax

The Enterprise Income Tax Law of the People’s

Republic of China (the “EIT Law”) was promulgated by the Standing Committee of the National People’s Congress on March

16, 2007 and became effective on January 1, 2008, and was later amended on February 24, 2017 and on December 29, 2018 separately.

Implementation Rules of the EIT Law (the “Implementation Rules”) were promulgated by the State Council on December 6, 2007

and became effective on January 1, 2008.

According to the EIT Law and the Implementation Rules, enterprises are divided into resident

enterprises and non-resident enterprises.

Resident enterprises shall pay enterprise income tax on their incomes obtained in and outside

the PRC at the rate of 25%.

Non-resident enterprises setting up institutions in the PRC shall pay enterprise income tax on the incomes

obtained by such institutions in and outside the PRC at the rate of 25%.

Non-resident enterprises with no institutions in the PRC, and

non-resident enterprises whose incomes having no substantial connection with their institutions in the PRC, shall pay enterprise income

tax on their incomes obtained in the PRC at a reduced rate of 10%.

The Arrangement between the PRC and Hong Kong

Special Administrative Region for the Avoidance of Double Taxation the Prevention of Fiscal Evasion with respect to Taxes on Income (the

“Arrangement”) was promulgated by the State Administration of Taxation (“SAT”) on August 21, 2006 and came into

effect on December 8, 2006.

According to the Arrangement, a company incorporated in Hong Kong will be subject to withholding tax at the

lower rate of 5% on dividends it receives from a company incorporated in the PRC if it holds a 25% interest or more in the PRC company.

The Notice on the Understanding and Identification of the Beneficial Owners in the Tax Treaty (the “Notice”) was promulgated

by SAT and became effective on October 27, 2009.

According to the Notice, a beneficial ownership analysis will be used based on a substance-over-form

principle to determine whether or not to grant tax treaty benefits.

Value-added Tax

Pursuant to the Provisional Regulations on Value-added

Tax of the PRC, or the VAT Regulations, which were promulgated by the State Council on December 13, 1993, took effect on January 1, 1994,

and were amended on November 10, 2008, February 6, 2016, and November 19, 2017, respectively, and the Rules for the Implementation of

the Provisional Regulations on Value-added Tax of the PRC, which were promulgated by the MOF on December 25, 1993, and were amended on

December 15, 2008, and October 28, 2011, respectively, entities and individuals that sell goods or labor services of processing, repair

or replacement, sell services, intangible assets, or immovables, or import goods within the territory of the People’s Republic of

China are taxpayers of value-added tax.

The VAT rate is 17% for taxpayers selling goods, labor services, or tangible movable property

leasing services or importing goods, except otherwise specified;

11% for taxpayers selling services of transportation, postal, basic telecommunications,

construction and lease of immovable, selling immovable, transferring land use rights, selling and importing other specified goods including

6% for taxpayers selling services or intangible assets.

to the Notice on the Adjustment to the Value-added Tax Rates issued by the SAT and the MOF on April 4, 2018, where taxpayers make VAT

taxable sales or import goods, the applicable tax rates shall be adjusted from 17% to 16% and from 11% to 10%, respectively.

Subsequently,

the Notice on Policies for Deepening Reform of Value-added Tax was issued by the SAT, the MOF and the General Administration of Customs

on March 30, 2019 and took effective on April 1, 2019, which further adjusted the applicable tax rate for taxpayers making VAT taxable

sales or importing goods.

The applicable tax rates shall be adjusted from 16% to 13% and from 10% to 9%, respectively.

The VAT rate applicable

to the company is currently 6%;

the income tax rate applicable to the company is 25%.

We are also eligible for receiving tax refund according

to certain favorable government policies starting from 2021.

Withholding Tax

Enterprise Income Tax Law states that since January 1, 2008, an income tax rate of 10% will normally be applicable to dividends declared

to non-PRC resident investors that do not have an establishment or place of business in the PRC, or that have such establishment or place

of business but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends

are derived from sources within the PRC.

to an Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation

and the Prevention of Fiscal Evasion with Respect to Taxes on Incomes (“Double Tax Avoidance Arrangement”) and other applicable

PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions

and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends the

Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%.

However, based on the Circular on Certain

Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties (the “SAT Circular 81”) issued on February

20, 2009 by SAT, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income

tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment.

According to the Circular on Several Questions regarding the “Beneficial Owner” in Tax Treaties, which was issued on February

3, 2018 by the SAT and took effect on April 1, 2018, when determining the applicant’s status of the “beneficial owner”

regarding tax treatments in connection with dividends, interests or royalties in the tax treaties, several factors, including without

limitation, whether the applicant is obligated to pay more than 50% of his or her income in twelve months to residents in third country

or region, whether the business operated by the applicant constitutes the actual business activities, and whether the counterparty country

or region to the tax treaties does not levy any tax or grant tax exemption on relevant incomes or levy tax at an extremely low rate,

will be taken into account, and it will be analyzed according to the actual circumstances of the specific cases.

This circular further

provides that applicants who intend to prove his or her status of the “beneficial owner” shall submit the relevant documents

to the relevant tax bureau according to the Announcement on Issuing the Measures for the Administration of Non-Resident Taxpayers’

Enjoyment of the Treatment under Tax Agreements.

have not commenced the application process for a Hong Kong tax resident certificate from the relevant Hong Kong tax authority, and there

is no assurance that we will be granted such a Hong Kong tax resident certificate.

We have not filed required forms or materials with

the relevant PRC tax authorities to prove that we should enjoy the 5% PRC withholding tax rate.

Laws and Regulations on Employment and Social Welfare

Law of the PRC

to the Labor Law of the PRC, which was promulgated by the Standing Committee of the NPC on July 5, 1994 with an effective date of January

1, 1995 and was last amended on August 27, 2009 and the Labor Contract Law of the PRC, which was promulgated on June 29, 2007, became

effective on January 1, 2008 and was last amended on December 28, 2012, with the amendments coming into effect on July 1, 2013, enterprises

and institutions shall ensure the safety and hygiene of a workplace, strictly comply with applicable rules and standards on workplace

safety and hygiene in China, and educate employees on such rules and standards.

Furthermore, employers and employees shall enter into

written employment contracts to establish their employment relationships.

Employers are required to inform their employees about their

job responsibilities, working conditions, occupational hazards, remuneration and other matters with which the employees may be concerned.

Employers shall pay remuneration to employees on time and in full accordance with the commitments set forth in their employment contracts

and with the relevant PRC laws and regulations.

We have entered into written employment contracts with all the employees and performed

their obligations under the relevant PRC laws and regulations.

Insurance and Housing Fund

to the Social Insurance Law of the PRC, which was promulgated by the Standing Committee of the NPC on October 28, 2010 and became effective

on July 1, 2011, employers in the PRC shall provide their employees with welfare schemes covering basic pension insurance, basic medical

insurance, unemployment insurance, maternity insurance, and occupational injury insurance.

We have been complying with local regulations

regarding social security and employee insurance.

to the Interim Regulations on the Collection and Payment of Social Insurance Premiums, the Regulations on Work Injury Insurance, the

Regulations on Unemployment Insurance and the Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in the PRC shall

provide benefit plans for their employees, which include basic pension insurance, unemployment insurance, maternity insurance, work injury

insurance and basic medical insurance.

An enterprise must provide social insurance by processing social insurance registration with local

social insurance agencies, and shall pay or withhold relevant social insurance premiums for or on behalf of employees.

The Law on Social

Insurance of the PRC, which was promulgated by the SCNPC on October 28, 2010, became effective on July 1, 2011, and was most recently

updated on December 29, 2018, has consolidated pertinent provisions for basic pension insurance, unemployment insurance, maternity insurance,

work injury insurance and basic medical insurance, and has elaborated in detail the legal obligations and liabilities of employers who

do not comply with relevant laws and regulations on social insurance.

Without force majeure reasons, employers must not suspend or reduce

their payment of social insurance for employees, otherwise, competent governmental authorities will have the power to enforce employers

to pay up social insurance within a prescribed time limit, and a fine of 0.05% of the unpaid social insurance can be charged on the part

of the employers per day commencing from the first day of default.

Provided that the employers still fail to make the payment within

the prescribed time limit, a fine of over one time and up to three times of the unpaid sum of social insurance can be charged.

to the Regulations on the Administration of Housing Provident Fund, which was promulgated by the State Counsel and became effective on

April 3, 1999, and was amended on March 24, 2002 and was partially revised on March 24, 2019 by Decision of the State Council on Revising

Some Administrative Regulations (Decree No.

710 of the State Council), housing provident fund contributions by an individual employee

and housing provident fund contributions by his or her employer shall belong to the individual employee.

Registration by PRC companies

at the applicable housing provident fund management center is compulsory and a special housing provident fund account for each of the

employees shall be opened at an entrusted bank.

employer shall timely pay up and deposit housing provident fund contributions in full amount and late or insufficient payments shall

be prohibited.

The employer shall process housing provident fund payment and deposit registrations with the housing provident fund administration

Under the circumstances where financial difficulties do exist due to which an employer is unable to pay or pay up housing provident

funds, permission of labor union of the employer and approval of the local housing provident funds commission must first be obtained

before the employer can suspend or reduce their payment of housing provident funds.

With respect to companies who violate the above regulations

and fail to process housing provident fund payment and deposit registrations or open housing provident fund accounts for their employees,

such companies shall be ordered by the housing provident fund administration center to complete such procedures within a designated period.

Those who fail to process their registrations within the designated period shall be subject to a fine ranging from RMB10,000 to RMB50,000.

When companies breach these regulations and fail to pay up housing provident fund contributions in full amount as due, the housing provident

fund administration center shall order such companies to pay up within a designated period, and may further apply to the People's Court

for mandatory enforcement against those who still fail to comply after the expiry of such period.

PRC subsidiary is in compliance with PRC’s social insurance and housing fund regulations.

Related to our Business Operations in Hong Kong

registration requirement

Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong) requires every person carrying on any business to make an application

to the Commissioner of Inland Revenue in the prescribed manner for the registration of that business.

The Commissioner of Inland Revenue

must register each business for which a business registration application is made and as soon as practicable after the prescribed business

registration fee and levy are paid and issue a business registration certificate or branch registration certificate for the relevant

business or the relevant branch, as the case may be.

The Company has applied and received business registration certificate in HK and

is in compliance with such regulations.

related to Hong Kong Taxation

Revenue Ordinance (Chapter 112 of the Laws of Hong Kong)

the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong), where an employer commences to employ in Hong Kong an individual

who is or is likely to be chargeable to tax, or any married person, the employer shall give a written notice to the Commissioner of Inland

Revenue not later than three months after the date of commencement of such employment.

Where an employer ceases or is about to cease

to employ in Hong Kong an individual who is or is likely to be chargeable to tax, or any married person, the employer shall give a written

notice to the Commissioner of Inland Revenue not later than one month before such individual ceases to be employed in Hong Kong.

tax is imposed in Hong Kong in respect of capital gains from the sale of shares.

gains from the sale of shares by persons carrying on a trade, profession or business in Hong Kong, where such gains are derived from

or arise in Hong Kong, will be subject to Hong Kong profits tax which is imposed at the rates of 8.25% on assessable profits up to HKD

2,000,000 and 16.5% on any part of assessable profits over HKD 2,000,000 on corporations from the year of assessment commencing on or

after 1 April 2018.

Certain categories of taxpayers (for example, financial institutions, insurance companies and securities dealers)

are likely to be regarded as deriving trading gains rather than capital gains unless these taxpayers can prove that the investment securities

are held for long-term investment purposes.

Duty Ordinance (Chapter 117 of the Laws of Hong Kong)

the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong), the Hong Kong stamp duty currently charged at the ad valorem rate of

0.1% on the higher of the consideration for or the market value of the shares, will be payable by the purchaser on every purchase and

by the seller on every sale of Hong Kong shares (in other words, a total of 0.2% is currently payable on a typical sale and purchase

transaction of Hong Kong shares).

In addition, a fixed duty of HKD 5 is currently payable on any instrument of transfer of Hong Kong

Where one of the parties is a resident outside Hong Kong and does not pay the ad valorem duty due by it, the duty not paid will

be assessed on the instrument of transfer (if any) and will be payable by the transferee.

If no stamp duty is paid on or before the due

date, a penalty of up to ten times the duty payable may be imposed.

of the date hereof, the Company is in compliance with the regulations regarding Hong Kong taxation.

applicable as we are a smaller reporting company.

UNRESOLVED STAFF COMMENTS

According to the Notice on the Adjustment to the

Value-added Tax Rates issued by the SAT and the MOF on April 4, 2018, where taxpayers make VAT taxable sales or import goods, the applicable

tax rates shall be adjusted from 17% to 16% and from 11% to 10%, respectively.

Subsequently, the Notice on Policies for Deepening Reform

of Value-added Tax was issued by the SAT, the MOF and the General Administration of Customs on March 30, 2019 and took effective on April

1, 2019, which further adjusted the applicable tax rate for taxpayers making VAT taxable sales or importing goods.

The applicable tax

rates shall be adjusted from 16% to 13% and from 10% to 9%, respectively.

The VAT rate applicable to the company is currently 6%;

income tax rate applicable to the company is 25%.

We are also eligible for receiving tax refund according to certain favorable government

policies starting from 2021.

Dividend Withholding Tax

The Enterprise Income Tax Law states that since

January 1, 2008, an income tax rate of 10% will normally be applicable to dividends declared to non-PRC resident investors that do not

have an establishment or place of business in the PRC, or that have such establishment or place of business but the relevant income is

not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within the

Pursuant to an Arrangement Between the Mainland

of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with

Respect to Taxes on Incomes (“Double Tax Avoidance Arrangement”) and other applicable PRC laws, if a Hong Kong resident enterprise

is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance

Arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC

resident enterprise may be reduced to 5%.

However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend

Provisions in Tax Treaties (the “SAT Circular 81”) issued on February 20, 2009 by SAT, if the relevant PRC tax authorities

determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily

tax-driven, such PRC tax authorities may adjust the preferential tax treatment.

According to the Circular on Several Questions regarding

the “Beneficial Owner” in Tax Treaties, which was issued on February 3, 2018 by the SAT and took effect on April 1, 2018,

when determining the applicant’s status of the “beneficial owner” regarding tax treatments in connection with dividends,

interests or royalties in the tax treaties, several factors, including without limitation, whether the applicant is obligated to pay more

than 50% of his or her income in twelve months to residents in third country or region, whether the business operated by the applicant

constitutes the actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax or

grant tax exemption on relevant incomes or levy tax at an extremely low rate, will be taken into account, and it will be analyzed according

to the actual circumstances of the specific cases.

This circular further provides that applicants who intend to prove his or her status

of the “beneficial owner” shall submit the relevant documents to the relevant tax bureau according to the Announcement on

Issuing the Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of the Treatment under Tax Agreements.

We have not commenced the application process

for a Hong Kong tax resident certificate from the relevant Hong Kong tax authority, and there is no assurance that we will be granted

such a Hong Kong tax resident certificate.

We have not filed required forms or materials with the relevant PRC tax authorities to prove

that we should enjoy the 5% PRC withholding tax rate.

PRC Laws and Regulations on Employment

and Social Welfare

Labor Law of the PRC

Pursuant to the Labor Law of the PRC, which was

promulgated by the Standing Committee of the NPC on July 5, 1994 with an effective date of January 1, 1995 and was last amended on August

27, 2009 and the Labor Contract Law of the PRC, which was promulgated on June 29, 2007, became effective on January 1, 2008 and was last

amended on December 28, 2012, with the amendments coming into effect on July 1, 2013, enterprises and institutions shall ensure the safety

and hygiene of a workplace, strictly comply with applicable rules and standards on workplace safety and hygiene in China, and educate

employees on such rules and standards.

Furthermore, employers and employees shall enter into written employment contracts to establish

their employment relationships.

Employers are required to inform their employees about their job responsibilities, working conditions,

occupational hazards, remuneration and other matters with which the employees may be concerned.

Employers shall pay remuneration to employees

on time and in full accordance with the commitments set forth in their employment contracts and with the relevant PRC laws and regulations.

We have entered into written employment contracts with all the employees and performed their obligations under the relevant PRC laws and

Social Insurance and Housing Fund

Pursuant to the Social Insurance Law of the PRC,

which was promulgated by the Standing Committee of the NPC on October 28, 2010 and became effective on July 1, 2011, employers in the

PRC shall provide their employees with welfare schemes covering basic pension insurance, basic medical insurance, unemployment insurance,

maternity insurance, and occupational injury insurance.

We have been complying with local regulations regarding social security and employee

According to the Interim Regulations on the Collection

and Payment of Social Insurance Premiums, the Regulations on Work Injury Insurance, the Regulations on Unemployment Insurance and the

Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in the PRC shall provide benefit plans for their employees,

which include basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance.

An enterprise must provide social insurance by processing social insurance registration with local social insurance agencies, and shall

pay or withhold relevant social insurance premiums for or on behalf of employees.

The Law on Social Insurance of the PRC, which was promulgated

by the SCNPC on October 28, 2010, became effective on July 1, 2011, and was most recently updated on December 29, 2018, has consolidated

pertinent provisions for basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical

insurance, and has elaborated in detail the legal obligations and liabilities of employers who do not comply with relevant laws and regulations

on social insurance.

Without force majeure reasons, employers must not suspend or reduce their payment of social insurance for employees,

otherwise, competent governmental authorities will have the power to enforce employers to pay up social insurance within a prescribed

time limit, and a fine of 0.05% of the unpaid social insurance can be charged on the part of the employers per day commencing from the

first day of default.

Provided that the employers still fail to make the payment within the prescribed time limit, a fine of over one

time and up to three times of the unpaid sum of social insurance can be charged.

According to the Regulations on the Administration

of Housing Provident Fund, which was promulgated by the State Counsel and became effective on April 3, 1999, and was amended on March

24, 2002 and was partially revised on March 24, 2019 by Decision of the State Council on Revising Some Administrative Regulations (Decree

710 of the State Council), housing provident fund contributions by an individual employee and housing provident fund contributions

by his or her employer shall belong to the individual employee.

Registration by PRC companies at the applicable housing provident fund

management center is compulsory and a special housing provident fund account for each of the employees shall be opened at an entrusted

The employer shall timely pay up and deposit housing

provident fund contributions in full amount and late or insufficient payments shall be prohibited.

The employer shall process housing

provident fund payment and deposit registrations with the housing provident fund administration center.

Under the circumstances where

financial difficulties do exist due to which an employer is unable to pay or pay up housing provident funds, permission of labor union

of the employer and approval of the local housing provident funds commission must first be obtained before the employer can suspend or

reduce their payment of housing provident funds.

With respect to companies who violate the above regulations and fail to process housing

provident fund payment and deposit registrations or open housing provident fund accounts for their employees, such companies shall be

ordered by the housing provident fund administration center to complete such procedures within a designated period.

Those who fail to

process their registrations within the designated period shall be subject to a fine ranging from RMB10,000 to RMB50,000.

When companies

breach these regulations and fail to pay up housing provident fund contributions in full amount as due, the housing provident fund administration

center shall order such companies to pay up within a designated period, and may further apply to the People’s Court for mandatory

enforcement against those who still fail to comply after the expiry of such period.

Regulations Related to our Business Operations

Business registration requirement

The Business Registration Ordinance (Chapter 310

of the Laws of Hong Kong) requires every person carrying on any business to make an application to the Commissioner of Inland Revenue

in the prescribed manner for the registration of that business.

The Commissioner of Inland Revenue must register each business for which

a business registration application is made and as soon as practicable after the prescribed business registration fee and levy are paid

and issue a business registration certificate or branch registration certificate for the relevant business or the relevant branch, as

the case may be.

The Company has applied and received business registration certificate in HK and is in compliance with such regulations.

Regulations related to Hong Kong Taxation

Inland Revenue Ordinance (Chapter 112 of the

Laws of Hong Kong)

Under the Inland Revenue Ordinance (Chapter 112

of the Laws of Hong Kong), where an employer commences to employ in Hong Kong an individual who is or is likely to be chargeable to tax,

or any married person, the employer shall give a written notice to the Commissioner of Inland Revenue not later than three months after

the date of commencement of such employment.

Where an employer ceases or is about to cease to employ in Hong Kong an individual who is

or is likely to be chargeable to tax, or any married person, the employer shall give a written notice to the Commissioner of Inland Revenue

not later than one month before such individual ceases to be employed in Hong Kong.

Capital gains tax

No tax is imposed in Hong Kong in respect of capital

gains from the sale of shares.

Trading gains from the sale of shares by persons

carrying on a trade, profession or business in Hong Kong, where such gains are derived from or arise in Hong Kong, will be subject to

Hong Kong profits tax which is imposed at the rates of 8.25% on assessable profits up to HKD 2,000,000 and 16.5% on any part of assessable

profits over HKD 2,000,000 on corporations from the year of assessment commencing on or after 1 April 2018.

Certain categories of taxpayers

(for example, financial institutions, insurance companies and securities dealers) are likely to be regarded as deriving trading gains

rather than capital gains unless these taxpayers can prove that the investment securities are held for long-term investment purposes.

Stamp Duty Ordinance (Chapter 117 of the Laws

of Hong Kong)

Under the Stamp Duty Ordinance (Chapter 117 of

the Laws of Hong Kong), the Hong Kong stamp duty currently charged at the ad valorem rate of 0.1% on the higher of the consideration for

or the market value of the shares, will be payable by the purchaser on every purchase and by the seller on every sale of Hong Kong shares

(in other words, a total of 0.2% is currently payable on a typical sale and purchase transaction of Hong Kong shares).

In addition, a

fixed duty of HKD 5 is currently payable on any instrument of transfer of Hong Kong shares.

Where one of the parties is a resident outside

Hong Kong and does not pay the ad valorem duty due by it, the duty not paid will be assessed on the instrument of transfer (if any) and

will be payable by the transferee.

If no stamp duty is paid on or before the due date, a penalty of up to ten times the duty payable may

As of the date hereof, the Company is in compliance

with the regulations regarding Hong Kong taxation.

Not applicable as we are a smaller reporting company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business