What changed in this filing

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Item 1A. Risk Factors

2025-09-11 compared with 2024-04-17 · 912 added, 785 removed, 478 unchanged (78% of the section changed)

in our securities involves a high degree of risk.

You should carefully consider the risks and uncertainties described below, together

with all of the other information contained in this Annual Report, before deciding to invest in our securities.

If any of the following

risks materialize, our business, financial condition, results of operation and prospects will likely be materially and adversely affected.

In that event, the market price of our common stock could decline, and you could lose all or part of your investment.

of Risks Affecting Our Company

following summarizes key risks and uncertainties that could materially adversely affect us.

You should read this summary together with

the more detailed description of each risk factor contained below.

Related to Our Business and Industry

identified in our financial reporting during audits could impair our ability to accurately report financial results.

on major customers presents risks if we cannot retain or attract new customers effectively.

Investing in our securities

involves a high degree of risk.

You should carefully consider the risks and uncertainties described below, together with all of the other

information contained in this Annual Report, before deciding to invest in our securities.

If any of the following risks materialize, our

business, financial condition, results of operation and prospects will likely be materially and adversely affected.

In that event, the

market price of our common stock could decline, and you could lose all or part of your investment.

Summary of Risks Affecting Our Company

The following summarizes key

risks and uncertainties that could materially adversely affect us.

You should read this summary together with the more detailed description

of each risk factor contained below.

Risks Related to Our Business and Industry

Weaknesses identified in our financial reporting during audits could impair our ability to accurately report financial results.

Dependency on major customers presents risks if we cannot retain or attract new customers effectively.

Our operating history may not be indicative of our future growth or financial results and we may not be able to sustain our historical growth rates.

to secure new land for facilities could severely impact our operations and financial health.

We are subject to risks related to construction of our factory in Sichuan

Province, China.

The COVID-19 pandemic and other crises could disrupt operations and negatively

affect our business, financial condition, and results.

recessions could have a significant adverse impact on our business.

property infringement claims could be costly and disrupt business operations.

significant amount of accounts receivable could become uncollectible, affecting financial stability.

industry dynamics could lead to harmful price fluctuations.

to maintain product quality and safety could damage our reputation and financial standing.

competition in the touchscreen display industry could reduce market share and profitability.

financing could restrict our ability to execute our business plan.

in related party transaction pricing could lead to significant tax liabilities.

of tax treatments or government subsidies could necessitate paying additional taxes.

Interruptions

from third-party suppliers could disrupt operations.

in the cost and availability of raw materials could negatively affect results.

on key executives and the lack of long-term supplier contracts pose risks.

to adopt new technologies might affect competitiveness.

claims or adverse publicity could impact customer confidence and business results.

on inventories and lack of business insurance could expose us to significant costs.

Related to Doing Business in China

changes in China could increase compliance costs and complicate capital raising.

HFCAA could lead to delisting of our common stock if audits are not inspected properly.

We may be subject to substantial fine if the CSRC has determined that we

have failed to comply with the post-offering filing obligations.

in U.S.-China trade policies could adversely impact our business operations.

regulation of loans and currency conversion could delay or prevent capital usage, affecting liquidity.

laws in the PRC might negatively impact our operational flexibility and financial results.

under the Foreign Corrupt Practices Act and Chinese anti-corruption law could lead to penalties.

or liquidation of our PRC subsidiary could significantly disrupt operations.

and policy changes in China could limit our ability to offer securities.

Uncertainties

in the PRC legal system could limit legal protections.

in enforcing foreign judgments in China could undermine contractual protections.

control of currency conversion and fluctuations in exchange rates could impact financial results and investments.

Chinese government’s substantial influence over business operations could lead to significant operational changes.

Related to Our Common Stock

in the price of our common stock may not reflect our operating performance.

limiting the judicial forum for disputes could restrict stockholder litigation options.

short selling could drive down our stock price.

exposure to negative publicity involving U.S.-listed Chinese companies could harm our business and reputation.

volumes of our common stock being sold could negatively affect the market price.

of dividends means stockholders must rely on stock price appreciation for returns.

Deteriorating

U.S.-China relations could lower our stock price and complicate access to capital markets.

Related to Our Business and Industry

COVID-19 pandemic, as well as other epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks could disrupt

our delivery and operations, which could materially and adversely affect our business, financial condition, and results of operations .

has had a global economic impact on the financial markets.

The global spread of COVID-19 pandemic may result in global economic distress,

and the extent to which it may affect our results of operations will depend on future developments, which are highly uncertain and cannot

be predicted.

We cannot assure you that the COVID-19 pandemic can be eliminated or contained in the near future, or at all, or a similar

outbreak will not occur again.

If the COVID-19 pandemic and the resulting disruption to our business were to extend over a prolonged

period, it could materially and adversely affect our business, financial condition, and results of operations.

addition, global pandemics, epidemics in Mainland China or elsewhere in the world, or fear of spread of contagious diseases, such as

Ebola virus disease (EVD), Middle East respiratory syndrome (MERS), severe acute respiratory syndrome (SARS), H1N1 flu, H7N9 flu, and

avian flu, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could also disrupt our business operations, reduce

or restrict our supply of products and services, incur significant costs to protect our employees and facilities, or result in regional

or global economic distress, which may materially and adversely affect our business, financial condition, and results of operations.

Actual or threatened war, terrorist activities, political unrest, civil strife, and other geopolitical uncertainty could have a similar

adverse effect on our business, financial condition, and results of operations.

Any one or more of these events may impede our production

and delivery efforts and adversely affect our sales results, or even for a prolonged period of time, which could materially and adversely

affect our business, financial condition, and results of operations.

are also vulnerable to natural disasters and other calamities.

We cannot assure you that we are adequately protected from the effects

of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks, or similar

Any of the foregoing events may give rise to interruptions, damage to our property, delays in production, breakdowns, system

failures, technology platform failures, or internet failures, which could cause the loss or corruption of data or malfunctions of our

manufacturing facility as well as adversely affect our business, financial condition, and results of operations.

connection with the audits of our consolidated financial statements as of and for the years ended December 31, 2022 and 2023, we identified

certain material weaknesses in our internal control over financial reporting.

If we fail to develop and maintain an effective system

of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud.

Failure to secure the certificate of land use right for a new parcel from the local PRC government could severely impact our operations and financial health.

We are subject to risks related to construction of our factory in Sichuan Province, China.

Economic recessions could have a significant adverse impact on our business.

Intellectual property infringement claims could be costly and disrupt business operations.

A significant amount of accounts receivable could become uncollectible, affecting financial stability.

Cyclical industry dynamics could lead to harmful price fluctuations.

Failure to maintain product quality and safety could damage our reputation and financial standing.

Intense competition in the touchscreen display industry could reduce market share and profitability.

Inadequate financing could restrict our ability to execute our business plan.

Adjustments in related party transaction pricing could lead to significant tax liabilities.

Revocation of tax treatments or government subsidies could necessitate paying additional taxes.

Interruptions from third-party suppliers could disrupt operations.

Fluctuations in the cost and availability of raw materials could negatively affect results.

Dependency on key executives and the lack of long-term supplier contracts pose risks.

Failure to adopt new technologies might affect competitiveness.

Liability claims or adverse publicity could impact customer confidence and business results.

Losses on inventories and lack of business insurance could expose us to significant costs.

Risks Related to Doing Business in China

Regulatory changes in China could increase compliance costs and complicate capital raising.

The HFCAA could lead to delisting of our common stock if audits are not inspected properly.

We may be subject to substantial fine if the CSRC has determined that we have failed to comply with the post-offering filing obligations.

Changes in U.S.-China trade policies could adversely impact our business operations.

PRC regulation of loans and currency conversion could delay or prevent capital usage, affecting liquidity.

Labor laws in the PRC might negatively impact our operational flexibility and financial results.

Liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law could lead to penalties.

Bankruptcy or liquidation of our PRC subsidiary could significantly disrupt operations.

Economic and policy changes in China could limit our ability to offer securities.

Uncertainties in the PRC legal system could limit legal protections.

Difficulties in enforcing foreign judgments in China could undermine contractual protections.

Government control of currency conversion and fluctuations in exchange rates could impact financial results and investments.

The Chinese government’s substantial influence over business operations could lead to significant operational changes.

Risks Related to Our Common Stock

Volatility in the price of our common stock may not reflect our operating performance.

By-laws limiting the judicial forum for disputes could restrict stockholder litigation options.

Manipulative short selling could drive down our stock price.

Direct exposure to negative publicity involving U.S.-listed Chinese companies could harm our business and reputation.

Large volumes of our common stock being sold could negatively affect the market price.

Non-payment of dividends means stockholders must rely on stock price appreciation for returns.

Deteriorating U.S.-China relations could lower our stock price and complicate access to capital markets.

We may be subject to delisting from Nasdaq if we

fail to timely file periodic reports with the SEC or to maintain Nasdaq’s minimum bid price, which could materially and adversely

affect the liquidity and value of our common stock.

Risks Related to

Our Business and Industry

COVID-19 as well

as other epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks could disrupt our delivery and operations,

which could materially and adversely affect our business, financial condition, and results of operations .

COVID-19 pandemic had a significant global impact on businesses and financial markets, and although its most severe effects have passed,

future outbreaks of COVID-19 or other contagious diseases could again disrupt economic activity and our operations.

Epidemics in Mainland

China or elsewhere in the world, or the fear of such outbreaks, may disrupt our supply chain, reduce or restrict our ability to deliver

products and services, increase costs to protect employees and facilities, or result in regional or global economic distress.

addition, natural disasters such as hurricanes, earthquakes, tsunamis, floods, and typhoons, as well as actual or threatened war, terrorist

activities, political unrest, civil strife, and other geopolitical events, could also materially disrupt our business operations.

also vulnerable to other calamities, including fire, power loss, telecommunications failures, break-ins, riots, and system or internet

Any of these events may cause interruptions, damage to property, production delays, or loss of data, which could materially

and adversely impact our business, financial condition, and results of operations.

In connection with

the audits of our consolidated financial statements as of and for the years ended December 31, 2024 and 2023, we identified certain material

weaknesses in our internal control over financial reporting.

If we fail to develop and maintain an effective system of internal control

over financial reporting, we may be unable to accurately report our financial results or prevent fraud.

SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include a management

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Furthermore, we anticipate that we will continue to incur considerable costs and use

significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley

connection with the auditing of our consolidated financial statements as of and for the years ended December

31, 2023 and 2022, we identified the following material weaknesses in our internal control over financial reporting:

segregation of duties consistent with control objectives;

of formal policies and procedures;

of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner.

significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.

connection with the auditing of our consolidated financial statements as of and for the years ended December 31, 2024 and 2023, we identified

the following material weaknesses in our internal control over financial reporting:

Lack of competent financial reporting and accounting personnel with appropriate understanding of U.S.

GAAP and financial reporting requirements to design and implement key controls over financial reporting process

Lack of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner.

defined in the rules and regulations adopted by the SEC, a “material weakness” is a deficiency, or combination of deficiencies,

in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual

or interim financial statements will not be prevented or detected on a timely basis.

in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or

interim financial statements will not be prevented or detected on a timely basis.

has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness

1 unchanged sentence

The remediation actions planned include:

to search for and evaluate qualified independent outside directors;

gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company;

to develop policies and procedures on internal control over financial reporting and monitor the effectiveness of operations on existing

controls and procedures.

have also engaged with a third-party financial consulting firm during the year to assist with the preparation of SEC reporting.

committed to maintaining a strong internal control environment, and believe that these remediation efforts will deliver improvements

Identify gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company;

Continue to cooperate with operation teams

to ensure control environment in place, and monitor the effectiveness of operations on existing controls and procedures.

Establish assessment of Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”) compliance requirements and improvement of overall internal control.

are committed to maintaining a strong internal control environment, and believe that these remediation efforts will deliver improvements

in our control environment.

2 unchanged sentences

additional enhancements or improvements, as necessary and as funds allow.

the implementation of these measures may not fully address these weaknesses in our internal control over financial reporting, and we

cannot conclude that they have been fully remedied.

Our failure to correct these weakness and deficiencies or our failure to discover

and address any other weakness and deficiencies could result in our inability to accurately report our financial results, prevent or

detect fraud or provide timely and reliable financial and other information pursuant to the reporting obligations we have as a public

company, which could have a material adverse effect on our business, financial condition and results of operations.

Further, it could

cause our investors to lose confidence in the information we report, which could adversely affect the price of our shares.

are heavily dependent on our top customers.

If we fail to acquire new customers or retain existing customers in a cost-effective manner,

our business, financial condition and results of operations may be materially and adversely affected.

are heavily dependent on our top customers, each of which accounted for 10% or more of our revenues.

We currently sell our products primarily

to customers in the PRC and to a lesser extent, overseas customers in European countries and East Asia such as South Korea and

For the year ended December 31, 2023, four customers accounted for 31.7%, 16.2%, 15.8% and 11.5% of the total accounts receivable

balance, respectively.

For the year ended December 31, 2022, three customers accounted for 32.2%, 22.8%, and 14.0% of the

total accounts receivable balance, respectively.

ability to attract new customers and retain existing customers cost-effectively, especially our top customers, is crucial to driving

net revenues growth and achieving profitability.

We have invested significantly in branding, sales and marketing to acquire and retain

customers since our inception.

For example, we attend domestic and international expos and exhibitions to market our products and attract

new customers.

We also expect to continue to invest significantly to acquire new customers and retain existing ones, especially

our top customers.

There can be no assurance that new customers will stay with us, or the net revenues from new customers we acquire

will ultimately exceed the cost of acquiring those customers.

In addition, if our existing customers, especially our existing top customers

no longer find our products appealing, or if our competitors offer more attractive products, prices, discounts or better customer services,

our existing customers may lose interest in us, decrease their orders or even stop ordering from us.

If we are unable to retain our existing

customers, especially our top customers or to acquire new customers in a cost-effective manner, our revenues may decrease and our results

of operations will be adversely affected.

operating history may not be indicative of our future growth or financial results and we may not be able to sustain our historical growth

We are heavily

dependent on our top customers.

If we fail to acquire new customers or retain existing customers in a cost-effective manner, our business,

financial condition and results of operations may be materially and adversely affected.

We are heavily dependent on

our top customers, each of which accounted for 10% or more of our revenues.

We currently sell our products primarily to customers in the

PRC and to a lesser extent, to overseas customers in Europe and East Asia, including South Korea and Taiwan.

For the year ended December

31, 2024, our top five customers accounted for approximately 22.0%, 19.1%, 15.3%, 14.5% and 11.5%, respectively, of our total revenues.

For the year ended December 31, 2023, our top six customers accounted for approximately 22.5%, 16.5%, 15.6%, 14.1%, 11.3% and 10.1%, respectively,

of our total revenues.

ability to attract new customers and retain existing customers cost-effectively, especially our top customers, is crucial to driving net

revenues growth and achieving profitability.

We have invested significantly in branding, sales and marketing to acquire and retain customers

since our inception.

For example, we attend domestic and international expos and exhibitions to market our products and attract new customers.

We also expect to continue to invest significantly to acquire new customers and retain existing ones, especially our top customers.

can be no assurance that new customers will stay with us, or that the net revenues from new customers we acquire will ultimately exceed

the cost of acquiring those customers.

In addition, if our existing customers, especially our top customers no longer find our products

appealing, or if our competitors offer more attractive products, prices, discounts or better customer service, our existing customers

may lose interest in us, decrease their orders or even stop ordering from us.

If we are unable to retain our existing customers, especially

our top customers or to acquire new customers in a cost-effective manner, our revenues may decrease and our results of operations may

be adversely affected.

Our operating history

may not be indicative of our future growth or financial results and we may not be able to sustain our historical growth rates.

operating history may not be indicative of our future growth or financial results.

11 unchanged sentences

may be adversely affected and the market price of our common stock could decline.

to secure a new parcel of land for the construction of our new buildings and facilities, and failure to acquire and install new production

lines on the new parcel may materially and adversely affect our business, financial condition and results of operations.

the year ended December 31, 2021, our use right to the Property was withdrawn by the local government and all ownership certificates

pertaining to the buildings on the Property were returned to the local government for cancellation.

order to minimize the interruption of our business, Sichuan Vtouch entered into a Leaseback Agreement with Sichuan Renshou on March

The Leaseback Agreement entitles us to lease back the Properties commencing from April 1, 2021 until December 31, 2021, at

a monthly rent of RMB300,000 (approximately $46,154), which period has been extended to October 31, 2022.

On October 16, 2022,

Sichuan Vtouch entered an extension to the Leaseback Agreement with Sichuan Renshou to extend the period it granted Sichuan Vtouch

to lease back the Properties until October 31, 2023, then subsequently extended to October 31, 2024, at a monthly rent of RMB400,000

(approximately $59,941).

The management believes that the Company can further renew the lease if necessary.

On July 23, 2021, Sichuan Vtouch entered into a contract with the Chengdu Wenjiang District Planning and Natural

Resources Bureau for the purchase of a land use right for a parcel of land spanning 131,010 square feet, for a consideration of RMB3,925,233

(equivalent to $537,998) for the Company’s new facility.

Failure to secure

the certificate of land use right for a new parcel from the local PRC government for the construction of our new buildings and facilities,

and failure to acquire and install new production lines on the new parcel may materially and adversely affect our business, financial

condition and results of operations.

On August 6, 2021, Sichuan

Vtouch entered into a contract with the Chengdu Wenjiang District Planning and Natural Resources Bureau for the purchase of a land use

right for a parcel of land spanning 131,010 square feet, for a consideration of approximately RMB3,925,233 (equivalent to $537,755) for

the Company’s new facility.

The Company paid the consideration in full on November 18, 2021.

estimates receiving the certificate of land use right from the local government in the fourth quarter of 2024.

of the date of this Annual Report, we estimate to finish the building construction by the end of 2024 and commence production in the third quarter of 2025, but there is no assurance and we may need extended time to achieve our

business plan.

If we fail to complete such construction prior to estimated period and the extended period, if any, we will have to

cease all or part of our operations, and as a result, our business, financial condition and results of operations may be materially

and adversely affected.

are subject to risks related to construction of our factory in Sichuan Province, China.

are constructing new facilities and office buildings, located in Sichuan Province, China.

As of the date of this Annual Report, we

estimates receiving the certificate of land use right from the local government in the fourth quarter of 2024.

We plan to finish the

building construction by the end of 2024 and commence production in the third quarter of 2025.

construction could experience delays or other difficulties, and will require significant capital.

We may not generate sufficient cash

flow to satisfy our capital expenditure commitments.

We may need to raise additional capital to fund a portion of our capital expenditures,

and such capital may not be available when needed or on terms favorable to our company.

The construction may not be completed on schedule

due to various reasons, such as supply chain issues and increased difficulty for workforce recruitment, which could result in increased

expenses and construction costs, and may result in reduced profitability of the project.

Any failure to complete the construction plan

on schedule and within budget could adversely affect our financial condition and results of operations.

construction may be subject to legal claims and proceedings instituted by contractors, workers and other parties involved in such project

from time to time.

Such claims and proceedings may include claims in respect of personal injuries and labor compensation in relation

to the construction project.

The construction of a factory is also subject to risks related to health and safety incidents and site accidents

and any non-compliance with building codes and other local regulations.

If any of the aforementioned incidents or accidents were to occur,

it could have a substantial negative impact on our success and result in a material adverse effect on our financial condition or results

of operations.

recessions could have a significant, adverse impact on our business.

revenues are generated from sales of our capacitive touchscreen products both domestically and internationally and we anticipate that

revenues from such sales will continue to represent the substantial portion of our total revenues in the near future.

Our sales and earnings

can also be affected by changes in the general economy.

touchscreen display industry historically has experienced cyclical fluctuations in financial results due to economic recession, downturns in

business cycles of our customers, interest rate fluctuations, and other economic factors beyond our control.

Deterioration in the economic

environment subjects our business to various risks, which may have a material and adverse impact on our operating results and cause us

to not reach our long-term growth goals.

For example, a downturn in the economy could directly affect the discretionary spending power

of our customers and in turn, depress the number of orders for our products.

may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.

cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate intellectual

property rights held by third parties.

We have not but in the future may be, subject to legal proceedings and claims relating to the

intellectual property rights of others.

There could also be existing intellectual property of which we are not aware that our products

may inadvertently infringe.

We cannot assure you that holders of intellectual property purportedly relating to some aspect of our technology

or business, if any such holders exist, would not seek to enforce such intellectual property against us in China, or any other jurisdictions.

If we are found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities

or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our

In addition, we may incur significant expenses, and may be forced to divert management’s time and other resources from our

business and operations to defend against these infringement claims, regardless of their merits.

Successful infringement or licensing

claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting

or prohibiting our use of the intellectual property in question, and our business, financial position and results of operations could

be materially and adversely affected.

the application and interpretation of China’s patent laws and the procedures and standards for granting patents in China are still

evolving and are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis.

have a significant amount of accounts receivable, which could become uncollectible .

of December 31, 2023, we had approximately $7.5 million in accounts receivable.

Our accounts receivable primarily include

balance due from customers when our products are sold and delivered to customers.

Our customers are required to make full payment within

three to five months from delivery date, although our industry typical payment term is 180 days from delivery.

For the years ended December

31, 2023 and 2022, we did not provide any extended payment terms to any of our customers.

Deteriorating conditions in, bankruptcies,

or financial difficulties of a customer or within their industries generally may impair the financial condition of our customers and

hinder their ability to pay us on a timely basis or at all, and accounts receivable are written off against allowances only after exhaustive

collection efforts.

The failure or delay in payment by one or more of our customers could reduce our cash flows and adversely affect

our liquidity and results of operations.

industry is cyclical, with recurring periods of capacity increases.

As a result, price fluctuations in response to supply and demand

imbalances could harm our results of operations.

touchscreen display industry in general is characterized by cyclical market conditions.

From time to time, the industry has been subject

to imbalances between excess supply and a slowdown in demand, and in certain periods, resulting in declines in selling prices.

capacity expansion anticipated in the touchscreen display industry may lead to excess capacity.

Capacity expansion in the industry may

be due to scheduled ramp-up of new manufacturing facilities, and any large increases in capacity as a result of such expansion could

further drive down the selling prices of our products, which would affect our results of operations.

We cannot assure you that any continuing

or further decrease in selling prices or future downturns resulting from excess capacity or other factors affecting the industry will

not be severe or that any such continuation, decrease or downturn would not seriously harm our business, financial condition and results

of operations.

ability to maintain or increase our revenues will primarily depend upon our ability to maintain market share, increase unit sales of

existing products and introduce and sell new products that offset the anticipated fluctuation and long-term declines in the selling prices

of our existing products.

We cannot assure you that we will be able to maintain or expand market share, increase unit sales, and introduce

and sell new products, to the extent necessary to compensate for market oversupply.

to maintain the quality and safety of our products could have a material and adverse effect on our reputation, financial condition and

results of operations.

We are in the process of obtaining

the certificate of land use right for the new parcel and expect to receive the certificate from the local government in the first quarter

However, there is no assurance that we will be able to obtain the required certificate of land use right in a timely manner,

The failure of obtaining the certificate will adversely affect our business operations.

Additionally, the development of this

site is subject to various regulatory approvals, including construction land planning permit (received in January 2022), construction

project planning permit (received in January 2022), and construction engineering license (received July 2022).

Failure to obtain additional

approvals from the local government, if required, will subject us to fines or suspension of the projects in accordance with relevant PRC

laws and regulations.

In addition, our ability to

install and operate new production lines on this parcel is contingent upon the successful acquisition and setup of equipment, compliance

with applicable environmental, construction, and safety regulations, and the availability of sufficient financing and human resources.

Any failure or significant delay in obtaining the land use rights, completing construction, or acquiring and installing production lines

may materially and adversely affect our ability to expand our operations, meet growing customer demand, and achieve our strategic objectives.

Such delays or failures could have a material adverse effect on our business, financial condition, and results of operations.

As of the date of this Annual

Report, we estimate to complete the building construction by the end of 2025 and commence production in the first quarter of 2026, assuming

we have obtained the land use right by then, but there is no assurance and we may need extended time to achieve our business plan.

we fail to complete such construction prior to estimated period and the extended period, if any, we will have to cease all or part of

our operations, and as a result, our business, financial condition and results of operations may be materially and adversely affected.

We are subject to risks related to construction of our factory

in Sichuan Province, China.

We are constructing new facilities

and office buildings on the new parcel located in Sichuan Province, China.

As of the date of this Annual Report, we estimate receiving

the certificate of land use right from the local government in the first quarter of 2026.

We plan to complete the building construction

by the end of 2025 and commence production in the first quarter of 2026.

The construction could experience

delays or other difficulties, and will require significant capital.

We may not generate sufficient cash flow to satisfy our capital expenditure

We may need to raise additional capital to fund a portion of our capital expenditures, and such capital may not be available

when needed or on terms favorable to our company.

The construction may not be completed on schedule due to various reasons, such as supply

chain issues and increased difficulty for workforce recruitment, which could result in increased expenses and construction costs, and

may result in reduced profitability of the project.

Any failure to complete the construction plan on schedule and within budget could

adversely affect our financial condition and results of operations.

The construction may be subject

to legal claims and proceedings instituted by contractors, workers and other parties involved in such project from time to time.

claims and proceedings may include claims in respect of personal injuries and labor compensation in relation to the construction project.

The construction of a factory is also subject to risks related to health and safety incidents and site accidents and any non-compliance

with building codes and other local regulations.

If any of the aforementioned incidents or accidents were to occur, it could have a substantial

negative impact on our success and result in a material adverse effect on our financial condition or results of operations.

Economic recessions

could have a significant, adverse impact on our business.

Our revenues are generated

from sales of our capacitive touchscreen products both domestically and internationally and we anticipate that revenues from such sales

will continue to represent the substantial portion of our total revenues in the near future.

Our sales and earnings can also be affected

by changes in the general economy.

The touchscreen display industry

historically has experienced cyclical fluctuations in financial results due to economic recession, downturns in business cycles of our

customers, interest rate fluctuations, and other economic factors beyond our control.

Deterioration in the economic environment subjects

our business to various risks, which may have a material and adverse impact on our operating results and cause us to not reach our long-term

growth goals.

For example, a downturn in the economy could directly affect the discretionary spending power of our customers and in turn,

depress the number of orders for our products.

We may be subject

to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.

We cannot be certain that

our operations or any aspects of our business do not or will not infringe upon or otherwise violate intellectual property rights held

by third parties.

We have not but in the future may be, subject to legal proceedings and claims relating to the intellectual property

rights of others.

There could also be existing intellectual property of which we are not aware that our products may inadvertently infringe.

We cannot assure you that holders of intellectual property purportedly relating to some aspect of our technology or business, if any such

holders exist, would not seek to enforce such intellectual property against us in China, or any other jurisdictions.

If we are found to

have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited

from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own.

In addition, we

may incur significant expenses, and may be forced to divert management’s time and other resources from our business and operations

to defend against these infringement claims, regardless of their merits.

Successful infringement or licensing claims made against us may

result in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use

of the intellectual property in question, and our business, financial position and results of operations could be materially and adversely

Further, the application and

interpretation of China’s patent laws and the procedures and standards for granting patents in China are still evolving and are

uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis.

We have a significant

amount of accounts receivable, which could become uncollectible .

As of December 31, 2024, we

had approximately $7.5 million in accounts receivable.

Our accounts receivable primarily include balance due from customers when our products

are sold and delivered to customers.

Our customers are required to make full payment within three to six months from delivery date, although

our industry typical payment term is 180 days from delivery.

For the years ended December 31, 2024 and 2023, we did not provide any extended

payment terms to any of our customers.

Deteriorating conditions in, bankruptcies, or financial difficulties of a customer or within their

industries generally may impair the financial condition of our customers and hinder their ability to pay us on a timely basis or at all,

and accounts receivable are written off against allowances only after exhaustive collection efforts.

The failure or delay in payment by

one or more of our customers could reduce our cash flows and adversely affect our liquidity and results of operations.

Our industry is

cyclical, with recurring periods of capacity increases.

As a result, price fluctuations in response to supply and demand imbalances could

harm our results of operations.

The touchscreen display industry

in general is characterized by cyclical market conditions.

From time to time, the industry has been subject to imbalances between excess

supply and a slowdown in demand, and in certain periods, resulting in declines in selling prices.

In addition, capacity expansion anticipated

in the touchscreen display industry may lead to excess capacity.

Capacity expansion in the industry may be due to scheduled ramp-up of

new manufacturing facilities, and any large increases in capacity as a result of such expansion could further drive down the selling prices

of our products, which would affect our results of operations.

We cannot assure you that any continuing or further decrease in selling

prices or future downturns resulting from excess capacity or other factors affecting the industry will not be severe or that any such

continuation, decrease or downturn would not seriously harm our business, financial condition and results of operations.

Our ability to maintain or

increase our revenues will primarily depend upon our ability to maintain market share, increase unit sales of existing products and introduce

and sell new products that offset the anticipated fluctuation and long-term declines in the selling prices of our existing products.

cannot assure you that we will be able to maintain or expand market share, increase unit sales, and introduce and sell new products, to

the extent necessary to compensate for market oversupply.

Failure to maintain

the quality and safety of our products could have a material and adverse effect on our reputation, financial condition and results of

quality and safety of our products are critical to our success.

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from suppliers and service providers for the losses caused by them.

face intense competition in the touchscreen display industry in general.

We face intense

competition in the touchscreen display industry in general.

If we fail to compete effectively, we may lose market share and customers,

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touchscreen display industry is intensely competitive in general.

We face less competition as we produce medium to large size capacitive touchscreens

which are specially tailored to certain industries, such as industrial HMI, gaming, financing, lottery, automotive, medical, and POS,

and requires more stable supply, longer guaranty and life span, compared with small size touchscreens which are characteristic with shorter

life cycle and guaranty but more demand in quantity.

However, we still have some competitors competing in China and globally with us.

Our competitors may have more financial, technical, geographical advantage, marketing and other resources than we do and may be more

experienced and able to devote greater resources to the development, promotion and support of their business.

Some competitors are well-established

in China and globally and any defensive measures they take in response to our expansion could hinder our growth and adversely affect

our sales and results of operations.

We face less competition as we produce medium- to large-sized capacitive

touchscreens which are specially tailored to certain industries, such as industrial HMI, gaming, financing, lottery, automotive, medical,

and POS, and requires more stable supply, longer guaranty and life span, compared with small size touchscreens which are characteristic

with shorter life cycle and guaranty but more demand in quantity.

However, we still have some competitors competing in China and globally

Our competitors may have more financial, technical, geographical advantage, marketing and other resources than we do and may

be more experienced and able to devote greater resources to the development, promotion and support of their business.

Some competitors

are well-established in China and globally and any defensive measures they take in response to our expansion could hinder our growth and

adversely affect our sales and results of operations.

increased competition may reduce our market share and profitability and require us to increase our sales and marketing efforts and capital

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and results of operations.

we do not obtain substantial additional financing, our ability to execute our business plan may be impaired.

If we do not obtain

substantial additional financing, our ability to execute our business plan may be impaired.

to the withdrawal of the land use right to the Property and cancellation of our ownership certificates pertaining to the buildings on

the Property by the local government pursuant to the Guidelines and the Compensation Agreement, on July 23, 2021, Sichuan Vtouch entered

the Property by the local government pursuant to the Guidelines and the Compensation Agreement, on August 6, 2021, Sichuan Vtouch entered

into a contract with the Chengdu Wenjiang District Planning and Natural Resources Bureau for the purchase of a land use right for a parcel

of land spanning 131,010 square feet, for a consideration of RMB3,925,233 (equivalent to $537,998) for the Company’s new facility.

of land spanning 131,010 square feet, for a consideration of approximately RMB3,925,233 (equivalent to $537,755) for the Company’s

new facility.

The Company paid the consideration in full on November 18, 2021.

The Company estimates receiving the certificate of land use right from

the local government in the fourth quarter of 2024.

business plan.

If we fail to complete such acquisition and construction within the estimated period, if any, we will have to cease

all or part of our operations, and as a result, our business, financial condition and results of operations may be materially and

adversely affected.

addition, our plans may call for significant new investments in research and development, marketing, expanded productions capacity,

and working capital for raw materials and other items.

Should our capital needs be higher than our estimation, we will be required

to seek additional investments, loans or debt financing to fully pursue our business plans.

Such additional investment may not be

available to us on terms which are favorable or acceptable.

Should we be unable to meet our full capital needs, our ability to fully

implement our business plan will be impaired.

adjustment of related party transaction pricing could lead to additional taxes, and therefore substantially reduce our consolidated net

income and the value of your investment.

We are in the process of obtaining the certificate of land

use right for the new parcel and expect to receive the certificate from the local government in the first quarter of 2026.

of the date of this Annual Report, we estimate to finish the building construction by the end of 2025 and commence production in the first

quarter of 2026, but there is no assurance and we may need extended time to achieve our business plan.

If we fail to complete such acquisition

and construction within the estimated period, if any, we will have to cease all or part of our operations, and as a result, our business,

financial condition and results of operations may be materially and adversely affected.

addition, our plans may call for significant new investments in research and development, marketing, expanded productions capacity, and

working capital for raw materials and other items.

Should our capital needs be higher than our estimation, we will be required to seek

additional investments, loans or debt financing to fully pursue our business plans.

Such additional investment may not be available to

us on terms which are favorable or acceptable.

Should we be unable to meet our full capital needs, our ability to fully implement our

business plan will be impaired.

Any adjustment

of related party transaction pricing could lead to additional taxes, and therefore substantially reduce our consolidated net income and

the value of your investment.

tax regime in China is rapidly evolving and there is significant uncertainty for taxpayers in China as PRC tax laws may be interpreted

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among related parties may be subject to audit or challenge by the PRC tax authorities.

If the PRC tax authorities determine that any

contractual arrangements were not entered into on an arm’s length basis and therefore constitute a favorable transfer pricing,

the PRC tax liabilities of the relevant subsidiaries could be increased, which could increase our overall tax liabilities.

the PRC tax authorities may impose late payment interest.

If the PRC tax authorities determine that any contractual

arrangements were not entered into on an arm’s length basis and therefore constitute a favorable transfer pricing, the PRC tax liabilities

of the relevant subsidiaries could be increased, which could increase our overall tax liabilities.

In addition, the PRC tax authorities

may impose late payment interest.

Our net income may be materially reduced if our tax liabilities increase.

our preferential tax treatments and government subsidies are revoked or become unavailable or if the calculation of our tax liability

is successfully challenged by the PRC tax authorities, we may be required to pay tax, interest and penalties in excess of our tax provisions.

If our preferential

tax treatments and government subsidies are revoked or become unavailable or if the calculation of our tax liability is successfully challenged

by the PRC tax authorities, we may be required to pay tax, interest and penalties in excess of our tax provisions.

Chinese government has provided tax incentives to our former subsidiary in Mainland China, Sichuan Wetouch, including reduced enterprise

income tax rates.

For example, under the PRC Enterprise Income Tax Law and its implementation rules, the statutory enterprise income

tax rate is 25%.

For example, under the PRC Enterprise Income Tax Law and its implementation rules, the statutory enterprise income tax

However, the income tax of an enterprise that has been determined to be a qualified enterprise located in western region

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three-year permitted.

As we have dissolved Sichuan Wetouch, and its business and operations have been assumed by Sichuan Vtouch, Sichuan Vtouch has reapplied for the preferential rate of 15% as a qualified enterprise.

Such application is currently

pending with the PRC tax authorities.

If Sichuan Vtouch’s application for the qualification of preferential

tax rate benefit is not approved, our PRC subsidiary will be subject to the statutory enterprise income tax rate of 25%.

the ordinary course of our business, we are subject to complex income tax and other tax regulations, and significant judgment is required

in the determination of a provision for income taxes.

Although we believe our tax provisions are reasonable, if the PRC tax authorities

successfully challenge our position and we are required to pay tax, interest, and penalties in excess of our tax provisions, our financial

condition and results of operations would be materially and adversely affected.

significant interruption in the operations of our third-party suppliers could potentially disrupt our operations.

As we have dissolved Sichuan Wetouch, and its business and operations have been assumed by Sichuan Vtouch, Sichuan

Vtouch is planning to apply for the preferential rate of 15% as a qualified enterprise with the PRC tax authorities.

As of the date of

this Annual Report, we have not applied for the preferential rate of 15%.

If Sichuan Vtouch later applies but its application for the

qualification of preferential tax rate benefit is not approved, our PRC subsidiary will still be subject to the statutory enterprise income

tax rate of 25%.

Further, in the ordinary course of our business, we are subject to complex income tax and other tax regulations, and

significant judgment is required in the determination of a provision for income taxes.

Although we believe our tax provisions are reasonable,

if the PRC tax authorities successfully challenge our position and we are required to pay tax, interest, and penalties in excess of our

tax provisions, our financial condition and results of operations would be materially and adversely affected.

A significant interruption

in the operations of our third-party suppliers could potentially disrupt our operations.

have limited control over the operations of our third-party suppliers and other business partners and any significant interruption in

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and adversely affected.

face the risk of fluctuations in the cost, availability and quality of our raw materials, which could adversely affect our results of

We face the risk

of fluctuations in the cost, availability and quality of our raw materials, which could adversely affect our results of operations.

cost, availability and quality of the raw materials, such as indium tin oxide glasses and panels, are important to our operations.

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in processing, failure of timely delivery or otherwise, could interrupt our operations and adversely affect our financial results.

are dependent upon key executives and highly qualified managers and we cannot assure their retention.

We are dependent

upon key executives and highly qualified managers and we cannot assure their retention.

success depends, in part, upon the continued services of key members of our management.

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of the market, our business and our Company represents a key strength of our business, which cannot be easily replicated.

of our business strategy and our future growth also depend on our ability to attract, train, retain and motivate skilled managerial,

sales, administration, development and operating personnel.

of our business strategy and our future growth also depend on our ability to attract, train, retain and motivate skilled managerial, sales,

administration, development and operating personnel.

can be no assurance that our existing personnel will be adequate or qualified to carry out our strategy and operations, or that we will

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on our business, financial condition and results of operations.

do not have long-term contracts with our suppliers and they can reduce order quantities or terminate their sales to us at any time.

We do not have

long-term contracts with our suppliers and they can reduce order quantities or terminate their sales to us at any time.

PRC subsidiary does not have long term contracts with our suppliers.

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they sell to us, or cease selling products to us altogether.

Such reductions or terminations could have a material adverse impact on

our revenues, profits and financial condition.

we fail to adopt new technologies to evolving customer needs or emerging industry standards, our business may be materially and adversely

Such reductions or terminations could have a material adverse impact on our

revenues, profits and financial condition.

If we fail to adopt

new technologies to evolving customer needs or emerging industry standards, our business may be materially and adversely affected.

remain competitive, we must continue to stay abreast of the constantly evolving industry trends and to enhance and improve our technology

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for technical, legal, financial or other reasons, our business may be materially and adversely affected.

may experience significant liability claims or complaints from customers, or adverse publicity involving our products

and our services.

We may experience

significant liability claims or complaints from customers, or adverse publicity involving our products and our services.

face an inherent risk of liability claims or complaints from our customers.

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or not concerning our products, can adversely affect our business, results of operations and reputation.

may experience losses on inventories.

We may experience

losses on inventories.

new product introductions in the technology industry can result in a decline in the selling prices of our products and the obsolescence

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levels, such actions by our customers may have a material adverse effect on our inventory management and our results of operations.

have no business liability or disruption insurance, which could expose us to significant costs and business disruption.

We have no business

liability or disruption insurance, which could expose us to significant costs and business disruption.

insurance industry in China is still at an early stage of development, and insurance companies in China currently offer limited business-related

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could adversely affect our results of operations and financial condition.

may incur liabilities that are not covered by insurance.

we seek to maintain appropriate levels of insurance , not all claims are insurable and we may experience major incidents of a nature

We may incur liabilities

that are not covered by insurance.

We do not have any insurance that cover, among other things, employee-related accidents and injuries,

product or business liability and other property damage and liability deriving from our activities.

Furthermore, insurance companies

in China currently do not offer as extensive an array of insurance products as insurance companies in more developed economies.

determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable

terms make it impractical for us to have such insurance.

We maintain an amount of insurance protection that we believe is adequate, but

there can be no assurance that such insurance will continue to be available on acceptable terms or that our insurance coverage will be

sufficient or effective under all circumstances and against all liabilities to which we may be subject.

If we were to incur substantial

losses or liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, our results of

operations could be materially and adversely affected.

We could, for example, be subject to substantial claims for damages upon the occurrence

of several events within one calendar year.

In addition, our insurance costs may increase over time in response to any negative

development in our claims history or due to material price increases in the insurance market in general.

may not be able to adequately protect and maintain our intellectual property.

we seek to maintain appropriate levels of insurance, not all claims are insurable and we may experience major incidents of a nature that

are not covered by insurance.

We do not have any insurance that cover, among other things, employee-related accidents and injuries, product

or business liability and other property damage and liability deriving from our activities.

Furthermore, insurance companies in China

currently do not offer as extensive an array of insurance products as insurance companies in more developed economies.

We have determined

that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms

make it impractical for us to have such insurance.

We maintain an amount of insurance protection that we believe is adequate, but there

can be no assurance that such insurance will continue to be available on acceptable terms or that our insurance coverage will be sufficient

or effective under all circumstances and against all liabilities to which we may be subject.

If we were to incur substantial losses or

liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, our results of operations

could be materially and adversely affected.

We could, for example, be subject to substantial claims for damages upon the occurrence of

several events within one calendar year.

In addition, our insurance costs may increase over time in response to any negative development

in our claims history or due to material price increases in the insurance market in general.

We may not be able

to adequately protect and maintain our intellectual property.

success will depend on our ability to continue to develop and market our products.

We have been have five pending patent

applications as of the date of this Annual Report.

No assurance can be given that such patents will not be challenged, invalidated,

infringed or circumvented, or that such intellectual property rights will provide a competitive advantage to us.

Also, litigation

may be necessary to enforce our intellectual property rights or determine the validity and scope of the proprietary rights of

The outcome of such potential litigation may not be in our favor and any success in litigation may not be able to adequately

protect our rights.

Such litigation may be costly and divert management attention away from our business.

An adverse determination

in any such litigation would impair our intellectual property rights and may harm our business, prospects and reputation.

Enforcement of judgments in China is uncertain and even if we are successful in such litigation it may not provide us with an

effective remedy.

introduction of new technologies and products may increase the likelihood that third parties will assert claims that our products infringe

upon their proprietary rights.

We have five pending patent applications as of the

date of this Annual Report.

No assurance can be given that such patents will not be challenged, invalidated, infringed or circumvented,

or that such intellectual property rights will provide a competitive advantage to us.

Also, litigation may be necessary to enforce our

intellectual property rights or determine the validity and scope of the proprietary rights of others.

The outcome of such potential litigation

may not be in our favor and any success in litigation may not be able to adequately protect our rights.

Such litigation may be costly

and divert management attention away from our business.

An adverse determination in any such litigation would impair our intellectual

property rights and may harm our business, prospects and reputation.

Enforcement of judgments in China is uncertain and even if we are

successful in such litigation it may not provide us with an effective remedy.

Our introduction

of new technologies and products may increase the likelihood that third parties will assert claims that our products infringe upon their

proprietary rights.

rapid technological changes that characterize our industry require that we quickly implement new processes and components with respect

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Although patent and

other intellectual property disputes in our industry have often been settled through licensing or similar arrangements, such defense

could require us to incur substantial expense and to divert significant resources of our technical and management personnel, and could

result in our loss of rights to develop or make certain products or require us to pay monetary damages or royalties to license proprietary

rights from third parties.

Furthermore, we cannot be certain that the necessary licenses would be available to us on acceptable terms,

Accordingly, an adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could

prevent us from manufacturing and selling certain of our products.

Any such litigation, whether successful or unsuccessful, could result

in substantial costs to us and diversions of our resources, either of which could adversely affect our business.

Related to Doing Business in China

regulatory developments in China may subject us to additional regulatory review and expose us to government restrictions, and additional

disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments

in China may impose additional compliance requirements for companies with significant China-based operations, all of which could increase

our compliance costs, subject us to additional disclosure requirements, and/or suspend or terminate our future securities offerings,

making capital-raising more difficult.

other intellectual property disputes in our industry have often been settled through licensing or similar arrangements, such defense could

require us to incur substantial expense and to divert significant resources of our technical and management personnel, and could result

in our loss of rights to develop or make certain products or require us to pay monetary damages or royalties to license proprietary rights

from third parties.

Furthermore, we cannot be certain that the necessary licenses would be available to us on acceptable terms, if at

Accordingly, an adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent

us from manufacturing and selling certain of our products.

Any such litigation, whether successful or unsuccessful, could result in substantial

costs to us and diversions of our resources, either of which could adversely affect our business.

Risks Related to

Doing Business in China

Adverse regulatory

developments in China may subject us to additional regulatory review and expose us to government restrictions, and additional disclosure

requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China

may impose additional compliance requirements for companies with significant China-based operations, all of which could increase our compliance

costs, subject us to additional disclosure requirements, and/or suspend or terminate our future securities offerings, making capital-raising

more difficult.

substantially all of our operations are based in China, we are subject to a wide range of relevant PRC laws.

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in China, in particular with respect to restrictions on China-based companies raising capital offshore and the government-led cybersecurity

reviews of certain companies, may lead to additional regulatory review in China over our financing and capital raising activities in

the United States.

In addition, we may become subject to industry-wide regulations that may be adopted by the relevant PRC authorities,

which may have the effect of limiting our product and service offerings, restricting the scope of our operations in China, or causing

the suspension or termination of our business operations in China entirely, all of which will materially and adversely affect our business,

financial condition and results of operations.

We may have to adjust, modify, or completely change our business operations in response

to adverse regulatory changes or policy developments, and we cannot assure you that any remedial action adopted by us can be completed

in a timely, cost-efficient, or liability-free manner or at all.

July 6, 2021, the relevant PRC government authorities published the Opinions on Strictly Cracking Down Illegal Securities Activities

in Accordance with the Law.

reviews of certain companies, may lead to additional regulatory review in China over our financing and capital raising activities in the

United States.

In addition, we may become subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which

may have the effect of limiting our product and service offerings, restricting the scope of our operations in China, or causing the suspension

or termination of our business operations in China entirely, all of which will materially and adversely affect our business, financial

condition and results of operations.

We may have to adjust, modify, or completely change our business operations in response to adverse

regulatory changes or policy developments, and we cannot assure you that any remedial action adopted by us can be completed in a timely,

cost-efficient, or liability-free manner or at all.

July 6, 2021, the relevant PRC government authorities published the Opinions on Strictly Cracking Down Illegal Securities Activities in

Accordance with the Law.

These opinions call for strengthened regulation over illegal securities activities and supervision on overseas

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to deal with the risks and incidents faced by China-based overseas-listed companies.

On December 24, 2021, the CSRC released the Administrative

Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments)

(the “Draft Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings

by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures”, together with the Draft Administrative Provisions,

the “Draft Rules”).

The Draft Rules lay out the filing regulations for both direct and indirect overseas listings and clarify

the determination criteria for indirect overseas listings in overseas markets.

Among other requirements, if a domestic enterprise intends

to indirectly offer and list securities in an overseas market, the record-filing obligation shall be completed within three working days

after the overseas listing application is submitted.

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures, which took effect on

March 31, 2023.

The Trial Administrative Measures further stipulate the rules and requirements for overseas offering and listing conducted

by PRC domestic companies.

Upon the effectiveness of the Trial Administrative Measures, we could be required to go through the filing

If required, we cannot assure you that we will be able to complete such process on time or at all.

July 10, 2021, the Cyberspace Administration of China issued the Measures for Cybersecurity Review (Revision Draft for Comments), or

the Measures, for public comments, which propose to authorize the relevant government authorities to conduct cybersecurity review on

a range of activities that affect or may affect national security, including listings in foreign countries by companies that possess

the personal data of more than one million users.

On December 28, 2021, the Measures for Cybersecurity Review (2021 version) were promulgated

and became effective on February 15, 2022 (the “Measures”), which iterates that any “online platform operators”

controlling personal information of more than one million users that seeks to list on a foreign stock exchange shall also be subject

to cybersecurity review.

As we are neither an “operator of critical information infrastructure” nor a “data processor”

carrying out data processing activities that affect or may affect national security, we believe that the Measures are not applicable

to us even after they take effect in current form.

Pursuant to the Opinions, Chinese regulators are

required to accelerate rulemaking related to the overseas issuance and listing of securities, and update the existing laws and regulations

related to data security, cross-border data flow, and management of confidential information.

Numerous regulations, guidelines and other

measures are expected to be adopted under the umbrella of or in addition to the Cybersecurity Law, Data Security Law and Personal Information

Protection Law.

As of the date of this Report, no official guidance or related implementation rules have been issued yet and the

interpretation of these opinions remains unclear at this stage.

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures,

which took effect on March 31, 2023.

The Trial Administrative Measures further stipulate the rules and requirements for overseas offering

and listing conducted by PRC domestic companies.

July 10, 2021, the Cyberspace Administration of China issued the Measures for Cybersecurity Review (Revision Draft for Comments), or the

Measures, for public comments, which propose to authorize the relevant government authorities to conduct cybersecurity review on a range

of activities that affect or may affect national security, including listings in foreign countries by companies that possess the personal

data of more than one million users.

On December 28, 2021, the Measures for Cybersecurity Review (2021 version) were promulgated and became

effective on February 15, 2022 (the “Measures”), which iterates that any “online platform operators” controlling

personal information of more than one million users that seeks to list on a foreign stock exchange shall also be subject to cybersecurity

As we are neither an “operator of critical information infrastructure” nor a “data processor” carrying

out data processing activities that affect or may affect national security, we believe that the Measures are not applicable to us even

after they take effect in current form.

The PRC government is increasingly focused on data security, recently launching cybersecurity

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regarding data and privacy security.

We may be required to change our data and other business practices and be subject to regulatory

investigations, penalties, and increased cost of operations as a result of these laws and policies.

July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of

the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating

We may be required to change our data and other business practices and be subject to regulatory investigations,

penalties, and increased cost of operations as a result of these laws and policies.

July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of the

SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating

companies before their registration statements will be declared effective, including whether the China-based operating company and the

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a variety of PRC laws and may be subject to tightened regulatory review and exposed to government restrictions in China.

the recent regulatory and policy developments in China and government actions taken by the PRC government, including possible imposition

of restrictions and/or approval requirements on China-based companies raising capital offshore, the offering of our securities may be

subject to additional disclosure requirements and review that the SEC or other regulatory authorities in the United States may adopt

for companies with China-based operations.

are subject to the Trial Administrative Measures, as the Company has:

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

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

is accounted for by PRC domestic companies;

and (ii) the main parts of the issuer’s business activities are conducted in mainland

China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management

are mostly Chinese citizens or domiciled in mainland China;

and, if required, we cannot assure you that we will be able to complete such

process on time or at all.

In light of the

recent regulatory and policy developments in China and government actions taken by the PRC government, including possible imposition of

restrictions and/or approval requirements on China-based companies raising capital offshore, the offering of our securities may be subject

to additional disclosure requirements and review that the SEC or other regulatory authorities in the United States may adopt for companies

with China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements, and/or

suspend or terminate our future securities offerings, making capital-raising more difficult.

We are subject

to the Trial Administrative Measures, as the Company has:

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

assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for

by PRC domestic companies;

and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main

places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly

Chinese citizens or domiciled in mainland China;

and, if required, we cannot assure you that we will be able to complete such process

on time or at all.

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

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companies, and b) the main parts of the issuer’s business activities are conducted in Mainland China, or its main places of business

are located in Mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens

or domiciled in Mainland China;

are located in Mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or

domiciled in Mainland China;

(ii) exemptions from immediate filing requirements for issuers that a) have already been listed or registered

13 unchanged sentences

and subsequent reports shall be filed with the CSRC on material

events, including change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.

Our PRC counsel has advised that because our common stock currently trades in the U.S., we were not required to submit filings to the

CSRC before the Offering was completed and the Offering was not conditioned on CSRC approval.

Rather, within three days of the closing

of the Offering, we are required to submit filings to the CSRC in accordance with the Trial Administrative Measures.

According to the

relevant provisions of the Trial Administrative Measures and its supporting guidelines, the Company is required to fulfill the filing

procedures with the CSRC within three days of the closing of the Offering.

events, including change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.Our

PRC counsel has advised that because our common stock currently trades in the U.S., we were not required to submit filings to the CSRC

before the Offering was completed and the Offering was not conditioned on CSRC approval.

Rather, within three days of the closing of the

Offering, we are required to submit filings to the CSRC in accordance with the Trial Administrative Measures.

According to the relevant

provisions of the Trial Administrative Measures and its supporting guidelines, the Company is required to fulfill the filing procedures

with the CSRC within three days of the closing of the 2024 Uplisting Offering.

According to the Trial Administrative Measures, the Company

has submitted the filing materials to the CSRC, but the materials were not complete due to lack of a commitment letter from the lead

underwriter for the Offering, and the Company withdrew the filing from the CSRC.

The Company will submit the filing materials again

when the materials are ready.

However, given that the Trial Administrative Measures were recently promulgated, there remain substantial

uncertainties as to their interpretation, application, and enforcement and there is no guarantee that the relevant PRC government agencies,

including the CSRC, would reach the same conclusion that we and our PRC counsel have reached.

If the CSRC has determined that

we have failed to comply with the post-offering filing obligations imposed by the Trial Administrative Measures or make a misrepresentation,

misleading statement or material omission in the materials we submit to the CSRC, the CSRC would have the right to order rectification,

issue a warning and impose a fine on us of between RMB 1 million and RMB 10 million and issuing a warning to the parties responsible

for such failure, misrepresentation or material omission and impose a fine on each of such individuals ranging from RMB 500,000 to RMB

common stock will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA,

if it is later determined that the PCAOB is unable to inspect and investigate completely our auditor.

The delisting of and prohibition

from trading of our common stock, or the threat of their being delisted and prohibited from trading, may cause the value of our common

stock to significantly decline or be worthless.

to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been

subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on a national securities

exchange or in the over-the-counter trading market in the United States.

December 18, 2020, the HFCAA was signed into law.

has submitted the filing materials to the CSRC, but the materials were not complete due to lack of a commitment letter from the lead underwriter

for the Offering, and the Company withdrew the filing from the CSRC.

The Company will submit the filing materials again when the materials

However, given that the Trial Administrative Measures were recently promulgated, there remain substantial uncertainties as

to their interpretation, application, and enforcement and there is no guarantee that the relevant PRC government agencies, including the

CSRC, would reach the same conclusion that we and our PRC counsel have reached.

If the CSRC has determined that we have failed

to comply with the post-offering filing obligations imposed by the Trial Administrative Measures or make a misrepresentation, misleading

statement or material omission in the materials we submit to the CSRC, the CSRC would have the right to order rectification, issue a warning

and impose a fine on us of between RMB 1 million and RMB 10 million and issuing a warning to the parties responsible for such failure,

misrepresentation or material omission and impose a fine on each of such individuals ranging from RMB 500,000 to RMB 5 million.

Our common stock will be prohibited from

trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, as amended, if it is later determined

that the PCAOB is unable to inspect and investigate completely our auditor.

The delisting of and prohibition from trading of our common

stock, or the threat of their being delisted and prohibited from trading, may cause the value of our common stock to significantly decline

or be worthless.

Pursuant to the HFCAA, if

the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections

by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on a national securities exchange or in the

over-the-counter trading market in the United States.

On December 18, 2020, the

HFCAA was signed into law.

The HFCAA has since then been subject to amendments by the U.S.

Congress and interpretations

and rulemaking by the SEC.

Congress and interpretations and rulemaking

On June 22, 2021, the U.S.

2 unchanged sentences

reducing the time period before the securities of such foreign companies may be prohibited from trading or delisted.

On December 16, 2021, the

PCAOB issued a report to notify the SEC of its determination relating to the PCAOB’s inability to inspect or investigate completely

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

The inability of the PCAOB to conduct inspections of

auditors in China made it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control

procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential

investors in issuers operating in China to lose confidence in such issuers’ procedures and reported financial information and the

quality of financial statements.

On December 15, 2022, the

PCAOB released a statement confirming it has secured complete access to inspect and investigate registered public accounting firms headquartered

in mainland China and Hong Kong, and it issued the 2022 HFCAA Determination Report to vacate its precious determinations to the contrary.

The PCAOB is continuing to demand complete access, and it will act immediately to reconsider such determinations should China obstruct,

or otherwise fail to facilitate the PCAOB’s access, at any time.

Our auditor, ST & Partners

PLT (“STP”), is headquartered in Malayia, subject to PCAOB inspection.

Our auditor was not subject to the determinations announced

by the PCAOB on December 16, 2021, which were vacated on December 15, 2022.

Our auditor, the independent registered public accounting

firm that issues the audit report, as an auditor of companies that are traded publicly in the United States and a firm registered with

the PCAOB, is subject to laws in the United States.

On December 29,

2022, the Consolidated Appropriations Act, 2023 was signed into law, which contained, among other things, an identical provision to the

AHFCAA, and reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three

years to two.

December 16, 2021, the PCAOB issued a report to notify the SEC of its determination relating to the PCAOB’s inability to inspect

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

The inability of the PCAOB

to conduct inspections of auditors in China made it more difficult to evaluate the effectiveness of these accounting firms’ audit

procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could

cause existing and potential investors in issuers operating in China to lose confidence in such issuers’ procedures and reported

financial information and the quality of financial statements.

December 15, 2022, the PCAOB released a statement confirming it has secured complete access to inspect and investigate registered public

accounting firms headquartered in mainland China and Hong Kong, and it issued the 2022 HFCAA Determination Report to vacate its precious

determinations to the contrary.

The PCAOB is continuing to demand complete access, and it will act immediately to reconsider such determinations

should China obstruct, or otherwise fail to facilitate the PCAOB’s access, at any time.

auditor, the independent registered public accounting firm that issues the audit report, as an auditor of companies that are traded publicly

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

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

Our auditor is headquartered in Lakewood, Colorado

and has been inspected by the PCAOB on a regular basis.

developments related to the HFCAA could add uncertainties to our offering.

We cannot assure you what further actions the SEC, the PCAOB

or the stock exchanges will take to address these issues and what impact such actions will have on companies that have significant operations

in the PRC and have securities listed on a U.S.

stock exchange (including a national securities exchange or over-the-counter stock market).

2022, the Consolidated Appropriations Act, 2023, was signed into law, which amended the HFCAA (i) to reduce the number of consecutive

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

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

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

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

As a result of the Consolidated Appropriations

Act, 2023, the HFCAA now also applies if the PCAOB’s inability to inspect or investigate the relevant accounting firm is due to

a position taken by an authority in any foreign jurisdiction.

The denying jurisdiction does not need to be where the accounting firm is

If the PCAOB determines in the future that it is unable to completely inspect or investigate our auditor and we continue to use

such auditor to issue an audit report on our financial statements filed with the SEC, our securities will be delisted from the stock exchange.

The delisting of our common stock or the threat of their being delisted, may materially and adversely affect the value of your investment.

These risks could result in a material adverse change in our operations and the value of our common stock, significantly limit or completely

hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline

or become worthless.

developments related to the HFCAA could add uncertainties to our future offerings.

We cannot assure you what further actions the SEC,

the PCAOB or the stock exchanges will take to address these issues and what impact such actions will have on companies that have significant

operations in the PRC and have securities listed on a U.S.

stock exchange (including a national securities exchange or over-the-counter

stock market).

In addition, any additional actions, proceedings, or new rules resulting from these efforts to increase U.S.

regulatory access to audit

information could create uncertainty for investors, the market price of our common stock could be adversely affected, and we could be

delisted if we and our auditor are unable to meet the PCAOB inspection requirement.

Such a delisting would substantially impair your

ability to sell or purchase our common stock when you wish to do so, and would have a negative impact on the price of our shares.

may be subject to substantial fine if the CSRC has determined that we have failed to comply with the post-offering filing obligations

imposed by the Trial Administrative Measure.

access to audit information could create uncertainty for investors, the market price of our common stock could be adversely affected,

and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement.

Such a delisting would substantially

impair your ability to sell or purchase our common stock when you wish to do so, and would have a negative impact on the price of our

We may be subject to substantial fine if

the CSRC has determined that we have failed to comply with the post-offering filing obligations imposed by the Trial Administrative Measure.

February 17, 2023, the CSRC promulgated the Trial Administrative Measures that require issuers to carry out filing procedures as required

if they conduct refinancing or are involved in other circumstances that require filing with the CSRC;

(iii) a negative list of types

of issuers banned from listing overseas, such as issuers under investigation for bribery and corruption;

(iv) regulation of issuers in

specific industries;

(iii) a negative list of types of

issuers banned from listing overseas, such as issuers under investigation for bribery and corruption;

(iv) regulation of issuers in specific

(v) issuers’ compliance with national security measures and the personal data protection laws;

and (vi) certain

other matters such as:

an issuer must file with the CSRC within three business days after it submits an application for initial public

offering to competent overseas regulators;

and subsequent reports shall be filed with the CSRC on material events, including change of

control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.

and (vi) certain other

matters such as:

an issuer must file with the CSRC within three business days after it submits an application for initial public offering

to competent overseas regulators;

and subsequent reports shall be filed with the CSRC on material events, including change of control

or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.

PRC counsel has advised that because our common stock currently trades in the U.S., we were not required to submit filings to the CSRC

before the Offering was completed and the Offering was not conditioned on CSRC approval.

Rather, within three days of the closing of

the Offering, we are required to submit filings to the CSRC in accordance with the Trial Administrative Measures.

We have submitted the

filing materials to the CSRC, but the materials were not complete due to lack of a commitment letter from the lead underwriter for the

Offering, and we withdrew the filing from the CSRC.

We will submit the filing materials again when the materials are ready.

given that the Trial Administrative Measures were recently promulgated, there remain substantial uncertainties as to their interpretation,

application, and enforcement and there is no guarantee that the relevant PRC government agencies, including the CSRC, would reach the

same conclusion that we and our PRC counsel have reached.

the CSRC has determined that we have failed to comply with the post-offering filing obligations imposed by the Trial Administrative Measures

or make a misrepresentation, misleading statement or material omission in the materials we submit to the CSRC, the CSRC would have the

right to order rectification, issue a warning and impose a fine on us of between RMB 1 million and RMB 10 million and issuing a warning

to the parties responsible for such failure, misrepresentation or material omission and impose a fine on each of such individuals ranging

from RMB 500,000 to RMB 5 million.

Our operations may be negatively affected, which could materially and adversely affect our liquidity

and our ability to fund and expand our business.

before our 2024 Uplisting Offering was completed and the 2024 Uplisting Offering was not conditioned on CSRC approval.

However, within

three days of the closing of the 2024 Uplisting Offering, we are required to submit filings to the CSRC in accordance with the Trial Administrative

We have submitted the filing materials to the CSRC, but the materials were not complete due to lack of a commitment letter from

the lead underwriter for the 2024 Uplisting Offering, and we withdrew the filing from the CSRC.

We will submit the filing materials again

when the materials are ready.

However, given that the Trial Administrative Measures were recently promulgated, there remain substantial

uncertainties as to their interpretation, application, and enforcement and there is no guarantee that the relevant PRC government agencies,

including the CSRC, would reach the same conclusion that we and our PRC counsel have reached.

If the CSRC has determined that we

have failed to comply with the post-offering filing obligations imposed by the Trial Administrative Measures or make a misrepresentation,

misleading statement or material omission in the materials we submit to the CSRC, the CSRC would have the right to order rectification,

issue a warning and impose a fine on us of between RMB 1 million and RMB 10 million and issuing a warning to the parties responsible for

such failure, misrepresentation or material omission and impose a fine on each of such individuals ranging from RMB 500,000 to RMB 5 million.

Our operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand

our business.

Changes in U.S.

and international trade policies, particularly with regard to China, may adversely impact our business and operating results.

government has recently made statements and taken certain actions that may lead to potential changes to U.S.

and international trade

policies, including recently-imposed tariffs affecting certain products manufactured in China.

It is unknown whether and to what extent

new tariffs (or other new laws or regulations) will be adopted, or the effect that any such actions would have on us or our industry

and customers.

Although cross-border business may not be an area of our focus, if we plan to sell our products internationally in the

future, any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for our

products and services, impact the competitive position of our products or prevent us from being able to sell products in certain countries.

If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular,

government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have an adverse

effect on our business, financial condition, results of operations.

regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion

may delay or prevent us from using the proceeds of any offerings or financings to make loans or additional capital contributions to our

Chinese subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

have recently been significant changes to international trade policies and tariffs affecting imports and exports.

Any significant increases

in tariffs on goods or materials or other changes in trade policy could negatively affect our search for a target and/or our ability to

complete our initial business combination.

has implemented a range of new tariffs and increases to existing tariffs.

In response to the tariffs announced by the U.S., other

countries have imposed, are considering imposing, and may in the future impose new or increased tariffs on certain exports from the United

There is currently significant uncertainty about the future relationship between the United States and other countries with respect

to trade policies, taxes, government regulations and tariffs.

and we cannot predict whether, and to what extent, current tariffs will

continue or trade policies will change in the future.

or the threat of tariffs or increased tariffs, could have a significant negative impact on certain businesses (either due to domestic

businesses’ reliance on imported goods or dependence on access to foreign markets, or foreign businesses’ reliance on sales

into the United States).

In addition, retaliatory tariffs could have a significant negative impact on foreign businesses that rely on

imports from the United States, and domestic businesses that rely on exporting goods internationally.

Among other things, historical financial

performance of companies affected by trade policies and/or tariffs may not provide useful guidance as to the future performance of such

companies, because future financial performance of those companies may be materially affected by new U.S.

tariffs or foreign retaliatory

tariffs, or other changes to trade policies.

Trade tensions between China

and the United States may intensify in the future, resulting in the imposition of more tariffs or other trade restrictions.

cross-border business is currently not an area of our focus, if we plan to sell products internationally in the future, any unfavorable

government policies on international trade, such as capital controls or tariffs, may affect the demand for our products and services,

impact the competitive position of our products or prevent us from being able to sell products in certain countries.

If any new tariffs,

legislation and/or regulations are implemented, or if existing trade agreements are renegotiated, such changes could have an adverse effect

on our business, financial condition, or results of operations.

In addition, future actions or escalations by either the United States

or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on our business.

In addition, recent economic

and trade sanctions threatened and/or imposed by the U.S.

government on a number of China-based companies have raised concerns as

to whether, in the future, there may be additional regulatory challenges or enhanced restrictions involving other China-based companies

in areas such as data security, information technology or other business activities.

Similar or more expansive restrictions, including

relating to export controls, that may be imposed by the United States or other jurisdictions in the future, may materially and adversely

affect our ability to acquire technologies, systems or products that may be important to our technology infrastructure, product and service

offerings and business operations.

Furthermore, we may also face

export controls or sanctions-related or other trade-related restrictions on transactions with certain

customers, business partners and other persons.

The Entity List maintained by the U.S.

Department of Commerce identifies foreign

parties that are prohibited from acquiring — whether by export, reexport, or transfer in-country — some or all items subject

Export Administration Regulations (“EAR”), unless the exporter secures a license.

Licenses, and exceptions

to the license requirement, are rarely granted to exporters.

Exporting, reexporting or transferring items subject to the EAR in violation

of licensing requirements could result in criminal and/or civil penalties.

These restrictions, and similar or more expansive restrictions

or sanctions that may be imposed by the United States or other jurisdictions in the future, may adversely affect our ability to work

with certain future customers and business partners, which would harm our business.

Furthermore, our association with customers or business

partners that are or become subject to U.S.

regulatory scrutiny or export controls- or sanctions-related restrictions could subject

us to actual or perceived reputational harm among current or prospective investors, suppliers or customers, other parties doing business

with us, or the general public.

Any such reputational harm could result in the loss of investors, suppliers or customers, which could

harm our business, financial conditions or prospects.

PRC regulation

of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay

or prevent us from using the proceeds of any offerings or financings to make loans or additional capital contributions to our Chinese

subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

conduct substantially all of our operations in China.

12 unchanged sentences

principal-secured products unless otherwise provided by relevant laws and regulations;

(iii) the granting of loans to non-affiliated

enterprises, except where it is expressly permitted in the business license;

and (iv) paying the expenses related to the purchase of

real estate that is not for self-use (except for the foreign-invested real estate enterprises).

(iii) the granting of loans to non-affiliated enterprises,

except where it is expressly permitted in the business license;

and (iv) paying the expenses related to the purchase of real estate that

is not for self-use (except for the foreign-invested real estate enterprises).

light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies,

we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals

or filings on a timely basis, if at all, with respect to future loans by us to our PRC subsidiary or with respect

to future capital contributions by us to our PRC subsidiary.

If we fail to complete such registrations or obtain such approvals,

our ability to use the proceeds from the Offering and to capitalize or otherwise fund our Chinese operations may be negatively affected,

which could materially and adversely affect our liquidity and our ability to fund and expand our business.

regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial

owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary’

or filings on a timely basis, if at all, with respect to future loans by us to our PRC subsidiary or with respect to future capital contributions

by us to our PRC subsidiary.

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

any future offerings and to capitalize or otherwise fund our Chinese operations may be negatively affected, which could materially and

adversely affect our liquidity and our ability to fund and expand our business.

PRC regulations

relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or

our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary’

ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

15 unchanged sentences

If any PRC shareholder of such SPV fails to make

the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from

distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be

prohibited from making additional capital contributions into its subsidiary in China.

On February 13, 2015, the SAFE promulgated a Notice

on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective

on June 1, 2015.

Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound

overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE.

qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from distributing

its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from

making additional capital contributions into its subsidiary in China.

On February 13, 2015, the SAFE promulgated a Notice on Further Simplifying

and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015.

Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct

investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE.

The qualified banks

will directly examine the applications and accept registrations under the supervision of SAFE.

may not be fully informed of the identities of all our beneficial owners who are PRC residents.

For example, because the investment in

or trading of our shares will happen in an overseas public or secondary market where shares are often held with brokers in brokerage

accounts, it is unlikely that we will know the identity of all of our beneficial owners who are PRC residents.

Furthermore, we have no

control over any of our future beneficial owners and we cannot assure you that such PRC residents will be able to complete the necessary

approval and registration procedures required by the Administrative Measures on Individual Foreign Exchange.

or trading of our shares will happen in an overseas public or secondary market where shares are often held with brokers in brokerage accounts,

it is unlikely that we will know the identity of all of our beneficial owners who are PRC residents.

Furthermore, we have no control over

any of our future beneficial owners and we cannot assure you that such PRC residents will be able to complete the necessary approval and

registration procedures required by the Administrative Measures on Individual Foreign Exchange.

of our shareholders that we are aware of are subject to SAFE regulations, and we expect all of these shareholders will have completed

all necessary registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37.

We cannot assure you,

however, that all of these shareholders may continue to make required filings or updates in a timely manner, or at all.

We can provide

no assurance that we are or will in the future continue to be informed of identities of all PRC residents holding direct or indirect

interest in our company.

Any failure or inability by such shareholders to comply with SAFE regulations may subject us to fines or legal

sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiary’ ability to distribute dividends

to, or obtain foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends.

result, our business operations and our ability to make distributions to you could be materially and adversely affected.

We cannot assure you, however,

that all of these shareholders may continue to make required filings or updates in a timely manner, or at all.

We can provide no assurance

that we are or will in the future continue to be informed of identities of all PRC residents holding direct or indirect interest in our

Any failure or inability by such shareholders to comply with SAFE regulations may subject us to fines or legal sanctions, such

as restrictions on our cross-border investment activities or our PRC subsidiary’ ability to distribute dividends to, or obtain foreign

exchange-denominated loans from, our company or prevent us from making distributions or paying dividends.

As a result, our business operations

and our ability to make distributions to you could be materially and adversely affected.

as these foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving,

7 unchanged sentences

the necessary filings and registrations required by the foreign exchange regulations.

This may restrict our ability to implement our

acquisition strategy and could adversely affect our business and prospects.

This may restrict our ability to implement our acquisition

strategy and could adversely affect our business and prospects.

of the date of this Annual Report, the PRC residents have either not completed, or have not applied for, foreign exchange registration

2 unchanged sentences

plan to make foreign exchange registrations, they may still face with the above said possible fines in accordance with the PRC Laws.

laws in the PRC may adversely affect our results of operations.

PRC National People’s Congress promulgated the Labor Contract Law which became effective on January 1, 2008 and was amended on

December 28, 2012 (the “Labor Contract Law”), and the State Council promulgated implementing regulations for the labor contract

law on September 18, 2008.

The Labor Contract Law and the implementing regulations impose requirements concerning, among others, the

execution of written contracts between employers and employees, the time limits for probationary periods, and the length of employment

The interpretation and implementation of these regulations are still evolving, our employment practices may violate the Labor

Contract Law and related regulations and we could be subject to penalties, fines or legal fees as a result.

If we are subject to severe

penalties or incur significant legal fees in connection with labor law disputes or investigations, our business, financial condition

and results of operations may be adversely affected.

Labor laws in the

PRC may adversely affect our results of operations.

PRC National People’s Congress promulgated the Labor Contract Law which became effective on January 1, 2008 and was amended on December

28, 2012 (the “Labor Contract Law”), and the State Council promulgated implementing regulations for the labor contract law

on September 18, 2008.

The Labor Contract Law and the implementing regulations impose requirements concerning, among others, the execution

of written contracts between employers and employees, the time limits for probationary periods, and the length of employment contracts.

The interpretation and implementation of these regulations are still evolving, our employment practices may violate the Labor Contract

Law and related regulations and we could be subject to penalties, fines or legal fees as a result.

If we are subject to severe penalties

or incur significant legal fees in connection with labor law disputes or investigations, our business, financial condition and results

of operations may be adversely affected.

the Labor Contract Law requires certain terminations be based upon seniority and not merit.

3 unchanged sentences

and results of operations.

may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law.

We may be exposed

to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law.

are subject to the U.S.

13 unchanged sentences

violations committed by companies in which we invest or that we acquire.

business may be materially and adversely affected if our PRC subsidiary declares bankruptcy or becomes subject to a dissolution or liquidation

Our business may

be materially and adversely affected if our PRC subsidiary declares bankruptcy or becomes subject to a dissolution or liquidation proceeding.

Enterprise Bankruptcy Law of the PRC, or the Bankruptcy Law, came into effect on June 1, 2007.

9 unchanged sentences

Inbound Direct Investment by Foreign Investors, effective May 13, 2013, if our PRC subsidiary undergoes a voluntary or involuntary liquidation

proceeding, prior approval from the SAFE for remittance of foreign exchange to our shareholders abroad is no longer required, but we

still need to conduct a registration process with the SAFE local branch.

It is not clear whether “registration” is a mere

formality or involves the kind of substantive review process undertaken by SAFE and its relevant branches in the past.

in China’s economic, political or social conditions or government policies could have a material adverse effect on our business

and operations.

The PRC government has recently indicated an intent to exert more oversight and control over overseas securities offerings

and other capital markets activities and foreign investment in China-based companies like us.

Any such action, once taken by the PRC

government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause

the value of such securities to significantly decline or in extreme cases, become worthless.

proceeding, prior approval from the SAFE for remittance of foreign exchange to our shareholders abroad is no longer required, but we still

need to conduct a registration process with the SAFE local branch.

It is not clear whether “registration” is a mere formality

or involves the kind of substantive review process undertaken by SAFE and its relevant branches in the past.

Changes in China’s

economic, political or social conditions or government policies could have a material adverse effect on our business and operations.

PRC government has recently indicated an intent to exert more oversight and control over overseas securities offerings and other capital

markets activities and foreign investment in China-based companies like us.

Any such action, once taken by the PRC government, could significantly

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

significantly decline or in extreme cases, become worthless.

Substantially

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to significantly decline or be worthless.

The PRC government has significant authority, oversight and discretion over the conduct of

our business and may intervene with or influence our operations as the government deems appropriate to further regulatory, political

and societal goals.

The PRC government has recently published new policies that significantly affected certain industries such as the

education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies

regarding our industry that could adversely affect our business, financial condition and results of operations.

Furthermore, the PRC

government has recently indicated an intent to exert more oversight and control over overseas securities offerings and other capital

markets activities and foreign investment in China-based companies like us.

Any such action, once taken by the PRC government, could

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

securities to significantly decline or in extreme cases, become worthless.

The PRC government has significant authority, oversight and discretion over the conduct of our

business and may intervene with or influence our operations as the government deems appropriate to further regulatory, political and societal

The PRC government has recently published new policies that significantly affected certain industries such as the education and

internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry

that could adversely affect our business, financial condition and results of operations.

Furthermore, the PRC government has recently

indicated an intent to exert more oversight and control over overseas securities offerings and other capital markets activities and foreign

investment in China-based companies like us.

Any such action, once taken by the PRC government, could significantly limit or completely

hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline

or in extreme cases, become worthless.

Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment

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These measures may cause decreased economic activity in China, which may adversely affect our business and operating results.

Uncertainties

with respect to the PRC legal system, including uncertainties regarding the enforcement of laws and sudden and unexpected changes in

laws and regulations in China, could adversely affect us and limit the legal protections available to you and us.

Uncertainties with

respect to the PRC legal system, including uncertainties regarding the enforcement of laws and sudden and unexpected changes in laws and

regulations in China, could adversely affect us and limit the legal protections available to you and us.

operations in China are governed by PRC laws and regulations.

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and our ability to operate our business in China.

the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and

enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to us.

Uncertainties

due to evolving laws and regulations could also impede the ability of a China-based company, such as our company, to obtain or maintain

permits or licenses required to conduct business in China.

In the absence of required permits or licenses, governmental authorities could

impose material sanctions or penalties on us.

In addition, some regulatory requirements issued by certain PRC government authorities

may not be consistently applied by other PRC government authorities (including local government authorities), thus making strict compliance

with all regulatory requirements impractical, or in some circumstances impossible.

From time to time, we may have to resort to administrative

and court proceedings to enforce our legal rights.

Any administrative and court proceedings in China may be protracted, resulting in

substantial costs and diversion of resources and management attention.

Since PRC administrative and court authorities have significant

discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult to evaluate the outcome

of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems.

These uncertainties

may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business and results

of operations.

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

all and may have retroactive effect.

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

after the violation.

Such unpredictability towards our contractual, property and procedural rights could adversely affect our business

and impede our ability to continue our operations.

if China adopts more stringent standards with respect to environmental protection or corporate social responsibilities, we may incur

increased compliance costs or become subject to additional restrictions in our operations.

Intellectual property rights and confidentiality

protections in China may also not be as effective as in the United States or other countries.

In addition, we cannot predict the effects

of future developments in the PRC legal system on our business operations, including the promulgation of new laws, or changes to existing

laws or the interpretation or enforcement thereof.

These uncertainties could limit the legal protections available to us and our investors,

including you.

Moreover, any litigation in China may be protracted and result in substantial costs and diversion of our resources and

management attention.

may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us

or our management based on foreign laws.

the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement

of these laws, regulations and rules involves uncertainties, which may limit legal protections available to us.

Uncertainties due to evolving

laws and regulations could also impede the ability of a China-based company, such as our company, to obtain or maintain permits or licenses

required to conduct business in China.

In the absence of required permits or licenses, governmental authorities could impose material

sanctions or penalties on us.

In addition, some regulatory requirements issued by certain PRC government authorities may not be consistently

applied by other PRC government authorities (including local government authorities), thus making strict compliance with all regulatory

requirements impractical, or in some circumstances impossible.

From time to time, we may have to resort to administrative and court proceedings

to enforce our legal rights.

Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion

of resources and management attention.

Since PRC administrative and court authorities have significant discretion in interpreting and

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

proceedings and the level of legal protection we enjoy than in more developed legal systems.

These uncertainties may impede our ability

to enforce the contracts we have entered into and could materially and adversely affect our business and results of operations.

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

and may have retroactive effect.

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

the violation.

Such unpredictability towards our contractual, property and procedural rights could adversely affect our business and impede

our ability to continue our operations.

if China adopts more stringent standards with respect to environmental protection or corporate social responsibilities, we may incur increased

compliance costs or become subject to additional restrictions in our operations.

Intellectual property rights and confidentiality protections

in China may also not be as effective as in the United States or other countries.

In addition, we cannot predict the effects of future

developments in the PRC legal system on our business operations, including the promulgation of new laws, or changes to existing laws or

the interpretation or enforcement thereof.

These uncertainties could limit the legal protections available to us and our investors, including

Moreover, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management

You may experience

difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management

based on foreign laws.

are a company incorporated under the laws of the United States and we conduct substantially all of our operations in China.

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courts based on the civil liability provisions of the U.S.

federal securities laws against us and our officers and directors as none

of them currently resides in the United States or has substantial assets located in the United States.

federal securities laws against us and our officers and directors as none of

them currently resides in the United States or has substantial assets located in the United States.

In addition, there is uncertainty

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PRC courts may recognize and enforce

foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the

country where the judgment is made or on principles of reciprocity between jurisdictions.

China does not have any treaties or other forms

of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments.

according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers

if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest.

result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

control of currency conversion may affect the value of your investment.

PRC government imposes controls on the convertibility of the Renminbi, or “RMB,” into foreign currencies and, in certain

cases, the remittance of currency out of China.

foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country

where the judgment is made or on principles of reciprocity between jurisdictions.

China does not have any treaties or other forms of written

arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments.

In addition, according

to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide

that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest.

As a result, it is uncertain

whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

Government control

of currency conversion may affect the value of your investment.

PRC government imposes controls on the convertibility of the Renminbi, or “RMB,” into foreign currencies and, in certain cases,

the remittance of currency out of China.

We receive some revenue and incur some expenses in U.S.

dollars but incur other expenses

primarily in RMB.

Although our main business is based in mainland China with our Chinese operating

subsidiary, some of our business may require us to use U.S.

existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures

from trade-related transactions, can be made in foreign currencies without prior approval from SAFE, by complying with certain procedural

requirements.

Approval from appropriate government authorities is required where Renminbi is to be converted into foreign currency and

remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies.

The PRC government

may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the

future, we may not be able to pay in foreign currencies, and our business and operations may be adversely affected.

in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

dollars but incur other expenses primarily

Although our main business is based in mainland China with our Chinese operating subsidiary, some of our business may require

us to use U.S.

Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions,

interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE,

by complying with certain procedural requirements.

Approval from appropriate government authorities is required where Renminbi is to be

converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign

The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions

and if this occurs in the future, we may not be able to pay in foreign currencies, and our business and operations may be adversely affected.

Fluctuations in

exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

value of the Renminbi against the U.S.

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With the development of the foreign exchange market and progress towards interest rate liberalization

and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system, and we

cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S.

dollar in the future.

is difficult to predict how market forces or PRC or U.S.

government policy may impact the exchange rate between the Renminbi and the

and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system, and we cannot

assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S.

dollar in the future.

It is difficult

to predict how market forces or PRC or U.S.

government policy may impact the exchange rate between the Renminbi and the U.S.

revaluation of the Renminbi may have a material and adverse effect on our operations.

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our exposure or at all.

In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict

our ability to convert Renminbi into foreign currency.

control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.

In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our

ability to convert Renminbi into foreign currency.

Governmental control

of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.

PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of

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denominated in foreign currencies.

As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC

subsidiary to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital

expenditure payments outside China in a currency other than Renminbi.

As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiary

to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure

payments outside China in a currency other than Renminbi.

light of the flood of capital outflows of China, the PRC government may from time to time impose more restrictive foreign exchange policies

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currencies to our shareholders, including holders of our Common Stock.

Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or

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

The Chinese government

exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations

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

Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through

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

The Chinese government may intervene or influence our

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

we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable

tax consequences to us and our non-PRC shareholders and the common stockholders.

The Chinese government may intervene or influence our operations

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

If we are classified as a PRC resident enterprise

for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders

and the common stockholders.

the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its “ de facto

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of an enterprise.

In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, which provides

certain specific criteria for determining whether the “ de facto management body” of a PRC-controlled enterprise that

is incorporated offshore is located in China.

Although this circular applies only to offshore enterprises controlled by PRC enterprises

or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the

SAT’s general position on how the “ de facto management body” text should be applied in determining the tax resident

status of all offshore enterprises.

According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise

or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “ de facto management body”

in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met:

the primary location of the day-to-day operational management is in the PRC;

(ii) decisions relating to the enterprise’s financial

and human resource matters are made or are subject to approval by organizations or personnel in the PRC;

(iii) the enterprise’s

primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC;

and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, which provides certain

specific criteria for determining whether the “ de facto management body” of a PRC-controlled enterprise that is incorporated

offshore is located in China.

Although this circular applies only to offshore enterprises controlled by PRC enterprises or PRC enterprise

groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general

position on how the “ de facto management body” text should be applied in determining the tax resident status of all

offshore enterprises.

According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise

group will be regarded as a PRC tax resident by virtue of having its “ de facto management body” in China, and will

be subject to PRC enterprise income tax on its global income only if all of the following conditions are met:

(i) the primary location

of the day-to-day operational management is in the PRC;

(ii) decisions relating to the enterprise’s financial and human resource

matters are made or are subject to approval by organizations or personnel in the PRC;

(iii) the enterprise’s primary assets, accounting

books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC;

and (iv) at least 50% of

voting board members or senior executives habitually reside in the PRC.

believe our Company, excluding our PRC subsidiary, is not a PRC resident enterprise for PRC tax purposes.

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we would be required to withhold a 10% tax from dividends we pay to our shareholders that are non-resident enterprises.

non-resident enterprise shareholders (including the common stockholders) may be subject to PRC tax on gains realized on the sale or other

disposition of the common stock, if such income is treated as sourced from within the PRC.

Furthermore, if we are deemed a PRC resident

enterprise, dividends paid to our non-PRC individual shareholders (including the common stock holders) and any gain realized on the transfer

of the common stock or ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends,

may be withheld at source by us).

These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders

of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event

that we are treated as a PRC resident enterprise.

In addition, non-resident

enterprise shareholders (including the common stockholders) may be subject to PRC tax on gains realized on the sale or other disposition

of the common stock, if such income is treated as sourced from within the PRC.

Furthermore, if we are deemed a PRC resident enterprise,

dividends paid to our non-PRC individual shareholders (including the common stockholders) and any gain realized on the transfer of the

common stock or ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may

be withheld at source by us).

These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders of

our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that

we are treated as a PRC resident enterprise.

Any such tax may reduce the returns on your investment in our common stock.

Related to Our Common Stock

price of our common stock may be volatile or may decline regardless of our operating performance and you may not be able to resell your

shares at or above the purchase price.

Risks Related to

Our Common Stock

The price of our

common stock may be volatile or may decline regardless of our operating performance and you may not be able to resell your shares at or

above the purchase price.

active trading market for our common stock may not be sustained.

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An inactive market may also impair our ability to raise

capital by selling shares of common stock and may impair our ability to acquire other businesses or technologies using our shares of

common stock as consideration, which, in turn, could materially adversely affect our business.

The market price of our common stock may

fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

performance of the equity markets;

operating performance and the performance of other similar companies;

published opinions and third-party valuations by banking and market analysts;

in our projected operating results that we provide to the public, our failure to meet these projections or changes in recommendations

by securities analysts that elect to follow our common stock;

or legal developments;

level of expenses related to operations;

failure to achieve its goals in the timeframe it announces;

announcements

of acquisitions, strategic alliances or significant agreements by us;

or departure of key personnel;

economy as a whole and market conditions in our industry;

activity by a number of stockholders;

size of our market float;

uncertainty and/or instability

ongoing and future impact of the COVID-19 pandemic and actions taken to slow its spread;

other factors discussed in this Annual Report.

capital by selling shares of common stock and may impair our ability to acquire other businesses or technologies using our shares of common

stock as consideration, which, in turn, could materially adversely affect our business.

The market price of our common stock may fluctuate

significantly in response to numerous factors, many of which are beyond our control, including:

overall performance of the equity markets;

our operating performance and the performance of other similar companies;

the published opinions and third-party valuations by banking and market analysts;

changes in our projected operating results that we provide to the public, our failure to meet these projections or changes in recommendations by securities analysts that elect to follow our common stock;

regulatory or legal developments;

the level of expenses related to operations;

our failure to achieve its goals in the timeframe it announces;

announcements of acquisitions, strategic alliances or significant agreements by us;

recruitment or departure of key personnel;

the economy as a whole and market conditions in our industry;

trading activity by a number of stockholders;

the size of our market float;

political uncertainty and/or instability;

any other factors discussed in this Annual Report.

the past, shareholders of public companies have often brought securities class action suits against those companies following periods

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required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

our By-laws provide that the courts in the State of Nevada are the sole and exclusive forum for substantially all disputes between us

and our shareholders, this could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our

directors or officers, or employees.

Since our By-laws

provide that the courts in the State of Nevada are the sole and exclusive forum for substantially all disputes between us and our shareholders,

this could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors or officers,

or employees.

Amended and Restated By-laws provide that, unless we consent in writing to the selection of an alternative forum, the appropriate state

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rules and regulations thereunder.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over

all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

or entity purchasing or otherwise acquiring any interest in our Company shall be deemed to have notice of and consented to these provisions.

exclusive-forum provisions may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes

with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all

suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

Any person or entity

purchasing or otherwise acquiring any interest in our Company shall be deemed to have notice of and consented to these provisions.

exclusive-forum provisions may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with

us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.

if a court were to find the choice of forum provision contained in our Amended and Restated By-laws to be inapplicable or unenforceable

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results of operations, and financial condition.

Even if we are successful in defending against these claims, litigation could result

in substantial costs and be a distraction to management and other employees.

sellers of our stock may be manipulative and may drive down the market price of our common stock.

selling is the practice of selling securities that the seller does not own but rather has borrowed or intends to borrow from a third

party with the intention of buying identical securities at a later date to return to the lender.

A short seller hopes to profit from

a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the

short seller expects to pay less in that purchase than it received in the sale.

As it is therefore in the short seller’s interest

for the price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations regarding

the relevant issuer, its business prospects and similar matters calculated to or which may create negative market momentum, which may

permit them to obtain profits for themselves as a result of selling the stock short.

Issuers whose securities have historically had limited

trading volumes and/or have been susceptible to relatively high volatility levels can be particularly vulnerable to such short seller

publication of any such commentary regarding us by a short seller may bring about a temporary, or possibly long term, decline in the

market price of our common stock.

No assurances can be made that we will not become a target of such commentary and declines in the market

price of our common stock will not occur in the future, in connection with such commentary by short sellers or otherwise.

we become directly subject to the scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to

expend significant resources to investigate and resolve the matter which could harm our business, operations and reputations, which could

result in a loss of your investment in our common stock.

Even if we are successful in defending against these claims, litigation could result in

substantial costs and be a distraction to management and other employees.

Short sellers of

our stock may be manipulative and may drive down the market price of our common stock.

selling is the practice of selling securities that the seller does not own but rather has borrowed or intends to borrow from a third party

with the intention of buying identical securities at a later date to return to the lender.

A short seller hopes to profit from a decline

in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller

expects to pay less in that purchase than it received in the sale.

As it is therefore in the short seller’s interest for the price

of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations regarding the relevant

issuer, its business prospects and similar matters calculated to or which may create negative market momentum, which may permit them to

obtain profits for themselves as a result of selling the stock short.

Issuers whose securities have historically had limited trading volumes

and/or have been susceptible to relatively high volatility levels can be particularly vulnerable to such short seller attacks.

publication of any such commentary regarding us by a short seller may bring about a temporary, or possibly long term, decline in the market

price of our common stock.

No assurances can be made that we will not become a target of such commentary and declines in the market price

of our common stock will not occur in the future, in connection with such commentary by short sellers or otherwise.

If we become directly

subject to the scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources

to investigate and resolve the matter which could harm our business, operations and reputations, which could result in a loss of your

investment in our common stock.

public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism and negative

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inadequate corporate governance policies or a lack of adherence thereto and, in some cases, allegations of fraud.

As a result of the

scrutiny, criticism and negative publicity, the publicly traded stock of many U.S.

listed Chinese companies has sharply decreased in

value and, in some cases, has become virtually worthless.

Many of these companies are now subject to shareholder lawsuits and SEC enforcement

actions and are conducting internal and external investigations into the allegations.

It is not clear what effect this sector-wide scrutiny,

criticism and negative publicity will have on our business.

If we become the subject of any unfavorable allegations, whether such allegations

are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend the Company.

This situation may be a major distraction to our management.

As a result of the scrutiny,

criticism and negative publicity, the publicly traded stock of many U.S.

listed Chinese companies has sharply decreased in value and,

in some cases, has become virtually worthless.

Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions

and are conducting internal and external investigations into the allegations.

It is not clear what effect this sector-wide scrutiny, criticism

and negative publicity will have on our business.

If we become the subject of any unfavorable allegations, whether such allegations are

proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend the Company.

situation may be a major distraction to our management.

If such allegations are not proven to be groundless, our company and business

operations will be severely hampered and your investment in our shares could be rendered worthless.

sale or availability for sale of substantial amounts of our common stock could adversely affect their market price.

The sale or availability

for sale of substantial amounts of our common stock could adversely affect their market price.

of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could adversely affect

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701 under the Securities Act.

We cannot predict what effect, if any, market sales of securities held by our significant shareholders

or any other shareholder or the availability of these securities for future sale will have on the market price of our common stock.

we do not expect to pay dividends in the foreseeable future, you must rely on a price appreciation of our common stock for return on

your investment.

We cannot predict what effect, if any, market sales of securities held by our significant shareholders or

any other shareholder or the availability of these securities for future sale will have on the market price of our common stock.

Because we do not

expect to pay dividends in the foreseeable future, you must rely on a price appreciation of our common stock for return on your investment.

currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our

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in our common stock as a source for any future dividend income.

board of directors has complete discretion as to whether to distribute dividends., Even if our board of directors decides to declare

and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash

flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial

condition, contractual restrictions and other factors deemed relevant by our board of directors.

Accordingly, the return on your investment

in our common stock will likely depend entirely upon any future price appreciation of our common stock.

There is no guarantee that our

common stock will appreciate in value, or even maintain the price at which you purchased the common stock.

You may not realize a return

on your investment in our common stock and you may even lose your entire investment in our common stock.

relations between the United States and China worsen, our stock price may decrease and could lead to our loss of access or increased difficulty in accessing U.S.

board of directors has complete discretion as to whether to distribute dividends., Even if our board of directors decides to declare and

pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow,

our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition,

contractual restrictions and other factors deemed relevant by our board of directors.

Accordingly, the return on your investment in our

common stock will likely depend entirely upon any future price appreciation of our common stock.

There is no guarantee that our common

stock will appreciate in value, or even maintain the price at which you purchased the common stock.

You may not realize a return on your

investment in our common stock and you may even lose your entire investment in our common stock.

If relations between

the United States and China worsen, our stock price may decrease and could lead to our loss of access or increased difficulty in accessing

capital markets.

5 unchanged sentences

capital markets.

We may be subject to delisting from Nasdaq if we fail to timely

file periodic reports with the SEC or to maintain Nasdaq’s minimum bid price, which could materially and adversely affect the liquidity

and value of our common stock .

Nasdaq Listing Rule 5250(c)(1) requires timely

filing of periodic reports with the SEC.

Between April and August in 2025, we received Nasdaq notices for late filings of our Form 10-K

for the year ended December 31, 2024 and our Forms 10-Q for the quarters ended March 31 and June 30, 2025.

At Nasdaq’s request,

we submitted a compliance plan on June 18, 2025;

Nasdaq accepted the plan on June 26, 2025 and granted us an extended compliance period

through October 13, 2025 to file all outstanding reports.

Following Nasdaq’s delinquency notice relating to the June 30, 2025 Form

10-Q, we submitted an updated compliance plan on August 28, 2025, reaffirming the steps in our original plan.

We are working diligently

with our auditors, legal counsel, and finance team to complete the required filings as promptly as practicable and remain committed to

regaining and maintaining compliance.

If we do not complete the required filings within the compliance period, however, our common stock

may be delisted, subject to our right to appeal to a Nasdaq Hearings Panel.

Separately, on July 15, 2025, we received a Nasdaq

notice that our bid price had closed below $1.00 for 30 consecutive business days, triggering noncompliance with Nasdaq’s minimum

bid price requirement.

Nasdaq has provided us a 180-calendar-day period to regain compliance, which generally requires a closing bid price

of at least $1.00 for a minimum of ten consecutive business days during that period.

We are monitoring the bid price closely and diligently

considering available options, including potential corporate actions, to regain compliance within the allotted period.

If we do not regain

compliance (and are not granted additional time), our securities may be subject to delisting, also subject to appeal rights.

Although these notices had no immediate effect

on the listing or trading of our common stock, there can be no assurance that we will regain or maintain compliance within the permitted

Any delisting would likely reduce the liquidity of our common stock, impair our ability to raise capital, and negatively

impact investor confidence and our business, financial condition, and results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors