AIRWA INC. 10-K

ITEM 1A. Risk Factors Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below and other information in this Annual Report on Form 10-K, including the financial statements and related notes that appear at the end of this report, before deciding to invest in our securities. These risks should be considered in conjunction with any other information included herein, including in conjunction with forward-looking statements made herein. If any of the following risks actually occur, they could materially adversely affect our business, financial condition, and operating results. Additional risks and uncertainties that we do not presently know or that we currently deem immaterial may also impair our business, financial condition, and operating results. The following discussion of risks is not all-inclusive but is designed to highlight what we believe are the material factors to consider when evaluating our business and expectations. These factors could cause our future results to differ materially from our historical results and from expectations reflected in forward-looking statements. Risks Related to Our Business, Operations, Industry, Legal, and Regulatory Requirements AI Services Business Our business depends on our ability to develop and successfully deploy artificial intelligence technologies, and our failure to do so could adversely affect our business, results of operations and financial condition. Our business is based on the development and deployment of artificial intelligence, machine learning, and related technologies that are designed to use our clients’ business data to develop customized AI models and solutions. AI technologies are rapidly evolving, and our ability to compete and grow depends in significant part on our ability to develop, improve, and deploy AI models and related technologies that perform reliably, securely, and cost-effectively. The development and deployment of AI systems involves substantial technical, financial, and operational challenges. Our models may not perform as expected, may produce inaccurate, incomplete, biased, misleading, or otherwise undesirable outputs, or may fail to perform adequately in particular industries, use cases, or environments. AI systems may also generate outputs that appear plausible or authoritative but are factually incorrect, incomplete, or unsupported by the underlying data. Model performance may vary depending on the quality, quantity, relevance, recency, and completeness of the data used to train, fine-tune, or otherwise customize the models, as well as on the particular prompts, inputs, use cases, and operating environments. Model performance may also deteriorate as underlying technologies, client data, business conditions, or other circumstances change. In addition, we may be unable to develop new capabilities or incorporate advances in AI technology as quickly or effectively as our competitors. Our AI technologies may also be affected by limitations in the quality, completeness, accuracy, consistency, or availability of the data used to train or customize them. Although using a client’s own business data is intended to improve customization and security, client data may contain errors, inconsistencies, biases, or other deficiencies that could be incorporated into our models and adversely affect their performance. Our use of client-specific data does not eliminate the risk that an AI model will produce inaccurate, biased, or otherwise undesirable results, and the use of more extensive or proprietary data could in some circumstances amplify the effects of deficiencies or biases contained in that data. 9 In addition, AI technologies and the methods used to develop and evaluate them continue to evolve, and techniques for identifying and mitigating inaccurate, biased, unsafe, or insecure model behavior may not be effective in all circumstances. We may incur substantial costs to test, validate, monitor, secure, and govern our AI models and systems, and those efforts may not identify or prevent all undesirable model behavior. Our clients may rely on our AI solutions to support business decisions or processes. Any failure of our AI solutions to provide the expected benefits could result in customer dissatisfaction, loss of customers, reputational harm, contractual claims, liability, and reduced demand for our services. The use of client data to train or customize AI models creates significant security, privacy, confidentiality, and data-rights risks. A fundamental aspect of our business is our ability to access, process, store, and use our clients’ business data to train, fine-tune, customize, evaluate, and operate AI models. This may involve highly confidential, proprietary, personal, regulated, or otherwise sensitive information belonging to our clients or their customers, employees, business partners, or other third parties. Any unauthorized access to, disclosure of, loss, theft, misuse, alteration, or destruction of client data could cause significant harm to our business and reputation and could result in governmental investigations, regulatory proceedings, litigation, contractual claims, indemnification obligations, fines, penalties, and other liabilities. A security incident involving one client’s data could also undermine confidence in our ability to protect data for all of our clients. Our security measures, and those of our cloud providers, infrastructure providers, AI technology providers, and other service providers, may be breached or otherwise compromised. Cyberattacks, ransomware, phishing, insider threats, software vulnerabilities, credential theft, and other security incidents are becoming increasingly sophisticated. In addition, AI technologies may create new attack vectors, including attempts to extract confidential information from models or manipulate model behavior. Our ability to maintain the confidentiality and security of client-specific models and data is particularly important because our value proposition depends in part on allowing clients to obtain the benefits of customized AI without exposing their business information to other customers or unauthorized persons. If we fail, or are perceived to have failed, to adequately segregate client data, model parameters, training data, prompts, outputs, or other information, our reputation and business could be materially adversely affected. Our efforts to provide secure, client-specific AI models may not prevent unintended disclosure or cross-client exposure of confidential information. Our technology and operating processes are designed to permit us to use individual clients’ data to customize AI models and solutions for those clients. However, technical or operational failures could result in unintended access to one client’s data by another client, employee, contractor, service provider, or other unauthorized party. AI models and associated systems may also present risks that are different from those associated with conventional software. For example, confidential information may potentially be reflected in model parameters, embeddings, logs, prompts, outputs, evaluation data, or other components of an AI system. Techniques intended to improve model performance could inadvertently increase the risk that information from training or customization data is reproduced or inferred from model outputs. In particular, our controls intended to prevent one client’s data from being used to train, fine-tune, evaluate, or otherwise improve models or services provided to other clients may not always operate as intended. Similarly, our systems may not successfully prevent confidential or proprietary information from being memorized, inferred, reproduced, or disclosed through model outputs, retrieval systems, embeddings, logs, or other components of an AI system. 10 If our controls intended to isolate client environments or otherwise protect client information are inadequate, or if our models or systems inadvertently disclose confidential information, we could face claims for breach of contract, breach of confidentiality, violation of privacy or data-protection laws, infringement or misappropriation of intellectual property rights, or other legal claims. Such an event could also cause clients to discontinue or limit their use of our services and materially harm our reputation. Our clients’ data may not be available to us on terms sufficient to operate and improve our AI solutions, and disputes concerning data ownership and usage rights could adversely affect our business. Our ability to provide customized AI solutions depends on our clients granting us sufficient rights to access, process, and use their data for the purposes contemplated by our agreements. Our clients may not have obtained all rights necessary for us to use the data they provide to us, particularly where their data contains personal information, third-party information, copyrighted materials, trade secrets, or other protected content. The legal status of data used to train, fine-tune, or evaluate AI models is evolving, and there may be uncertainty regarding who owns such data, what rights a client has to provide the data to us, what rights we have to process or use the data, whether particular uses constitute training or other forms of processing, and whether model weights, parameters, embeddings, outputs, or other materials derived from such data may be used or retained. Clients or other third parties may assert that we do not have sufficient rights to use particular data or that our use of such data violates contractual, privacy, intellectual property, or other legal rights. For example, data provided by a client may include information obtained from third parties, copyrighted or licensed materials, personal information, trade secrets, or other information that the client is not authorized to provide to us for AI training or customization. Our ability to independently verify the rights associated with all data provided by our clients may be limited. If a client provides data to us without having obtained the necessary rights or consents, we could nevertheless become subject to claims, investigations, or other proceedings relating to our use of that data. If we are unable to obtain or maintain adequate rights to use client data, or if clients impose restrictions on our ability to use their data, we may be required to modify our products, discontinue certain capabilities, incur additional costs, or develop alternative sources of data. These restrictions could also limit our ability to improve our models or develop new products and could adversely affect our competitive position. Data protection, privacy, and other regulatory or contractual requirements may also restrict the geographic location in which client data may be processed or stored, the personnel or service providers who may access it, the purposes for which it may be used, and the length of time for which it may be retained. Such restrictions could increase our costs, limit our ability to train or customize models, delay implementation, or prevent us from offering particular products or services to certain clients or in certain jurisdictions. AI-generated outputs may be inaccurate, biased, inappropriate, or otherwise defective, which could expose us to liability and harm our reputation. AI systems can generate outputs that are inaccurate, incomplete, misleading, biased, offensive, inappropriate, or inconsistent with the underlying data. AI-generated outputs may also contain “hallucinations,” meaning information that is generated by a model but is not supported by the underlying data or otherwise factually accurate. The outputs generated by our models may also reflect limitations or biases contained in the data used to train or customize those models. Our models may also generate outputs that are difficult to explain, reproduce or validate. Even where our systems are designed to use only information that a particular user or client is authorized to access, errors in data permissions, retrieval systems, model configuration, or other components may result in an output that contains information that the user should not receive. 11 Our clients may rely on our AI solutions to support business decisions or processes, and in certain circumstances an inaccurate or inappropriate output could result in financial loss, operational disruption, regulatory violations, damage to a client’s customers or business relationships, or other harm. Even where our agreements limit our liability or require clients to review AI-generated outputs, claims may nevertheless be asserted against us. The risks associated with AI-generated outputs may be particularly significant when our solutions are used in regulated industries or for decisions involving financial, employment, healthcare, legal, compliance, or other material matters. Our clients may not always identify or independently verify an erroneous or inappropriate output before acting upon it. As our AI solutions become more capable and are incorporated into increasingly important business processes, the consequences of errors or unexpected model behavior may become more significant. Any material failure of our AI solutions could result in customer claims, increased insurance and compliance costs, loss of customers, negative publicity, and reputational damage. The legal and regulatory environment governing AI, data privacy, and the use of data for AI training is rapidly evolving, and changes in laws and regulations could increase our costs, restrict our operations, or expose us to liability. Our business is subject to laws, regulations, and contractual requirements relating to privacy, data protection, cybersecurity, intellectual property, consumer protection, automated decision-making, and artificial intelligence. These requirements are evolving rapidly and may differ materially among jurisdictions. Governments and regulatory authorities are adopting or considering new laws and regulations addressing AI systems, including requirements concerning transparency, testing, risk management, human oversight, data governance, documentation, security, and accountability. Privacy and data-protection laws may also restrict how we collect, process, transfer, store, and use information, including information used to train or customize AI models. Regulators and courts may also interpret existing privacy, intellectual property, consumer protection, and other laws in ways that restrict the use of client data for AI training, fine-tuning, evaluation, or other purposes. Requirements concerning consent, data minimization, purpose limitation, data subject rights, automated decision-making, data localization, and cross-border transfers may limit our ability to use or retain client data in the manner contemplated by our business model. For example, laws and regulations in the United States, the European Union, and other jurisdictions may impose requirements on the use of personal data and AI systems that could require us to modify our products, establish additional controls, limit particular uses of data, maintain additional documentation, or incur significant compliance costs. The regulatory framework applicable to AI is likely to continue changing, and the interpretation and enforcement of existing requirements may also change. New laws or regulatory interpretations could also impose requirements concerning the provenance of training data, documentation of data and model development processes, testing for bias or accuracy, disclosure of AI-generated content, human oversight, model risk management, or the ability of individuals to challenge AI-assisted decisions. Compliance with these requirements could require significant changes to our technology, contracts, processes, and business model. Any failure or perceived failure by us to comply with applicable laws, regulations, or contractual requirements could result in investigations, enforcement actions, fines, penalties, litigation, restrictions on our operations, loss of customers, and reputational harm. New or expanded requirements could also make our products more expensive or difficult to develop and operate or prevent us from offering certain AI capabilities in particular markets. Our use of third-party AI models, cloud infrastructure, software, and other technologies exposes us to additional risks and dependencies. We may rely on third parties for foundation models, AI infrastructure, cloud hosting, data storage, cybersecurity, software, hardware, and other technologies used in the development and operation of our solutions. These third parties may change their pricing, terms, functionality, availability, or licensing practices, or may discontinue or restrict their products or services. 12 Our use of third-party foundation models or other AI technologies may also create uncertainty concerning the provenance of training data, the rights associated with model inputs and outputs, the security and privacy of data submitted to such providers, the manner in which such providers may use or retain data, and the intellectual property rights associated with resulting models or outputs. Our reliance on third parties may also expose us to security, privacy, intellectual property, availability, and performance risks. A failure, outage, security incident, or other disruption affecting a third-party provider could impair our ability to provide services to our clients. If a third-party AI provider changes its model, training practices, terms of use or technical specifications, our models or applications may perform differently or require substantial modification. Changes to a third-party foundation model may also cause changes in the accuracy, bias, security, latency, or other characteristics of our solutions, even where we have not changed our own software or client-specific data. We may also be unable to obtain continued access to third-party technologies on commercially reasonable terms, or at all. Any such disruption could increase our costs, delay product development, reduce functionality, and adversely affect our business. Our AI models and other technologies may infringe or misappropriate the intellectual property or other rights of third parties, or we may be unable to adequately protect our own intellectual property. The intellectual property rights applicable to AI technologies, including rights in training data, model architectures, model outputs, software, datasets, and other AI-generated or AI-assisted materials, continue to evolve. There is substantial uncertainty regarding the ownership and scope of intellectual property rights in AI-generated or AI-assisted materials and regarding whether the use of particular datasets, copyrighted works, or other materials in training or fine-tuning AI models may infringe or otherwise violate third-party rights. Third parties may assert that our use of particular data, software, models, or other materials infringes, misappropriates, or otherwise violates their intellectual property or other rights. We may also face claims arising from the incorporation of third-party AI technologies into our products and services. For example, claims may allege that training data used by a third-party foundation model provider, or outputs generated by a model that we use, infringe copyrights, trademarks, patents, or other rights. Our ability to determine whether such claims have merit or to control the conduct of third-party providers whose technologies we incorporate into our solutions may be limited. Any such claims, whether or not meritorious, could require us to expend substantial resources to defend them, obtain licenses, modify our technology, or discontinue particular products or features. At the same time, our ability to protect our own intellectual property, including proprietary methods for customizing AI models and protecting client-specific model configurations, may be limited. We rely on a combination of intellectual property laws, confidentiality obligations, contractual restrictions, and technical safeguards, all of which may fail to prevent unauthorized use or disclosure. If we are unable to protect our intellectual property, competitors may be able to replicate aspects of our technology, which could reduce our competitive advantage. Our highly competitive and rapidly changing market may make it difficult for us to maintain or increase our market share. The markets for AI, machine learning, data analytics, and enterprise software are highly competitive and subject to rapid technological change. We compete with established technology companies, enterprise software providers, AI companies, consulting and professional services firms, cloud providers, and internally developed solutions maintained by our potential clients. Our competitors may have substantially greater financial, technical, marketing, sales, and other resources than we do. They may also have greater access to proprietary data, larger installed customer bases, stronger brand recognition, or established relationships with enterprises. 13 Our clients may also choose to develop AI capabilities internally or use general-purpose AI platforms rather than purchase our solutions. As AI technology becomes more widely available, the functionality that differentiates our products today may become more commoditized. In particular, improvements in general-purpose foundation models may reduce the perceived need for customized models or other client-specific AI solutions. Conversely, if customers demand increasingly sophisticated customization, security, validation, and governance capabilities, we may incur substantial additional costs to meet those expectations. If we are unable to innovate rapidly, demonstrate measurable value to clients, or differentiate our customized and secure approach from competing alternatives, our business and results of operations could be adversely affected. Our ability to attract and retain highly skilled personnel is critical to our success. Our success depends substantially on our ability to attract, train, and retain highly skilled employees, including AI researchers, machine learning engineers, software engineers, cybersecurity professionals, data scientists, product managers, sales personnel, and other technical and business personnel. Competition for individuals with expertise in AI and related technologies is intense. Larger technology companies and other organizations may be able to offer greater compensation, resources, and opportunities than we can. The loss of key personnel, or our inability to recruit and retain qualified personnel, could impair our ability to develop, operate, and support our products and could delay our growth initiatives. Our sales cycles may be lengthy and unpredictable, and our business may depend on our ability to demonstrate the value and security of our solutions to prospective clients. Enterprise customers may require substantial evaluation, testing, security reviews, legal review, and implementation work before purchasing our solutions. Because our solutions may process sensitive business data and may be integrated into important business processes, prospective clients may subject us to extensive security, privacy, AI governance, and compliance requirements. These processes may increase our sales cycle and sales expenses and make the timing and amount of our revenue difficult to predict. Prospective customers may also delay or abandon purchases because of economic uncertainty, concerns about AI, budget constraints, competing technologies, or internal initiatives to develop AI capabilities themselves. If we are unable to demonstrate that our solutions provide sufficient value relative to their cost and risks, our sales may decline and our growth prospects could be adversely affected. Failure to successfully implement our solutions or meet contractual requirements could result in customer disputes, loss of customers, and liability. Our solutions may require significant implementation, integration, configuration, training, and ongoing support. The successful deployment of our solutions may depend on the quality and completeness of client data, the client’s IT environment, cooperation by the client’s personnel, and the performance of third-party systems. If implementations are delayed or fail to meet customer expectations, we may incur additional costs, provide service credits or other concessions, delay revenue recognition, or become subject to contractual disputes. Certain customer agreements may also contain service-level commitments, warranties, indemnification obligations, or other provisions that could expose us to significant liability. Our business may be adversely affected by service interruptions, system failures or other disruptions to our operations. Our clients may depend on our systems and AI solutions for important business processes. Any interruption, degradation or failure in the availability, performance, or functionality of our systems could adversely affect our clients and our business. 14 Our operations may be disrupted by cybersecurity incidents, hardware or software failures, cloud infrastructure failures, telecommunications failures, power outages, natural disasters, extreme weather, public health events, geopolitical events, or other circumstances beyond our control. Our business continuity and disaster recovery plans may not prevent all disruptions or may prove inadequate in the event of a significant incident. As our business grows and our solutions become more important to clients, the consequences of a prolonged interruption could become more significant. We may be subject to significant contractual, indemnification, and other liabilities arising from our use of client data and the operation of our AI solutions. Our agreements with clients may contain representations, warranties, confidentiality provisions, data-protection obligations, service-level commitments, indemnification obligations, and limitations of liability. Some customers may seek increasingly extensive contractual protections relating to AI performance, security, privacy, intellectual property, and regulatory compliance. Customers may also seek contractual representations concerning the provenance and authorized use of training data, the segregation of client data, the accuracy or reliability of AI-generated outputs, compliance with AI laws and regulations, and our ability to prevent customer information from being used to train or improve models for other customers. If a client or other third party suffers a loss that it attributes to our services, including an inaccurate AI output, security incident, unauthorized use of data, intellectual property claim, or regulatory violation, we may face claims for damages or indemnification. Our contractual limitations of liability may not protect us in all circumstances or may be unenforceable in particular jurisdictions or with respect to particular claims. Any significant liability could adversely affect our financial condition and results of operations, while the existence of such claims could also damage our reputation and make it more difficult to attract and retain customers. Our international operations may expose us to additional legal, regulatory, operational, and economic risks. If we expand our international operations, we will become subject to additional risks associated with conducting business in foreign jurisdictions, including differing privacy and data-protection requirements, data localization requirements, AI regulations, intellectual property laws, employment laws, tax regimes, trade restrictions, currency fluctuations, and political and economic instability. Requirements concerning the transfer or storage of client data may be particularly significant to our business because our solutions depend on the processing of client data. Restrictions on cross-border data transfers or requirements to maintain data in particular jurisdictions could increase our infrastructure and compliance costs and may require us to modify our products or operating model. Our financial results may fluctuate, and our growth may not continue at historical or anticipated rates. Our future financial performance depends on a variety of factors, including our ability to acquire and retain customers, expand existing customer relationships, successfully develop and commercialize new AI capabilities, manage infrastructure and personnel costs, and compete effectively. We may incur substantial costs to research, develop, train, test, secure, and deploy AI models and related infrastructure. The costs of computing resources, cloud services, data acquisition, cybersecurity, compliance, and highly skilled personnel may increase as our business expands. Our historical growth, if any, should not be considered indicative of future results. We may experience fluctuations in revenue, operating expenses, and cash flow as a result of customer purchasing patterns, implementation timing, changes in demand, changes in technology, and other factors. If our investments in AI and related infrastructure do not produce sufficient revenue or customer adoption, our results of operations and financial condition could be materially adversely affected. 15 If we fail to effectively manage our growth, our business and results of operations could be adversely affected. As we grow, we will need to expand our personnel, infrastructure, security controls, customer support, compliance programs, and internal systems. Managing this growth may place significant demands on our management and operational resources. Rapid growth may also increase the risk of operational errors, security incidents, service failures, inconsistent customer experiences, and failures to maintain adequate internal controls. If we are unable to effectively manage our growth, the quality of our products and services could suffer, and our reputation and financial performance could be adversely affected. Our compliance obligations may increase as the legal and regulatory environment surrounding AI, privacy, and cybersecurity develops. In addition to laws directly governing AI and data privacy, we may be subject to industry-specific requirements, contractual requirements imposed by clients, and other regulations concerning cybersecurity, records, confidentiality, automated decision-making, and the use of personal or sensitive information. Compliance with these requirements may require significant expenditure on personnel, technology, legal advice, audits, testing, documentation, and controls. Changes in applicable laws or regulations could require us to modify or discontinue products, change how we process data, or incur significant additional costs. Technology Licensing Business We are dependent on third parties for a significant portion of our revenue through intellectual property licensing agreements, and we may not realize the expected benefits of such arrangements. We have in the past entered into, and may continue to enter into, licensing arrangements with third parties that we believe will commercialize our intellectual property and bolster our revenue. Licensing agreements involving our intellectual property are subject to various risks. Our licensees may fail to comply with their obligations set out in the respective agreements. If the licensees generate insufficient revenue from their operations, they may be unable to meet the minimum payments required under the agreements. Our past licensees have elected, and any future licensees may elect, to terminate the licensing arrangements due to a change in their strategic focus, the availability of funding, or other external factors. Termination of any licensing arrangements may result in a reduction in our revenue and the need for replacement arrangements with other licensees. Our licensees have significant discretion in determining the efforts and resources that they will apply to their own operations, potentially limiting their ability to make the required payments under the licensing agreements. Such licensees may independently develop intellectual property that could substitute for ours or may partner with competitors offering different technology. Our licensees may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property rights or our rights over our proprietary information or could expose us to potential liability. Disputes may arise between us and our licensees that interfere with the licensing arrangements or lead to the termination of the licensing agreements. Such disputes could result in costly litigation or arbitration that diverts management attention and resources. As we expand to new jurisdictions, if we fail to enter into licensing arrangements for a particular territory with a suitable strategic partner and do not have sufficient funds or local expertise to undertake the necessary commercialization activities ourselves, we may not be able to generate revenue from that territory. 16 For these and other reasons, we may not achieve the outcomes expected from our licensing arrangements. These arrangements are subject to significant business, economic, and competitive uncertainties and contingencies, many of which are difficult to predict and are beyond our control. We may face operational and financial risks including increases in near- and long-term expenditure, exposure to unknown liabilities, disruption of our business, and diversion of our management’s time and attention. Even if we achieve the expected benefits, we may not be able to do so within the anticipated time frame. Any of the foregoing could materially adversely affect our business, financial condition, results of operations, and prospects. The love and marriage market sector, including matchmaking apps, is competitive, with low switching costs and a consistent stream of new services and entrants, and innovation by competitors may disrupt our business. The love and marriage market sector, including matchmaking apps, is competitive, with a consistent stream of new services and entrants. Some of our competitors and the competitors of our licensees may enjoy better competitive positions in certain geographical regions, user demographics, or other key areas that we or our licensees currently serve or may serve in the future. These advantages could enable such competitors to offer services that are more appealing to users and potential users than the services offered by us or our licensees or to respond more quickly or cost-effectively than us or our licensees to new or changing opportunities. In addition, within the love and marriage market sector generally, costs for consumers to switch between services are low, and consumers have a propensity to try new approaches to connecting with people and to use multiple services at the same time. As a result, new services, entrants, and business models are likely to continue to emerge. If we or a licensee becomes established as a dominant player in any particular market, it is possible that a new service could gain rapid scale at the expense of existing brands by harnessing a new technology, such as generative AI, or a new or existing distribution channel, creating a new or different approach to connecting people, or some other means. We may need to respond by introducing new services or features (for us or for our licensees), and we may not be successful in that. If we do not sufficiently innovate to provide new services, or improve upon existing services, that users or prospective users find appealing, we or our licensees may be unable to continue to attract new users or continue to appeal to existing users. Potential competitors include larger companies that could devote greater resources to the promotion or marketing of their services, take advantage of acquisitions or other opportunities more readily, or develop and expand their services more quickly than we or our licensees do. Potential competitors also include established social media companies that may develop features or services that compete with ours or our licensees’ or operators of mobile operating systems and app stores. For example, Facebook offers a dating feature on its platform, which it introduced globally several years ago and has grown dramatically in size supported by Facebook’s massive worldwide user footprint. Social media and mobile platform competitors could use strong or dominant positions in one or more markets, coupled with ready access to existing large pools of potential users and personal information regarding those users, to gain competitive advantages over us or our licensees, including by offering different features or services that users may prefer or offering their services to users at no charge, which may enable them to acquire and engage users at the expense of our user growth or engagement. If we are not able to compete effectively against current or future competitors as well as other services that may emerge, or if our decisions regarding where to focus our investments are not successful in the long term, the size and level of engagement of our user base may decrease, which could have an adverse effect on our business, financial condition, and results of operations. If, similarly, our licensees are unable to compete effectively or are unsuccessful in this regard, the size and level of engagement of their user base may decrease, which could impact their payments to us and therefore have an adverse effect on our business, financial condition, and results of operations. The limited operating history and geographic reach of YYEM’s brands and services make it difficult to evaluate our current business and future prospects. We seek to tailor our services to meet the preferences of specific geographies, demographics, and other communities of users. Building a given brand or service is generally an iterative process that occurs over a meaningful period of time and involves considerable resources and expenditure. The historical growth rate of any brand or service may not be indicative of future growth rates for the brand or service or for brands and services that we may launch in other jurisdictions. We may encounter risks and difficulties as we build our brands and services. The failure to successfully scale these brands and services and address these risks and difficulties could adversely affect our business, financial condition, and results of operations. 17 If our licensees fail to add users, our revenue, financial results, and business may be significantly harmed. Our financial performance will be significantly determined by our licensees’ success in adding and retaining users of their services. Currently, the size of our licensees’ user base is impacted by a number of factors, including competing products and services and global and regional business, macroeconomic, and geopolitical conditions. If people do not perceive our licensees’ services to be useful, the licensees may not be able to attract or retain users. With each new generation of users, expectations of matchmaking and dating services change and user behaviors and priorities shift. As a result, we may need to further leverage our existing capabilities or advances in technologies such as artificial intelligence (“AI”) and those relating to the metaverse, or adopt new technologies, to improve our licensees’ existing services or introduce new services in order to better satisfy existing users and to expand our licensees’ penetration of what continues to be a large available new-user market. However, there can be no assurance that further implementation of technologies such as AI and those relating to the metaverse will enhance our licensees’ services or be beneficial to our business, and the introduction of new features or services to their existing services may have unintended consequences for their ecosystem, which could lead to fluctuations in the size of their user base. If our licensees are unable to maintain or increase the size of their user base, our revenue and other financial results may be adversely affected. Furthermore, as the size of our licensees’ user base fluctuates in one or more markets from time to time, we may become increasingly dependent on our ability to maintain or increase levels of monetization in order to grow our revenue. Any significant decrease in user retention or growth could render our licensees’ services less attractive to users, which could have a material adverse impact on our business, financial condition, and results of operations. Distribution and marketing of, and access to, the online services offered by us and our licensees may rely, in significant part, on a variety of third-party platforms, in particular, mobile app stores. If these third parties limit, prohibit, or otherwise interfere with features or services or change their policies in any material way, it could adversely affect our business, financial condition, and results of operations. We may market and distribute our online services (including our AI matchmaker application) through a variety of third-party distribution channels, some of which may limit or prohibit advertisements for services such as ours, whether because they decide to launch competing offerings in the same industry or because they are reacting to poor behavior by other industry participants, or for some other reason. Furthermore, certain platforms on which we may market our services may not properly monitor or ensure the quality of content located adjacent to or near our advertisements on such platforms, which could have a negative effect on consumers’ perceptions of our company. The same issues apply to our licensees’ distribution channels and the platforms on which they may market their services. Any of these developments could rise to a level where our business, financial condition, and results of operations are adversely affected. Additionally, our licensees’ applications will most often be accessed through the Apple App Store and Google Play Store. Both Apple and Google have broad discretion to change their policies regarding their mobile operating systems and app stores in ways that may limit, eliminate, or otherwise interfere with a company’s ability to distribute or promote its applications through their stores, its ability to update its applications, and its ability to access information that the apps collect about users. To the extent either Apple or Google does so, our business, financial condition, and results of operations could be adversely affected. The success of our licensees’ services for end users will depend in part on our ability, or our licensees’ ability, to access, collect, and use personal data about users and subscribers. Our licensees may rely extensively on the Apple App Store and Google Play Store, as well as other technology platforms, to distribute and monetize our mobile applications. Users and subscribers will pay through these platforms, which will prevent us or our licensees from accessing key user data that we or they would otherwise receive if the transaction were with the users and subscribers directly. This could negatively impact customer relationship management efforts, the ability to reach new segments of our licensees’ user and subscriber bases and the population generally, the efficiency of paid marketing efforts, the rates our licensees are able to charge advertisers seeking to reach users and subscribers of their services, our licensees’ ability to comply with applicable law, and their ability to identify and exclude users and subscribers whose access would violate applicable terms and conditions, including underage individuals and bad actors, all of which could cause our business, financial condition, and results of operations to be adversely affected. 18 Challenges properly managing the use of artificial intelligence could result in reputational harm, competitive harm, and legal liability. We and our licensees are working to integrate AI technologies into our respective services, which integrations may become important to our operations over time. Competitors or other third parties may incorporate AI into their services more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, AI algorithms and training methodologies may be flawed. If the content or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, offensive, biased, or otherwise improper or harmful, we or our licensees may face reputational consequences or legal liability, and our business, financial condition, and results of operations may be adversely affected. Furthermore, the use of AI has been known to result in, and may in the future result in, cybersecurity incidents that implicate the personal data of end users of AI-enhanced services. Any such cybersecurity incidents related to our use of AI or our licensees’ use of AI could adversely affect our reputation and results of operations. AI also presents emerging ethical issues, and if our use of AI becomes controversial, we may experience reputational harm, competitive harm, or legal liability. The rapid evolution of AI will require the dedication of significant resources to develop, test, and maintain AI technologies, including to further implement AI ethically in order to minimize unintended harmful impact. While we will aim to deploy AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise. The legal and regulatory landscape surrounding generative AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, discrimination, cybersecurity, and privacy and data protection. Compliance with existing, new, and changing laws, regulations, and industry standards relating to AI may limit some uses of AI, impose significant operational costs, and limit our ability to develop, deploy, or use AI technologies. Furthermore, the integration of AI technologies into our products and services may result in new or enhanced governmental or regulatory scrutiny. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or reputational harm. Foreign currency exchange rate fluctuations may adversely affect our results of operations. Our reporting currency is the U.S. dollar, and all of our license agreements are currently denominated in U.S. dollars. However, if, in the future, our revenue is received in various other currencies due to our international operations, our revenue could be reduced when translated into U.S. dollars during periods of a strengthening U.S. dollar. In addition, as foreign currency exchange rates fluctuate, the translation of our international revenue into U.S. dollar-denominated operating results could affect the period-to-period comparability of such results and could also result in foreign currency exchange gains and losses. We depend on our key personnel. Our future success will depend on our continued ability to identify, hire, develop, motivate, and retain highly skilled individuals across the markets where we operate, with the continued contributions of management, as well as contributions from sales teams and technology teams, being especially critical to our success. Competition for well-qualified employees or contractors is intense, and our continued ability to compete effectively depends, in part, on our ability to attract new employees or contractors. Effective succession planning is also important to our future success. If we fail to ensure the effective transfer of management or other institutional knowledge, our ability to execute short- and long-term strategic, financial, and operating goals, as well as our business, financial condition, and results of operations generally, could be adversely affected. 19 In addition to intense competition for talent, workforce dynamics are constantly evolving, such as recent broad shifts to hybrid work models. If we do not manage changing workforce dynamics effectively, it could materially adversely affect our culture, reputation, and operational flexibility going forward. We may not be able to protect our systems and infrastructure from cyberattacks and may be adversely affected by cyberattacks experienced by third parties. We may find ourselves targeted by cyberattacks, computer viruses, worms, bot attacks, or other destructive or disruptive software, distributed denial of service attacks, and attempts to misappropriate customer information, including personal user data, credit card information, and account login credentials. While we invest in the protection of our systems and infrastructure, and in related personnel and training, there can be no assurance that our efforts will prevent significant breaches in our systems or other such events from occurring. Any cyber or similar attack that we are unable to protect ourselves against could damage our systems and infrastructure, prevent us from providing services, tarnish our reputation, result in the disclosure of confidential or sensitive information of our users, and be costly to remedy, as well as subject us to investigation by regulatory authorities or to litigation that could result in liability to third parties. The impact of cyber or similar attacks experienced by any third parties who provide services to us or might otherwise process data on our behalf could have a similar effect on us. Even cyber or similar attacks that do not directly affect us or our third-party service providers or data processors may result in widespread access to user data, for instance through account login credentials that such users might have used across multiple internet sites, including our sites, or directly through access to user data that these third-party service providers could process in the context of the services they provide to us. These events can lead to government enforcement actions, fines, and litigation, as well as a loss of consumer confidence generally, which could make users less likely to use or continue to use our services. The occurrence of any of these events could have an adverse effect on our business, financial condition, and results of operations. Our business is subject to complex and evolving laws and regulations, including with respect to data privacy and platform liability, particularly if we develop our own offerings for end users. These laws and regulations are subject to change and uncertain interpretation and could result in changes to our business practices, increased cost of operations, declines in user growth or engagement, legal claims, monetary penalties, or other harm to our business. As we plan on expanding our footprint internationally, we will be subject to a variety of laws and regulations that involve matters that are important to or may otherwise impact our business. We are indirectly affected by laws and regulations in jurisdictions where we do not operate but our licensees do. Some laws and regulations can be enforced by private parties in addition to governmental entities and are constantly evolving and subject to change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the rapidly evolving industry in which we and our licensees operate, and such laws and regulations may be interpreted and applied inconsistently from jurisdiction to jurisdiction. These laws and regulations, as well as any associated inquiries, investigations, or other government actions, may be costly to comply with and may delay or impede the development of new services, require changes to or cessation of certain business practices, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies that may harm our business, including fines or modifications to existing business practices. Tax laws, in particular, are subject to interpretation by the relevant taxing authorities. While we endeavor to comply with applicable law, there can be no assurance that the relevant taxing authorities will not take a position contrary to us, and if so, that such position will not adversely affect us, directly or indirectly. Any events of this nature could adversely affect our business, financial condition, and results of operations. Proposed or new legislation and regulations could also adversely affect our business. To the extent new or more stringent measures are required to be implemented, impose new liability, or limit or remove existing protections, our business, financial condition, and results of operations could be adversely affected. The adoption of any laws or regulations that adversely affect the popularity or growth in use of the internet, including laws or regulations that undermine open and neutrally administered internet access, could decrease user demand for the services offered by our licensees and increase our cost of doing business, thereby negatively impacting our business, financial condition, and results of operations. 20 We may fail to adequately protect our intellectual property rights or may be accused of infringing the intellectual property rights of third parties. We rely on patents that we license out, and we expect, in the future, that we will rely on our trademarks and related domain names and logos for marketing and to build and maintain brand loyalty and recognition. We also expect to rely on other patented and patent-pending proprietary technologies and trade secrets relating to our services. We will continue to rely on a combination of laws and contractual restrictions to establish and protect our intellectual property rights. For example, we continue to apply to register, or secure by contract where appropriate, trademarks and service marks as they are developed and used, and we are reserving, registering, and renewing domain names as we deem appropriate. Effective trademark protection may not be available or sought in every country in which our services are made available, and contractual disputes may affect the use of marks governed by private contract. Similarly, not every variation of a domain name may be available or registered by us, even if available. We generally will seek to apply for patents or other similar statutory protections as and when we deem appropriate, based on then-current facts and circumstances. No assurance can be given that any patent application we have filed or will file will result in a patent being issued, or that any existing or future patents will afford adequate protection against competitors and similar technologies. In addition, no assurance can be given that third parties will not create new products or methods that achieve similar results without infringing upon patents we own. Despite these measures, our intellectual property rights may still not be protected in a meaningful manner, challenges to contractual rights could arise, third parties could copy or otherwise obtain and use our intellectual property without authorization, our existing trademarks, patents, or trade secrets could be determined to be invalid or unenforceable, or laws and interpretations of laws regarding the enforceability of existing intellectual property rights could change over time in a manner that provides less protection. The occurrence of any of these events could tarnish our reputation, limit our marketing ability, or impede our ability to effectively compete against competitors with similar technologies, any of which could adversely affect our business, financial condition, and results of operations. We may also occasionally be subject to legal proceedings and claims regarding intellectual property, including claims of alleged infringement of trademarks, copyrights, patents, and other intellectual property rights held by third parties and of invalidity of our own rights. In addition, we may decide we should engage in litigation to enforce our intellectual property rights, to protect our trade secrets and patents, or to determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition, and results of operations. We intend to expand to various international markets, including markets in which we have limited experience, and as a result, we face additional risks in connection with those operations. Operating internationally, particularly in countries in which we have limited experience, exposes us to a number of additional risks, such as: ● operational and compliance challenges caused by distance, language, and cultural differences; ● difficulties in staffing and managing international operations; ● differing levels of social and technological acceptance of our services or lack of acceptance of them generally; ● differing and potentially adverse tax laws; ● compliance challenges due to different laws and regulatory environments, particularly in the case of privacy, data security, intermediary or platform liability, and consumer protection; 21 ● competitive environments that favor local businesses or local knowledge of such environments; ● limitations on the level of intellectual property protection; and ● trade sanctions, political unrest, terrorism, war, and epidemics, or the threat of any of these events. These risks could adversely affect our business, financial condition, and results of operations. Advertising Business Our business depends on our ability to maintain relationships with third-party advertising agencies and other intermediaries, and the loss or deterioration of those relationships could materially adversely affect our business. We operate as an intermediary between advertisers seeking to conduct digital advertising campaigns and advertising agencies, authorized partners, resellers, and other intermediaries that have relationships with Google, Meta, TikTok and other digital advertising platforms and can provide advertising services to those advertisers. We generally do not maintain direct relationships with these digital advertising platforms and instead depend on third-party intermediaries to provide the services and platform access that our advertisers seek. Our relationships with these third-party intermediaries may be terminated, modified, or discontinued. An intermediary may change its business strategy, pricing, eligibility requirements, geographic coverage, or willingness to accept referrals from us, or may enter into relationships with competing referral sources. In addition, an intermediary may cease providing services through one or more digital advertising platforms or otherwise become unable to provide the services that our advertisers require. If we lose relationships with important intermediaries, if those intermediaries become unwilling or unable to accept advertisers referred by us, or if we are unable to establish relationships with suitable replacement intermediaries, our ability to connect advertisers with desired advertising services could be materially impaired. Any such loss or deterioration of our intermediary relationships could materially adversely affect our business, financial condition, and results of operations. Our limited role in the advertising process may make our business susceptible to being bypassed by advertisers and third-party intermediaries. Our business model generally involves identifying potential advertisers and introducing or connecting them with third-party advertising agencies and other intermediaries that can provide the substantive advertising services and maintain the relationships necessary to place advertising campaigns with major digital advertising platforms. We generally do not provide the underlying advertising inventory or perform the substantive advertising services ultimately purchased by the advertiser. As a result, after an introduction has been made, an advertiser and the third-party intermediary may have the ability and incentive to establish a direct relationship without our further involvement. An advertiser may choose to deal directly with an intermediary following an introduction made by us, and an intermediary may develop or maintain its own direct relationships with advertisers without our participation. In addition, advertisers may use self-service tools offered by digital advertising platforms or engage advertising agencies directly without an intermediary such as us. Depending on the terms of our contractual arrangements, we may not be able to prevent advertisers and intermediaries from bypassing us, and we may have limited ability to monitor transactions occurring after an introduction. If advertisers and intermediaries increasingly transact directly with one another following introductions made by us, or if our role is otherwise eliminated from transactions that we originate, our revenue per advertiser could decline and our business model and growth prospects could be materially adversely affected. 22 Our revenue depends on the advertising expenditure of advertisers that we introduce and on the compensation arrangements we maintain with third-party intermediaries. Our revenue may depend substantially upon the amount of advertising purchased by advertisers whom we introduce to third-party advertising agencies and other intermediaries. If those advertisers reduce their advertising expenditure, discontinue their campaigns, move their advertising budgets to other providers, or otherwise fail to generate advertising activity following our introductions, our revenue may decline. In addition, the compensation we receive from third-party intermediaries may be based upon the amount of advertising spend generated by advertisers introduced by us or upon other criteria established by our agreements with those intermediaries. Accordingly, an increase in the number of introductions we make may not result in a proportionate increase in our revenue if the advertisers we introduce do not generate substantial advertising expenditure or if the applicable compensation rates decline. Advertisers may reduce their advertising expenditure because of economic conditions, changes in consumer demand, changes in their financial condition, changes in marketing strategies, changes in the perceived effectiveness of digital advertising, or other factors beyond our control. Any material reduction in advertising expenditure by our referred advertisers could materially adversely affect our business, financial condition and results of operations. The third-party intermediaries with which we work may lose or materially alter their relationships with Google, Meta, TikTok and other digital advertising platforms, which could indirectly adversely affect our business. Although we do not ourselves maintain direct relationships with Google, Meta, TikTok and other major digital advertising platforms, the third-party advertising agencies and other intermediaries to which we refer advertisers generally depend upon their own relationships with those platforms. Those relationships may be terminated, restricted, or modified by the applicable platform. A digital advertising platform may discontinue an authorized-partner or similar program, change its eligibility requirements, impose new restrictions on agencies or other intermediaries, alter the advertising inventory or functionality available to them, or otherwise change the terms on which they can serve advertisers. Such changes could impair the ability of an intermediary with which we work to serve advertisers or could make its services less attractive to advertisers. The intermediary may consequently become less willing or able to accept referrals from us, or advertisers may no longer have a need or desire to use that intermediary. Because we generally have no direct contractual relationship with the underlying digital advertising platforms, we may have little or no ability to influence such decisions or protect ourselves against their consequences. Any material deterioration in the platform relationships of our intermediary partners could materially adversely affect our business. We may be unable to identify and establish relationships with a sufficient number of qualified third-party intermediaries. The attractiveness of our services to potential advertisers depends in part on our ability to connect them with third-party advertising agencies and other intermediaries that can provide access to the advertising platforms, geographic markets, advertising formats, and campaign services sought by those advertisers. The digital advertising industry is continually evolving, and the platforms, advertising formats, technologies, and agencies that are attractive to advertisers may change over time. We must therefore identify new and suitable intermediary relationships and maintain a sufficient network of providers capable of meeting the needs of our referred advertisers. There can be no assurance that we will be able to identify suitable intermediaries, establish relationships with them on commercially favorable terms, or maintain relationships with a sufficient number and variety of intermediaries. If our network of intermediaries does not provide sufficient breadth, geographic coverage, platform access, or service capabilities, we may be unable to satisfy the requirements of potential advertisers and our ability to attract and retain advertisers could be adversely affected. 23 We face competition from advertising agencies, digital marketing companies, and other providers that may be able to perform the intermediary function themselves or eliminate the need for our services. Our business model principally involves identifying potential advertisers and connecting them with third-party providers that can execute advertising campaigns. Advertising agencies, digital marketing firms, media companies, and other service providers may themselves engage directly with advertisers and therefore may not need a separate intermediary to identify or introduce potential customers. Similarly, third-party intermediaries with which we work may develop their own direct sales capabilities or relationships with advertisers, thereby reducing their need for our services. Advertisers may also increasingly use self-service advertising tools provided directly by digital advertising platforms or engage agencies without an intermediary. Because the services we provide may be limited primarily to identifying and making introductions between advertisers and third-party intermediaries, competitors or counterparties that provide a broader range of services, have stronger direct relationships with advertisers, or can otherwise eliminate the need for our services may have a competitive advantage. Increased competition or changes in the manner in which advertisers obtain digital advertising services could reduce demand for our services and materially adversely affect our business. We may have limited ability to monitor transactions resulting from our introductions and to enforce our rights to receive compensation. Our ability to generate revenue depends in part on our ability to receive compensation from transactions or advertising activity resulting from introductions that we make. Depending on the terms of our agreements with third-party intermediaries, we may rely on those intermediaries to identify advertisers introduced by us, report the advertising activity generated by those advertisers, and calculate the compensation payable to us. We may therefore have limited visibility into the transactions occurring between referred advertisers and third-party intermediaries. It may be difficult for us to determine whether an advertiser introduced by us subsequently conducts advertising through an intermediary, the amount of advertising spend associated with that advertiser, or whether the compensation paid to us has been properly calculated. If we cannot effectively monitor and enforce our contractual rights, we may fail to receive compensation to which we are entitled. Disputes concerning whether an advertiser was introduced by us, the amount of qualifying advertising activity or the applicable compensation rate could result in increased costs, delayed payments, or reduced revenue. Our reputation and business could be harmed by the conduct or performance of third-party advertising agencies and other intermediaries with which we work. We may be associated by advertisers with the third-party advertising agencies and other intermediaries to which we refer them. Although we generally do not control the services ultimately provided by those third parties, an advertiser may nevertheless attribute a poor experience with an intermediary to us because we facilitated the relationship. An intermediary may provide services that are ineffective, delayed or otherwise inconsistent with an advertiser’s expectations. An intermediary could also engage in conduct that violates applicable laws, regulations, advertising-platform policies or industry standards. Such conduct could result in rejected or suspended advertising campaigns, advertiser complaints, disputes, regulatory action, or other adverse consequences. Even where we are not responsible for the underlying conduct, negative experiences involving an intermediary to which we referred an advertiser could damage our reputation, reduce repeat business and referrals, impair our relationships with potential advertisers, and make it more difficult for us to establish new intermediary relationships. 24 Changes in the policies, technology, and business practices of digital advertising platforms could indirectly adversely affect our business. The digital advertising platforms on which our intermediary partners depend may change their advertising policies, targeting capabilities, algorithms, measurement systems, pricing models, data-access policies, account requirements, technical specifications, or available advertising formats. Although we do not generally contract directly with these platforms, changes implemented by them can affect the third-party intermediaries with which we work and the advertisers whom we introduce to those intermediaries. Such changes may make certain advertising campaigns less effective or more difficult to implement, limit the services that an intermediary can provide, increase the cost of providing advertising services, or reduce advertisers’ demand for particular advertising channels. The digital advertising industry is also characterized by rapid technological change. If the intermediary partners with which we work are unable to adapt to changes implemented by major platforms, or if advertisers shift their spending to platforms or advertising technologies that are not adequately served by our intermediary network, demand for our services could decline. In addition, changes in privacy, data protection, consumer protection, and other laws and regulations governing digital advertising may affect the ability of advertising platforms and intermediaries to collect, use, and process data for targeted advertising. Such changes could reduce the effectiveness of digital advertising, increase compliance costs, or otherwise adversely affect the demand for the services provided by our intermediary partners and, consequently, our services. International Trading Business Our business is substantially dependent on global trade, and declines or disruptions in international commerce could materially adversely affect our business. We purchase, sell, import, export, and distribute products across international markets. As a result, our business is substantially dependent on the continued movement of goods across borders and on favorable conditions for international commerce. International trade is affected by numerous factors beyond our control, including global and regional economic conditions, consumer and business demand, government policies, tariffs, trade agreements, import and export restrictions, sanctions, geopolitical conflicts, diplomatic relations, transportation costs, currency exchange rates, interest rates, and disruptions to global supply chains. A reduction in international trade volume, deterioration in economic conditions in our principal markets, or disruptions in the movement of goods could reduce demand for our products, increase our costs, and adversely affect our operating results. Changes in tariffs, trade restrictions, and trade policies could materially adversely affect our business, and We may be unable to accurately predict changes in tariffs and other trade policies. Our business is subject to laws and regulations governing international trade, including tariffs, duties, quotas, import and export controls, trade restrictions, embargoes, sanctions, and other barriers to international commerce. Governments may impose new or increased tariffs or other restrictions on products that we import or export. Governments may also modify or withdraw existing trade agreements or impose retaliatory tariffs in response to trade policies adopted by other countries. For example, recent changes in international trade policy have resulted in increased tariffs on certain imports and threatened or actual retaliatory measures by trading partners. Such measures can increase the cost of imported products, disrupt established supply chains, and reduce demand for products subject to tariffs. We may be unable to pass increased tariffs, duties, or other costs through to our customers. Even if we are able to increase our selling prices, higher prices may reduce demand for our products or cause customers to purchase products from alternative suppliers. 25 Furthermore, trade policies can change rapidly and with limited advance notice. The uncertainty associated with potential changes in tariffs, duties, quotas, and other trade restrictions may make it difficult for us to determine appropriate purchasing, pricing, inventory, and sourcing strategies. We may purchase inventory before a tariff increase becomes effective, resulting in higher costs, or may delay purchases in anticipation of a tariff reduction that does not occur. In addition, changes in tariff classifications, country-of-origin determinations, or customs valuation rules could result in additional duties, penalties, or other costs. Our business is exposed to geopolitical risks and international political instability. We will operate in, source products from, and sell products into multiple countries and regions. Political instability, armed conflicts, diplomatic disputes, civil unrest, changes in government, terrorism, sanctions, and other geopolitical events could disrupt our operations and the movement of goods. Geopolitical tensions may result in trade restrictions, sanctions, border closures, transportation disruptions, increased security costs, or changes in customer demand. A deterioration in relations between the countries in which we operate or from which we source products could materially adversely affect our business. We depend on suppliers and manufacturers, and disruptions affecting our suppliers could adversely affect our business. Our ability to generate revenue depends on our ability to obtain products from suppliers in sufficient quantities, at acceptable prices, and on a timely basis. Our suppliers may experience financial difficulties, production problems, labor shortages, regulatory issues, natural disasters, transportation disruptions, or other events that prevent them from fulfilling orders. If a supplier fails to deliver products on time or in accordance with our specifications, we may be unable to fulfill customer orders, resulting in lost sales, penalties, customer dissatisfaction, and reputational harm. We may not be able to identify suitable alternative suppliers quickly or on commercially reasonable terms. Alternative suppliers may charge higher prices, require longer lead times or provide products that do not meet our customers’ or end users’ requirements. Furthermore, supplier concentration may increase our exposure to geopolitical and country-specific risks. Events such as tariffs, export restrictions, labor disputes, political instability, currency controls, sanctions, natural disasters, or transportation disruptions could make products unavailable or significantly increase their cost. We may be exposed to supplier quality and product-compliance risks. We do not have control over the quality of products supplied by third parties. We generally depend on suppliers to manufacture or provide products in accordance with applicable specifications, laws, and regulations. Products supplied to us may contain defects, fail to meet specifications, or violate applicable safety, labeling, environmental, or other requirements. If defective or non-compliant products enter our supply chain, we may incur costs associated with returns, replacements, recalls, customer claims, regulatory investigations, and reputational damage. Changes in supplier relationships could adversely affect our margins. Suppliers may increase prices, modify payment terms, reduce discounts, impose minimum purchase requirements, or change distribution arrangements. We may be unable to pass these increases on to our customers, particularly where customer pricing has been established in advance. Our business depends on our ability to maintain and expand our relationships with the online platforms, retail stores, and other distribution channels that we use. Our results depend on our ability to distribute our products through online platforms, retail stores, and other distribution channels so as to reach customers and generate sufficient sales volume. Such distribution channels may enter into exclusive relationships with competitors, terminate their relationships with us for other reasons, develop direct relationships with manufacturers, or source products independently. Loss of these distribution channels could materially reduce our revenue and profitability. Retail stores and other platforms with significant bargaining power may also demand lower prices, favorable payment terms, or other concessions. 26 We may be unable to accurately forecast demand, resulting in excess or insufficient inventory. Our business requires us to make decisions regarding inventory purchases based on anticipated customer demand. If demand is lower than expected, we may hold excess inventory, which could require price reductions, promotional activities or inventory write-downs. Conversely, if demand is greater than anticipated, we may not have sufficient inventory to fulfill customer orders, resulting in lost sales and customer dissatisfaction. The products we purchase may become obsolete, outdated, damaged, or otherwise less marketable because of changes in customer preferences, technology, regulations, or market conditions. We may be required to write down inventory to its estimated realizable value, which could materially adversely affect our financial results. Inventory losses, theft, or damage could adversely affect us. Inventory may be damaged, lost, or stolen while in our possession or while being transported. Even if we maintain insurance coverage, insurance may not fully cover the resulting losses. Inventory requires substantial working capital. Our business may require significant amounts of capital to purchase inventory before we receive payment from customers. An increase in inventory requirements or a lengthening of the period between purchasing inventory and collecting customer receivables could increase our working-capital requirements and put pressure on our liquidity. Disruptions to transportation and logistics, or increases in related costs, could adversely affect our business. We rely on third-party transportation providers, including ocean carriers, airlines, trucking companies, railroads, freight forwarders, ports, and other logistics providers. Transportation disruptions may result from port congestion, labor disputes, strikes, vessel or aircraft shortages, fuel shortages, weather events, geopolitical conflicts, security incidents, infrastructure failures, or other causes. As our products may be transported through strategically important ports, waterways, and shipping routes, disruptions involving major ports or shipping routes could result in significant delays and higher transportation costs. Disruptions to transportation and logistics, including events affecting major international shipping lanes, could delay deliveries, increase freight costs, and reduce our ability to fulfill customer orders. Our profitability may be affected by changes in ocean freight, air freight, trucking, fuel, warehousing, insurance, and other logistics costs. We may not be able to pass increases in these costs on to customers. Fluctuations in foreign currency exchange rates, or currency controls, could adversely affect our results. Because we conduct business in multiple currencies, fluctuations in exchange rates may affect our revenue, cost of goods sold, operating expenses, accounts receivable, accounts payable, and cash flow. Changes in exchange rates may also affect the cost of products purchased from foreign suppliers and the value of sales made to customers in foreign currencies. Certain countries may impose foreign exchange controls, restrictions on the conversion or repatriation of local currency, or other limitations on the movement of funds across borders. This includes China, where we conduct business. Such restrictions could prevent us from efficiently transferring cash between subsidiaries or repatriating earnings. 27 Failure to comply with government regulations, including customs laws, export-control laws, and economic sanctions, could result in significant liability. Our international operations require compliance with customs laws and regulations governing classification, valuation, country of origin, tariffs, duties, and documentation. Government authorities may audit our transactions and challenge our customs classifications or valuations. Failure to comply could result in additional duties, penalties, interest, seizure or detention of goods, and other enforcement actions. We are also subject to U.S. and foreign export-control and economic-sanctions laws. These laws may restrict transactions involving certain countries, persons, entities, products, or end uses. Violations may result in substantial civil or criminal penalties, loss of export privileges, restrictions on our ability to conduct business, and reputational damage. Beyond these, certain products may be subject to licensing, safety, environmental, labeling, health, quality, technical, or other regulatory requirements. Changes in these requirements could increase our costs or prevent us from importing or exporting particular products. We are subject to anti-corruption laws in overseas jurisdictions. Our international operations expose us to risks under the U.S. Foreign Corrupt Practices Act and similar anti-corruption laws in other jurisdictions. We may conduct business in countries where corruption and improper payments are more prevalent. Although we maintain policies and procedures designed to promote compliance, we cannot provide any assurance that employees, agents, suppliers, or other third parties will always comply with applicable laws. A violation could result in significant fines, penalties, investigations, and reputational harm. Our business may require substantial working capital. The timing difference between purchasing inventory, selling inventory, and collecting customer receivables may create substantial working-capital requirements. We may need to obtain financing to fund inventory purchases and other operating activities. If financing becomes unavailable or more expensive, our ability to purchase inventory and execute orders could be adversely affected. We depend on key personnel with specialized international trading expertise. Our success depends on executives and employees with experience in international markets, sourcing, logistics, customs, trade finance, customer relationships, and regulatory compliance. The loss of key personnel could adversely affect our relationships with suppliers and customers and impair our ability to execute our strategy. We may have difficulty attracting and retaining qualified employees. Competition for employees with international trading, supply-chain, finance, compliance and industry-specific expertise may increase our personnel costs. Any inability to attract or retain qualified personnel could adversely affect our growth. We face significant competition. We compete with other importers, exporters, distributors, wholesalers, manufacturers, trading companies, brokers, and online marketplaces. Some competitors may have greater financial resources, stronger supplier relationships, larger distribution networks, or greater purchasing power. Increased competition could result in lower selling prices, reduced margins, and loss of customers. Our suppliers may increasingly sell directly to customers through their own distribution networks, websites, or other channels. Likewise, customers may seek to purchase products directly from manufacturers. Online marketplaces and digital procurement platforms may make it easier for customers and suppliers to transact directly. Disintermediation could reduce the value of our role in the supply chain and adversely affect our revenue. If we fail to adapt to changing procurement and distribution models, our competitive position could weaken. 28 We may face product liability claims or contractual disputes Customers or other parties may assert claims alleging that products sold by us were defective, unsafe, or non-compliant with applicable requirements. Such claims could result in litigation, recalls, product replacement costs, indemnification obligations, and reputational damage. We may also face disputes with customers, suppliers, logistics providers, or other counterparties concerning pricing, delivery, quality, payment, warranties, or other contractual matters. International disputes may be particularly costly and difficult to resolve. General Business-Related Risks We are subject to litigation, and adverse outcomes in such litigation could have an adverse effect on our financial condition. From time to time, we may become subject to litigation, and to various legal proceedings relating to employment matters, intellectual property matters, and privacy and consumer protection laws, as well as stockholder derivative suits, class action lawsuits, mass arbitrations, and other matters. Such litigation and proceedings may involve claims for substantial amounts of money or for other relief, may result in significant costs for legal representation, arbitration fees, or other legal or related services, or might necessitate changes to our business or operations. The defense of these actions is likely to be time consuming and expensive. We will evaluate these litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential loss. Based on these assessments and estimates, we may establish reserves or disclose the relevant litigation claims or legal proceedings as and when required or appropriate. These assessments and estimates will be based on information available to our management at the time of such assessment or estimation and will involve a significant amount of judgment. As a result, actual outcomes or losses could differ materially from those envisioned by our current assessments and estimates. Our failure to successfully defend or settle any of these litigation claims or legal proceedings could result in liability that, to the extent not covered by our insurance, could have an adverse effect on our business, financial condition, and results of operations. Our operations are subject to volatile global economic conditions, particularly those that adversely impact consumer confidence and spending behavior. Adverse macroeconomic conditions, including lower consumer confidence, changes to fiscal and monetary policy, the availability and cost of credit, and weakness in the economies in which we or our licensees and the users of our services or those of our licensees are located may continue to adversely affect our business, financial condition, and results of operations. In recent years, the United States, Europe and other key global markets have experienced historically high levels of inflation, which have impacted, among other things, employee compensation expenses. If inflation rates rise again or continue to remain historically high or further increase in those locations where inflation rates remain elevated, it will likely affect our expenses, and may reduce consumer discretionary spending, which could affect the buying power of our users and lead to a reduction in demand for our services. Other events and trends that could result in decreased levels of consumer confidence and discretionary spending include a general economic downturn, recessionary concerns, high unemployment levels, and increased interest rates, as well as any sudden disruption in business conditions. Economic growth in Mainland China has declined notably in recent years, affecting us through the impact on Hong Kong’s economy. Additionally, geopolitical developments, such as wars in Ukraine and the Middle East, tensions between the United States and China, climate change, and the responses by central banking authorities to control inflation (in some economies of the West) or boost growth (in China), can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets. Our financial results may be adversely affected if substantial investments in businesses and operations fail to produce the expected returns. From time to time, we may invest in technology, business infrastructure, new businesses, product offering and manufacturing innovation and expansion of existing businesses, such as our digital commerce operations, which require substantial cash investments and management attention. We believe cost-effective investments are essential to business growth and profitability; however, significant investments are subject to typical risks and uncertainties inherent in developing a new business or expanding an existing business. As examples of such significant investments, we purchased Rafael AI in fiscal year 2026 and Best Life in fiscal year 2027. The failure of any significant investment to provide expected returns or profitability could have a material adverse effect on our financial results and divert management attention from more profitable business operations. 29 We may need additional capital in the future to finance our planned growth, which we may not be able to raise or which may only be available on terms unfavorable to us or our stockholders, and this may result in our inability to fund our working capital requirements and harm our operating results. We have and expect to continue to have substantial working capital needs. Our cash on hand, together with cash generated from product sales, services, cash equivalents, and short-term investments may not meet our working capital and capital expenditure requirements. We may be required to raise additional funds in fiscal year 2027 or we will need to limit operations until such time as we can raise substantial funds to meet our working capital needs. In addition, we will need to raise additional funds to fund our operations and implement our growth strategy, or to respond to competitive pressures or perceived opportunities, such as investment, acquisition, marketing, and development activities. If we experience operating difficulties or other factors, many of which may be beyond our control, that cause our revenue or cash flow from operations, if any, to decrease, we may be limited in our ability to spend the capital necessary to complete our development, marketing, and growth programs. Additional financing might not be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures may be significantly limited. In such a capital restricted situation, we may curtail our marketing, development, and operational activities or be forced to sell some of our assets on an untimely or unfavorable basis. Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Our management is responsible for establishing and maintaining adequate internal controls over our financial reporting. As defined in Exchange Act Rule 13a-15(f), internal controls over financial reporting involves a process designed by, or under the supervision of, the principal executive and principal financial officer, and effected by the Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles and to ensure that receipts and expenditure of the Company are being made only in accordance with authorizations of management or directors of the Company; and ● provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Our internal controls may be inadequate or ineffective, which could cause financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision. Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have a material adverse effect on the Company’s business, financial condition, results of operations, and future prospects. Our auditors will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer a “smaller reporting company”. 30 If we fail to maintain effective internal controls over financial reporting, then the price of the Common Stock may be adversely affected. Our internal controls over financial reporting may have weaknesses and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of the Common Stock. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosure regarding our business, prospects, financial condition, or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal controls over financial reporting or any disclosure of management’s critical assessment of our internal controls over financial reporting may have an adverse impact on the price of the Common Stock. The costs of being a public company could result in us being unable to continue as a going concern. As a public company, we are required to comply with numerous financial reporting and legal requirements, including those pertaining to audits and internal controls. The costs of maintaining public company reporting requirements could be significant and may preclude us from seeking financing or equity investments on terms acceptable to us and our shareholders. We estimate these costs to be in excess of $500,000 per year, and they may be higher if our business volume or business activity increases significantly. Our current estimate of costs does not include the necessary expenses associated with compliance, documentation, and specific reporting requirements of Section 404 as we will not be subject to the full reporting requirements of Section 404 until we no longer qualify as a “smaller reporting company”. If our revenue is insufficient or non-existent, or we cannot satisfy many of these costs through the issuance of shares or debt, we may be unable to satisfy these costs in the normal course of business. This would result in our being unable to continue as a going concern. Fluctuations in our tax obligations and effective tax rate may have a negative effect on our operating results. We may be subject to income taxes in multiple jurisdictions. We record tax expense based on our estimates of future payments, which may include reserves for uncertain tax provisions in multiple tax jurisdictions. At any one time, multiple tax years may be subject to audit by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues. As a result, we expect that throughout the year there could be ongoing variability in our quarterly tax rates as events occur and exposures are evaluated. Further, our effective tax rate in a given financial period may be materially impacted by changes in mix and level of earnings or by changes to existing accounting rules or regulations. In addition, tax legislation enacted in the future could negatively impact our current or future tax structure and effective tax rates. We could be subject to changes in tax rates, adoption of new tax laws, additional tax liabilities, or increased volatility in our effective tax rate. We are subject to the tax laws in the United States and numerous foreign jurisdictions. Current economic and political conditions make tax laws and regulations, or their interpretation and application, in any jurisdiction subject to significant change. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which includes a number of significant changes to previous U.S. tax laws that impact us, including provisions for a one-time transition tax on deemed repatriation of undistributed foreign earnings, and a reduction in the corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017, among other changes. The Tax Act also transitions U.S. international taxation from a worldwide system to a modified territorial system and includes base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation. 31 We have historically incurred net operating losses for U.S. federal income tax purposes and have not been required to pay material U.S. federal income taxes as a result of such losses. We generally expect our net operating loss carryforwards to be available to offset a portion of future taxable income, subject to applicable limitations. However, our ability to utilize these net operating loss carryforwards may be limited under applicable tax laws, including limitations arising from changes in ownership, and there can be no assurance that we will be able to realize the full benefit of such carryforwards. If we generate taxable income in future periods and are unable to utilize our net operating loss carryforwards to fully offset such income, we may be required to make material cash tax payments. We earn a substantial portion of our income in foreign countries and are subject to the tax laws of those jurisdictions. There have been proposals to reform foreign tax laws that could significantly impact how U.S. multinational corporations are taxed on foreign earnings. Although we cannot predict whether or in what form these proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our income tax expense and cash flow. We also earn income and conduct operations in foreign jurisdictions and are subject to the tax laws and regulations of those jurisdictions. Changes in tax rates, tax laws, regulations, administrative practices or interpretations in the jurisdictions in which we operate could increase our tax liabilities or otherwise adversely affect our effective tax rate and cash flow. Our effective tax rate may vary from period to period as a result of, among other factors, changes in the geographic mix of our earnings and losses, changes in the amount and utilization of net operating loss carryforwards, changes in valuation allowances against deferred tax assets, adjustments to prior-year tax provisions, and changes in applicable tax laws or tax rates. Portions of our operations are subject to a reduced tax rate or may be free of tax under various tax holidays and rulings. We also utilize tax rulings and other agreements to obtain certainty in the treatment of certain tax matters. These holidays and rulings expire in whole or in part from time to time and may be extended when certain conditions are met or terminated if certain conditions are not met. The impact of any changes in conditions would be the loss of certainty in treatment thus potentially impacting our effective income tax rate. We may be subject to examination of our tax returns by the U.S. Internal Revenue Service and foreign tax authorities. The determination of our tax liabilities requires judgment, and tax authorities may disagree with tax positions taken by us. The ultimate outcome of any tax examination or assessment could differ from amounts recorded in our financial statements and could result in additional taxes, interest or penalties. Any such additional liabilities could adversely affect our results of operations, financial condition, and cash flow. For as long as we are a “smaller reporting company,” we will not be required to comply with certain reporting requirements that apply to other publicly reporting companies. We cannot predict whether the reduced disclosure requirements applicable to smaller reporting companies will make our Common Stock less attractive to investors. We are currently a “smaller reporting company.” For as long as we continue to be a smaller reporting company, we may choose to take advantage of certain exemptions from reporting requirements applicable to other publicly reporting companies that are not smaller reporting companies. These include not being required to comply with the auditor attestation requirements for the assessment of our internal controls over financial reporting provided by Section 404 of the Sarbanes-Oxley Act of 2002, and not being required to provide certain disclosure regarding executive compensation required of larger publicly reporting companies. We cannot predict if investors will find our Common Stock less attractive if we choose to rely on these exemptions. If some investors find our Common Stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our shares and our share price may be more volatile. Further, as a result of these scaled regulatory requirements, our disclosure may be more limited than that of other publicly reporting companies and you may not have the same protections afforded to shareholders of such companies. Risks Related to Doing Business in Hong Kong A joint statement by the SEC and the PCAOB, rule changes by Nasdaq, the HFCAA and AHFCAA, and the Consolidated Appropriations Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainty to our continued listing. On April 21, 2020, the SEC and the Public Company Accounting Oversight Board (the “PCAOB”) released a joint statement highlighting the risks associated with investing in companies based in or having substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets. 32 On December 18, 2020, the Holding Foreign Companies Accountable Act (the “HFCAA”) was signed and became law. This legislation, among other things, bans an issuer’s securities from trading if the PCAOB is unable to inspect the issuer’s public accounting firm for three consecutive years (later reduced to two years by the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”)). On December 2, 2021, the SEC issued amendments to finalize interim final rules previously adopted in March 2021 to implement the submission and disclosure requirements of the HFCAA. While the PCAOB initially determined that it was unable to completely inspect or investigate registered public accounting firms headquartered in mainland China or Hong Kong because of a position taken by one or more authorities in each of those jurisdictions, this determination was effectively reversed on December 15, 2022, following the CSRC, the Ministry of Finance of the PRC, and the PCAOB signing a Statement of Protocol governing inspections and investigations of audit firms based in China and Hong Kong permitting the PCAOB to select any issuer audits for inspection or investigation and to transfer information unfettered to the SEC. Should any PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB would consider the need to issue a new determination. Our auditor, Enrome, is not headquartered in mainland China or Hong Kong. Nevertheless, should Enrome or any of our former or future auditors have any work papers in China or Hong Kong at any point in the future that the PCAOB is unable to fully inspect, it will be difficult to evaluate the effectiveness of such auditors’ audit procedures or equity control procedures, and investors could consequently lose confidence in our reported financial information and procedures or the quality of our financial statements, which could adversely affect us and our Common Stock. Furthermore, if trading in our securities is prohibited under the HFCAA in the future because the PCAOB determines that it cannot inspect or fully investigate Enrome or other future auditors at such future time, an exchange will likely delist our securities. The Chinese government, in general, could exercise significant oversight and discretion over the conduct of our business and has made statements indicating an intent to exert more oversight and control over offerings that are conducted overseas and over foreign investment in China-based issuers. Although our subsidiary YYEM is based in a special administrative region of the PRC, which enjoys separate governing and economic systems from that of mainland China under the principle of one country, two systems, Hong Kong is part of China and, as such, the Chinese government could intervene or influence our operations at any time, which could result in a material change in YYEM’s operations and the value of our Common Stock. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas or over foreign investment in China-based issuers, in particular any effort to extend such actions directly or indirectly to Hong Kong-based companies, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. Greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering. Over the years, the PRC has enacted a number of laws and regulations aimed at governing the collection and security of personal data. These include the Cybersecurity Review Measures, which took effect on February 15, 2022 and require a government review of critical information infrastructure operators (“CIIOs”) and of internet operators that possess the personal information of at least one million users or meet certain other criteria; the Network Data Security Administration (Draft for Comments), published in 2021 and not yet enacted, which provides that companies engaging in data processing activities that may affect national security must apply for a cybersecurity review by the CAC under certain circumstances; the PRC Data Security Law, promulgated in 2021, which imposes certain requirements for the collection and processing of data in order to protect its security; the Personal Information Protection Law, promulgated in 2021, which integrates various scattered rules with respect to personal information rights and privacy protection; the Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications, which came into effect in 2021 and prohibits the operators of mobile apps from denying users access to the apps just because they do not consent to the collection of unnecessary personal information; and the Measures for the Security Assessment of Data Cross-border Transfer, effective in 2022, which require data processors to apply for a cross-border security assessment coordinated by the CAC under certain circumstances, including where they transfer personal information overseas and have already transferred personal information of more than 100,000 people, or sensitive personal information of more than 10,000 people, overseas since the start of the previous year. (See also the discussion of the Confidentiality and Archives Administration Provisions, below. 33 We do not believe YYEM is subject to cybersecurity review by the CAC, or to any of the other personal data-related laws and regulations described above, since YYEM is a Hong Kong company without subsidiaries or operations in the PRC. In addition, it does not currently have, and does not anticipate that it will be collecting, over one million users’ personal information in the foreseeable future, which might otherwise subject it to the Cybersecurity Review Measures. YYEM has not received any notice from any authorities identifying it as a CIIO or otherwise requiring it to undergo a cybersecurity review or network data security review by the CAC. There nevertheless remains uncertainty as to how the Cybersecurity Review Measures and the Security Administration Draft will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures and the Security Administration Draft. There is no assurance that YYEM will be able to fully or timely comply with any of the personal data and data security laws should they be deemed to be applicable to its operations. There is no certainty as to how any review or other actions would impact YYEM’s operations, and we cannot guarantee that any clearance could be obtained or maintained if approved. In the future, YYEM may be subject to PRC laws and regulations, including those regarding corporate structure, overseas listings, data- and cybersecurity, and anti-monopoly concerns, which could result in a material negative impact on its operations and the value of the securities we are registering for sale. YYEM is incorporated and registered under the laws of Hong Kong. YYEM does not have, nor does it intend to have, any subsidiary, VIE structure or direct operations in mainland China. All of YYEM’s revenue and profit are currently generated by operations in Hong Kong. The Basic Law of the Hong Kong Special Administrative Region (the “Basic Law”) provides that PRC laws and regulations shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law, which is confined to laws relating to national defense, foreign affairs, and other matters that are not within the scope of autonomy. YYEM therefore is not directly subject to PRC laws and regulations regarding the general conduct of its business or regarding overseas listings. Nevertheless, with its headquarters and substantial operations in Hong Kong, YYEM faces risks and uncertainties associated with the complex and evolving PRC laws and regulations, including whether and how PRC government statements and regulatory developments, such as those relating to corporate structure, overseas listings, data- and cybersecurity, and anti-monopoly concerns, would be applicable to Hong Kong companies such as YYEM, and whether and when the Chinese government might exercise significant oversight over the conduct of business in Hong Kong. If YYEM were to become subject to PRC laws and regulations, it could incur material costs to ensure compliance, and it might be subject to fines, no longer be permitted to conduct offerings to foreign investors, or no longer be permitted to continue business operations as presently conducted. The uncertainties regarding the enforcement of laws and the fact that rules and regulations in China can change quickly with little advance notice, along with the risk that the Chinese government may intervene in or influence YYEM’s operations, could result in a material change in its operations and the value of the securities we are registering, including the possibility that the value of such securities could become worthless. In recent years, the PRC government initiated, with little advance notice, a series of regulatory actions and statements to regulate certain types of business operations in mainland China, including cracking down on illegal activities in the securities market, enhancing supervision over mainland China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. For example, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market, requiring various governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over mainland China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. The CAC also promulgated the various data security-related measures described above under “ Greater oversight by the Cyberspace Administration of China over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering. ” As explained above, we believe the Company and its subsidiaries are not directly subject to the regulations and rules issued by CAC and other governmental agencies. 34 On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (the “New Overseas Listing Rules”) with five interpretive guidelines, which took effect on March 31, 2023. The New Overseas Listing Rules require Chinese domestic enterprises to complete filings with relevant governmental authorities and report related information under certain circumstances. The new rules provide that the determination as to whether a Chinese domestic company is indirectly offering and listing securities on an overseas market shall be made on a substance-over-form basis, and if the issuer meets the following conditions, the offering and listing will be deemed an indirect overseas offering and listing by a Chinese domestic company: (i) the revenue, profit, total assets or net assets of the Chinese domestic entity constitutes more than 50% of such item in the issuer’s audited consolidated financial statements for the most recent fiscal year; or (ii) the senior managers in charge of business operations and management of the issuer are mostly Chinese citizens or with a regular domicile in China, the main locations of its business operations are in China, or its main business activities are conducted in China. YYEM is headquartered in Hong Kong, and at least 50% of its executive officers and directors are based in Hong Kong and are not Chinese citizens. Furthermore, all of its assets are located in Hong Kong and all of its revenue and profit are generated from operations in Hong Kong. We therefore believe that YYEM is not subject to the New Overseas Listing Rules. On February 24, 2023, the CSRC, the Ministry of Finance, the National Administration of State Secrets Protection, and the National Archives Administration released the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality and Archives Administration Provisions”), which took effect on March 31, 2023. PRC domestic enterprises seeking to offer securities and list in overseas markets, either directly or indirectly, are required to establish and improve their confidentiality systems and archives work and to complete various approval and filing procedures with competent authorities, if such PRC domestic enterprises or their overseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets of state organs to relevant securities companies, securities service institutions, overseas regulatory agencies, or other entities and individuals. As of the date of this Annual Report, these new laws and guidelines have not impacted YYEM’s ability to conduct its business. YYEM is headquartered in Hong Kong and does not have a VIE structure. YYEM is not a cyberspace operator with personal information of more than 1 million users or activities that affect or may affect the national security of China, and it does not possess documents and materials likely to affect the national security or public interest of China. However, any change in foreign investment regulations or other policies in China, or related enforcement actions by the PRC government, could result in a material change in YYEM’s operations and the value of our Common Stock and could significantly limit or completely hinder our ability to offer our Common Stock to investors or cause the value of our Common Stock to significantly decline or be worthless. We are subject to risks relating to economic, political, legal, and social conditions in Hong Kong. Even though most of YYEM’s revenue is generated outside Hong Kong, any adverse changes in the economic, political, legal, and social conditions of Hong Kong could lead to an adverse impact on the demand for YYEM’s services and result in deteriorating financial performance of the Company. We cannot assure you that there will not be any political movements or large-scale political unrest in Hong Kong that could adversely impact the market. If such unrest or movement persists for a substantial period of time, it may lead to disruption of the general economic, political, and social conditions in Hong Kong, and YYEM’s overall business, results of operations, and financial condition may be adversely affected. 35 The Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact YYEM’s operations in Hong Kong. On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Hong Kong National Security Law. This law defines the duties of the government bodies responsible for safeguarding national security and specifies four categories of offences — secession, subversion, terrorist activities, and collusion with a foreign country or external elements to endanger national security — and their corresponding penalties. On July 14, 2020, the U.S. President signed the Hong Kong Autonomy Act (the “HKAA”), into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. On August 7, 2020, the U.S. government imposed HKAA-authorized sanctions on eleven individuals, including the then Hong Kong Chief Executive Carrie Lam and the current Hong Kong Chief Executive John Lee. On October 14, 2020, the U.S. State Department submitted to relevant committees of Congress the report required under the HKAA, identifying persons materially contributing to “the failure of the Government of China to meet its obligations under the Joint Declaration or the Basic Law.” The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with a foreign person sanctioned under this authority. The imposition of sanctions may directly affect foreign financial institutions as well as any third parties or customers dealing with any foreign financial institution that is targeted. The ramifications of the Hong Kong National Security Law and the HKAA are still unfolding, and it is therefore difficult to predict the full impact on Hong Kong and companies located in Hong Kong. If YYEM is accused of violating the Hong Kong National Security Law or the HKAA by competent authorities, its business operations, financial position, and results of operations could be materially and adversely affected. Risks Related to Ownership of Our Shares Our stock price may be volatile, or may decline regardless of our operating performance, and you could lose all or part of your investment as a result. You should consider an investment in our securities to be risky, and you should invest in our securities only if you can withstand a significant loss and wide fluctuation in the market value of your investment. The market price of our Common Stock could be subject to significant fluctuations in response to the factors described in this section and other factors, many of which are beyond our control. Among the factors that could affect our stock price are: ● actual or anticipated variations in our quarterly and annual operating results or those of companies perceived to be similar to us; ● Changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors, or differences between our actual results and those expected by investors and securities analysts; ● Fluctuations in the market valuations of companies perceived by investors to be comparable to us; ● The public’s response to our or our competitors’ filings with the SEC or announcements regarding new products or services, enhancements, significant contracts, acquisitions, strategic investments, litigation, restructurings, or other significant matters; ● Speculation about our business in the press or the investment community; ● Future sales of our shares; ● Actions by our competitors; ● Additions or departures of members of our senior management or other key personnel; and ● The passage of legislation or other regulatory developments affecting us or our industry. In addition, the securities markets have experienced significant price and volume fluctuations that have affected and continue to affect the market price of equity securities of many companies, including ours. These fluctuations have often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general economic, systemic, political, and market conditions, such as recessions, loss of investor confidence, interest rate changes, or international currency fluctuations, may negatively affect the market price of our shares. 36 If any of the foregoing occurs, it could cause our stock price to fall and may expose us to securities class action litigation that, even if unsuccessful, could be costly to defend and a distraction to management. The trading market for our common shares will be influenced by the research and reports that equity research analysts publish about us and our business. The price of our common shares could decline if one or more securities analysts downgrade our common shares or if those analysts issue a sell recommendation or other unfavorable commentary or cease publishing reports about us or our business. If one or more of the analysts who elect to cover us downgrade our common shares, our share price could decline rapidly. If one or more of these analysts cease coverage of us, we could lose visibility in the market, which in turn could cause the price and trading volume of our Common Stock to decline. The price of our Common Stock may continue to be especially volatile, and if the benefits of any particular acquisition do not meet the expectations of investors, stockholders, or financial analysts, the market price of our Common Stock may decline. The trading price of our Common Stock has been volatile, and fluctuations in the price could contribute to the loss of all or part of your investment. Our stock price may continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed in this section, among other factors, could have a material adverse effect on your investment, and our Common Stock may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our Common Stock may not recover and may experience a further decline. If the performance of the Company does not meet the expectations of investors or securities analysts, the market price of our Common Stock may decline. Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and Nasdaq in particular, has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our Common Stock, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial condition, or results of operations. A decline in the market price of our Common Stock also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. We do not intend to pay dividends on the shares of our Common Stock. We intend to retain all of our earnings, if any, for the foreseeable future to finance the operation and expansion of our business and do not anticipate paying cash dividends. Any future determination to pay dividends will be at the discretion of our Board of Directors, subject to compliance with applicable law and any contractual provisions, and will depend on, among other factors, our results of operations, financial condition, capital requirements, and other factors that our Board of Directors deems relevant. You should expect to receive a return on your investment in our Common Stock only if the market price of the stock increases, which may never occur. Future sales of shares of Common Stock may result in a decrease in the market price of our Common Stock, even if our business is doing well. The market price of our Common Stock could decline due to sales of a large number of shares of Common Stock in the market or the perception that such sales could occur. This could make it more difficult to raise funds through future offerings of Common Stock. Our Board of Directors has authority, without action or vote of the shareholders, to issue all or part of the authorized 1,000,000,000 shares of Common Stock that are not issued or reserved for issuance under convertible or exchangeable instruments. In addition, we may attempt to raise additional capital by selling shares, possibly at a deep discount to the market price. These actions may result in material dilution of the ownership interests of existing shareholders and the book value of our Common Stock. 37 If securities or industry analysts do not publish research, or they publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. The trading market for our Common Stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of our company, the trading price of our Common Stock may be negatively impacted. In the event that securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our Common Stock could decrease, which might cause our share price and trading volume to decline. Holders of our Common Stock may be diluted by the future issuance of additional shares of Common Stock or preferred stock, or securities convertible into shares of Common Stock or preferred stock, in connection with incentive plans, acquisitions or otherwise; future sales of such shares in the public market or the expectation that such sales may occur may decrease the market price of our Common Stock. We could issue a significant number of shares of Common Stock, for example in connection with investments or acquisitions. We may increase the number of shares of Common Stock reserved for the 2026 AiRWA Share Incentive Plan, which would provide additional shares of Common Stock for the issuance, pursuant to the terms and subject to the conditions set forth in such plan, of long-term incentive compensation which may take the form of options, restricted stock units or other securities. Any of these issuances could dilute existing stockholders of the Company, and such dilution could be significant. Moreover, such dilution could have a material adverse effect on the market price for the shares of our Common Stock. Any issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of shares of our Common Stock, either by diluting the voting power of our Common Stock if the preferred stock votes together with the Common Stock as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote, even if the action were approved by the holders of our Common Stock. The future issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences, or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our Common Stock by making an investment in the Common Stock less attractive. For example, investors in the Common Stock may not wish to purchase Common Stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase Common Stock at the lower conversion price, causing economic dilution to the holders of Common Stock. As of April 30, 2026, the Company had no shares of preferred stock authorized, issued, or outstanding. The Company may someday have large shareholders able to exert significant influence on the Company, and their interests may conflict with the interests of other shareholders. The Company has in the past had, and could in the future have, large shareholders, including officers and directors. These shareholders would be able to exert significant influence over certain matters, including matters that must be resolved by a general meeting of shareholders, such as the election of members to the board of directors or the declaration of dividends or other distributions. To the extent that the interests of these shareholders may differ from the interests of the Company’s other shareholders, the Company’s other shareholders may be disadvantaged by any actions that these shareholders may seek to pursue. Our stockholders may not be able to enforce judgments entered by United States courts against certain of our officers and directors. We are incorporated in the State of Delaware. However, most of our directors and executive officers may reside outside of the United States. As a result, our stockholders may not be able to effect service of process upon those persons within the United States or enforce against those persons judgments obtained in U.S. courts.