{"url_path":"/sec/ablv/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/1957489/0001213900-26-048085-index.html","accession_number":"0001213900-26-048085","cik":"0001957489","ticker":"ABLV","issuer_name":"Able View Global Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1957489/0001213900-26-048085-index.html","primary_entity_key":"0001957489","primary_entity_name":"Able View Global Inc."},"word_count":8259,"has_tables":true,"body_markdown":"**ITEM 5. OPERATING AND FINANCIAL REVIEW\nAND PROSPECTS**\n\n \n\n**Business Overview**\n\n \n\nWe are one of the largest comprehensive brand\nmanagement partners of international beauty and personal care brands in China. To purchase from global brand owners and conduct sales\nin China, our comprehensive brand management capabilities encompass all segments of the brand management value chain, including strategy,\nbranding, digital and social marketing, omni-channel sales, customer service, overseas logistics, warehouse and fulfilment. Our mission\nis to help global brands enter, grow and succeed in China.\n\n \n\nWe generate revenue from the sales of the products\nof our brand partners. Any services that we provide to our brand partners in connection with the arrangements with our brand partners\nis factored into our overall budget and cost when we resell the brand partners’ products to consumers in China. We sell products\nto three groups: (i) online marketplaces; (ii) distributors; and (iii) directly to end consumers from e-commerce stores\noperated by us.\n\n \n\nWe also generate revenue from provision of operation\nservices for online stores owned by customers. The operation services cover marketing and promotion of cosmetics products, warehouse management,\nlogistics of products, and customer relationship services.\n\n \n\nFor the years ended December 31, 2025,\n2024 and 2023, net revenue from product sales was $96.6 million $122.0 million and $124.7 million, respectively, from our continuing operations.\nFor the years ended December 31, 2025, 2024 and 2023, revenue from provision of operation services was $8.6 million, $4.8 million\nand $4.5 million, respectively, from our continuing operations.\n\n \n\nFor the years ended December 31, 2025 and 2024,\nthe Company incurred net loss from continuing operations of $2.8 million and $1.1 million, respectively. For the year ended December 31,\n2023, the Company generated net income of $9.4 million from continuing operations.\n\n \n\n**Recent Development**\n\n \n\nOn June 27, 2025, we transferred 100% equity interest\nin Shanghai Jingyue Trading Co., Ltd. (“Shanghai Jingyue”) to a certain third party (the “Buyer”) at zero consideration.\nThe disposal of Shanghai Jingyue was part of our strategic decision to streamline operations and reallocate resources toward our core\nbrand management business. Shanghai Jingyue had experienced declining sales of certain cosmetic brands, and management expected its financial\nperformance to continue to deteriorate due in part to adverse brand perception. As a result, we determined that disposing of this subsidiary\nwould better align our operations with our long-term strategic focus. The disposal represents a strategic shift that has a significant\neffect on our financial results and has been accounted for as discontinued operations in accordance with ASC 205-20-45.\n\n \n\nIn connection with the disposal of Shanghai Jingyue,\nwe agreed to purchase inventories from Shanghai Jingyue with carrying value of $162,535 at the original cost of $3,330,617. In addition,\nthe Buyer agreed to waive $4,389,889 of liabilities owed by the Company to Shanghai Jingyue. The disposal resulted in a net increase in\nincome tax expense of $301,704, which was included in net income from discontinued operations.\n\n \n\n60\n\n \n\n \n\nIn September 2024, we entered into Convertible\nNote Purchase Agreements (the “Agreements”) with each of the three (3) non-U.S. investors (the “Purchasers”).\n\n \n\nPursuant to the Agreements, we issued and sold\nto the Purchasers convertible notes (the “Notes”) in the aggregate principal amount of US$5,000,000 after an original issue\ndiscount of 20%. The Notes have an interest rate of 8% per annum, and a maturity date of three (3) years from the date of issuance. The\nNotes are convertible into Class B Ordinary Shares (the “Conversion Shares”) at the option of the Purchasers, at a conversion\nprice (the “Conversion Price”) of the higher of (i) 75% of the lowest volume-weighted average trading price of the Class B\nOrdinary Shares during the ten (10) latest consecutive business days preceding the conversion, or (ii) $0.6 per Class B Ordinary Share.\nIn addition, we will issue the Purchasers certain conversion warrants upon the conversion of the Notes, with each warrant eligible to\npurchase one (1) Class B Ordinary Share per Conversion Share (the “Conversion Warrants”), and the exercise price of such Conversion\nWarrants is the same as the Conversion Price of the Notes. By November 4, 2024, we have collected proceeds from the Notes. On November\n20, 2024, the Company received conversion notice from the Purchasers. On November 25, 2024, we issued an aggregation of 7,751,939 Class\nB Ordinary Shares and 7,751,939 Conversion Warrants to the three Purchasers at conversion price of $0.645 per share. The Conversion Warrants\nwere expired as of the date of this report.\n\n \n\n**Factors Affecting Results of Operations**\n\n \n\nOur business, financial condition and results\nof operations have been, and are expected to continue to be, affected by a number of factors, which primarily include the following:\n\n \n\n**Overall economic and political conditions**\n\n \n\nOur business, financial condition and results\nof operations are sensitive to changes in overall economic and political conditions that affect consumer spending in China. In addition,\nthe retail industry is highly sensitive to general economic changes. Many factors outside of our control, including inflation and deflation,\ninterest rates, volatility of equity and debt securities markets, and other government policies can adversely affect consumer confidence\nand spending. The domestic and international political environments, including global inflation and uncertain financial markets or at\nall, could in turn adversely affect our business, financial condition, and results of operations.\n\n \n\n**Our ability to retain our existing brand\npartners**\n\n \n\nWe provide services to help distribute and sell\ncross-border products from various global brand owners through e-commerce platforms for brand partners primarily pursuant to\ncontractual arrangements with a term typically ranging from 12 to 36 months. Although we are fairly confident that we will be able\nto renew the contracts with these brand partners, there is possibility that these contracts may not be renewed or, if renewed, may not\nbe renewed under the same or more favorable terms for us. We may not be able to accurately predict future trends in brand partners renewals,\nand our brand partners’ renewal rates may decline or fluctuate due to factors such as level of satisfaction with our capacities,\nas well as factors beyond our control, such as level of competition faced by our brand partners, their level of success in e-commerce and\ntheir spending levels.\n\n \n\n**Our ability to maintain our relationships\nwith distribution channels**\n\n \n\nWe generate a substantial majority of our revenues\nfrom product sales on e-commerce channels, including marketplaces, social media and other emerging e-commerce channels. We usually\nrenew our platform service agreements on an annual basis, and these e-commerce channels have no obligation to do business with us\nor to allow us to have access to their channels in the long term. If we fail to maintain our relationships with these channels, they may\ndecide at any time and for any reason to significantly curtail or inhibit our ability to integrate our brand management capabilities with\ntheir channels. We have annual platform service agreements with major online marketplaces, which may not be renewed in the future. A majority\nof our platform service agreements have been renewed for the fiscal year ended December 31, 2025. We endeavor to timely renew those platform\nservice agreements before their expiration.\n\n \n\n61\n\n \n\n \n\nAdditionally, these channels may decide to make\nsignificant changes to their respective business models, policies, systems or plans, and those changes could impair or inhibit our ability\nor our partners’ ability to sell their products on those channels or may adversely affect the amount of GMV on those channels, or\notherwise reduce the desirability of selling on those channels. Further, any of these channels could decide whether to apply for licenses\nand permissions or acquire other brands within our industry that would allow them to compete with us. If we are unable to adapt to new\ne-commerce channels as they emerge, our value may be less attractive to our partners. Any of these developments could have a material\nadverse effect on the results of our operations.\n\n \n\n**Our ability to manage our inventory**\n\n \n\nWe assume inventory ownership over products from\nsome brand partners and thus are subject to inventory risk. We deploy different strategies to deal with non-seasonal and seasonal\ndemands and make adjustments to our procurement plan in order to minimize the turnaround time of the inventory and manage our storage\ncosts. Demand for products, however, can change significantly between the time inventory is ordered and the date by which we target to\nsell it. Demand may be affected by seasonality, new product launches, fashion trends, changes in product cycles and pricing, product defects,\nchanges in consumer spending patterns and habits, changes in consumer tastes with respect to our products and other factors. In addition,\nwhen we begin selling a new product, it may be difficult to determine appropriate product selection and accurately forecast demand.\n\n \n\n**Our ability to respond to rapid changes\nin channel technologies or requirements**\n\n \n\nThe e-commerce marketplaces that we operate\nin are characterized by rapid technological changes and frequent changes in rules, specifications and other requirements for us to be\nable to sell our brand partner’s products on particular channels. Our ability to retain and attract brand partners depends in large\npart on our ability to improve our existing capabilities, introducing new marketing and sales operations that can adapt quickly to the\nemerging channels, such as Douyin and Xiaohongshu, and adapt to the changes in channel technologies. To achieve market acceptance for\nour operations, we must effectively forecast and design operations that meet emerging channels and frequently change channel requirements\nin a timely manner. If we fail to do so, our ability to renew our contracts with existing brand partners and expand our business with\nnew brand partners will be impaired.\n\n  \n\n**Key Components of Results of Operations**\n\n** **\n\n**Revenues**\n\n \n\nWe generated revenue primarily from (i) sales\nof cosmetics and beauty products, of which we recognize the revenues on a gross basis, net of return allowances and consideration payable\nto customers when the products are delivered and title is passed to customers, and (ii) provision of operation services for online stores\nowned by cosmetics brand names. For the years ended December 31, 2025, 2024 and 2023, our revenues from continuing operations were comprised\nof the following:\n\n \n\n  \nFor the Years Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nRevenues \n   \n   \n  \n\nSales of cosmetics and other beauty products \n$96,564,901  \n$122,002,947  \n$124,732,099 \n\nProvision of operation services \n 8,638,465  \n 4,759,367  \n 4,544,377 \n\nTotal revenue \n$105,203,366  \n$126,762,314  \n$129,276,476 \n\n \n\n62\n\n \n\n \n\n**Cost of revenues**\n\n \n\nOur cost of revenues primarily consists of (i)\npurchase price of products, (ii) inbound shipping charges and write-downs of inventories and (iii) labor costs which facilitate our operation\nservices. Inbound shipping charges to receive products from the suppliers are included in inventories and recognized as cost of revenues\nupon sale of the products to the customers. Our cost of revenues from continuing operations were $93.3 million, $112.3 million and $99.0\nmillion for the years ended December 31, 2025, 2024 and 2023, respectively.\n\n** **\n\n**Selling and marketing expenses**\n\n \n\nSelling and marketing expenses from continuing\noperations primarily consist of (i) promotion and advertising expenses; (ii) freight and warehouse expenses; (iii) human\nresource service fees and IT service fees; (iv) payroll and welfare expenses, including salaries, social insurance and housing funds\nfor our personnel in sales department; and (v) other miscellaneous expenses.\n\n \n\n  \nFor the Years Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nPromotion and advertising expenses \n$4,343,967  \n$7,139,172  \n$6,734,039 \n\nFreight expenses and warehouses \n 2,424,725  \n 2,713,109  \n 3,054,379 \n\nHuman resource service fees and IT service fees \n 342,830  \n 622,638  \n 1,807,230 \n\nPayroll and welfare expenses \n 475,822  \n 258,050  \n 1,385,090 \n\nOthers \n 241,699  \n 276,601  \n 278,114 \n\n  \n$7,829,043  \n$11,009,570  \n$13,258,852 \n\n  \n\n**General and administrative expenses**\n\n \n\nGeneral and administrative expenses from continuing\noperations primarily consist of (i) professional expenses, mainly including legal consulting fees for our daily operations and audit\nfees; (ii) provision of expected credit losses against other receivables; (iii) payroll and welfare expenses, including salaries,\nsocial insurance and housing funds for our personnel in our general and administrative department; (iv) office rental expenses; and\n(v) other miscellaneous expenses.\n\n \n\n  \nFor the Years Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nProfessional expenses \n$2,661,163  \n$1,765,571  \n$2,513,393 \n\nProvision of expected credit losses against other receivable \n —  \n 398,150  \n — \n\nPayroll and welfare expenses \n 714,611  \n 439,267  \n 1,610,543 \n\nOffice rental expenses \n 481,827  \n 676,944  \n 609,288 \n\nOthers \n 712,969  \n 418,837  \n 993,708 \n\n  \n$4,570,570  \n$3,698,769  \n$5,726,932 \n\n \n\n**Taxation**\n\n \n\n*Cayman Islands*\n\n \n\nUnder the current laws of the Cayman Islands,\nthe Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands\nwithholding tax will be imposed.\n\n \n\n*Singapore*\n\n \n\nThe Company is subject to corporate income tax\nfor its business operation in Singapore. Corporate income tax is imposed at a flat rate of 17%.\n\n \n\n*Hong Kong*\n\n \n\nAbleview Brands, Ableview Management, and Able\nView are incorporated in Hong Kong and are subject to Hong Kong Profits Tax on the taxable income as reported in their statutory financial\nstatements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate for the first HKD$2 million of assessable\nprofits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong\nKong, effective from the year of assessment 2018/2019. Before that, the applicable tax rate was 16.5% for corporations in Hong Kong.\n\n \n\n63\n\n \n\n* *\n\n*PRC*\n\n* *\n\nWeitong, Beijing Jingyuan, Shanghai Jinglu, Shanghai\nJingnan, Zhejiang Jingxiu, Wuhan Jingtong and CSS Shanghai are subject to PRC Corporate Income Tax (“CIT”) on the taxable\nincome in accordance with the relevant PRC income tax laws. Effective from January 1, 2008, the PRC’s statutory Enterprise Income\nTax (“EIT”) rate is 25%.\n\n* *\n\nFor qualified small and low-profit enterprises, from January 1, 2023\nto December 31, 2027, 25% of the first RMB 3.0 million of the assessable profit before tax is subject to the tax rate of 20%. For the\nyears ended December 31, 2023, 2024 and 2025, some PRC subsidiaries are qualified small and low-profit enterprises and thus are eligible\nfor the above preferential tax rates for small and low-profit enterprises.\n\n \n\n**Results of Operations**\n\n* *\n\nThe following table sets forth a summary of our\nconsolidated results of operations from continuing operations for the years ended December 31, 2025, 2024 and 2023. This information\nshould be read together with our consolidated financial statements and related notes included elsewhere herein. The operating results\nin any period are not necessarily indicative of the results that may be expected for any future period.\n\n* *\n\n  \nFor the Years Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nRevenues \n   \n   \n  \n\n- Third parties \n$105,105,571  \n$124,603,580  \n$129,107,132 \n\n- Related parties \n 97,795  \n 2,158,734  \n 169,344 \n\nTotal revenue \n 105,203,366  \n 126,762,314  \n 129,276,476 \n\n  \n    \n    \n   \n\nCost of revenue \n    \n    \n   \n\n- Third parties \n (93,215,160) \n (110,103,133) \n (98,805,866)\n\n- Related parties \n (75,206) \n (2,156,885) \n (150,437)\n\nTotal cost of revenue \n (93,290,366) \n (112,260,018) \n (98,956,303)\n\n  \n    \n    \n   \n\nGross profit \n 11,913,000  \n 14,502,296  \n 30,320,173 \n\n  \n    \n    \n   \n\nOperating expenses \n    \n    \n   \n\nSelling and marketing expenses \n (7,829,043) \n (11,009,570) \n (13,258,852)\n\nGeneral and administrative expenses \n (4,570,570) \n (3,698,769) \n (5,726,932)\n\nTotal operating expenses \n (12,399,613) \n (14,708,339) \n (18,985,784)\n\n  \n    \n    \n   \n\n(Loss) income from operations \n (486,613) \n (206,043) \n 11,334,389 \n\n  \n    \n    \n   \n\nOther income (expenses), net \n    \n    \n   \n\nInterest expenses, net \n (671,679) \n (405,599) \n (834,162)\n\nOther income \n 40  \n 98,929  \n 52,156 \n\nForeign currency exchange gain\n(loss) \n 461,728  \n (393,622) \n (843,319)\n\nTotal other expenses, net \n (209,911) \n (700,292) \n (1,625,325)\n\n  \n    \n    \n   \n\n(Loss) income before income taxes \n (696,524) \n (906,335) \n 9,709,064 \n\n  \n    \n    \n   \n\nIncome tax expenses \n (2,070,829) \n (240,231) \n (301,898)\n\n  \n    \n    \n   \n\nNet (loss) income from continuing operations \n (2,767,353) \n (1,146,566) \n 9,407,166 \n\n  \n    \n    \n   \n\nDiscontinued operations: \n    \n    \n   \n\n(Loss) income before income taxes from operations of\ndiscontinued operation \n (675,658) \n (8,685,904) \n 1,981,834 \n\nGain on disposal of discontinued operation \n 4,760,997  \n —  \n — \n\nIncome tax (expenses) benefits \n (497,968) \n 2,413,058  \n (1,638,954)\n\nNet income (loss) from discontinued operations \n 3,587,371  \n (6,272,846) \n 342,880 \n\n  \n    \n    \n   \n\nNet income (loss) \n$820,018  \n$(7,419,412) \n$9,750,046 \n\n \n\n64\n\n \n\n* *\n\n*For the years ended December 31, 2025 and 2024*\n\n \n\n*Revenues*\n\n \n\nOur continuing operations generate revenues from\n(i) sales of beauty and personal care products of international brands over multiple sales channels, and (ii) rendering operations services\nfor online stores owned by cosmetics brands. Our revenues decreased by $21.6 million, or 17% from $126.8 million for the year\nended December 31, 2024 to $105.2 million for the year ended December 31, 2025. The decrease was primarily caused by a $25.4 million\ndecrease in sales of beauty and personal care products, mainly due to the cessation of sales of certain branded beauty and personal care\nproducts, which resulted in lower customer demand. This decrease was partially offset by an increase of $3.9 million in provision of operation\nservices because of an increase in sales generated by online stores owned by customers. Our operation service fees are calculated at a\nfixed percentage of sales volume.\n\n \n\n*Cost of revenues*\n\n \n\nOur cost of revenues from continuing operations\ndecreased by $19.0 million, or 17% from $112.3 million for the year ended December 31, 2024 to $93.3 million for the year ended December\n31, 2025. The decrease was in line with the decrease in revenues.\n\n* *\n\n*Gross margin*\n\n \n\nFor the years ended December 31, 2025 and 2024,\nthe gross margin from continuing operations was stable at 11% and 11%, respectively.\n\n \n\n*Selling and marketing expenses*\n\n \n\nOur selling and marketing expenses from continuing\noperations decreased by $3.2 million, or 29% from $11.0 million for the year ended December 31, 2024 to $7.8 million for\nthe year ended December 31, 2025. The decrease was mainly due to (i) a decrease of $2.8 million in promotion and advertising expenses\nas we strategically reduced spending on underperforming traditional advertising and shifted more of our marketing budget toward higher-ROI\ndigital channels, reflecting our focus on improving operational efficiency during the market downturn, and (ii) a decrease of $0.3 million\nin freight expenses which was in line with decrease in sales orders.\n\n* *\n\n*General and administrative expenses*\n\n \n\nOur general and administrative expenses from continuing\noperations were $4.6 million for the year ended December 31, 2025, compared to $3.7 million for the year ended December 31,\n2024. Such increase was mainly due to an increase of $0.9 million in professional expenses related to legal proceedings against a supplier\nand additional public relationship expenses, an increase of $0.3 million in payroll and welfare expenses and an increase of $0.3 million\nin other expenses, partially offset by a decrease in expected credit loss of $0.4 million against other receivables and a decrease in\noffice rental expenses of $0.2 million.\n\n \n\n*Income tax expenses*\n\n \n\nWe recorded income tax expenses from continuing\noperations of $2.1 million and $0.2 million for the years ended December 31, 2025 and 2024, respectively.\n\n \n\nFor the year ended December 31, 2025, we recorded\ncurrent income tax expenses from continuing operations of $0.6 million, as compared with $0.2 million for the same period of 2024. The\nincrease in current income tax expenses was primarily attributable to an increase in taxable income generated by certain subsidiaries.\n\n \n\n65\n\n \n\n \n\nFor the year ended December 31, 2025 and 2024,\nwe recorded deferred tax expenses from continuing operations of $1.5 million and $0.1 million, respectively. The increase in deferred\ntax expenses was primarily because we utilized net operating losses brought forward.\n\n \n\n*Net income (loss) from discontinued operations*\n\n \n\nOn June 27, 2025, we transferred 100% equity interest\nin Shanghai Jingyue to certain unrelated third party (the “Buyer”) at zero consideration. The disposal of Shanghai Jingyue\nwas part of our strategic decision to streamline operations and reallocate resources toward our core brand management business. Shanghai\nJingyue had experienced declining sales of certain cosmetic brands, and management expected its financial performance to continue to deteriorate\ndue in part to adverse brand perception. In connection with the disposal of Shanghai Jingyue, we agreed to purchase inventories from Shanghai\nJingyue with carrying value of $162,535 at the original cost of $3,330,617. In addition, the Buyer agreed to waive $4,389,889 of liabilities\nowed by the Company to Shanghai Jingyue. The disposal resulted in a net increase in income tax expense of $301,704, which was included\nin net income from discontinued operations.\n\n \n\nWe determined that the disposal of Shanghai Jingyue\nmet the criteria to be classified as a discontinued operation and, as a result, Shanghai Jingyue’s historical financial results\nare reflected in the Company’s condensed consolidated financial statements as a discontinued operation. The disposal of Shanghai\nJingyue represents a strategic shift that has a significant effect on the Company’s financial results, which trigger discontinued\noperations accounting in accordance with ASC 205-20-45. The assets and liabilities related to the discontinued operations were retroactively\nclassified as assets/liabilities of discontinued operations as of December 31, 2024 in the consolidated balance sheet, while results\nof operations related to the discontinued operations, including comparatives, were retroactively reported as (loss) income from discontinued\noperations in the consolidated statements of operations and comprehensive income (loss) and cash flows from discontinued operations of\nthe three categories for the years ended December 31, 2024 and 2023 were separately presented in the consolidated statements of cash flows\nfor all periods presented retroactively in accordance with U.S. GAAP.\n\n \n\nFor the year ended December 31, 2025, the net\nincome from discontinued operation was comprised of disposal gain of $4.5 million and net loss of $0.9 million incurred by Shanghai Jingyue.\nFor the year ended December 31, 2024, the net loss from discontinued operation was $6.3 million.\n\n \n\n*Net income (loss)*\n\n \n\nAs a result of the foregoing, we reported net\nincome of $0.8 million and net loss of $7.4 million for the years ended December 31, 2025 and 2024, respectively.   \n\n \n\n*For the years ended December 31, 2024 and 2023*\n\n \n\n*Revenues*\n\n \n\nOur continuing operations generate revenues from\n(i) sales of beauty and personal care products of international brands over multiple sales channels, and (ii) rendering operations services\nfor online stores owned by cosmetics brands. Our revenues decreased by $2.5 million, or 2% from $129.3 million for the year\nended December 31, 2023 to $126.8 million for the year ended December 31, 2024. The decrease was primarily caused by decrease of\n$2.7 million in sales of beauty and personal care products, which was primarily due to a decrease in customer demand affected by a downward\nmacroeconomic environment.\n\n \n\n66\n\n \n\n \n\n*Cost of revenues*\n\n \n\nOur cost of revenues from continuing operations\nincreased by $13.3 million from $99.0 million for the year ended December 31, 2023 to $112.3 million for the year ended December 31, 2024.\nThe increase was primarily due to an increase in purchase cost of beauty and personal care products and inventory write-down of $1.3 million\nagainst certain beauty and personal care products due to slow moving.\n\n* *\n\n*Gross margin*\n\n \n\nFor the years ended December 31, 2024 and 2023,\nthe gross margin from continuing operations was 11% and 23%, respectively. The decrease in gross margin was primarily attributable to\nthe downward macroeconomic environment and an inventory write-down of $1.3 million against beauty and personal care products due to slowing\nmoving for the year ended 2024.\n\n \n\n*Selling and marketing expenses*\n\n \n\nOur selling and marketing expenses from continuing\noperations decreased by $2.3 million, or 17% from $13.3 million for the year ended December 31, 2023 to $11.0 million for\nthe year ended December 31, 2024. The decrease was mainly due to (i) a decrease of $1.1 million in payroll and welfare expenses which\nwas affected by combined effects of (a) a decrease of bonus expenses to salespersons with decrease of revenues and (b) resignation of\nsalespersons, and (ii) a decrease of $1.2 million   in human resource service fees and IT service fees in relation to supporting\npromotion and advertising activities.\n\n* *\n\n*General and administrative expenses*\n\n \n\nOur general and administrative expenses from continuing\noperations were $5.7 million for the year ended December 31, 2023, compared to $3.7 million for the year ended December 31,\n2024. In 2024, we incurred a decrease of $1.2 million in payroll and welfare expenses due to no bonus expenses incurred during the year\nof 2024 and resignation of employees and a decrease of $0.7 million in professional expenses as we incurred higher legal expenses before\nwe consummated business combination in August 2023.\n\n* *\n\n*Income tax benefits (expenses)*\n\n \n\nWe recorded income tax expenses from continuing\noperations of $0.2 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively.\n\n \n\nFor the year ended December 31, 2024, we recorded\ncurrent income tax expenses from continuing operations of $0.2 million, as compared with $2.6 million for the same period of 2023. The\nchange in current income tax expenses was primarily attributable to net operating losses incurred in the year ended December 31, 2024\nby certain of our subsidiaries, which generated taxable income for the year ended December 31, 2023.\n\n \n\nFor the year ended December 31, 2024 and 2023,\nwe recorded deferred tax expenses from continuing operations of $0.1 million and deferred tax benefits of $2.3 million, respectively.\nThe deferred tax benefits arose because we incurred net operating losses in the year ended December 31, 2023 in certain of our subsidiaries\nwhich was more likely than not that certain subsidiaries would have sufficient taxable income to realize the deferred tax assets in the\nfuture.\n\n \n\n*Net (loss) income from discontinued operations*\n\n \n\nOn June 27, 2025, we transferred 100% equity interest\nin Shanghai Jingyue to certain unrelated third party (the “Buyer”) at zero consideration. The disposal of Shanghai Jingyue\nwas part of our strategic decision to streamline operations and reallocate resources toward our core brand management business. Shanghai\nJingyue had experienced declining sales of certain cosmetic brands, and management expected its financial performance to continue to deteriorate\ndue in part to adverse brand perception. In connection with the disposal of Shanghai Jingyue, we agreed to purchase inventories from Shanghai\nJingyue with carrying value of $162,535 at the original cost of $3,330,617. In addition, the Buyer agreed to waive $4,389,889 of liabilities\nowed by the Company to Shanghai Jingyue. The disposal resulted in a net increase in income tax expense of $301,704, which was included\nin net income from discontinued operations.\n\n \n\n67\n\n \n\n \n\nWe determined that the disposal of Shanghai Jingyue\nmet the criteria to be classified as a discontinued operation and, as a result, Shanghai Jingyue’s historical financial results\nare reflected in the Company’s condensed consolidated financial statements as a discontinued operation. The disposal of Shanghai\nJingyue represents a strategic shift that has a significant effect on the Company’s financial results, which trigger discontinued\noperations accounting in accordance with ASC 205-20-45. The assets and liabilities related to the discontinued operations were retroactively\nclassified as assets/liabilities of discontinued operations as of December 31, 2024 in the consolidated balance sheet, while results\nof operations related to the discontinued operations, including comparatives, were retroactively reported as (loss) income from discontinued\noperations in the consolidated statements of operations and comprehensive income (loss) and cash flows from discontinued operations of\nthe three categories for the years ended December 31, 2024 and 2023 were separately presented in the consolidated statements of cash flows\nfor all periods presented retroactively in accordance with U.S. GAAP.\n\n \n\nFor the year ended December 31, 2024 and 2023,\nthe net loss from discontinued operation represented net loss of $6.3 million and net income of $0.3 million incurred by Shanghai Jingyue.\n\n \n\n*Net (loss) income*\n\n \n\nAs a result of the foregoing, we reported net\nloss of $7.4 million and net income of $9.8 million for the years ended December 31, 2024 and 2023, respectively.  \n\n** **\n\n**Discussion of Certain Balance Sheet Items**\n\n \n\nThe following table sets forth selected information\nfrom our consolidated balance sheets as of December 31, 2025 and 2024. This information should be read together with our consolidated\nfinancial statements and related notes included elsewhere herein.\n\n \n\n  \nDecember 31,\n2025  \nDecember 31,\n2024 \n\nASSETS \n   \n  \n\nCurrent Assets \n   \n  \n\nCash and cash equivalents \n$9,010,336  \n$15,191,995 \n\nAccounts receivable \n 12,765,279  \n 15,012,273 \n\nAccounts receivable – related party \n —  \n 1,088,558 \n\nPrepayments and other current assets \n 6,987,633  \n 1,962,048 \n\nInventories \n 3,347,184  \n 6,349,620 \n\nAssets of discontinued operations, current \n —  \n 668,458 \n\nTotal Current Assets \n 32,110,432  \n 40,272,952 \n\n  \n    \n   \n\nNon-current Assets \n    \n   \n\nProperty and equipment, net \n 117,635  \n 139,183 \n\nRight of use assets, net \n 228,330  \n 13,599 \n\nDeferred tax assets \n 1,494,931  \n 2,221,467 \n\nOther non-current assets \n 598,943  \n 777,935 \n\nAssets of discontinued operations, non-current \n —  \n 4,204,879 \n\nTotal Non-current Assets \n 2,439,839  \n 7,357,063 \n\n  \n    \n   \n\nTotal Assets \n$34,550,271  \n$47,630,015 \n\n  \n    \n   \n\nLIABILITIES AND SHAREHOLDERS’ EQUITY \n    \n   \n\nCurrent Liabilities \n    \n   \n\nShort-term loans \n$9,259,172  \n$7,972,764 \n\nAccounts payable \n 1,949,054  \n 2,475,273 \n\nAdvance from customers \n 909,243  \n 187,913 \n\nIncome tax payable \n 3,626,532  \n 2,024,460 \n\nLease liabilities, current \n 93,191  \n 9,163 \n\nOther payable and accrued expenses \n 3,934,724  \n 2,696,107 \n\nAmount due to related parties \n —  \n 101,658 \n\nLiabilities of discontinued operations, current \n —  \n 1,949,380 \n\nTotal Current Liabilities \n 19,771,916  \n 17,416,718 \n\n  \n    \n   \n\nNon-current Liabilities \n    \n   \n\nLease liabilities, non-current \n 110,622  \n — \n\nAmount due to related parties, non-current \n 4,714,830  \n 16,017,183 \n\nLong-term borrowings \n 2,180,694  \n 2,180,694 \n\nLiabilities of discontinued operations, non-current \n —  \n 4,924,205 \n\nTotal Non-current Liabilities \n 7,006,146  \n 23,122,082 \n\nTotal Liabilities \n$26,778,062  \n$40,538,800 \n\n \n\n68\n\n \n\n \n\n**Cash and cash equivalents**\n\n \n\nCash and cash equivalents consist of funds deposited\nwith banks and financial institutions and cash on hand, which are highly liquid and are unrestricted as to withdrawal or use.\n\n \n\nThe total balance of cash and cash equivalents\nfrom continuing operations was $9.0 million and $15.2 million as of December 31, 2025 and 2024, respectively. The change in\nbalance of cash and cash equivalents was primarily a result of a decrease in cash of $3.6 million from our operating activities and\na decrease of cash of $4.0 million from our investing activities, net off against an increase in cash of $1.6 million from our financing\nactivities.\n\n** **\n\n**Accounts receivable**\n\n \n\nAs of December 31, 2025 and 2024, the accounts\nreceivable from continuing operations were $12.8 million and $15.0 million, respectively. We generally offer credit terms of 90 to\n180 days to our customers. For the years ended December 31, 2025 and 2024, the turnover days for accounts receivable were 48 days and\n39 days, respectively, which were well within the credit terms.\n\n** **\n\n**Prepayments and other current assets**\n\n \n\nAs of December 31, 2025 and 2024, the balance\nof prepayments and other current assets from continuing operations primarily consisted of the following items:\n\n \n\n  \nDecember 31,\n2025  \nDecember 31,\n2024 \n\nPrepayments and other current assets \n   \n  \n\nPrepayments to suppliers \n$3,739,837  \n$619,283 \n\nDue from a supplier (a) \n 1,005,942  \n — \n\nPrepaid marketing and advertising expenses \n 823,122  \n 543,964 \n\nLoans to third parties (b) \n 1,212,614  \n 500,000 \n\nTax recoverable \n 7,544  \n 53,963 \n\nOthers \n 198,574  \n 244,838 \n\n  \n$6,987,633  \n$1,962,048 \n\nOther non-current assets \n    \n   \n\nLong-term deposits \n 583,591  \n 756,154 \n\nOthers \n 15,352  \n 21,781 \n\n  \n$598,943  \n$777,935 \n\n \n\n(a)\nThe balance as of December 31, 2025 represented prepayments advanced to one supplier which terminated cooperation with us. We reclassified the balance from prepayments to suppliers to due from suppliers. As of the date of this report, we have collected approximately $0.8 million of the outstanding balance.\n\n \n\n(b)\n\nAs of December 31, 2025, the balance represented loans provided to\nShanghai Jingyue. The loans bear interest rate of 3% per annum and repayable on December 30, 2026.\n\n \n\nAs of December 31, 2024, the balance represented loans provided to\none third party, which was repaid in the year ended December 31, 2025.\n\n \n\n69\n\n \n\n \n\n**Inventories**\n\n \n\nThe balance of inventories from continuing operations\nwas $3.3 million and $6.3 million as of December 31, 2025 and 2024, respectively. The decrease in inventory balance was primarily\nbecause we lowered our stocks of inventories as of December 31, 2025, which was in line with the decrease in revenues.\n\n \n\n**Short-term loans**\n\n \n\nAs of December 31, 2025 and 2024, the balance\nof short-term borrowings primarily consisted of the following items:\n\n \n\n  \nDecember 31,\n2025  \nDecember 31,\n2024 \n\nShort-term loans from financial institutions other than banks \n$2,901,080  \n$— \n\nShort-term loans from banks \n 6,358,092  \n 7,972,764 \n\n  \n$9,259,172  \n$7,972,764 \n\n \n\n(a)\nDuring the years ended December 31, 2025 and 2023, we entered\ninto certain loan agreements with certain financial institutions, pursuant to which we borrowed $5.4 million and $9.5 million, respectively,\nfrom these financial institutions. All borrowings were repaid in full upon their respective maturity dates. The borrowings bore interest\nrates ranging between 8.8% and 9.0% per annum. For the year ended December 31, 2024, we did not borrow from financial institutions. For\nthe years ended December 31, 2025, 2024 and 2023, we repaid borrowings of $2.5 million, $0.7 million and $17.9 million, respectively.\nThe loans outstanding as of December 31, 2025 were with the maturity dates due through December 2026.\n\n \n \n\n(b)\n\nDuring the year ended December 31, 2025, 2024\nand 2023, we entered into separate loan agreements with a bank each year, pursuant to which we borrowed $21.1 million, $33.4 million and\n$48.4 million, respectively. The loans were renewed upon maturity, with final maturities dates extending through October 2026. The\nborrowing bore interest rates ranging between 3.2% and 7.5% per annum. For the year ended December 31, 2025, 2024 and 2023, we repaid\nborrowings of $23.4 million, $32.3 million and $53.0 million, respectively.\n\n \n\nDuring the year ended December 31, 2024, we entered into another loan\nagreement with another bank, pursuant to which we borrowed $4.9 million with maturity date due through October 2025. The loans were renewed\nupon maturity, with final maturity dates extending through October 2026. The borrowing bore interest rates ranging between 4.6% and\n5.1% per annum. For the years ended December 31, 2025 and 2024, we did not repay the bank.\n\n \n\nDuring the year ended December 31, 2025, we entered into one additional\nloan agreement with another bank, pursuant to which we borrowed $0.7 million with maturity date due in July 2026. The borrowing bore an\ninterest rate of 2.5% per annum. \n\n \n\n**Amount due to related parties, current and\nnoncurrent**\n\n \n\nAs of December 31, 2025 and 2024, the balance\nof amount due to related parties primarily consisted of the following items: \n\n \n\n  \nDecember 31,\n2025  \nDecember 31,\n2024 \n\nAmount due to related parties, current \n   \n  \n\nAccounts payable \n$—  \n$101,658 \n\n  \n$—  \n$101,658 \n\nAmount due to related parties, noncurrent \n    \n   \n\nDividends payable(a) \n$4,629,034  \n$15,788,003 \n\nOther payable \n 85,796  \n 229,180 \n\n  \n$4,714,830  \n$16,017,183 \n\n \n\n(a)\n\nDividends payable reflects the dividends declared by Ableview Brands\nLimited on December 31, 2022 for the distribution of the retained earnings within 2022.  As of December 31, 2025, the dividend payable\ndue to shareholders was extended to July 2027. We recorded the dividends payable as non-current liabilities. For the year ended December\n31, 2025, the Company net settled dividends payable of $11.1 million through net-settlement agreements with respective related parties.\n\n \n\n70\n\n \n\n \n\n**B. Liquidity and Capital Resources**\n\n \n\nTo date, we have financed our operating and investing\nactivities primarily through cash generated from operating activities, borrowings from financial institutions, third parties and related\nparties and financing through issuance of convertible notes. As of December 31, 2025, our cash and cash equivalents from continuing\noperations were $9.0 million. Our cash and cash equivalents primarily consist of cash and time deposits with terms of three months\nor less. For the years ended December 31, 2025, 2024 and 2023, we reported revenues of $105.2 million, $126.8 million and $129.3 million,\nrespectively.\n\n \n\nOur results of continuing operations were affected\nby supply chain disruptions in the year ended 2023 which resulted in delayed shipment of our cosmetics products and longer inventory turnover\ndays. The disruptions were solved in the year ended 2024. Our inventory turnover days were 20 days, 35 days and 59 days in the years\nended December 31, 2025, 2024 and 2023, respectively. In addition, the turnover days for accounts receivable for the years ended\nDecember 31, 2025, 2024 and 2023 were 48 days, 39 days and 45 days, respectively. Longer turnover days for accounts receivable\nslightly affect our short-term liquidity. We generally grant our customers credit terms up to 90 days.\n\n \n\nWe do not believe we have a material collection\nrisk under our business model that will have a negative impact on collectability, and no significant written-off occurred historically.\nTherefore, we do not have substantial doubt on the collectability of the remaining accounts balances, and we do not provide allowance\nagainst accounts receivable as of December 31, 2025 and 2024.\n\n \n\nOn March 22, 2024, the Company entered into a\nLoan Agreement (the “Loan Agreement”) with High West Capital Partners, LLC (the “Lender”), pursuant to which the\nLender agreed to lend to the Company (the “Loan”) amounts to be extended in four tranches. The amount of each tranche of the\nLoan is adjusted depending on the trading price of the Company’s Class B Ordinary Shares. The first tranche, extended on March 28,\n2024, provided the Company with loan proceeds of approximately $0.59 million; the second tranche, extended on April 9, 2024, provided\nthe Company with loan proceeds of approximately $0.68 million; the third and final tranche, extended on April 18, 2024, provides the Company\nwith loan proceeds of approximately $0.91 million. Each tranche of the Loan has a maturity date of five years from the date the tranche\nis extended and an interest of 5.05% per annum to be paid by the Company to the Lender in semi-annual installments. The Loan Agreement\ncontains other customary provisions and is governed by the laws of Hong Kong. \n\n \n\nOn November 4, 2024, we consummated the issuance\nand sale of certain convertible notes in the principal amount of $5.0 million (the “Notes”) to three investors (the “Note\nPurchasers”). Such principal amount includes an original issue discount of 20%. The Notes have an interest rate of 8% per annum,\nand maturity of three (3) years. On November 25, 2024, the Company issued an aggregation of 7,751,939 Class B Ordinary Shares at the conversion\nprice of $0.645 per share and 7,751,939 warrants (“Conversion Warrants”) with an exercise of $0.645 per share, to the Note\nPurchasers. The Conversion Warrants have expired as of the date of this report.\n\n \n\nMoreover, given the current disparity between\nthe exercise price of the Pubco Warrants (defined below) and the current trading price of the Class B Ordinary Shares, we are unlikely\nto receive significant proceeds from exercises of the Pubco Warrants in the near future. If we need to obtain external financing, we cannot\nassure you that financing will be available in amounts or on terms acceptable to us, if at all. Our future liquidity needs and other business\nreasons could require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked\nsecurities could result in additional dilution to our shareholders. The incurrence of additional indebtedness would result in increased\ndebt service obligations and operating and financing covenants that would restrict our operations. \n\n \n\nWe believe that our current cash and cash equivalents\nand our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and capital expenditures\nfor the next 12 months. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the\ntime, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result\nin further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in\noperating covenants that might restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable\nto us, if at all.\n\n \n\n71\n\n \n\n \n\nFor the years ended December 31, 2025,\n2024 and 2023, 11%, 17% and 10% of our revenues have been in the form of Renminbi. Under existing PRC foreign exchange regulations, payments\nof current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions,\ncan be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore,\nour PRC Operating Entities are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine\nprocedural requirements. However, current PRC regulations permit our PRC Operating Entities to pay dividends to us only out of its accumulated\nprofits, if any, determined in accordance with Chinese accounting standards and regulations. Our PRC Operating Entities are required to\nset aside at least 10% of their after-tax profits after making up previous years’ accumulated losses each year, if\nany, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable\nas cash dividends. Historically, our PRC Operating Entities have not paid dividends to us, and they will not be able to pay dividends\nuntil they generate accumulated profits. Furthermore, capital account transactions, which include foreign direct investment in and loans\nto our PRC Operating Entities, must be approved by and/or registered with SAFE, its local branches and certain local banks.\n\n \n\nAs a Cayman Islands exempted company and offshore\nholding company, the Cayman holding company is permitted under PRC Laws and regulations to provide funding to our PRC Operating Entities\nonly through loans or capital contributions, subject to the approval, filings or registration of government authorities and limits on\nthe amount of capital contributions and loans. This may delay us from using the proceeds from any future offering to make loans or capital\ncontributions to our PRC Operating Entities.\n\n \n\n*Cash flows*\n\n \n\nThe following table sets forth a summary of our\ncash flows for the years ended December 31, 2025, 2024 and 2023 presented:\n\n \n\n  \nFor the Years Ended\nDecember 31, \n\n  \n2025  \n2024  \n2023 \n\nNet cash (used in) provided by operating activities from continuing operations \n$(3,631,932) \n$(3,727,609) \n$25,474,737 \n\nNet cash provided by (used in) operating activities from discontinued operations \n 4,827,758  \n 1,483,065  \n (1,901,407)\n\nNet cash (used in) provided by investing activities from continuing operations \n (3,971,096) \n (51,771) \n 408,605 \n\nNet cash used in investing activities from discontinued operations \n (311,612) \n (973) \n (154,943)\n\nNet cash provided by (used in) financing activities from continuing operations \n 1,588,334  \n 7,210,978  \n (19,035,175)\n\nNet cash (used in) provided by financing activities from discontinued operations \n (4,490,841) \n (3,169,394) \n 2,819,153 \n\nEffect of exchange rate changes on cash and cash equivalents from continuing operations \n (166,965) \n 285,498  \n (22,045)\n\nEffect of exchange rate changes on cash and cash equivalents from discontinued operations \n 2,952  \n (26,679) \n (34,149)\n\nNet (decrease) increase in cash and cash equivalents, including cash and cash equivalents classified to assets of discontinued operations \n (6,153,402) \n 2,003,115  \n 7,554,776 \n\nLess: net increase (decrease) in cash and cash equivalents of discontinued operations \n 28,257  \n (1,713,981) \n 728,654 \n\nNet (decrease) increase in cash and cash equivalents of continuing operations \n (6,181,659) \n 3,717,096  \n 6,826,122 \n\nCash and cash equivalents of continuing operations at beginning of year \n 15,191,995  \n 11,474,899  \n 4,648,777 \n\nCash and cash equivalents of continuing operations at end of year \n$9,010,336  \n$15,191,995  \n$11,474,899 \n\n \n\n72\n\n \n\n \n\n*Operating activities*\n\n \n\nNet cash used in operating activities from continuing operations for\nthe year ended December 31, 2025 was $3.6 million, primarily attributable to net loss from continuing operations of $2.8 million,\nadjusted for non-cash item of deferred tax expenses of $1.5 million, and changes in operating assets and liabilities, including (i) a\ndecrease of $2.7 million and $1.1 million in accounts receivable due from third   parties and related parties, respectively,\nas affected by decrease in revenues; (ii) an increase of $4.1 million in prepayments made to suppliers; (iii) a decrease of $3.3 million\nin inventories because we reduced our stocks of cosmetic products; (iv) a decrease of $7.9 million in accounts payable\nbecause of a decrease in purchase; (v) an increase of $1.5 million in income tax payable because we incurred\nincreased income tax expenses in the year of 2025 due to more taxable income were generated in certain of our subsidiaries; and (vi) an\nincrease of $1.2 million in other payable and accrued expenses.\n\n \n\nNet cash used in operating activities from continuing operations for\nthe year ended December 31, 2024 was $3.7 million, primarily attributable to net loss from continuing operations of $1.1 million,\nadjusted for non-cash item of inventory write-down of $1.3 million, and changes in operating assets and liabilities, including (i) an\nincrease of $3.3 million in accounts receivable as certain of our customers fully utilized the credit terms at the end of year 2024,\n(ii) a decrease of $7.7 million in inventories because we reduced our stocks of cosmetic products; (iii) a decrease of $7.6 million\nin accounts payable because of a decrease in purchase; (iv) a decrease of $2.3 million in income tax payable because we paid\nincome tax expenses incurred in the year of 2023 while we incurred decreased income tax expenses in the year of 2024 due to loss making\nin certain of our subsidiaries; and (v) an increase of $1.4 million in other payable and accrued expenses.\n\n \n\nNet cash provided by operating activities from continuing operations\nfor the year ended December 31, 2023 was $25.5 million, primarily attributable to a net income from continuing operations of\n$9.4 million, adjusted for non-cash item of deferred income tax benefits of $2.3 million, and changes in operating assets and liabilities,\nincluding (i) a decrease of $8.2 million and $1.6 million in accounts receivable due from third parties and related parties,\nrespectively, as we collected certain aged accounts receivables from customers which delayed in payments as affected by the COVID-19 pandemic\nat the end of year 2022, (ii) an increase of $6.8 million in accounts payable, and (iii) an increase of $2.1 million income\ntax payable due to increase of current income tax expenses incurred.\n\n \n\n*Investing activities*\n\n \n\nFor the year ended December 31, 2025, we\nreported cash used in investing activities from continuing operations of $4.0 million, which was primarily used in loans of $1.2 million\nprovided to Shanghai Jingyue and payment of $3.2 million to Shanghai Jingyue as purchase of inventories, partially offset by collection\nof advances of $0.5 million from a third party.\n\n \n\nFor the year ended December 31, 2024, we\nreported cash used in investing activities from continuing operations of $51,771, which was primarily used in purchases of property and\nequipment of $65,857 and advances of $90,332 to related parties, partially offset by collection of advances of $0.1 million from related\nparties. \n\n \n\nFor the year ended December 31, 2023, we\nreported cash provided by investing activities from continuing operations of $0.4 million, which was primarily provided by collection\nof advances from related parties amounted to $3.9 million, partially offset by advances of $3.0 million to related parties, and loans\nof $0.5 million to third parties. \n\n \n\n73\n\n \n\n \n\n*Financing activities*\n\n \n\nFor the year ended December 31, 2025, we reported cash provided\nby financing activities from continuing operations of $1.6 million, which primarily consisted of proceeds of $27.2 million from\nshort-term borrowings and proceeds of $9.2 million from borrowings from related parties, partially offset by repayment of short-term borrowings\nof $26.0 million, repayment of related party borrowings of $8.8 million.\n\n \n\nFor the year ended December 31, 2024, we\nreported cash provided by financing activities from continuing operations of $7.2 million, which primarily consisted of proceeds\nof $38.3 million from short-term borrowings, proceeds of $8.6 million from borrowings from related parties, proceeds of\n$2.2 million from long-term borrowings from a third party, and proceeds of $4.0 million from issuance of convertible notes, partially\noffset by repayment of short-term borrowings of $33.0 million, repayment of related party borrowings of $12.0 million,\nand repurchase of Class B Ordinary Shares of $0.9 million,\n\n \n\nFor the year ended December 31, 2023, we\nreported cash used in financing activities from continuing operations of $19.0 million, which was primarily used in repayment of\nshort-term borrowings of $70.8 million, repayment of related party borrowings of $6.6 million, payment of offering costs\nof $3.1 million and repurchase of Class B Ordinary Shares of $0.4 million, partially offset by proceeds of $58.0 million from short-term borrowings,\nand proceeds of $3.9 million from borrowings from related parties.\n\n \n\n**Quantitative and Qualitative Disclosures About\nMarket Risk**\n\n* *\n\n*Foreign Exchange Risk*\n\n \n\nForeign currency risk is the risk of loss resulting\nfrom changes in foreign currency exchange rates. Fluctuations in exchange rates between the RMB and other currencies in which we conduct\nbusiness may affect our financial position and results of operations.\n\n \n\nOur functional currency is U.S. dollar, and\nwe had four subsidiaries which are operating in Hong Kong with functional currency of Hong Kong dollar and one subsidiary which\nis operating in Singapore with functional currency of Singapore dollar. We are mainly exposed to foreign exchange risk arising from our\ncash and cash equivalents dominated in RMB.\n\n \n\nIn addition, we have five subsidiaries which are\noperating in mainland China with all of the transactions settled in RMB. We consider that our business in mainland China is not exposed\nto any significant foreign exchange risk as there are no significant financial assets or liabilities of these subsidiaries denominated\nin the currencies other than the functional currency.\n\n* *\n\n*Interest Rate Risk*\n\n \n\nOur exposure to interest rate risk primarily relates\nto the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. Interest-earning instruments\ncarry a degree of interest rate risk. We have not been exposed to material risks due to changes in interest rates, and we have not used\nany derivative financial instruments to manage our interest risk exposure.\n\n \n\n74\n\n \n\n \n\n**C. Research and Development, patent and licenses,\netc.**\n\n \n\nWe have not engaged in any research and development\nactivities since inception.\n\n \n\n**D. Trend Information**\n\n \n\nOther than as disclosed above and elsewhere in this annual report,\nwe are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on\nour revenues, net income (loss), profitability, liquidity or capital resources, or that would cause reported financial information not\nnecessarily to be indicative of future operating results or financial condition.\n\n \n\n**E. Critical Accounting Estimates**\n\n \n\nWe prepare our financial statements in accordance\nwith U.S. GAAP, which requires our management to make judgments, estimates and assumptions. We continually evaluate these judgments,\nestimates and assumptions based on our own historical experience, knowledge and assessment of current business and other conditions, our\nexpectations regarding the future based on available information and various assumptions that we believe to be reasonable, which together\nform our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral\ncomponent of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require\na higher degree of judgment than others in their application.\n\n \n\nThe selection of critical accounting policies,\nthe judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions\nand assumptions are factors that should be considered when reviewing our financial statements. \n\n \n\nFor the year ended December 31, 2025, we identified\nno critical accounting estimates in the preparation of our consolidated financial statements.\n\n \n\n**Recently issued accounting pronouncements**\n\n \n\nA list of recently issued accounting pronouncements\nthat are relevant to us is included in Note 2 of our consolidated financial statements included elsewhere herein."}