{"url_path":"/sec/gibow/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/2034520/0001493152-26-023628-index.html","accession_number":"0001493152-26-023628","cik":"0002034520","ticker":"GIBO","issuer_name":"GIBO HOLDINGS Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/2034520/0001493152-26-023628-index.html","primary_entity_key":"0002034520","primary_entity_name":"GIBO HOLDINGS Ltd"},"word_count":4453,"has_tables":true,"body_markdown":"**ITEM\n5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\n \n\n*Following\nthe Business Combination, our business is conducted through GIBO and its subsidiaries. You should read the following discussion and analysis\nof our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes\nincluded elsewhere in this Report. This discussion contains forward-looking statements that involve risks and uncertainties about our\nbusiness and operations. The actual results may differ materially from those anticipated in these forward-looking statements as a result\nof various factors, including those we describe under the section titled**“Item 3. Key Information—D. Risk Factors.”*\n\n  \n\nFounded\nwith an aim to revolutionize content creation and consumption through AI, we have become a unique and integrated AI-driven creative\ntechnology company with extensive functionalities provided to both viewers and creators that serves a broad community of young\npeople across Asia to create, publish, share and enjoy AI-powered video content. In 2025, we launched our short drama projects on *GIBO.ai*\nand had five ongoing projects as of December 31, 2025. As of December 31, 2025, we had approximately 89.0 million registered users,\nincluding approximately 78,000 content creators, from 15 countries or regions in Asia, namely Indonesia, the Philippines, Vietnam,\nThailand, Myanmar, Malaysia, South Korea, Japan, Taiwan, Bangladesh, India, Cambodia, Hong Kong, Singapore and Laos. As of the same\ndate, we had an average of approximately 34.5 million MAUs on our platform since its launch in September 2023. On our platform,\nyoung people create AI-powered content, discover the things they love, and interact and engage with one another.\n\n \n\nOur\ntechnology platform powers the *GIBO.ai* website, which enables content creators to automate tasks, create personalized audio and\ngraphics, obtain data-driven insights into the content they created, and explore new ideas through collaboration. *GIBO.ai,*launched\nin September 2023 and equipped with cutting-edge AI-powered technology for the generation and optimization of video content, emphasizes\non the establishment of a sustainable ecosystem that can not only content animation creators on the content creation process but also\nprovide distribution channels for their works to be accessed and monetized by viewers on the platform.\n\n \n\nThe\nAI-generated animation video content on *GIBO.ai*, currently offered substantially in short-form entertainment videos, covers a\nwide variety of themes in animation and short drama. Driven by the big data analytical capabilities, we learn user preferences with respect\nto content tags and personalize feeds accordingly. As of December 31, 2025, we had approximately 196,000 video uploads and approximately\n156.1 billion aggregate video views on our platform. As of the same date, we had enabled over 44.0 million user interactions on our\nplatform, including posts, comments, likes, shares, private messages.\n\n \n\n*GIBO.ai*offers a suite of AI-powered animation content creation tools through *GIBO Create*, our integrated suite of AI-powered content\ncreation tools which enables content creators on our platform to improve their productivity and effortlessly become pros at content production.\n*GIBO Create* is designed to democratize content production, leveraging advanced AIGC technologies to enable creators at all levels\nto bring their imaginative stories to life with unprecedented ease and efficiency. *GIBO Create*encompasses (i) *AI Voice Synthesis\nTool,* (ii) *AI Image Generator*, (iii) *Scriptwriting and Storyboarding Tool*, and (iv) *Audio-Visual Synchronization\nTool*. With the help of these tools, animation content creators can use *GIBO Create*to generate human-like voiceovers with\npremium quality in multiple languages, voices, tones and styles, and unique images in distinctive comic styles that visualize the creators’\nideas.\n\n \n\nWith global demand for\nshort-form storytelling continuing to accelerate, in December 2025, we strategically expanded the application of *GIBO\nCreate* to the short-form video and short dramas industry to broaden its exposure to larger and faster-growing segments of\nthe digital entertainment market. We upgraded *GIBO Create* to enable large-scale,\nhigh-efficiency short film generation and deployment by optimizing *GIBO Create* for\none to three-minute episodic formats and supporting rapid iteration across genres such as drama, romance, suspense, youth content,\nand serialized storytelling. The upgrade positioned *GIBO Create* as a production\nengine capable of meeting platform-level volume requirements without compromising content consistency or quality. By leveraging our\nunderlying AI calculation infrastructure, the upgraded *GIBO Create* can dynamically\nallocate compute resources based on production scale, enabling content creators to move from concept to publish-ready content in\nreduced timelines. We believe that the short drama industry is well-suited for AI-enabled production and data-driven distribution\ndue to its shorter production cycles, high-frequency user engagement, and scalable mobile distribution model. We expect that\nleveraging our existing AI infrastructure, content production capabilities, and analytics systems across the short drama sector will enhance operational scalability, user growth, and revenue diversification over time.\n\n \n\nLeveraging\nour vibrant ecosystem comprised of highly-engaged users and talented creators of AI-generated content, we aim to form a virtuous cycle\nfor commercialization. While access to our platform is currently free for all users, we plan to drive monetization through launching\nadvertising, offering membership subscriptions and pay-per-view options, and providing IT services. In 2023, 2024 and 2025, we generated revenue of nil, $30.0 million and nil, respectively, and incurred net losses\nof $12.1 million, $24.9 million and $231.9 million, respectively.\n\n \n\n**Key\nFactors that Affect Our Results of Operations**\n\n \n\nWe\nbelieve the following key factors may affect our financial condition and results of operations:\n\n \n\n**Our\nAbility to Retain and Expand Our User Base Depends on Our Ability to Offer high-quality AI Animation Content that Meets User Preferences\nand Demands**\n\n \n\nOur\nsuccess depends on our ability to offer high-quality content focused on animation and games. The breadth, depth, and quality of our AI\nanimation content are fundamental in maintaining the attractiveness and value to our users. As of December 31, 2025, we had developed\napproximately 89.0 million registered users. We rely on our experience from past and current operations to offer, manage, and refine\nour high-quality AI animation content, which may not be effective as user preferences and market trends change. If we are unable to expand\ninto new high quality AI animation content by diversifying our animation or gaming product pipeline, our ability to keep AI animation\ncontent offerings comprehensive and up-to-date may be adversely affected. If we are unable to keep up with evolving user preferences,\nwe may experience a decline in the attractiveness of our user base.\n\n \n\n54\n\n \n\n \n\nUser\ngenerated content and professional generated user content are critical to our AI animation content offering. We encourage and support\nuser generated content and professional generated content in providing AI animation content to sustain our popularity among users and\nas an effective for product development inspiration. Any failure in encouraging, supporting, and incentivizing user generated content\nmay materially and adversely affect the breadth, depth, and quality of our AI animation content offerings. If we are unable to continue\nto offer high-quality AI animation content, the reputation and attractiveness of our brand could be compromised, and it may experience\na decline in our user base, which could materially and adversely affect our business and future results of operations.\n\n \n\n**Our\nAbility to Control Costs and Expenses and Improve Our Operating Efficiency**\n\n \n\nOur\nbusiness growth is dependent on our ability to improve our operating efficiency, which is determined by our abilities to monitor and\nadjust costs and expenses. Specifically, we consider our ability to monitor and adjust staffing costs (including payroll and employee\nbenefit expenses), administrative expenses and research and development costs essential to the success of our business. If our operating\ncosts exceed our estimated budget, our operational efficiency might decrease, having an adverse impact on our business, results of operation,\nand financial condition.\n\n \n\n**Our\nAbility to Compete Successfully**\n\n \n\nWe\nface significant competition from other animation and gaming companies and other players in the online entertainment market. Some of\nour competitors, including have a longer operating history, a large user base, or greater financial resources than we do. Our competitors\nmay compete with us in a variety of ways, including attracting the same target users, produce similar styled animations and games, and\nconducting brand promotions and other marketing activities. In addition, we face competition for leisure time, attention and discretionary\nspending of our animation players. Other forms of entertainment, such as offline, traditional online, personal computer and console games,\ntelevision, movies, sports and the internet, together represent much larger or more well-established markets and may be perceived by\nour users to offer greater variety, affordability, interactivity and enjoyment. Consumer tastes and preferences for leisure time activities\nare also subject to sudden or unpredictable change on account of new innovations, developments or product launches. If any of our competitors\nachieves greater market acceptance than we do or is able to offer more attractive content, or that our users do not find our animation\ngames to be compelling or if other existing or new leisure time activities are perceived by our users to offer greater variety, affordability,\ninteractivity and overall enjoyment, our user base and our market share may decrease, which may materially and adversely affect our business,\nour future financial condition, and results of operations.\n\n \n\n**Taxation**\n\n \n\n**Cayman Islands**\n\n \n\nThe Cayman Islands currently\nlevies no taxes on individuals or corporations based upon profits, income, gains, or appreciation, and there is no taxation in the nature\nof inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands\nexcept for stamp duties, which may be applicable on instruments executed in, or brought within the jurisdiction of, the Cayman Islands.\nIn addition, the Cayman Islands does not impose withholding tax on dividend payments.\n\n \n\n**Hong Kong**\n\n \n\nOur subsidiary in Hong Kong is\nsubject to an income tax rate of 16.5% on any part of assessable profits over HKD2,000,000 and 8.25% for assessable profits below HKD2,000,000.\nAdditionally, payments of dividends by our subsidiary in Hong Kong to our company are not subject to any Hong Kong withholding tax.\n\n \n\n**Results\nof Operations**\n\n \n\nThe\nfollowing table summarizes the results of our operations for the fiscal years\npresented.\n\n \n\n  \nFor the year ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nRevenues \n$-  \n 30,000,000  \n$-\n\nCost of revenues \n -  \n 4,368,333  \n -\n\nGross\nprofit \n -  \n 25,631,667  \n -\n\n  \n    \n    \n   \n\nOperating\ncosts \n    \n    \n   \n\nGeneral and administrative\nexpenses \n 2,445,669  \n$1,253,323  \n 719,260 \n\nDepreciation and amortization \n 11,709,430  \n 209,431  \n 76,097 \n\nResearch and development expenses \n 117,800,000  \n 49,032,968  \n 11,326,463 \n\nImpairment\nloss on plant and equipment \n 99,131,667  \n -  \n - \n\nTotal\noperating costs \n 231,086,766   \n 50,495,722  \n **12,121,820** \n\n  \n    \n    \n   \n\nLoss\nfrom operations \n (231,086,766) \n (24,864,055) \n (12,121,820)\n\n  \n    \n    \n   \n\nOther (expense) income  \n    \n    \n   \n\nInterest expense \n (824,219) \n -  \n - \n\nInterest income \n -  \n 371  \n 191 \n\nForeign\nexchange translation gain \n -  \n 11,351  \n 4,060 \n\nTotal\nother (expense) income \n (824,219) \n 11,722  \n 4,251 \n\n  \n    \n    \n   \n\nLoss before income taxes \n (231,910,985) \n (24,852,333) \n (12,117,569)\n\n  \n    \n    \n   \n\nIncome\ntax expense \n -  \n -  \n - \n\n  \n    \n    \n   \n\nNet\nloss \n$(231,910,985) \n$(24,852,333) \n$(12,117,569)\n\n \n\n**Comparison\nof the Fiscal Years Ended December 31, 2025 and 2024**\n\n \n\n**Revenues**\n\n \n\nIn\nfiscal years 2025 and 2024, our revenues was nil and $30,000,000, respectively. The decrease in our revenues was primarily\ndue to generated revenues from IT services\nto customers in fiscal year 2024.\n\n \n\n**Cost\nof Revenues**\n\n \n\nIn\nfiscal years 2025 and 2024, our cost of revenues was nil and $4,368,333, respectively, primarily due to decreased revenues\nassociated with our IT services.\n\n \n\n**Operating\nCosts**\n\n \n\nOur\noperating costs primarily include research and development expenses, marketing and promotional expenses, professional fees, depreciation\nand amortization and impairment loss on plant and equipment.\n\n \n\nOur\nonly activities from inception through December 31, 2025 were research and development of AI animation technology and content, development\nof users. In December 2025, we strategically expanded the application of *GIBO Create* to the short-form video and short dramas\nindustry to broaden its exposure to larger and faster-growing segments of the digital entertainment market. We incur expenses associated\nwith conducting AI animation research and development, marketing activities to develop user base and general organization administrative\nexpenses.\n\n** **\n\nTotal\noperating costs increased by approximately $180,591,044, or 357.6%, from $50,495,722 in the fiscal year 2024 to $231,086,766 in fiscal\nyear 2025.\n\n \n\n55\n\n \n\n \n\nThe\nincrease in our operating costs primarily due to (i) an increase in research and development expenses by $68,767,032 or 140.2%, from\n$49,032,968 in fiscal year 2024 to $117,800,000 in fiscal year 2025 because we outsourced more AI animation development services and\nexpanded the application of *GIBO Create* to the short-form video and short dramas industry to broaden its exposure to larger and\nfaster-growing segments of the digital entertainment market, so purchased from third-party vendors in fiscal year 2025 than we did in\nfiscal year 2024 to conduct AI-driven market research, user preference analysis, AI animation software design, prototyping of the user\ninterface, security architecture outlining measures for data protection, encryption, and intrusion prevention, and integration of backend\nsystems, third-party services, and AI functionalities, etc. which led to higher research and development expenses in fiscal year 2025;\n(ii) an increase in depreciation and amortization expenses by $11,499,999 or 5,491.1%, from $209,431 in fiscal year 2024 to $11,709,430\nin fiscal year 2025, primarily because our computer software and applications used in conducting our AI animation business, which led\nto increased amortization expenses during fiscal year 2025; and (iii) an increase in general and administrative expenses by $1,192,346\nor 95.1%, from $1,253,323 in fiscal year 2024 to $2,445,669 in fiscal year 2025 because of increased professional and consulting service\nfees; (IV) an increase in impairment loss on plant and equipment by $99,131,667 or 100.0%, from nil in fiscal year 2024 to $99,131,667\nin fiscal year 2025, the Company recognized an impairment loss of $99 million in respect of its property and equipment in fiscal year\n2025 due to rapid technological advancements in the AI compute industry, including the shift toward more efficient AI architectures and\nsignificant pricing compression, which collectively accelerated the economic obsolescence of the affected assets.\n\n \n\nAs\na result of the above, we reported a net loss of $231,910,985 in fiscal year 2025, as compared to a net loss of $24,852,333 in fiscal\nyear 2024.\n\n \n\n**Comparison\nof the Fiscal Years Ended December 31, 2024 and 2023**\n\n \n\n**Revenues**\n\n \n\nOur\ntotal revenues increased by $30,000,000, or 100.0%, to $30,000,000 in fiscal year 2024 from nil in fiscal year 2023. The increase in our\nrevenues was primarily due to an increase in revenues from IT services to customers in fiscal year 2024.\n\n \n\nWhile\naccess to our platform is currently free for all users, we plan to drive monetization and generate revenues through launching advertising,\noffering membership subscriptions and pay-per-view options, and providing IT services. As of the date of this Report,\nwe had one IT service agreement which leverages our technological capabilities to empower the business growth of our enterprise\ncustomers and accelerate the monetization of our business.\n\n \n\n**Cost\nof Revenues**\n\n \n\nOur\ncost of revenues increased by $4,368,333, or 100.0%, from nil in fiscal year 2023 to $4,368,333 in fiscal year 2024, primarily due to\nincreased revenues associated with our IT services.\n\n \n\n**Operating\nCosts**\n\n \n\nOur\noperating costs primarily include research and development expenses, marketing and promotional expenses, professional fees, depreciation\nand amortization.\n\n \n\nOur\nonly activities from inception through December 31, 2023 and December 31, 2024 were research and development of AI animation technology\nand content, development of users and searching for a Business Combination opportunity. We incur expenses associated with conducting\nAI animation research and development, marketing activities to develop user base and general organization administrative expenses.\n\n \n\nTotal\noperating costs increased by approximately $38,373,902, or 316.6%, from $12,121,820 in the fiscal year 2023 to $50,495,722 in fiscal\nyear 2024.\n\n \n\nThe\nincrease in our operating costs primarily due to (i) an increase in research and development expenses by $37,706,505 or 332.9%, from\n$11,326,463 in fiscal year 2023 to $49,032,968 in fiscal year 2024 because we outsourced more AI animation development services to third-party\nvendors in fiscal year 2024 than we did in fiscal year 2023 to conduct AI-driven market research, user preference analysis, AI animation\nsoftware design, prototyping of the user interface, security architecture outlining measures for data protection, encryption, and intrusion\nprevention, and integration of backend systems, third-party services, and AI functionalities, etc. which led to higher research and development\nexpenses in fiscal year 2024; (ii) an increase in depreciation and amortization expenses by $133,334 or 175.2%, from $76,097 in fiscal\nyear 2023 to $209,431 in fiscal year 2024, primarily because our computer software and applications used in conducting our AI animation\nbusiness, which led to increased amortization expenses during fiscal year 2024; and (iii) an increase in general and administrative expenses\nby $534,063 or 74.3%, from $719,260 in fiscal year 2023 to $1,253,323 in fiscal year 2024 because of increased professional and consulting\nservice fees.\n\n \n\nAs\na result of the above, we reported a net loss of $24,852,333 in fiscal year 2024, as compared to a net loss of $12,117,569 in fiscal\nyear 2023.\n\n \n\n**Liquidity\nand Capital Resources**\n\n \n\nWe\nwere incorporated in the Cayman Islands as a holding company and our Cayman Islands holding company did not have active business operations\nas of December 31, 2025 and as of the date of this Report. Our consolidated assets and liabilities and consolidated operating costs\nand net loss are the operation results of our subsidiary Hong Kong Daily and GIBO AI. Our subsidiary’s ability to transfer funds\nto us in the form of loans or advances or cash dividends is not materially restricted by regulatory provisions in accordance with laws\nand regulations in Hong Kong and Cayman Islands. As of December 31, 2025 and 2024, none of the net assets of our subsidiary in Hong Kong\nand Cayman Islands were restricted net assets and there were no funds transferred from Hong Kong Daily and GIBO AI to us in the form\nof loans, advances, or cash dividends during the years ended December 31, 2025 and 2024.\n\n \n\n56\n\n \n\n \n\nFor\nthe years ended December 31, 2025 and 2024, we reported a net loss of approximately $231.1 million and $24.9 million, respectively,\nprimarily due to significant amount of research and development costs incurred when we outsourced AI animation development projects\nto third-party vendors to conduct AI-powered market research, user preference analysis, AI animation software design, prototyping of\nthe user interface, security architecture outlining measures for data protection, encryption, and intrusion prevention, and\nintegration of backend systems, third-party services, and AI functionalities. Cash provided by operating activities amounted to\napproximately $23.6 million for the years ended December 31, 2024, and cash used in operating activities amounted to approximately\n$121.6 million for the years ended December 31, 2025, respectively. These conditions raised substantial doubt about the\nCompany’s ability to continue as a going concern.\n\n \n\nOur\nliquidity is based on our ability to obtain financing from investors to fund our general operations and business expansion needs. Our\nability to continue as a going concern is dependent on our management’s ability to successfully execute our business plan, which\nincludes controlling operating cost and expenses to generate positive operating cash flows and obtain financing from outside sources.\n\n \n\nHowever,\nthere can be no assurance that our future cashflows from operating activities or financing activities including equity financing will\nbe sufficient to support our ongoing operations, or that any additional financing will be available in a timely manner or on acceptable\nterms, if at all. If we are unable to raise sufficient financing or events or circumstances occur such that we do not meet our strategic\nplans, we will be required to reduce our research and development expenditure and certain discretionary spending, or be unable to fund\ncapital expenditures, which would have a material adverse effect on our financial position, results of operations, cash flows, and ability\nto achieve our intended business objectives. In the year ended December 31, 2024, we have generated revenues amounted to $30.0 million,\nand we continued need to raise additional capital to finance our future operations. Accordingly, we have concluded that there is substantial\ndoubt about our ability to continue as a going concern for a period of one year from the date that these financial statements are issued.\nOur consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly,\nthe financial statements have been prepared on a basis that assumes we will continue as a going concern and which contemplates the realization\nof assets and satisfaction of liabilities and commitments in the ordinary course of business.\n\n \n\n**Cash\nFlows Summary**\n\n \n\nThe\nfollowing table sets forth summary of our cash flows for the fiscal years\npresented:\n\n \n\n  \n\n**For the Year Ended****December 31,**\n\n \n\n  \n2025  \n2024 \n \n**2023**\n \n\nNet cash (used\nin) provided by operating activities \n$(121,390,036) \n$23,608,570 \n \n$\n(11,422,031\n)\n\nNet cash used in investing\nactivities \n -  \n (30,000,000)\n \n \n(600,000\n)\n\nNet\ncash provided by financing activities \n 121,706,022  \n 426,317 \n \n \n18,043,307\n \n\nNet increase (decrease)\nin cash \n 315,986  \n (5,965,113)\n \n \n6,021,276\n \n\nCash,\nbeginning of year and \n 86,750  \n 6,051,863 \n \n \n30,587\n \n\nCash,\nend of year \n$402,736  \n$86,750 \n \n$\n6,051,863\n \n\n \n\n*Operating\nActivities*\n\n \n\nNet\ncash used in operating activities amounted to $121,390,036 for the year ended December 31, 2025, and primarily consisted of the following:\n\n \n\n \n●\nNet\nloss of $231,086,766;\n\n \n●\nDepreciation\nand amortization of $11,709,430;\n\n \n●\nImpairments\nloss on plant and equipment of $99,131,667;\n\n \n●\nInterest expense of $824,219;\n\n \n●\nA\nincrease in other current assets of $152,833 and a decrease in other current liabilities of $1,136,736. The increase in other current\nassets primarily due to prepaid server expense in the fiscal year 2025, the decrease in other current liabilities primarily due to\na decrease in accrued agent fee of GIBO.\n\n \n\nNet\ncash provided by operating activities amounted to $23,608,570 for the years ended December 31, 2024, and primarily consisted of the following:\n\n \n\n \n●\nnet\nloss of $24,852,333;\n\n \n \n \n\n \n●\nA\ndecrease in prepaid expenses and other current assets of $524,415 and an increase in accrued expenses and other current liabilities\nof $2,203,647. The decrease in prepaid expenses and other current assets primarily due to decrease in prepaid server expense in the\nyears ended December 31, 2024, the increase in accrued expenses and other current liabilities primarily due to an increase in accrued\nagent fee of GIBO.\n\n \n\n57\n\n \n\n \n\nNet\ncash used in operating activities amounted to $11,422,031 for the year ended December 31, 2023, and primarily consisted of the following:\n\n \n\n \n●\nnet\nloss of $12,117,569;\n\n \n \n \n\n \n●\nA\ndecrease in other current assets of $577,881 and an increase in other current liabilities of $41,560. The decrease in other current\nassets primarily due to prepaid server expense in the fiscal year 2022, the increase in other current liabilities primarily due to\nan increase in accrued /register agent fee of GIBO.\n\n \n\n*Investing\nActivities*\n\n \n\nCash\nused in investing activities was nil for the year ended December 31, 2025.\n\n \n\nCash\nused in investing activities was $30,000,000 for the year ended December 31, 2024, which primarily included purchases of servers and\nnetwork equipment used in conducting our AI animation business.\n\n \n\nCash used in investing activities was\n$600,000 for the year ended December 31, 2023, which primarily included purchases of computer software and applications used in conducting\nour AI animation business.\n\n \n\n*Financing\nActivities*\n\n \n\nCash\nprovided by financing activities was $121,706,022 for the year ended December 31, 2025, which mainly consisted of borrowing from related\nparties and third parties as working capital of $118,661,546 and $3,044,476, respectively.\n\n \n\nCash\nprovided by financing activities was $426,317 for the years ended December 31, 2024, which consisted of borrowing from related parties\nand third parties as working capital of $1,930,779 and $105,252, respectively, and payment of deferred offering costs of $1,609,714.\n\n \n\nCash provided by financing activities was $18,043,307 for\nthe year ended December 31, 2023, which consisted of capital contribution by shareholders of $17,525,456 and borrowing from related parties\nas working capital of $517,851.\n\n \n\n**Trend\nInformation**\n\n \n\nOther\nthan as disclosed elsewhere in this Report, we are not aware of any trends, uncertainties, demands, commitments,\nor events that are reasonably likely to have a material effect on our liquidity, or capital resources, or that would cause reported financial\ninformation not necessarily to be indicative of future operating results or financial condition.\n\n \n\n**Off-balance\nSheet Arrangements**\n\n \n\nWe\ndid not have any off-balance sheet arrangements as of December 31, 2025 and 2024.\n\n \n\n**Inflation**\n\n \n\nInflation\ndoes not materially affect our business or the results of our operations.\n\n \n\n**Seasonality**\n\n \n\nSeasonality\ndoes not materially affect our business or the results of our operations.\n\n \n\n**Contractual\nObligation**\n\n \n\n**Contractual\nObligations**\n\n \n\nOur\nHong Kong subsidiary entered into non-cancelable leases agreement with the landlord for office lease. For the years\nended December 31, 2025, 2024 and 2023, we reported total operating lease expenses of $57,588, $77,976 and $77,976,\nrespectively.\n\n \n\nThe\nfollowing table summarizes the maturity of operating lease liability and future minimum payments of operating leases as of December 31,\n2025:\n\n \n\n  \nAmounts \n\n**Year\nending December 31,** \n   \n\n2026 \n 36,000 \n\n2027 \n 36,000 \n\n2028 \n$39,600 \n\n  \n   \n\nTotal\nfuture minimum lease payments \n 111,600 \n\nLess:\nimputed interest \n (8,305)\n\nPresent\nvalue of operating lease liability \n$103,295 \n\n \n\n58\n\n \n\n \n\nTotal\nfuture minimum lease payments under the non-cancelable operating lease with respect to the office lease as of December 31, 2025 are as\nfollows:\n\n \n\n \n\n \n**Lease\ncommitment** \n\nWithin one year \n$36,000 \n\nWithin two years \n 36,000 \n\nOver\ntwo years \n 39,600 \n\n  \n   \n\n**Total**** **\n**$****111,600**** **\n\n \n\n**Critical\nAccounting Policy, Judgments and Estimates**\n\n \n\nOur\ndiscussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These\nfinancial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported\namounts of our assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the consolidated\nfinancial statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. The\nmost significant estimates and assumptions include the realizability of prepayments, useful lives of property and equipment and intangible\nassets, the recoverability of long-lived assets and provision necessary for contingent liabilities. We continue to evaluate these estimates\nand assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments\nabout the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an\nintegral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies\nrequire higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this Report reflect the more significant judgments and estimates used in preparation of our consolidated financial statements.\nFurther, we elected to use the extended transition period for complying with new or revised accounting standards that have different\neffective dates for public and private companies until the earlier of the date that we (1) are no longer an emerging growth company or\n(2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements\nmay not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.\n\n \n\n**Recent\nAccounting Pronouncements**\n\n \n\nA\ndescription of recently issued accounting pronouncements that may potentially impact our financial position and results of operations\nis disclosed in “*Note 2. Summary of Significant Accounting Policies*” to our consolidated financial statements included\nelsewhere in this Report.\n\n \n\n59"}