{"url_path":"/sec/hcai/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 Key Information**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1958399/0001213900-26-055775-index.html","accession_number":"0001213900-26-055775","cik":"0001958399","ticker":"HCAI","issuer_name":"Huachen AI Parking Management Technology Holding Co., Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1958399/0001213900-26-055775-index.html","primary_entity_key":"0001958399","primary_entity_name":"Huachen AI Parking Management Technology Holding Co., Ltd"},"word_count":32790,"has_tables":true,"body_markdown":"**Item 3. Key Information**\n\n** **\n\n**Overview**\n\n** **\n\n**Our Corporate Structure and Operations in China**\n\n \n\nHuachen Cayman is a holding\ncompany with no material operation. The Operating Subsidiaries conduct operations in China. Investors in our Class A Ordinary Shares should\nbe aware that they will not directly hold equity interests in our PRC Subsidiaries, but rather only in Huachen Cayman, the holding company.\n\n \n\nHuachen Cayman may rely on\ndividends to be paid by the PRC subsidiaries to fund its cash and financing requirements, including the funds necessary to pay dividends\nand other cash distributions to our shareholders, to service any debt it may incur and to pay its operating expenses. If the PRC subsidiaries\nincur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other\ndistributions to Huachen Cayman.\n\n \n\nSee “Item 8. Financial\nInformation – A. Consolidated Statements and Other Financial Information – Dividend Policy” and “Item\n3. Key Information — 3.D. Risk Factors — Risks Related to our Corporate Structure – “*Huachen Cayman\nis a holding company and will rely on dividends paid by the subsidiaries for its cash needs. Any limitation on the ability of the subsidiaries\nto make dividend payments to Huachen Cayman, or any tax implications of making dividend payments to Huachen Cayman, could limit its ability\nto pay its expenses or pay dividends to holders of our Class A Ordinary Shares,*” and “Item\n3. Key Information — 3.D. Risk Factors *— *Risks Related to Doing Business in China *—\nTo the extent cash or assets in the business are in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be\navailable to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions\nand limitations on the ability of us or our subsidiaries by the PRC government to transfer cash or assets*.”\n\n \n\n1\n\n \n\n**Enforceability of Civil Liabilities**\n\n \n\nWe are incorporated under\nthe laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain\nbenefits associated with being a Cayman Islands exempted company, such as:\n\n \n\n \n●\npolitical and economic stability;\n\n \n\n \n●\nan effective judicial system;\n\n \n\n \n●\na favorable tax system;\n\n \n\n \n●\nthe absence of exchange control or currency restrictions; and\n\n \n\n \n●\nthe availability of professional and support services.\n\n \n\nHowever, certain disadvantages\naccompany incorporation in the Cayman Islands. These disadvantages include:\n\n \n\n \n●\nthe Cayman Islands has a less developed body of securities laws as compared to the United States and provides fewer protections to investors; and\n\n \n\n \n●\nCayman Islands companies may not have standing to sue before the federal courts of the United States.\n\n \n\nOur constituent documents\ndo not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us,\nour officers, directors and shareholders, be arbitrated.\n\n \n\nAll of our assets are located\noutside the United States. In addition, a majority of our directors and officers are nationals and/or residents of countries other than\nthe United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result,\nit may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against\nthem or against us, judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of\nthe securities laws of the United States or any state in the United States.\n\n \n\nWe have appointed Cogency\nGlobal Inc. as our agent upon whom process may be served in any action brought against us in the United States District Court for the\nSouthern District of New York under the federal securities laws of the United States or of any State of the United States or any action\nbrought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New\nYork.\n\n \n\nShanghai Xiading Law Firm,\nour counsel as to Chinese law, has advised us that the recognition and enforcement of foreign judgments are provided for under the Chinese\nCivil Procedure Law. Chinese courts may recognize and enforce foreign judgments in accordance with the requirements of the Chinese Civil\nProcedure Law based either on treaties between China and the country where the judgment is made or in reciprocity between jurisdictions.\nChina does not have any treaties or other agreements with the Cayman Islands or the United States that provide for the reciprocal recognition\nand enforcement of foreign judgments. As a result, it is uncertain whether a Chinese court would enforce a judgment rendered by a court\nin either of these two jurisdictions.\n\n \n\nAccording to the Civil Procedure\nLaw of the PRC (amended in 2017), if a legally effective judgment or ruling made by a foreign court requires recognition and enforcement\nby a people’s court of the PRC, the party concerned may directly apply to an intermediate people’s court with jurisdiction\nover for recognition and enforcement, or the foreign court may request recognition and enforcement by a people’s court in accordance\nwith the provisions of an international treaty concluded or acceded to by the country and the PRC, or in accordance with the principle\nof reciprocity.\n\n \n\n2\n\n \n\nIf the people’s courts\nare of the opinion that the legally effective judgment or ruling made by the foreign court applying for or requesting recognition and\nenforcement does not violate the basic principles of the laws of the PRC or the sovereignty, security and public interests of the country\nafter the people’s court reviews the legally effective judgment or ruling made by the foreign court applying for or requesting recognition\nand enforcement in accordance with the international treaties concluded or acceded to by the PRC or in accordance with the principle of\nreciprocity, then the people’s court shall issue a ruling that recognizes its validity and, if enforcement is necessary, issues\nan enforcement order, which order shall be implemented in accordance with the relevant laws. A judgment or ruling that violates the basic\nprinciples of the laws of the PRC or the sovereignty, security and public interests of the country will not be recognized and implemented.\n\n \n\nIf an award made by a foreign\narbitration institution requires recognition and enforcement by the people’s court of the PRC, the party concerned shall directly\napply to the intermediate people’s court in the place where the person subjected to enforcement has his domicile or where his property\nis located. The people’s court shall handle the matter in accordance with international treaties concluded or acceded to by the\nPRC or in accordance with the principle of reciprocity.\n\n \n\nMourant Ozannes (Cayman) LLP,\nour counsel as to the laws of the Cayman Islands, has advised us that there is uncertainty as to whether the courts of the Cayman Islands\nwould (1) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the\ncivil liability provisions of federal securities laws of the United States or the securities laws of any state in the United States, or\n(2) entertain original actions brought in the Cayman Islands against us or our directors or officers that are predicated upon the federal\nsecurities laws of the United States or the securities laws of any state in the United States.\n\n \n\nMourant Ozannes (Cayman) LLP\nhas informed us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States (and\nthe Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment in personam\nobtained in such jurisdiction may be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination\nof the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands,\nprovided such judgment (a) is given by a competent foreign court with jurisdiction to give the judgment, (b) imposes a specific positive\nobligation on the judgment debtor (such as an obligation to pay a liquidated sum or perform a specified obligation), (c) is final and\nconclusive, (d) is not in respect of taxes, a fine or a penalty; (e) has not been obtained by fraud; and (f) was not obtained in a manner\nand is not of a kind the enforcement of which is contrary to natural justice or public policy of the Cayman Islands. However, the Cayman\nIslands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities\nlaw if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or\npunitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such\ncivil liability judgments from U.S. courts would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings\nif concurrent proceedings are being brought elsewhere.\n\n \n\nWe believe that there is uncertainty\nas to whether the courts of Hong Kong would (i) recognize or enforce judgments of United States courts obtained against us or our directors\nor officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States\nor (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of\nthe United States or any state in the United States. A judgment of a court in the United States predicated upon U.S. federal or state\nsecurities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount\ndue thereunder, and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other\nthings, is (1) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a\nfine or other penalty) and (2) final and conclusive on the merits of the claim, but not otherwise. Such a judgment may not, in any event,\nbe so enforced in Hong Kong if (a) it was obtained by fraud; (b) the proceedings in which the judgment was obtained were opposed to natural\njustice; (c) its enforcement or recognition would be contrary to the public policy of Hong Kong; (d) the court of the United States was\nnot jurisdictionally competent; or (e) the judgment was in conflict with a prior Hong Kong judgment. Hong Kong has no arrangement for\nthe reciprocal enforcement of judgments with the United States. As a result, there is uncertainty as to the enforceability in Hong Kong,\nin original actions or in actions for enforcement, of judgments of United States courts of civil liabilities predicated solely upon the\nfederal securities laws of the United States or the securities laws of any State or territory within the United States.\n\n \n\n3\n\n \n\n**Implication of the Holding Foreign Companies\nAccountable Act (the “HFCA Act”)**\n\n \n\nThe HFCA Act was enacted on\nDecember 18, 2020. The HFCA Act states if the SEC determines that a company has filed audit reports issued by a registered public accounting\nfirm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit the company’s\nshares from being traded on a national securities exchange or in the over the counter trading market in the United States.\n\n \n\nOn March 24, 2021, the SEC\nadopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company\nwill be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process to\nbe subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing\nand trading prohibition requirements described above.\n\n \n\nOn June 22, 2021, the U.S.\nSenate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, legislation entitled “Consolidated\nAppropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by President Biden, which contained,\namong other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring\nthe SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections\nfor two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading.\n\n \n\nOn December 2, 2021, the SEC\nissued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which took effect on January\n10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered\npublic accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because\nof a position taken by an authority in foreign jurisdictions.\n\n \n\nOn December 16, 2021, PCAOB\nannounced the PCAOB HFCA Act determinations (the “PCAOB determinations”) relating to the PCAOB’s inability to inspect\nor investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special Administrative\nRegion and dependency of the PRC, because of a position taken by one or more authorities in the PRC or Hong Kong.\n\n \n\nOn August 26, 2022, the\nPCAOB announced that it had signed a Statement of Protocol (the “SOP”) with the China Securities Regulatory Commission and\nthe Ministry of Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the\n“SOP Agreement”), establishes a specific, accountable framework to make possible complete inspections and investigations by\nthe PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. The SOP Agreement remains unpublished and\nis subject to further explanation and implementation. Pursuant to the fact sheet with respect to the SOP Agreement disclosed by the SEC,\nthe PCAOB shall have sole discretion to select any audit firms for inspection or investigation and the PCAOB inspectors and investigators\nshall have a right to see all audit documentation without redaction. On December 15, 2022, the PCAOB Board determined that the PCAOB was\nable to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong\nKong and voted to vacate its previous determinations to the contrary.\n\n \n\nAudit Alliance LLP, the independent\nregistered public accounting firm that issues the audit report for the fiscal year ended December 31, 2025, 2024 and 2023 included in\nthis annual report, is currently subject to PCAOB inspections and the PCAOB is thus able to inspect Audit Alliance LLP. Audit Alliance\nLLP is headquartered in Singapore and has been inspected by the PCAOB. In the future, if there is any regulatory change or step taken\nby PRC regulators or the SEC or Nasdaq applies additional and more stringent criteria, and if PCAOB determines that it is not able to\ninspect Audit Alliance LLP at such future time, Nasdaq may delist our Class A Ordinary Shares and the value of our Class A Ordinary Shares\nmay significantly decline or become worthless.\n\n** **\n\n**Recent Regulatory Development in the PRC**\n\n \n\nWe are aware that, recently,\nthe PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in China with\nlittle advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based\ncompanies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews,\nand expanding the efforts in anti-monopoly enforcement.\n\n \n\nFor example, on June 10, 2021,\nthe Standing Committee of the National People’s Congress enacted the PRC Data Security Law, which took effect on September 1, 2021.\nThe law requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection,\ndata processing activities must be conducted based on data classification and hierarchical protection system for data security.\n\n \n\nOn July 6, 2021, the\nGeneral Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document\nto crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among\nother things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation,\nto enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application\nof the PRC securities laws.\n\n \n\n4\n\n \n\nOn August 20, 2021, the 30th\nmeeting of the Standing Committee of the 13th National People’s Congress voted and passed the “Personal Information Protection\nLaw of the People’s Republic of China”, or “PRC Personal Information Protection Law”, which became effective on\nNovember 1, 2021. The PRC Personal Information Protection Law applies to the processing of personal information of natural persons within\nthe territory of China that is carried out outside of China where (1) such processing is for the purpose of providing products or services\nfor natural persons within China, (2) such processing is to analyze or evaluate the behavior of natural persons within China, or (3) there\nare any other circumstances stipulated by related laws and administrative regulations.\n\n \n\nOn December 28, 2021, the\nCAC jointly with the relevant authorities formally published Measures for Cybersecurity Review (2021) which took effect on February 15,\n2022 and replace the former Measures for Cybersecurity Review (2020) issued on July 10, 2021. Measures for Cybersecurity Review (2021)\nstipulates that operators of critical information infrastructure purchasing network products and services, and online platform operator\n(together with the operators of critical information infrastructure, the “Operators”) carrying out data processing activities\nthat affect or may affect national security, shall conduct a cybersecurity review, any online platform operator who controls more than\none million users’ personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to\nbe listed in a foreign country.\n\n \n\nOn February 17, 2023, the\nChina Securities Regulatory Commission (“CSRC”) promulgated the Trial Administrative Measures of Overseas Securities Offering\nand Listing by Domestic Companies, or the “Trial Measures,” and five supporting guidelines, which came into effect on March\n31, 2023. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly,\nshall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following\nits submission of initial public offerings or listing application. If a domestic company fails to complete required filing procedures\nor conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative\npenalties, such as an order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in\ncharge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.\n\n \n\nIn connection with our issuance\nof securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, except\nfor the filing procedures with the CSRC and reporting of relevant information according to the Overseas Listing Trial Measures, we\nbelieve that the Company and its subsidiaries are currently not required to obtain any other approval from the CSRC to list on U.S exchanges\nor issue securities to foreign investors, given that: (i) our PRC subsidiary was incorporated as a wholly foreign-owned enterprise by\nmeans of direct investment rather than by merger or acquisition of equity interest or assets of a PRC domestic company owned by PRC companies\nor individuals as defined under the M&A Rule that are our beneficial owners; (ii) the Chinese regulatory authority currently has not\nissued any definitive rule or interpretation concerning whether offerings like ours under this annual report are subject to the M&A\nRule; and (iii) no provision in the M&A Rule clearly classifies contractual arrangements as a type of transaction subject to the M&A\nRule.\n\n \n\nHowever, there remains some\nuncertainty as to how the M&A Rule will be interpreted or implemented in the context of an overseas offering and the opinions summarized\nabove are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A\nRule. We cannot assure you that relevant PRC government agencies, would reach the same conclusion as our PRC counsel, Shanghai Xiading\nLaw Firm, does, and hence we may face regulatory actions or other sanctions from the PRC regulatory agencies. These regulatory agencies\nmay impose fines and penalties on the operations in China, limit our operating privileges in China, delay or restrict the repatriation\nof the proceeds from our continued offering into China, restrict or prohibit the payments or remittance of dividends by our PRC subsidiaries\nor take other actions that could have a material adverse effect on the business, financial condition, results of operations, reputation\nand prospects, as well as the trading price of the shares. It is uncertain when and whether the Company will be required to obtain permission\nfrom the China regulatory authority to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will\nbe denied or rescinded.\n\n \n\nThe China regulatory authority\nmay legally restricted or influence the operations at any time, which could result in a material change in the operations. Recently, the\nChina regulatory authority initiated a series of regulatory actions and statements to regulate business operations in China with little\nadvance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies\nlisted overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding\nthe efforts in anti-monopoly enforcement. As confirmed by our PRC counsel, Shanghai Xiading Law Firm, we currently are not subject to\ncybersecurity review with the CAC, to conduct business operations in China, given that: (i) the Operating Subsidiaries do not possess\na large amount of personal information in the business operations; and (ii) data processed in the business does not have a bearing on\nnational security and thus may not be classified as core or important data by the authorities. In addition, as confirmed by our PRC counsel,\nShanghai Xiading Law Firm, we are not subject to merger control review by China’s anti-monopoly enforcement agency due to the level\nof our revenues which were provided by us and audited by our auditor Audit Alliance LLP, and the fact that we currently do not expect\nto propose or implement any acquisition of control of, or decisive influence over, any company with revenues within China of more than\nRMB 400 million. See “Item 3. Key Information — 3.D. Risk Factors — Risks Related to Doing Business in China *—\nChanges in the policies, regulations, rules, and the enforcement of laws of the PRC government may also be implemented quickly with little\nadvance notice. Therefore, our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.”*\n\n** **\n\n5\n\n \n\n**Transfers of Cash between Our Company and Our\nSubsidiaries**\n\n \n\nOur management monitors the\ncash position of each entity within our organization regularly and prepare budgets on a monthly basis to ensure each entity has the necessary\nfunds to fulfill its obligation for the foreseeable future and to ensure adequate liquidity. In the event that there is a need for cash\nor a potential liquidity issue, it will be reported to our Chief Financial Officer and subject to approval by our board of directors,\nwe will enter into an intercompany loan for the subsidiary.\n\n \n\nHuachen Cayman currently has\nnot maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers between the Company, our\nsubsidiaries, or investors. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations. To the extent\ncash or assets in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund\noperations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations\non the ability of us or our subsidiaries by the PRC government to transfer cash or assets.\n\n \n\nUnder existing PRC foreign\nexchange regulations, payment of current account items, such as profit distributions and trade and service-related foreign exchange transactions,\ncan be made in foreign currencies without prior approval from the State Administration of Foreign Exchange, by complying with certain\nprocedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior approval\nfrom SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC\nforeign exchange regulations, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate\nshareholders who are PRC residents. Approval from, or registration with, appropriate government authorities is, however, required where\nthe RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated\nin foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account\ntransactions. Current PRC regulations permit our PRC subsidiaries to pay dividends to the Company only out of their accumulated profits,\nif any, determined in accordance with Chinese accounting standards and regulations. As of the date of this annual report, there are no\nrestrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including\nfunds from Hong Kong to the PRC), except for transfer of funds involving money laundering and criminal activities. Cayman Islands law\nprescribes that a company may only pay dividends out of its profits or share premium, and that a company may only pay dividends if, immediately\nfollowing the date on which the dividend is paid, the company remains able to pay its debts as they fall due in the ordinary course of\nbusiness. Other than that, there is no restrictions on Huachen Cayman’s ability to transfer cash to investors.\n\n \n\nAs a holding company, Huachen\nCayman may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for its cash\nand financing requirements. If any of the PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such\ndebt may restrict their ability to pay dividends to Huachen Cayman. Huachen Cayman is permitted under the laws of the Cayman Islands to\nprovide funding to the subsidiary incorporated in Hong Kong through loans or capital contributions without restrictions on the amount\nof the funds. The subsidiaries are permitted under the respective laws of Hong Kong to provide funding to Huachen Cayman through dividend\ndistribution without restrictions on the amount of the funds. There are no restrictions on dividends transfers from HK to the Cayman Islands.\nCurrent PRC regulations permit our WFOE to pay dividends to the Company only out of its accumulated profits, if any, determined in accordance\nwith Chinese accounting standards and regulations.\n\n \n\nThe PRC has currency and capital\ntransfer regulations that require us to comply with certain requirements for the movement of capital. The Company is able to transfer\ncash (US Dollars) to its PRC subsidiaries through an investment (by increasing the Company’s registered capital in a PRC subsidiary).\nThe Company’s subsidiaries within China can transfer funds to each other when necessary, through the way of current lending. The\ntransfer of funds among companies are subject to the Provisions on Private Lending Cases, which was implemented on August 20, 2020 to\nregulate the financing activities between natural persons, legal persons and unincorporated organizations. As advised by our PRC counsel,\nShanghai Xiading Law Firm, the Provisions on Private Lending Cases does not prohibit using cash generated from one subsidiary to fund\nanother subsidiary’s operations. We have not been notified of any other restriction which could limit our PRC subsidiaries’\nability to transfer cash between PRC subsidiaries. The Company’s subsidiaries in the PRC have not transferred any earnings or cash\nto the Company to date. As of the date of this annual report, there has not been any assets or cash transfer between the holding company\nand its subsidiaries. As of the date of this annual report, there has not been any assets or cash transfer between the holding company\nand its subsidiaries. As of the date of this annual report, there has not been any dividends or distributions made to US investors. The\nCompany’s business is conducted through its subsidiaries. The Company is a holding company and its material assets consist solely\nof the ownership interests held in its PRC subsidiaries. The Company relies on dividends paid by its subsidiaries for its working capital\nand cash needs, including the funds necessary: (i) to pay dividends or cash distributions to its shareholders, (ii) to service any debt\nobligations and (iii) to pay operating expenses. As a result of PRC laws and regulations (noted below) that require annual appropriations\nof 10% of after-tax income to be set aside in a general reserve fund prior to payment of dividends, the Company’s PRC subsidiaries\nare restricted in that respect, as well as in other respects noted below, in their ability to transfer a portion of their net assets to\nthe Company as a dividend.\n\n \n\nWith respect to transferring\ncash from the Company to its subsidiaries, increasing the Company’s registered capital in a PRC subsidiary requires the filing of\nthe local commerce department, while a shareholder loan requires a filing with the SAFE or its local bureau. Aside from the declaration\nto the SAFE, there is no restriction or limitations on such cash transfer or earnings distribution.\n\n \n\n6\n\n \n\nWith respect to the payment\nof dividends, we note the following:\n\n \n\n \n1.\nPRC regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with accounting standards and PRC regulations (an in-depth description of the PRC regulations is set forth below);\n\n \n \n \n\n \n2.\nOur PRC subsidiaries are required to set aside, at a minimum, 10% of their net income after taxes, based on PRC accounting standards, each year as statutory surplus reserves until the cumulative amount of such reserves reaches 50% of their registered capital;\n\n \n\n \n3.\nSuch reserves may not be distributed as cash dividends;\n\n \n\n \n4.\nOur PRC subsidiaries may also allocate a portion of their after-tax profits to fund their staff welfare and bonus funds; except in the event of a liquidation, these funds may also not be distributed to shareholders; the Company does not participate in a Common Welfare Fund; and\n\n \n\n \n5.\nThe incurrence of debt, specifically the instruments governing such debt, may restrict a subsidiary’s ability to pay shareholder dividends or make other cash distributions.\n\n \n\nIf, for the reasons noted\nabove, our subsidiaries are unable to pay shareholder dividends and/or make other cash payments to the Company when needed, the Company’s\nability to conduct operations, make investments, engage in acquisitions, or undertake other activities requiring working capital may be\nmaterially and adversely affected. However, the operations and business, including investment and/or acquisitions by our subsidiaries\nwithin China, will not be affected as long as the capital is not transferred in or out of the PRC.\n\n \n\nAs of the date of this annual\nreport, no dividends, distributions or transfers have been made between Huachen Cayman and any of its subsidiaries and no dividends, distributions\nor transfers have been made by Huachen Cayman to its shareholders. For the foreseeable future, the Company intends to use the earnings\nfor research and development, to develop new products and to expand its production capacity. As a result, we do not expect to pay any\ncash dividends in the foreseeable future. Also, as of the date of this annual report, no cash generated from one subsidiary is used to\nfund another subsidiary’s operations and we do not anticipate any difficulties or limitations on our ability to transfer cash between\nsubsidiaries.\n\n \n\n**Corporate Structure**\n\n \n\nThe following diagram illustrates\nthe corporate structure of Huachen Cayman and its subsidiaries as of the date of this annual report.\n\n \n\n \n\n7\n\n \n\n*Our Subsidiaries\nand Business Functions*\n\n \n\nHuachen Cayman was incorporated\non September 30, 2021, under the laws of the Cayman Islands. Huachen Cayman is a holding company and is currently not actively engaging\nin any business.\n\n \n\nYu He Chuang Co., Ltd (“YHC\nHK”) was incorporated on April 1, 2025, under the laws of the under the laws of Hong Kong. YHC HK is a wholly-owned subsidiary of\nthe Company. It is a holding company and is not actively engaging in any business.\n\n \n\nChuang Yu He (Shanghai) Industrial\nCo., Ltd. (“CYH Shanghai”) was incorporated on June 12, 2025 under the laws of the PRC. CYH Shanghai is a wholly-owned subsidiary\nof YHC HK and currently has no operations.\n\n \n\nHangzhou Zhihuichong Technology\nCo., Ltd. (“Hangzhou ZHC”) was incorporated on November 20, 2025 under the laws of the PRC. Hangzhou ZHC is a wholly-owned\nsubsidiary of CYH Shanghai and its primary business consists of the development and operation of charging infrastructure and operating\nplatforms for new-energy two-wheeled vehicles and electric vehicles.\n\n \n\nJiaxing Xuchen Technology\nCo., Ltd. (“Jiaxing XC”) was incorporated on September 9, 2025 under the laws of the PRC. Jiaxing XC is a wholly-owned subsidiary\nof CYH Shanghai and currently engages in the sale of equipment structures and metal products.\n\n \n\n**3.A. [Reserved]**\n\n \n\n**3.B. Capitalization and Indebtedness**\n\n \n\nNot applicable for annual\nreports on Form 20-F.\n\n \n\n**3.C. Reasons for the Offer and Use of Proceeds**\n\n \n\nNot applicable for annual\nreports on Form 20-F.\n\n \n\n**3.D. Risk Factors**\n\n \n\n**Risk Factor Summary**\n\n** **\n\nYou should carefully consider\nall of the information in this annual report before making an investment in our Class A Ordinary Shares. Below please find a summary of\nthe principal risks and uncertainties we face, organized under relevant headings. In particular, as we are a PRC-based company incorporated\nin the Cayman Islands, you should pay special attention to subsections headed “Item 3. Key Information—3.D. Risk Factors—Risks\nRelated to Our Corporate Structure.” and “Item 3. Key Information—3.D. Risk Factors—Risks Related to Doing Business\nin the Jurisdictions in which the Operating Subsidiaries Operate”.\n\n \n\nOur business is subject to\na number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial\ncondition, results of operations, cash flows, and prospects. These risks are discussed more fully below and include, but are not limited\nto, risks related to:\n\n \n\n8\n\n \n\nRisks Related to Our Corporate Structure\n\n** **\n\n \n●\nHuachen Cayman is a holding company and will rely on dividends paid by the subsidiaries for its cash needs. Any limitation on the ability of the subsidiaries to make dividend payments to Huachen Cayman, or any tax implications of making dividend payments to Huachen Cayman, could limit its ability to pay its expenses or pay dividends to holders of our Class A Ordinary Shares. (Page 11)\n\n \n\n \n● \nWe are a Cayman Islands exempted company and all of our assets are located outside of the United States. In addition, a majority of our current directors and officers are nationals and/or residents of countries other than the United States. All or a substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. (Page 12)\n\n \n\nRisks Related to Doing Business in China\n\n** **\n\n \n●\nThe Chinese government exerts substantial influence over the manner in which we must conduct our business activities, which could result in a material change in our operations and/or the value of our Class A Ordinary Shares. The Chinese government may intervene or influence our operations at any time, which could result in a material change in our operations and the value of our Class A Ordinary Shares. (Page 12)\n\n \n\n \n●\nChanges in the policies, regulations, rules, and the enforcement of laws of the PRC government may also be implemented quickly with little advance notice. Therefore, our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain. (Page 13)\n\n \n\n \n●\nThere are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations, along with the risk that the Chinese government may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers could result in a material change in our operations, financial performance and/or the value of our Class A Ordinary Shares or impair our ability to raise money. (Page 13)\n\n \n\n \n●\nTo the extent cash or assets in the business are in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC government to transfer cash or assets. (Page 15)\n\n \n\n \n●\nGovernmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment. (Page 16)\n\n \n\n \n●\nThe recent joint statement by the SEC and PCAOB, Nasdaq’s proposed rule changes and the HFCAA all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. (Page 16)\n\n \n\n \n●\nYou may experience difficulties in effecting service of process, enforcing foreign judgments or bringing actions in China against us or our management named in this annual report based on foreign laws. (Page 19)\n\n \n \n \n\n \n●\nIt may be difficult for overseas shareholders and/or regulators to conduct cross-border investigations in China. (Page 20)\n\n** **\n\nRisks Related to our Class A Ordinary Shares\n\n \n\n \n●\nOur CEO has control over key decision making as a result of his control of a majority of our voting shares. (Page 39)\n\n \n\n \n●\nAs a “controlled company” under the rules of the Nasdaq Capital Market, we may choose to exempt our Company from certain corporate governance requirements that could have an adverse effect on our public shareholders. (Page 39)\n\n \n\n \n●\nHuachen Cayman is an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A Ordinary Shares less attractive to investors. (Page 40)\n\n \n\n \n●\nHuachen Cayman is a “foreign private issuer,” and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance and prospects. (Page 40)\n\n \n\n \n●\nBecause Huachen Cayman is a foreign private issuer and is exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer. (Page 41)\n\n \n\n9\n\n \n\nRisks Related to Our Business and Industry\n\n \n\n \n●\nWe may not successfully implement our strategic transition\nfrom smart parking solutions and equipment structural parts to electric vehicle charging infrastructure.\n\n \n \n \n\n \n●\nChanges in the availability,\nquality and cost of key raw materials and other necessary supplies or services could have a material adverse effect on our business,\nfinancial condition and results of operations. (Page 28)\n\n \n\n \n●\nOur transition into electric\nvehicle charging infrastructure is at an early stage, and we may not generate sufficient revenue to offset the decline or disposition\nof our historical smart parking business. (Page 28)\n\n \n\n \n●\nWe may depend on third-party manufacturers, suppliers,\ncontractors, platform vendors and service providers in our electric vehicle charging business and remaining equipment structural\nparts and metal products business.\n\n \n \n \n\n \n●\nWe are exposed to risks\nassociated with the transportation of the products we sell. (Page 29)\n\n \n\n \n●\nAny quality problems associated\nwith our products may result in loss of customers and sales, and we may face product liability claims if the problems are related\nto our products. (Page 29)\n\n \n\n \n●\nOur business is subject to risks generally associated\nwith the electric vehicle charging industry, and we may not successfully monetize value-added services in this new business line.\n(Page 30)\n\n \n\n \n●\nWe may be exposed to counterparty credit risks and\nlong payment cycles during and after our business transition. (Page 30)\n\n \n\n \n●\nWe may not achieve sufficient utilization of our electric\nvehicle charging infrastructure. (Page 30)\n\n \n\n \n●\nWe may be unable to secure suitable sites, venue resources,\nelectrical capacity or approvals for electric vehicle charging infrastructure. (Page 31)\n\n \n\n \n●\nWe may incur substantial\ncosts before our electric vehicle charging business generates meaningful revenue or cash flow. (Page 31)\n\n \n\n \n●\nOur electric vehicle charging\noperating platforms may experience outages, defects, cybersecurity incidents, payment failures or data compliance issues. (Page 31)\n\n \n\n \n●\nWe may be subject to fire\nsafety, electrical safety, product liability, personal injury and property damage risks in connection with our electric vehicle charging\nbusiness. (Page 31)\n\n \n\n \n●\nIf the Operating Subsidiaries\nfail to improve our services to keep up with the rapidly changing demands, preferences, electric vehicle charging trends, or technologies\nin the electric vehicle charging industry, our revenue and growth could be adversely affected. (Page 32)\n\n \n\n10\n\n \n\n**Risks Related to Our Corporate Structure**\n\n** **\n\n**Huachen Cayman is a holding company and\nwill rely on dividends paid by the subsidiaries for its cash needs. Any limitation on the ability of the subsidiaries to make dividend\npayments to Huachen Cayman, or any tax implications of making dividend payments to Huachen Cayman, could limit its ability to pay its\nexpenses or pay dividends to holders of our Class A Ordinary Shares.**\n\n \n\nHuachen Cayman is a holding\ncompany with no material operation. The Operating Subsidiaries conduct operations in China. Huachen Cayman may rely on dividends to be\npaid by the PRC subsidiaries to fund its cash and financing requirements, including the funds necessary to pay dividends and other cash\ndistributions to our shareholders, to service any debt it may incur and to pay its operating expenses. If the PRC subsidiaries incur debt\non their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions\nto Huachen Cayman.\n\n \n\nUnder PRC laws and regulations,\nour PRC subsidiaries may pay dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations.\nIn addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if\nany, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital.\n\n \n\nOur PRC subsidiaries generate\nall of their revenue in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange\nmay limit the ability of our PRC subsidiaries to use the Renminbi revenues to pay dividends to us. The China regulatory authority may\ncontinue to strengthen its capital controls in accordance with the requirements of laws and regulations, and more restrictions and substantial\nvetting processes may be put forward by the SAFE for cross-border transactions falling under both the current account and the capital\naccount. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other kinds of payments to us could materially\nand limit our ability to grow, make investments or acquisitions that could be beneficial to the business, pay dividends, or otherwise\nfund and conduct the business.\n\n \n\nIn addition, the Enterprise\nIncome Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by\nChinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the\nPRC central government and governments of other countries or regions where the non-PRC resident enterprises are incorporated. Any limitation\non the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability\nto grow, make investments or acquisitions that could be beneficial to the business, pay dividends, or otherwise fund and conduct the business.\n\n \n\n**You may face difficulties in protecting\nyour interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands\nlaw.**\n\n** **\n\nWe are an exempted company\nincorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our amended and restated memorandum and articles\nof association, the Companies Act (as revised) of the Cayman Islands (the “Companies Act”) and the common law of the Cayman\nIslands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of\nour directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of\nthe Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law\nof England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. Decisions\nof the Privy Council (which is the final Court of Appeal for British Overseas Territories such as the Cayman Islands) are binding on a\ncourt in the Cayman Islands. Decisions of courts in other Commonwealth jurisdictions are similarly persuasive but not binding authority.\nThe rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law may not be as clearly established as\nthey would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a\nless developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially\ninterpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a\nshareholder derivative action in a federal court of the United States.\n\n \n\n11\n\n \n\n**Certain judgments obtained against us by our shareholders may\nnot be enforceable.**\n\n** **\n\nWe are a Cayman Islands exempted\ncompany and all of our assets are located outside of the United States. In addition, a majority of our current directors and officers\nare nationals and/or residents of countries other than the United States. All or a substantial portion of the assets of these persons\nare located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against\nthese individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities\nlaws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render\nyou unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant\nlaws of the Cayman Islands and the PRC, see “*Enforceability of Civil Liabilities.*”\n\n \n\nShareholder claims, including\nsecurities law class actions and fraud claims, are common in the United States and are generally difficult to pursue as a matter of law\nor practicability in China. For example, in China, there are significant legal and other barriers to obtaining information needed for\nshareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local authorities in\nChina may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement\ncross-border supervision and administration, such regulatory cooperation with the securities regulatory authorities in the United States\nhave not been efficient in the absence of a mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities\nLaw, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection\nactivities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators or other relevant\nauthorities, no entity or individual may provide any documents and materials relating to securities business activities to foreign entities\nor government agencies.\n\n \n\n**Risks Related to Doing Business in China**\n\n** **\n\n**The Chinese government exerts substantial\ninfluence over the manner in which we must conduct our business activities, which could result in a material change in our operations\nand/or the value of our Class A Ordinary Shares. The Chinese government may intervene or influence our operations at any time, which could\nresult in a material change in our operations and the value of our Class A Ordinary Shares.**\n\n \n\nThe Chinese government has\nexercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state\nownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation,\nenvironmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose\nnew, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part\nto ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision\nnot to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in\nthe implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof\nand could require us to divest ourselves of any interest we then hold in Chinese properties.\n\n \n\nFor example, the Chinese cybersecurity\nregulator announced on July 2, 2021 that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later\nordered that the company’s app be removed from smartphone app stores.\n\n \n\nAs such, the Operating Subsidiaries\nmay be subject to various government and regulatory interference in the provinces in which they operate. The Operating Subsidiaries could\nbe subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions.\nThe Operating Subsidiaries may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties\nfor any failure to comply. The Chinese government may intervene or influence our operations at any time with little advance notice, which\ncould result in a material change in our operations and the value of our Class A Ordinary Shares. Any actions by the Chinese government\nto exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could\nsignificantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such\nsecurities to significantly decline or be worthless.\n\n \n\n12\n\n \n\n**Changes in the policies, regulations, rules,\nand the enforcement of laws of the PRC government may also be implemented quickly with little advance notice. Therefore, our assertions\nand beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.**\n\n** **\n\nHuachen Cayman is a holding\ncompany incorporated under the laws of the Cayman Islands and is not a Chinese operating company. As a holding company with no material\noperations of its own, it conducts all of its operations and operates its business in China through the Operating Subsidiaries. All of\nthe clients of the PRC subsidiaries are PRC persons. Because of our corporate structure as a Cayman Islands holding company with operations\nconducted by our PRC subsidiaries, the PRC government may choose to exercise significant oversight and discretion, and the regulations\nto which our Operating Subsidiaries are subject may change rapidly and with little notice to us and our Operating Subsidiaries or our\nshareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often\nuncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities,\nand inconsistently with our and our Operating Subsidiaries’ current policies and practices. New laws, regulations, and other government\ndirectives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other\ngovernment actions may:\n\n \n\n \n●\ndelay or impede our Operating Subsidiaries’ development;\n\n \n\n \n●\nresult in negative publicity or increase our Operating Subsidiaries’ operating costs;\n\n \n\n \n●\nrequire significant management time and attention; and\n\n \n\n \n●\nsubject our Operating Subsidiaries to remedies, administrative penalties and even criminal liabilities that may harm our Operating Subsidiaries’ business, including fines assessed for our Operating Subsidiaries’ current or historical operations, or demands or orders that our Operating Subsidiaries modify or even cease our Operating Subsidiaries’ business practices.\n\n \n\nWe are aware that recently,\nthe PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in the PRC\nwith little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based\ncompanies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews,\nand expanding the efforts in anti-monopoly enforcement.\n\n \n\nSince these statements and\nregulatory actions are new, it is highly uncertain how soon the PRC legislative or administrative regulation making bodies will respond\nor what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, or\nwhat the potential impact that any such modified or new laws and regulations would have on our operating subsidiaries’ daily business\noperation, the ability to accept foreign investments and list on an U.S. or other foreign exchange.\n\n** **\n\n**There are uncertainties regarding the interpretation\nand enforcement of PRC laws, rules and regulations, along with the risk that the Chinese government may intervene or influence our operations\nat any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers could result\nin a material change in our operations, financial performance and/or the value of our Class A Ordinary Shares or impair our ability to\nraise money.**\n\n \n\nAll of the Operating Subsidiaries’\noperations are conducted in the PRC, and are governed by PRC laws, rules and regulations. The operating entity is subject to laws, rules\nand regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike\nthe common law system, prior court decisions may be cited for reference but have limited precedential value.\n\n \n\nIn 1979, the PRC government\nbegan to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general. The overall effect of\nlegislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investment in China.\nHowever, China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently\ncover all aspects of economic activities in China or may be subject to significant degrees of interpretation by PRC regulatory agencies.\nIn particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions\nand the nonbinding nature of such decisions, and because the laws, rules and regulations often give the relevant regulator significant\ndiscretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can\nbe inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policies and internal rules, some\nof which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of the\noperating entity’s violation of these policies and rules until after the violation.\n\n \n\n13\n\n \n\nAny administrative and court\nproceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC\nadministrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it\nmay be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection the operating\nentity enjoys than in more developed legal systems. These uncertainties may impede the operating entity’s ability to enforce the\ncontracts it has entered into and could materially and adversely affect its business, financial condition and results of operations.\n\n \n\nThe General Office of the\nCentral Committee of the Communist Party of China and the General Office of the State Council jointly issued the Illegal Securities Opinions,\nwhich were made available to the public on July 6, 2021. The Illegal Securities Opinions emphasized the need to strengthen the administration\nover illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective\nmeasures, such as promoting the construction of relevant regulatory systems, will be taken to address with the risks and incidents of\nChina-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Illegal Securities\nOpinions remain unclear on how the law will be interpreted, amended and implemented by the relevant PRC governmental authorities, but\nthe Illegal Securities Opinions and any related implementing rules to be enacted may subject the operating entity to compliance requirements\nin the future.\n\n \n\nOn July 10, 2021, the CAC\nissued a revised draft of the Measures for Cybersecurity Review for public comments, which required that, among others, in addition to\na CIIO,” any “data processor” controlling personal information of no less than one million users which seeks to list\nin a foreign stock exchange should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing\nthe national security risks of the relevant activities.\n\n \n\nOn November 14, 2021, the\nCAC released the Regulations on Network Data Security (draft for public comments) and accepted public comments until December 13, 2021.\nThe draft Regulations on Network Data Security provide that data processors refer to individuals or organizations that autonomously determine\nthe purpose and the manner of processing data. If a data processor that processes personal data of more than one million users intends\nto list overseas, it shall apply for a cybersecurity review. In addition, data processors that process important data or are listed overseas\nshall carry out an annual data security assessment on their own or by engaging a data security services institution, and the data security\nassessment report for the prior year should be submitted to the local cyberspace affairs administration department before January 31 of\neach year. On December 28, 2021, the Measures for Cybersecurity Review (2021 version) was promulgated and took effect on February 15,\n2022, which iterates that any “online platform operators” controlling personal information of more than one million users\nwhich seeks to list in a foreign stock exchange should also be subject to cybersecurity review. As advised by our PRC counsel, Shanghai\nXiading Law Firm, the operating entity does not process users’ personal information and it is not deemed to be a CIIO nor is it\nan online platform operator with personal information of more than one million users.\n\n \n\nWe are a comprehensive electric\nvehicle charging provider, and neither the Company nor its subsidiaries engage in data activities as defined under the Personal Information\nProtection Law of the PRC (the “Personal Information Protection Law”), which includes, without limitation, collection, storage,\nuse, processing, transmission, provision, publication and deletion of data. In addition, neither the Company nor its subsidiaries are\noperators of any “critical information infrastructure” as defined under the PRC Cybersecurity Law and the Security Protection\nMeasures on Critical Information Infrastructure. However, the Measures for Cybersecurity Review (2021 version) was recently adopted, and\nthe Network Internet Data Protection Draft Regulations (draft for comments) is in the process of being formulated and the Illegal Securities\nOpinions remain unclear on how such measures will be interpreted, amended and implemented by the relevant PRC governmental authorities.\n\n \n\nEffective January 1, 2025,\nChina’s Network Data Security Management Regulations introduce enhanced requirements for data security and privacy, particularly\nconcerning personal information protection, data localization, and cross-border data transfers. These regulations impose stricter compliance\nobligations on data handlers, including requirements to conduct regular data security risk assessments, implement classified data protection\nmeasures, and obtain governmental approval for certain cross-border data transfers. Additionally, companies processing large volumes of\n“important data” or “national core data” may face heightened scrutiny and stricter regulatory oversight. Failure\nto comply with these regulations could result in significant financial penalties, operational disruptions, revocation of business licenses,\nor restrictions on cross-border operations. As a result, we may be required to adjust our data handling practices, enhance internal compliance\nmeasures, and allocate additional resources to meet evolving regulatory requirements in China.\n\n \n\n14\n\n \n\nSince the Network Data Security\nManagement Regulations are now effective, our PRC subsidiaries likely will be required to perform annual data security assessment either\nby itself or retaining a third-party data security service provider and submit such data security assessment report to the local\nagency every year. Neither the CAC nor any other PRC regulatory agency or administration has contacted the Company in connection with\nthe PRC subsidiaries. Neither the Company nor the PRC subsidiaries are currently required to obtain regulatory approval from the CAC nor\nany other PRC authorities. However, there remains uncertainty as to how the Measures for Cybersecurity Review (2021) will be interpreted\nor implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation\nand interpretation related to the Measures for Cybersecurity Review (2021). We cannot assure you that PRC regulatory agencies, including\nthe CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws. Our PRC subsidiaries\ncurrently have obtained all material permissions and approvals required for our operations in compliance with the relevant PRC laws and\nregulations in the PRC, including the business license. In the event that the applicable laws, regulations or interpretations change such\nthat we are subject to any mandatory cybersecurity review and other specific actions required by the CAC, we cannot guarantee whether\nwe can complete the registration process in a timely manner, or at all. If we inadvertently conclude that such approval is not required,\nfail to obtain and maintain such approvals, licenses or permits required for our business or respond to changes in the regulatory environment,\nwe could be subject to liabilities, penalties and operational disruption, which may materially and adversely affect our business, operating,\nsignificantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to\nsignificantly decline in value or become worthless.\n\n \n\nOn February 17, 2023, the\nCSRC released the Trial Measures, which came into effect on March 31, 2023, and five supporting guidelines. Pursuant to the Trial Measures,\ndomestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure to\nthe CSRC. On the same day, the CSRC held a press conference for the release of the Trial Measures and issued the Notice of the Arrangements\nfor the Recordation-Based Administration of Overseas Offering and Listing by Domestic Enterprises.\n\n \n\nWe are required to make filings\nwith the CSRC and should complete the filing before our listing on the Nasdaq. According to Article 16 of the Trial Measures, an issuer\nconducting overseas initial public offering or listing shall undergo the recordation formalities with the CSRC within three working days\nafter the application documents for offering and listing are submitted overseas. On February 5, 2024, we received approval from the CSRC\nregarding our completion of the required filing procedures for our initial public offering, which was closed on February 6, 2025. In addition,\nif we do not maintain the approvals, or applicable laws, regulations, or interpretations change such that we are required to obtain other\npermission and approval in the future, we may be subject to investigations by competent regulators, fines or penalties, ordered to suspend\nthe relevant operations and rectify any non-compliance, prohibited from engaging in relevant business or conducting any offering, and\nthese risks could result in a material adverse change in the operations, limit our ability to offer or continue to offer securities to\ninvestors, or cause such securities to significantly decline in value or become worthless.\n\n \n\nFurthermore, the PRC government\nauthorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers\nlike us. Such actions taken by the PRC government authorities may intervene or influence our operations at any time, which are beyond\nour control. Therefore, any such action may adversely affect our operations and significantly limit or hinder our ability to offer or\ncontinue to offer securities to you and reduce the value of such securities.\n\n \n\nUncertainties regarding the\nenforcement of laws and the fact that rules and regulations in China can change quickly with little advance notice, along with the risk\nthat the Chinese government may intervene or influence our operations at any time, or may exert more control over offerings conducted\noverseas and/or foreign investment in China-based issuers could result in a material change in our operations, financial performance and/or\nthe value of our Class A Ordinary Shares or impair our ability to raise money.\n\n** **\n\n**To the extent cash or assets in the business\nare in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or for other use\noutside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our\nsubsidiaries by the PRC government to transfer cash or assets.**\n\n \n\nThe transfer of funds and\nassets between Huachen Cayman and its Hong Kong and PRC subsidiaries is subject to restrictions. The PRC government imposes controls on\nthe conversion of the RMB into foreign currencies and the remittance of currencies out of the PRC. See “Item 3. Key Information\n— 3.D. Risk Factors — Risks Related to Doing Business in China *— Governmental control of currency conversion\nmay limit our ability to utilize our revenues effectively and affect the value of your investment.*” In addition, the PRC Enterprise\nIncome Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by\nChinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and\nthe governments of other countries or regions where the non-PRC resident enterprises are tax resident. See “Item 3. Key Information\n— 3.D. Risk Factors — Risks Related to Doing Business in China *— Huachen Cayman is a holding company and will\nrely on dividends paid by our subsidiaries for our cash needs. Any limitation on the ability of our subsidiaries to make dividend payments\nto us, or any tax implications of making dividend payments to us, could limit our ability to pay our parent company expenses or pay dividends\nto holders of our Class A Ordinary Shares*.”\n\n \n\n15\n\n \n\nAs of the date of this annual\nreport, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of\nHong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities.\nHowever, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions\nin the future.\n\n \n\nAs a result of the above,\nto the extent cash or assets in the business are in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be\navailable to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions\nand limitations on the ability of us or our subsidiaries by the PRC government to transfer cash or assets.\n\n \n\n**Governmental control of currency conversion\nmay limit our ability to utilize our revenues effectively and affect the value of your investment.**\n\n \n\nThe PRC government imposes\ncontrols on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive\nall of our revenues in RMB. Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from\nthe PRC operating entities to fund any cash and financing requirements we may have. 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 approval of SAFE, by complying with certain procedural requirements. Specifically, under\nthe existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of PRC operating entities may be\nused to pay dividends to our Company. However, approval from or registration with appropriate government authorities is required where\nRMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated\nin foreign currencies. As a result, we need to obtain SAFE approval to use the cash generated from the operations of the PRC operating\nentities to pay off their respective debt in a currency other than RMB owed to entities outside China, or to make other capital expenditure\npayments outside China in a currency other than RMB.\n\n \n\nIn light of the flood of capital\noutflows of China in 2016 due to the weakening RMB, the PRC government has imposed more restrictive foreign exchange policies and stepped\nup scrutiny of major outbound capital movements including overseas direct investment. More restrictions and substantial vetting processes\nare put in place by SAFE to regulate cross-border transactions falling under the capital account. If any of our shareholders regulated\nby such policies fails to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be\nsubject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future\nto foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign\ncurrencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including\nholders of our Class A Ordinary Shares.\n\n \n\n**The recent joint statement by the SEC and\nPCAOB, Nasdaq’s proposed rule changes and the HFCAA all call for additional and more stringent criteria to be applied to emerging\nmarket companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the\nPCAOB.**\n\n \n\nThe HFCAA was enacted on December 18,\n2020. The HFCAA states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that\nhas not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC will prohibit the company’s\nshares from being traded on a national securities exchange and in over-the-counter markets in the U.S.\n\n \n\nOn March 24, 2021, the\nSEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. A\ncompany will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process\nto be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing\nand trading prohibition requirements described above. On December 2, 2021, the SEC adopted final amendments implementing the disclosure\nand submission requirements of the HFCAA.\n\n \n\n16\n\n \n\nOn June 22, 2021, the\nSenate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would decrease the number of non-inspection years\nfrom three years to two years, and thus, would reduce the time before our securities may be prohibited from trading or delisted.\n\n \n\nThe SEC adopted rules to implement\nthe HFCAA and, pursuant to the HFCAA, the PCAOB issued its report on December 16, 2021, notifying SEC of its determination that it\nis unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China or Hong Kong\nbecause of a position taken by one or more authorities in China or in Hong Kong, respectively. The rules apply to foreign issuers\nwhose registered public accounting firm is located in a foreign jurisdiction that does not permit the PCAOB to inspect or investigate\n(“Commission-Identified Issuers”). The rules further provide notice regarding the procedures the SEC has established to identify\nissuers and to impose trading prohibitions on the securities of certain Commission-Identified Issuers, as required by the HFCAA. Our\nauditor, Audit Alliance LLP, is an independent registered public accounting firm that issues the audit report included elsewhere in this\nannual report. As an auditor of publicly traded companies in the United States and a firm registered with the PCAOB, it is subject\nto laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable\nprofessional standards. The most recent inspection was conducted in December 2023. However, we cannot assure you whether U.S. regulatory\nauthorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit\nprocedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience\nas it relates to the audit of our financial statements.\n\n \n\nOn August 26, 2022, the\nPCAOB signed the SOP Agreements with the CSRC and China’s Ministry of Finance. The SOP Agreements established a specific, accountable\nframework. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate\nregistered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations\nto the contrary. However, should China regulatory authorities fail to agree to the PCAOB’s access in the future, the PCAOB Board\nwill consider the need to issue a new determination. Notwithstanding the foregoing, in the event it is later determined that the PCAOB\nis unable to inspect or investigate completely our auditor, then such lack of inspection could cause our securities to be delisted from\nthe stock exchange. On June 22, 2021, the U.S. Senate passed Accelerating Holding Foreign Companies Accountable Act and on December 29,\n2022, the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things, an identical provision\nto Accelerating Holding Foreign Companies Accountable Act and amended the Holding Foreign Companies Accountable Act by requiring the SEC\nto prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections\nfor two consecutive years instead of three, thus reducing the time before our Class A Ordinary Shares may be prohibited from trading\nor delisted.\n\n \n\nUncertainties of the ability\nof auditors to comply with the requirements of the HFCAA, as well as further rulemakings by U.S., regulators with respect to their work\nin China, could cause the market price of our Class A Ordinary Shares to fall. If the PCAOB determines that it cannot inspect the audits\nof our PRC operating subsidiaries, the trading of our securities may be prohibited under the HFCAA and, as a result, the Nasdaq may delist\nour securities. The delisting of our Class A Ordinary Shares, or the threat of their being delisted, may materially and adversely affect\nthe value of your investment.\n\n** **\n\n**In light of recent events indicating further\ndevelopment by the Cyberspace Administration of China over data security, particularly for companies seeking to list on a foreign exchange,\nwe may be subject to a variety of PRC laws and other obligations regarding data protection and any other rules, and any failure to comply\nwith applicable laws and obligations could have a material and adverse effect on the business and the Offering.**\n\n \n\nThe operations of the PRC\nsubsidiaries are located in China and the clients are PRC persons. As such the PRC subsidiaries are subject to PRC laws relating\nto the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information\nand other data. These laws apply not only to third-party transactions, but also other parties with which we have commercial relations.\nThese laws continue to develop, and the China regulatory authority may adopt other rules and restrictions in the future. Non-compliance\ncould result in penalties or other significant legal liabilities.\n\n \n\n17\n\n \n\nThe PRC regulatory requirements\nregarding cybersecurity are evolving. For instance, various regulatory bodies in the PRC, including the CAC, the Ministry of Public Security,\nand the SAMR, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations.\nThe Cybersecurity Law, which was adopted by the National People’s Congress on November 7, 2016, and the Cybersecurity Review\nMeasures, which were promulgated on April 13, 2020, provide that personal information and important data collected and generated\nby an operator of critical information infrastructure in the course of its operations in China must be stored in China, and if an operator\nof critical information infrastructure purchases internet products and services that affect or may affect national security, it will be\nsubject to cybersecurity review by the CAC. On June 10, 2021, the Standing Committee of the National People’s Congress\npromulgated the Data Security Law, which took effect on September 1, 2021. The Data Security Law requires that data shall not be\ncollected by theft or other illegal means, and also provides for a data classification and hierarchical protection system. The data classification\nand hierarchical protection system puts data into different groups according to its importance in economic and social development, and\nthe damages it may cause to national security, public interests, or the legitimate rights and interests of individuals and organizations\nin case the data is falsified, damaged, disclosed, illegally obtained or illegally used. If any of our data processing activities conducted\nafter the Data Security Law became effective were found to be not in compliance with this law, we could be ordered to make corrections,\nand under certain serious circumstances, such as severe data divulgence, we could be subject to penalties, including the revocation of\nthe business licenses or other permits. Furthermore, the recently issued Opinions on Strictly Cracking Down Illegal Securities Activities\nin Accordance with the Law require (i) speeding up the revision of the provisions on strengthening the confidentiality and archives\nmanagement relating to overseas issuance and listing of securities and (ii) improving the laws and regulations relating to data security,\ncross-border data flow, and management of confidential information. As there remain uncertainties regarding the further interpretation\nand implementation of those laws and regulations, we cannot assure you that we will be compliant such new regulations in all respects,\nand we may be ordered to rectify and terminate any actions that are deemed illegal by the regulatory authorities and become subject to\nfines and other sanctions.\n\n \n\nAccording to the New Measures,\nif an operator of critical information infrastructure who purchase network products or services that affects or may affect national security\nor a network platform operator who possesses the personal information of more than one million users and intends to list in a foreign\ncountry shall declare to the Office of Cybersecurity Review for cybersecurity review. The New Measures further elaborates the factors\nto be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of\ncore data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the\ncountry; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information\nbeing affected, controlled, or maliciously used by foreign governments after listing abroad. As of the date of this annual report, the\nCompany and its PRC Subsidiaries have possessed substantially less than one million users of personal information in their business operations\nand neither the Company nor any of its subsidiaries is recognized as an “operator of critical information infrastructure”\nby any authentic authority. Therefore, as advised by our PRC counsel, Shanghai Xiading Law Firm, neither the Company nor any of its subsidiaries\nshall be deemed to be an “operator of critical information infrastructure” or “network platform operator” controlling\npersonal information of no less than one million users. We are required to collect and retain some basic information furnished by the\nclients, suppliers and employees in accordance with prevailing business practices, but we do not handle a large amount of personal and\nconfidential data in the ordinary course of business. As of the date of this annual report, we have not been involved in any investigations\non cybersecurity or data security initiated by related governmental regulatory authorities, and we have not received any inquiry, notice,\nwarning, or sanction in such respect. Our PRC subsidiaries have received all necessary permissions required to obtain from PRC authorities\nto operate its current business in China, including Business Licenses.\n\n \n\n18\n\n \n\nHowever, given the recent\nevents indicating greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, it\nremains uncertain as to how the New Measures will be interpreted or implemented. There remains uncertainty as to the enactment, interpretation\nand implementation of regulatory requirements related to current and future applicable laws, overseas securities offerings and other capital\nmarkets activities. PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and\ninterpretation related to the New Measures. They may also take actions requiring us, or making it advisable for us, to suspend or adjust\nour capital markets activities. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we expect\nto take all reasonable measures and actions to comply therewith. In the event of a failure to comply, we may be required to suspend our\nrelevant businesses and become subject to fines and other penalties. If the CAC or other PRC regulatory agencies later promulgate new\nrules or explanations requiring that we obtain their approvals for any follow-on offering in the future, we may be unable to obtain such\napprovals, which could limit our ability to continue to offer securities to our investors.\n\n \n\n**You may experience difficulties in effecting\nservice of process, enforcing foreign judgments or bringing actions in China against us or our management named in this annual report\nbased on foreign laws.**\n\n \n\nHuachen Cayman is a holding\ncompany incorporated under the laws of the Cayman Islands without material operation. All of the operations are conducted by the Operating\nSubsidiaries in China. In addition, all of our assets are held by the PRC subsidiaries and are located in China and most of our senior\nexecutive officers and directors reside within China for a significant portion of the time. As a result, it may be difficult or impossible\nfor investors to effect service of process on us inside China. It may also be difficult for you to enforce in U.S. courts judgments\nobtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers\nand directors. Moreover, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts\nagainst us, or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state.\n\n \n\nThe recognition and enforcement\nof foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance\nwith the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made\nor on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the\nUnited States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC\nCivil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that\nthe judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain\nwhether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands.\nIn addition, it will be difficult for U.S. shareholders to originate actions against us in China in accordance with PRC laws because\nwe are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding\nour Class A Ordinary Shares, to establish a connection to the PRC for a PRC court to have jurisdiction as required under the PRC Civil\nProcedures Law.\n\n \n\n**Our results of operation may be materially\nand adversely affected by a downturn in China or the global economy.**\n\n \n\nAll of the operations and\nassets are currently located in China, and all of our revenue was generated in China for the fiscal years ended December 31, 2025, 2024\nand 2023. Accordingly, the business, prospects, financial condition and results of operations may be influenced to a significant degree\nby the economic and social conditions in China generally and by the continued economic growth in China as a whole. While the\nChinese economy has experienced significant growth over the past decades, growth has been different, both geographically and among\nvarious sectors of the economy. The China regulatory authority has implemented various measures to encourage economic growth and guide\nthe allocation of resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on us.\nProlonged slowdown in the global or the Chinese economy may affect potential customers’ confidence in the financial market\nas a whole and have a negative impact on our financial condition. Further, recent global economic conditions including inflationary pressures,\nhave not materially affected the operations in the PRC. However, continued pressure from global economic conditions may the PRC markets\nin the future and in turn, may affect the operations. Turbulence in the international markets may also adversely affect our ability to\naccess the capital markets to meet liquidity needs. We cannot assure the future changes in the world and PRC economies that could impact\nthe industries in which we operate, which could in turn diminish the demand for the services.\n\n \n\n19\n\n \n\n**It may be difficult for overseas shareholders\nand/or regulators to conduct cross-border investigations in China.**\n\n \n\nShareholder claims or regulatory\ninvestigations that are common in the U.S. are typically difficult to pursue as a matter of law or practicality in China. There are\nsignificant legal obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Chinese\nauthorities may establish a regulatory cooperation agreement with the securities regulatory authorities of another jurisdiction to implement\ncross-border supervision and administration which may be difficult to achieve in the absence of mutual and practical cooperation.\n\n** **\n\n**We are required to complete the record filing\nrequirement with PRC authorities to list on overseas stock exchanges and may not be able to complete the record filing because the filing\nmaterials are incomplete or do not meet the requirements of the CSRC.**\n\n \n\nOn February 17, 2023,\nthe CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures,\nwhich became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated No.1 to No.5\nSupporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas Listings\nby Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively, the\nGuidance Rules and Notice. Under the Trial Measures and the Guidance Rules and Notice, domestic companies conducting overseas securities\noffering and listing activities, either in direct or indirect form, shall complete filing procedures with the CSRC pursuant to the requirements\nof the Trial Measures within three working days following its submission of initial public offerings or listing application.\n\n \n\nOur PRC counsel, Shanghai\nXiading Law Firm, has advised us that, based on its understanding of the current PRC laws and regulations, our offering will be identified\nas an indirect overseas issuance and listing by CSRC. According to Article 16 of the Trial Measures, an issuer conducting overseas initial\npublic offering or listing shall undergo the recordation formalities with the CSRC within three working days after the application documents\nfor offering and listing are submitted overseas. On February 5, 2024, we received approval from the CSRC regarding our completion of the\nrequired filing procedures for our initial public offering, which was closed on February 6, 2025. In addition, if we do not maintain the\napprovals, or applicable laws, regulations, or interpretations change such that we are required to obtain other permission and approval\nin the future, we may be subject to investigations by competent regulators, fines or penalties, ordered to suspend the relevant operations\nand rectify any non-compliance, prohibited from engaging in relevant business or conducting any offering, and these risks could result\nin a material adverse change in the operations, limit our ability to offer or continue to offer securities to investors, or cause such\nsecurities to significantly decline in value or become worthless.\n\n \n\nOn February 24, 2023, the\nCSRC, together with the Ministry of Finance, National Administration of State Secrets Protection and National Archives Administration\nof China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing,\nwhich were issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in\n2009, or the “Provisions.” The revised Provisions were issued under the title the “Provisions on Strengthening Confidentiality\nand Archives Administration of Overseas Securities Offering and Listing by Domestic Companies,” and came into effect on March 31,\n2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect\noverseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (a)\na domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant\nindividuals or entities, including securities companies, securities service providers, and overseas regulators, any documents and materials\nthat contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according\nto law, and file with the secrecy administrative department at the same level; and (b) a domestic company that plans to, either directly\nor indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities, including securities\ncompanies, securities service providers, and overseas regulators, any other documents and materials that, if leaked, will be detrimental\nto national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. On\nor after March 31, 2023, any failure or perceived failure by our Company and our subsidiaries, to comply with the above confidentiality\nand archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities\nbeing held legally liable by competent authorities and referred to the judicial organ to be investigated for criminal liability if suspected\nof committing a crime.\n\n \n\n20\n\n \n\n**Changes in international trade policies,\ntrade disputes, barriers to trade, or the emergence of a trade war may influence growth in China.**\n\n \n\nInternational trade disputes,\nand other business interruptions could harm or disrupt international commerce and the global economy and could have a material adverse\neffect on us and the customers, contract manufacturers, raw material vendors, and other partners. International trade disputes could result\nin tariffs and other protectionist measures which may materially and adversely affect the business.\n\n \n\nThere have also been concerns\nabout the relationship between the PRC and other countries, including the surrounding Asian countries, which may potentially have economic\neffects. In particular, there is significant uncertainty about the future relationship between the United States and the PRC with\nrespect to trade policies, treaties, government regulations and tariffs. Economic conditions in China are sensitive to global economic\nconditions, as well as changes in domestic economic and policies and the expected or perceived overall economic growth rate in China.\n\n \n\nIn February and March 2025,\nthe United States administration imposed an additional 20 percent duty on Chinese imports. Subsequently, authorities in China announced\ntariffs over selected United States products and regulatory investigation against United States companies in response to the tariff imposed\nby the United States. Furthermore, on April 2, 2025, President Trump announced that the United States would impose a 10% tariff on all\ncountries, effective on April 5, 2025, and an individualized reciprocal higher tariff on countries with which the United States has the\nlargest trade deficits, including a 34% additional reciprocal tariff on goods imported from China that brings the total tariff rate to\n54%. On April 4, 2025, the Foreign Ministry of China announced that China would impose a retaliatory 34% tariff on goods imported from\nthe United States. On April 8, 2025, President Trump announced to impose an additional 50% tariff on Chinese imports. The Trump administration\nproceeded to implement a 104% tariff on goods imported from China on April 9, 2025. Subsequently, on April 10, 2025, President Trump announced\na temporary suspension of reciprocal tariff measures targeting most U.S. trading partners for a 90-day period, while concurrently escalating\ntariffs on Chinese goods to 125%. These additional tariffs may increase our operating costs and create disruptions in our supply chain.\nAdditionally, the U.S. government continues to signal that it may alter trade agreements and terms between China and the United States,\nincluding limiting trade with China, and may impose additional tariffs on imports from China and other countries from which we import\ngoods.\n\n \n\nUncertainty surrounding international\ntrade disputes and the potential of the escalation to trade war and global recession could have a negative effect on customer confidence.\nWe may have also access to fewer business opportunities, and the operations may be negatively impacted as a result. In addition, the current\nand future actions or escalations by either the United States or the PRC that affect trade relations may cause global economic turmoil\nand potentially have a negative impact on our markets, the business, or our results of operations, as well as the financial condition\nof the clients, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.\n\n \n\n**Fluctuations in currency exchange rates\ncould have a material and adverse effect on the value of your investment.**\n\n \n\nOur revenue and expenses have\nbeen and are expected to continue to be primarily denominated in RMB, and we are exposed to the risks associated with the fluctuation\nin the currency exchange rate of RMB. Should RMB appreciate against other currencies, the value of the proceeds from any future financings,\nwhich are to be converted from US dollar or other currencies into RMB, would be reduced and might accordingly hinder the business development\ndue to the lessened amount of funds raised. On the other hand, in the event of the devaluation of RMB, the dividend payments of our Company,\nwhich are to be paid in US dollars after the conversion of the distributable profit denominated in RMB, would be reduced. Hence, substantial\nfluctuation in the currency exchange rate of RMB may have a material adverse effect on the business, operations and financial position\nand the value of your investment in the Class A Ordinary Shares.\n\n** **\n\n21\n\n \n\n**We may be subject to civil complaints and\nregulatory actions under certain laws and regulations relating to labor, social insurance and housing provident fund.**\n\n \n\nIn accordance with the PRC\nSocial Insurance Law and the Regulations on the Administration of Housing Fund and other relevant laws and regulations, the PRC has established\na social insurance system and other employee benefits, including basic pension insurance, basic medical insurance, work-related injury\ninsurance, unemployment insurance, maternity insurance, housing fund, and a handicapped employment security fund, or collectively the\n“Employee Benefits.” An employer is required to pay the Employee Benefits for its employees in accordance with the rates provided\nunder relevant regulations and to withhold the social insurance and other Employee Benefits that should be assumed by the employees. An\nemployer that has not made social insurance contributions at a rate and based on an amount prescribed by the law, or at all, may be ordered\nto rectify the non-compliance and pay the required contributions within a stipulated deadline and be subject to a late fee of up to 0.05%\nor 0.2% per day, as the case may be. If the employer still fails to rectify the failure to make social insurance contributions within\nthe stipulated deadline, it may be subject to a fine ranging from 1 to 3 times of the amount overdue.\n\n \n\nAlthough we have not received\nany order or notice from the local authorities nor any claims or complaints from our current and former employees regarding our non-compliance\nin this regard, we cannot assure you that we will not be subject to any order to rectify non-compliance in the future, nor can we assure\nyou that there are no, or will not be any, employee complaints regarding social insurance payment or housing provident fund contributions\nagainst us, or that we will not receive any claims in respect of social insurance payment or housing provident fund contributions under\nthe PRC laws and regulation.\n\n \n\n**There are withholding tax liabilities of\nour PRC subsidiaries under the PRC Enterprise Income Tax Law, and dividends payable by our PRC subsidiaries to our offshore subsidiaries\nmay not enjoy certain treaty benefits.**\n\n \n\nOur Operating Subsidiaries\nin the PRC generate all of our profits through their business operations. Under the PRC Enterprise Income Tax Law and its implementation\nrules, the profits of a foreign-invested enterprise generated through operations, which are distributed to its immediate holding company\noutside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and the PRC,\nsuch rate may be reduced to 5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in China company.\nOur current Operating Subsidiaries are majority-owned by our Hong Kong subsidiary, Hua Chen HK, through the intermediate holding\ncompany, Hua Chen WOFE. Accordingly, Hua Chen HK may qualify for a 5% tax rate in respect of distributions from the PRC subsidiaries.\nUnder the Notice of the State Administration of Taxation on Issues regarding the Administration of the Dividend Provision in Tax Treaties\npromulgated in 2009, the taxpayer needs to satisfy certain conditions to enjoy the benefits under a tax treaty. These conditions include:\n(i) the taxpayer must be the beneficial owner of the relevant dividends, and (ii) the corporate shareholder to receive dividends\nfrom the PRC subsidiary must have met the direct ownership thresholds during the 12 consecutive months preceding the receipt of the\ndividends. Further, the State Administration of Taxation (“SAT”) promulgated the Notice on How to Understand and Recognize\nthe “Beneficial Owner” in Tax Treaties in 2009, which limits the “beneficial owner” to individuals, enterprises\nor other organizations normally engaged in substantive operations, and sets forth certain detailed factors in determining “beneficial\nowner” status.\n\n \n\nEntitlement to a lower tax\nrate on dividends according to tax treaties or arrangements between the PRC central government and governments of other countries or regions\nis subject to the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, which provides that non-resident\nenterprises are not required to obtain pre-approval from the relevant tax authority to enjoy the reduced withholding tax. Instead, non-resident\nenterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty\nbenefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax\nfilings, which will be subject to post-tax filing examinations by the relevant tax authorities. As a result, we cannot assure you that\nwe will be entitled to any preferential withholding tax rate under treaties for dividends received from our PRC subsidiaries.\n\n \n\n22\n\n \n\n**You may be subject to PRC income tax on\ndividends from us or on any gain realized on the sale or other disposition of our shares under PRC law.**\n\n \n\nUnder the Enterprise Income\nTax (“EIT”) Law subject to any applicable tax treaty or similar arrangement between China and your jurisdiction of residence\nthat provides for a different income tax arrangement, PRC withholding tax at the rate of 10% is normally applicable to dividends from\nsources within China payable to investors that are non-PRC resident enterprises, which do not have an establishment or place of business\nin China, or which have such establishment or place of business if the relevant income is not effectively connected with the establishment\nor place of business. Any gain realized on the transfer of shares by such investors is subject to 10% PRC income tax if such gain is regarded\nas income derived from sources within China unless a treaty or similar arrangement otherwise provides. Under the PRC Individual Income\nTax Law and its implementation rules, dividends from sources within China paid to foreign individual investors who are not PRC residents\nare generally subject to a PRC withholding tax at a rate of 20%, and gains from PRC sources realized by such investors on the transfer\nof shares are generally subject to 20% PRC income tax, in each case, subject to any reduction or exemption set forth in applicable tax\ntreaties and PRC laws.\n\n \n\nAs all of our business operations\nare in China, it is unclear whether dividends we pay with respect to our shares, or the gain realized from the transfer of our shares,\nwould be treated as income derived from sources within China and as a result be subject to PRC income tax if we are considered a PRC resident\nenterprise. If PRC income tax is imposed on gains realized from the transfer of our Shares or on dividends paid to our non-PRC resident\ninvestors, the value of our investors’ investment in our Shares may be materially and adversely affected. Furthermore, our shareholders\nwhose jurisdictions of residence have tax treaties or arrangements with China may not qualify for benefits under such tax treaties or\narrangements.\n\n \n\nThe heightened scrutiny over\nacquisition transactions by the PRC tax authorities may have a negative impact on our business operations, our acquisition or restructuring\nstrategy or the value of your investment in us.\n\n \n\nPursuant to the Notice on\nStrengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises (“SAT Circular 698”)\nissued by the SAT in December 2009 with retroactive effect from January 1, 2008, where a nonresident enterprise transfers the equity interests\nof a PRC resident enterprise indirectly by disposition of the equity interests of an overseas non-public holding company (an “Indirect\nTransfer”), and such overseas holding company is located in a tax jurisdiction that (i) has an effective tax rate of less than 12.5%\nor (ii) does not impose income tax on foreign income of its residents, the non-resident enterprise, being the transferor, must report\nto the competent tax authority of the PRC resident enterprise this Indirect Transfer. Using a “substance over form” principle,\nthe PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was\nestablished for the purpose of reducing, avoiding or deferring PRC tax.\n\n \n\nOn March 28, 2011, the SAT\nreleased the SAT Public Notice (2011) No. 24 (“SAT Public Notice 24”), which became effective on April 1, 2011, to clarify\nseveral issues related to Circular 698. According to SAT Public Notice 24, the term “effective tax” refers to the effective\ntax on the gain derived from disposition of the equity interests of an overseas holding company; and the term “does not impose income\ntax” refers to the cases where the gain derived from disposition of the equity interests of an overseas holding company is not subject\nto income tax in the jurisdiction where the overseas holding company is a resident.\n\n \n\nOn February 3, 2015, the SAT\nissued (“SAT Circular 7”), which abolished certain provisions in SAT Circular 698, as well as certain other rules providing\nclarification on SAT Circular 698. SAT Circular 7 provided comprehensive guidelines relating to, and also heightened the PRC tax authorities’\nscrutiny over, indirect transfers by a nonresident enterprise of PRC taxable assets. Under SAT Circular 7, the PRC tax authorities are\nentitled to reclassify the nature of an indirect transfer of PRC taxable assets, when a non-resident enterprise transfers PRC taxable\nassets indirectly by disposing of equity interests in an overseas holding company directly or indirectly holding such PRC taxable assets,\nby disregarding the existence of such overseas holding company and considering the transaction to be a direct transfer of PRC enterprise\nincome taxes and without any other reasonable commercial purpose. However, SAT Circular 7 contains certain exemptions, including (i) where\na non-resident enterprise derives income from the indirect transfer of PRC taxable assets by acquiring and selling shares of an overseas\nlisted holding company which holds such PRC taxable assets on a public market; and (ii) where there is an indirect transfer of PRC taxable\nassets, but if the non-resident enterprise had directly held and disposed of such PRC taxable assets, the income from the transfer would\nhave been exempted from enterprise income tax in the PRC under an applicable tax treaty or arrangement.\n\n \n\n23\n\n \n\nOn October 17, 2017,\nthe STA promulgated the Announcement on Matters Concerning Withholding and Payment of Income Tax of Non-resident Enterprises from Source\n(the “STA Circular 37”), which came into force and replaced the STA Circular 698 and certain other regulations on December\n1, 2017 and partly amended on June 15, 2018. The STA Circular 37 does, among other things, simplify procedures of withholding and payment\nof income tax levied on non-resident enterprises.\n\n \n\nWe have conducted and may\nconduct acquisitions involving changes in corporate structures, and historically our shares were transferred by certain then shareholders\nto our current shareholders. We cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains\nand impose tax return filing obligations on us or require us to provide assistance for the investigation of PRC tax authorities with respect\nthereto. Any PRC tax imposed on a transfer of our Shares or any adjustment of such gains would cause us to incur additional costs and\nmay have a negative impact on the value of your investment in us.\n\n \n\n**PRC regulation of loans to and direct investment\nin PRC entities by offshore holding companies and governmental management of currency conversion may delay us from remitting the proceeds\nof our future offerings into China through loans or additional capital contributions to our PRC subsidiaries, thereby reducing our ability\nto fund and expand the business.**\n\n \n\nAny funds we transfer to our\nPRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with\nrelevant governmental authorities in China regardless of the amount of the transfer. According to the relevant PRC regulations on\nforeign investment entities (“FIEs”) in China, capital contributions to our PRC subsidiaries are subject to the filing\nwith the Ministry of Commerce of the PRC (“MOFCOM”) or their respective local branches and registration with a local bank\nauthorized by SAFE. In addition, (i) any foreign loan procured by our PRC subsidiaries is required to be registered with SAFE\nor their respective local branches and (ii) our PRC subsidiaries may not procure loans which exceed the difference between their\nrespective total project investment amount and registered capital or twice of their net worth. We may not be able to complete such registrations\nor obtain necessary approvals on a timely basis with respect to future capital contributions or foreign loans by us to our PRC subsidiaries.\nIf we fail to complete such registrations, our ability to use the proceeds of our continued offering, and to capitalize our PRC operations\nmay be negatively affected, which could adversely affect our liquidity and our ability to fund and expand the business.\n\n \n\nThe process for sending the\nproceeds from our future offerings back to China may take as long as six months after the closing of our future offerings. In utilizing\nthe proceeds of our future offerings, we may make additional capital contributions or loans to Hua Chen WFOE and our PRC subsidiaries.\nAny loans to Hua Chen WFOE or the PRC subsidiaries are subject to PRC regulations. For example, loans by us to our subsidiaries in China,\nwhich are foreign-invested enterprises, to finance their activities cannot exceed statutory limits and must be registered with SAFE.\n\n \n\nTo remit the proceeds of any\nfuture offerings, we must take the following steps:\n\n \n\n \n●\nFirst, we will open a special foreign exchange account for capital account transactions. To open this account, we must submit to SAFE certain application forms, identity documents, transaction documents, form of foreign exchange registration of overseas investments of the domestic residents, and foreign exchange registration certificate of the invested company. As of the date of this annual report, we have already opened a special foreign exchange account for capital account transactions.\n\n \n\n \n●\nSecond, we will remit the Offering proceeds into this special foreign exchange account.\n\n \n\n \n●\nThird, we will apply for settlement of the foreign exchange. In order to do so, we must submit to SAFE certain application forms, identity documents, payment order to a designated person, and a tax certificate.\n\n \n\n24\n\n \n\nWe may also decide to finance\nour subsidiaries by means of capital contributions. These capital contributions must be approved by MOFCOM or its local counterpart. We\ncannot assure you that we will be able to obtain these government approvals on a timely basis, if at all, with respect to future capital\ncontributions by us to our subsidiaries. If we fail to receive such approvals, our ability to use the proceeds of our future offerings\nand to capitalize our Chinese operations may be negatively affected, which could adversely affect our liquidity and our ability to fund\nand expand the business. If we fail to receive such approvals, our ability to use the proceeds of our future offerings and to capitalize\nour Chinese operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand the business.\n\n \n\nOn March 30, 2015, the\nSAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested\nEnterprises, (“SAFE Circular 19”), which took effect as of June 1, 2015. SAFE Circular 19 launched a nationwide\nreform of the administration of the settlement of the foreign exchange capitals of FIEs and allows FIEs to settle their foreign exchange\ncapital at their discretion but continues to prohibit FIEs from using the RMB fund converted from their foreign exchange capital for expenditure\nbeyond their business scopes, providing entrusted loans or repaying loans between nonfinancial enterprises. The SAFE issued the Circular\non Reforming and Regulating Policies on the Supervision over Foreign Exchange Settlement of Capital Accounts, (“SAFE Circular 16”),\neffective in June 2016. Pursuant to SAFE Circular 16, enterprises registered in China may also convert their foreign debts from\nforeign currency to RMB on a self-discretionary basis. SAFE Circular 16 provides an integrated standard for conversion of foreign exchange\nunder capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis which\napplies to all enterprises registered in China. SAFE Circular 16 reiterates the principle that RMB converted from foreign currency-denominated\ncapital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations,\nwhile such converted RMB will not be provided as loans to its non-affiliated entities. As Circular 16 is relatively new, there remains\nuncertainty as to its interpretation and application and any other future foreign exchange related rules. Violations of these circulars\ncould result in severe monetary or other penalties. SAFE Circular 19 and SAFE Circular 16 may supervise our ability to use Renminbi\nconverted from the net proceeds of our future offerings and our concurrent private placement, to invest in or acquire any other PRC companies\nthrough our PRC subsidiaries.\n\n \n\n**Acquisitions of Chinese companies by foreign\ninvestors may need a series of procedures, which could make it rather difficult for us to pursue growth through acquisitions in China.**\n\n \n\nThe Regulations on Mergers\nand Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rule, adopted by six PRC regulatory agencies in August 2006\nand amended in 2009, and some other regulations and rules concerning mergers and acquisitions established additional procedures and requirements\nthat could make merger and acquisition activities by foreign investors more time consuming and complex, including requirements in some\ninstances that the MOC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC\ndomestic enterprise. For example, the M&A Rule require that MOFCOM be notified in advance of any change-of-control transaction in\nwhich a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction\ninvolves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a\ndomestic enterprise which holds a famous trademark or PRC time-honored brand. Moreover, the Anti-Monopoly Law promulgated by the SCNPC\neffective in 2008 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds (i.e.,\nduring the previous fiscal year, (i) the total global turnover of all operators participating in the transaction exceeds RMB10 billion\nand at least two of these operators each had a turnover of more than RMB400 million within China, or (ii) the total turnover within China\nof all the operators participating in the concentration exceeded RMB 2 billion, and at least two of these operators each had a turnover\nof more than RMB 400 million within China) must be cleared by MOFCOM before they can be completed.\n\n \n\nMoreover, the Anti-Monopoly\nLaw requires that the MOC shall be notified in advance of any concentration of undertaking if certain thresholds are triggered. In addition,\nthe security review rules issued by the MOC that became effective in September 2011 specify that mergers and acquisitions by foreign investors\nthat raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire\nde facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOC,\nand the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy\nor contractual control arrangement. In the future, we may grow the business by acquiring complementary businesses. Complying with the\nrequirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any\nrequired approval processes, including obtaining approval from the MOC or its local counterparts may delay or inhibit our ability to complete\nsuch transactions, which could affect our ability to expand the business or maintain our market share.\n\n \n\n25\n\n \n\n**If we are classified as a PRC resident enterprise\nfor PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.**\n\n \n\nUnder the PRC Enterprise Income\nTax Law and its implementation rules, an enterprise established outside of the PRC with its “de facto management body”\nwithin the PRC is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income\nat the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full\nand substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In\n2009, the SAT issued a circular, known as SAT Circular 82, partially abolished on December 29, 2017, which provides certain specific\ncriteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore\nis located in China. Although this circular applies only to offshore enterprises controlled by PRC enterprises or PRC enterprise\ngroups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general\nposition on how the “de facto management body” text should be applied in determining the tax resident status of all offshore\nenterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group\nwill be regarded as a PRC tax resident by virtue of having its “de facto management body” in China, and will be\nsubject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location\nof the day-to-day operational management is in China; (ii) decisions relating to the enterprise’s financial and human\nresource matters are made or are subject to approval by organizations or personnel in China; (iii) the enterprise’s primary\nassets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in China; and\n(iv) at least 50% of voting board members or senior executives habitually reside in China.\n\n \n\nWe believe that, as a Cayman\nIslands exempted company, Huachen Cayman is not a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an\nenterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term\n“de facto management body.” If the PRC tax authorities determine that our company is a PRC resident enterprise for enterprise\nincome tax purposes, we would be subject to PRC enterprise income on our worldwide income at the rate of 25%. Furthermore, we would be\nrequired to withhold a 10% tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our\nClass A Ordinary Shares. In addition, non-resident enterprise shareholders may be subject to PRC tax on gains realized on the sale or\nother disposition of the Class A Ordinary Shares, if such income is treated as sourced from within the PRC. Furthermore, if we are\ndeemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders and any gain realized on the transfer of the Class\nA Ordinary Shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may be withheld at\nsource by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders of our company would\nbe able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated\nas a PRC resident enterprise. Any such tax may reduce the returns on your investment in our Class A Ordinary Shares.\n\n** **\n\n**We face uncertainty with respect to indirect\ntransfers of equity interests in PRC resident enterprises by their non-PRC holding companies.**\n\n \n\nOn February 3, 2015,\nthe SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident\nEnterprises, or SAT Bulletin 7. SAT Bulletin 7 extends its tax jurisdiction to transactions involving the transfer of taxable assets through\noffshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 has introduced safe harbors for internal group\nrestructurings and the purchase and sale of equity through a public securities market. SAT Bulletin 7 also brings challenges to both foreign\ntransferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets, as such persons need to determine\nwhether their transactions are subject to these rules and whether any withholding obligation applies.\n\n \n\nOn October 17, 2017,\nthe SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise\nIncome Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice\nand procedure of the withholding of non-resident enterprise income tax.\n\n** **\n\n26\n\n \n\nWhere a non-resident enterprise\ntransfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer,\nthe non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such\nindirect transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax authority may disregard\nthe existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing,\navoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and\nthe transferee or other person who pays for the transfer is obligated to withhold the applicable taxes currently at a rate of 10% for\nthe transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under\nPRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.\n\n \n\nWe face uncertainties as to\nthe reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring,\nsale of the Class A Ordinary Shares in our offshore subsidiaries and investments. Our company may be subject to filing obligations or\nmay be taxed if our company is a transferor in such transactions and may be subject to withholding obligations if our company is a transferee\nin such transactions, under SAT Bulletin 7 and/or SAT Bulletin 37. For transfers of Class A Ordinary Shares of our company by investors\nwho are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under SAT Bulletin 7 and/or SAT Bulletin\n37. As a result, we may be required to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the relevant transferors from whom\nwe purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars,\nwhich may have a material adverse effect on our financial condition and results of operations.\n\n** **\n\n**Increase in labor costs in PRC may affect\nthe business and operations.**\n\n \n\nThe current Labor Law of the\nPRC was first adopted on July 5, 1994 and subsequently amended on August 27, 2009 and December 29, 2018. The Labor Law of the PRC provides\nthe restrictions on and increase of costs for dismissal of employees and establishes a system of guaranteed minimum wage. Over the past\ndecade, as the Chinese economy has rapidly grown, the minimum wage standards have been increased. To the extent that we require some labor,\nhigher labor costs could prevent us from being able to provide services efficiently and economically, which could have a negative impact\non the operations. In addition, Chinese regulatory authorities have stepped up their enforcement and oversight of labor and social security,\nand if we are in breach of the rules, it will result in increased operating expenses.\n\n \n\nWe expect the labor costs,\nincluding wages and benefits, to continue to increase. Unless we are able to pass along these increased labor costs to our buyers by raising\nthe prices of the products and services, our financial condition and results of operations will be materially adversely affected.\n\n** **\n\n**We may be exposed to liabilities under the\nForeign Corrupt Practices Act and Chinese anti-corruption law.**\n\n \n\nIn connection with our future\nofferings, we will become subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”), and other laws that prohibit\nimproper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers\nas defined by the statute for the purpose of obtaining or retaining business. We are also subject to Chinese anti-corruption laws, which\nstrictly prohibit the payment of bribes to government officials. We have operations agreements with third parties, and make sales in China,\nwhich may experience corruption.\n\n \n\nAlthough we believe, to date,\nwe have complied in all material respects with the provisions of the FCPA and Chinese anti-corruption law, our existing safeguards and\nany future improvements may prove to be less than effective, and the employees, consultants, or distributors may engage in conduct for\nwhich we might be held responsible. Violations of the FCPA or Chinese anti-corruption law may result in severe criminal or civil sanctions,\nand we may be subject to other liabilities, which could negatively affect the business, operating results and financial condition. In\naddition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we\ninvest or that we acquire.\n\n \n\n27\n\n \n\n**Risks Related to the Business and Operations**\n\n** **\n\n**We may not successfully implement our strategic\ntransition from smart parking solutions and equipment structural parts to electric vehicle charging infrastructure.**\n\n \n\nWe have historically operated as a smart parking\nsolutions and equipment structural parts provider in China, with business activities including smart cubic parking garage design, manufacturing,\nsales, installation and maintenance, as well as the sale of equipment structural parts. We are currently undertaking a significant strategic\ntransition away from our historical smart parking business and toward the development and operation of charging infrastructure and operating\nplatforms for new-energy two-wheeled vehicles and electric vehicles.\n\n \n\nThis transition involves substantial changes to\nour business model, operating structure, technology requirements, capital needs, customer base, regulatory exposure and competitive environment.\nOur historical experience in smart parking and equipment structural parts may not translate into the capabilities required to develop,\noperate and scale an electric vehicle charging business. The electric vehicle charging business may require us to develop new expertise\nin site selection, charging equipment procurement, installation, electricity supply, grid connection, fire and electrical safety, charging\nplatform operation, user acquisition, payment systems, data management, maintenance and regulatory compliance.\n\n \n\nIf we are unable to successfully execute this\ntransition, develop the necessary operational and technical capabilities, attract users, secure suitable locations, achieve sufficient\nutilization of charging infrastructure, or manage the costs and risks associated with the electric vehicle charging business, our business,\nfinancial condition and results of operations could be materially and adversely affected.\n\n \n\n**Changes in the availability, quality and\ncost of key raw materials and other necessary supplies or services could have a material adverse effect on our business, financial condition\nand results of operations.**\n\n** **\n\nWe are exposed to fluctuations\nin the prices of raw materials, transportation, and other necessary supplies or services due to factors beyond our control, such as policies,\ninflation, fluctuations in currency exchange rates, changes in weather, or changes in the supply and demand for such relevant raw materials,\nas a trade and agency entity, our margins are sensitive to volatility in global steel and specialized metal prices. Therefore, it could\nresult in higher costs for our principal business if prices of our key raw materials increase in the future. We may not be able to offset\nthe price increases by increasing our product prices, in which case our margins would decline, and our financial condition and results\nof operations could be materially and adversely affected. In addition, if we significantly increase the prices of our products, we may\nlose our competitive advantage. This in turn could result in a loss of sales and customers. In either case, our business, financial condition,\nand results of operations could be materially and adversely affected.\n\n \n\n**Our transition into electric vehicle charging\ninfrastructure is at an early stage, and we may not generate sufficient revenue to offset the decline or disposition of our historical\nsmart parking business.**\n\n** **\n\nOur electric vehicle charging business is newly\ncommenced and has a limited operating history. We have not yet demonstrated that we can generate meaningful revenue, cash flow or profitability\nfrom the development and operation of charging infrastructure and operating platforms. Our historical financial results were primarily\nderived from smart parking solutions, equipment structural parts and related maintenance services, and may not be indicative of our future\nresults as we transition into electric vehicle charging infrastructure.\n\n \n\nAs we shift away from our historical businesses,\nwe may experience a decline in revenue from smart parking solutions, maintenance services and equipment structural parts before our electric\nvehicle charging business generates sufficient revenue to replace such decline. Our transition may also require substantial upfront investment\nin charging equipment, site development, platform development, personnel, maintenance, compliance and marketing. If our electric vehicle\ncharging business does not develop as expected, or if it takes longer than anticipated to achieve commercial scale, our revenue, profitability,\nliquidity and growth prospects could be materially and adversely affected.\n\n \n\n28\n\n \n\n**We may depend on third-party manufacturers,\nsuppliers, contractors, platform vendors and service providers in our electric vehicle charging business and remaining equipment structural\nparts and metal products business.**\n\n** **\n\nAs we transition away from our historical smart\nparking business and toward electric vehicle charging infrastructure, we may increasingly depend on third-party manufacturers, suppliers,\ncontractors, platform vendors and service providers to support both our new charging business and our remaining equipment structural parts\nand metal products business. These third parties may provide charging equipment, electrical components, equipment structures, metal products,\ninstallation services, grid connection services, software development, payment processing, network connectivity, maintenance, customer\nsupport, fire safety compliance and other services necessary to our operations.\n\n \n\nFollowing our transition to a more asset-light\nbusiness model, we may rely heavily on third-party manufacturers and suppliers to fulfill orders and support project deployment. Any operational\ndisruptions, financial instability, labor shortages, capacity constraints, raw material shortages, quality control failures, equipment\ndefects, delivery delays or compliance issues at these third-party facilities could lead to project delays, increased costs, customer\ndissatisfaction, safety incidents, regulatory scrutiny or reputational damage.\n\n \n\nWe may not be able to promptly replace such manufacturers,\nsuppliers, contractors or service providers on commercially reasonable terms, or at all. In addition, if third-party charging equipment,\nelectrical components, platform systems or installation services fail to meet applicable quality, safety or performance standards, we\nmay be required to incur additional costs to repair, replace or upgrade equipment, suspend operations at affected sites, compensate customers\nor site partners, or respond to regulatory inquiries or claims. Any such event could materially and adversely affect our business, financial\ncondition and results of operations.\n\n \n\n**We are exposed to risks associated with\nthe transportation of the products we sell.**\n\n \n\nWe load products from our\nwarehouses and provide transportation service until our products are delivered to our customers. However, in the event of such an accident\nresulting in damage to the products we sell in transit, our ability to supply the products could be adversely affected. We may need rework\nand repair our products. The occurrence of any such event could also require us to make significant capital expenditures beyond those\nanticipated and delay product deliveries which may lead to customer claims. The sales we may lose or the increased costs we may incur\nas a result of such operational disruptions and delays in delivery may not be recoverable under existing policies, and long-term business\ninterruptions may result in the loss of end customers. If any one or more of these risks were to occur, our business, financial condition,\nresults of operations and prospects could be materially and adversely affected.\n\n** **\n\n**Any quality problems associated with our\nproducts may result in loss of customers and sales, and we may face product liability claims if the problems are related to our products.**\n\n \n\nThe success of our business\ndepends on the continued delivery of quality and reliable products. We cannot assure you that our quality controls will be effective at\nall times, and we may face returns or cancellation of orders and customer complaints if the quality of any of our products deteriorates\nfor any reason, or if consumers believe that our products do not deliver the claimed results.\n\n \n\nIn addition, if our products\nare defective or adversely affect the overall cause of consumer property damage or personal injury, we may be subject to product liability\nclaims or product recalls that could cause financial and reputational harm. Even if we ultimately prevail, we may be required to incur\nsubstantial costs in defending such legal claims. In addition, consumers’ perception of our products and their willingness to purchase\nthem may be adversely affected, regardless of whether the quality problems are related to us. Accordingly, any actual or known quality\nproblems associated with our products could have a material adverse effect on our business, financial condition, results of operations,\nand prospects.\n\n \n\n29\n\n \n\n**Our business is subject to risks generally\nassociated with the electric vehicle charging industry, and we may not successfully monetize value-added services in this new business\nline.**\n\n \n\nAs part of our strategic transition away from\nour historical smart parking business, we have begun to enter the electric vehicle charging industry, including the development and operation\nof charging infrastructure and related operating platforms for new-energy two-wheeled vehicles and electric vehicles. Our strategic focus\nin this business includes accelerating profit growth and identifying opportunities for value-added service monetization, including through\ncharging services, platform-based services, user traffic, data-driven services, advertising and other commercial applications. However,\nour electric vehicle charging business is newly commenced, and there can be no assurance that we will be able to successfully develop,\noperate or monetize these services.\n\n \n\nThe success of our electric vehicle charging business\nwill depend significantly on the development and health of the electric vehicle charging industry. We are therefore exposed to industry-related\nrisks, including changes in electric vehicle adoption rates, user charging habits, demand for new-energy two-wheeled vehicle charging,\navailability of competing charging or battery-swapping solutions, charging station utilization rates, electricity prices, site availability,\ntechnological changes, equipment reliability, platform stability, customer preferences, safety requirements and government policies or\nregulations. Many of these factors are difficult to predict and beyond our control.\n\n \n\nIn addition, because we are transitioning from\nsmart parking solutions and equipment structural parts to electric vehicle charging infrastructure, we may face execution risks that are\nmore significant than those faced by companies with a longer operating history in the charging industry. We may not be able to attract\nsufficient users, secure suitable sites, maintain reliable charging infrastructure, price our services competitively, or generate meaningful\nrevenue from value-added services. If utilization of our charging infrastructure or user engagement with our operating platforms is lower\nthan expected, our ability to recover our upfront investment and generate profit from this business may be materially limited.\n\n \n\nOur electric vehicle charging business may also\nbe affected by general economic and market conditions, including inflation, slower economic growth, unemployment levels, interest rates,\nenergy prices, reduced consumer confidence, reduced discretionary spending, disruptions in the property and mobility sectors, and geopolitical\nor other macroeconomic uncertainty. These conditions could reduce demand for electric vehicles, charging services, platform-based services\nor advertising and other value-added services. Any adverse developments in the electric vehicle charging industry or broader economic\nenvironment could materially and adversely affect our business, financial condition and results of operations.\n\n \n\n**We may be exposed to counterparty credit\nrisks and long payment cycles during and after our business transition.**\n\n** **\n\nOur historical businesses have involved significant\ncontract values and customer payment cycles, and our new electric vehicle charging business may involve receivables from users, commercial\ncustomers, site partners, property owners, platform participants, equipment purchasers or other counterparties. If counterparties delay\npayment, dispute invoices, experience liquidity issues or default on their obligations, our cash flow and working capital could be adversely\naffected.\n\n \n\nWe may be required to record\nallowances for credit losses, write off receivables, or incur additional costs to collect amounts owed to us. Payment delays or defaults\nmay be particularly harmful during our transition period because we may need to fund upfront costs for our charging infrastructure business\nwhile revenue from historical business lines declines. Any material payment delays, defaults or disputes could materially and adversely\naffect our financial condition and results of operations.\n\n \n\n**We may not achieve sufficient utilization\nof our electric vehicle charging infrastructure.**\n\n** **\n\nThe success of our electric\nvehicle charging business will depend in part on the utilization rates of our charging infrastructure. Utilization may be affected by\nEV adoption rates, adoption of new-energy two-wheeled vehicles, user charging habits, location quality, charging speed, charging prices,\nequipment reliability, payment convenience, competition, access to home or workplace charging, availability of battery-swapping services,\nlocal traffic patterns, electricity prices and user confidence in the safety and reliability of charging facilities.\n\n \n\nIf utilization of our charging\ninfrastructure is lower than expected, we may be unable to recover our investment in charging equipment, installation, platform development,\nmaintenance, site access, marketing and operations. Low utilization could also make it more difficult to secure additional sites, attract\nfinancing, negotiate favorable commercial arrangements or expand our platform. Any failure to achieve sufficient utilization could materially\nand adversely affect our business, financial condition and results of operations.\n\n** **\n\n30\n\n** **\n\n**We may be unable to secure suitable sites,\nvenue resources, electrical capacity or approvals for electric vehicle charging infrastructure.**\n\n** **\n\nThe development and operation\nof electric vehicle charging infrastructure requires access to suitable locations with sufficient user demand, available parking or stopping\nspace, electrical capacity, grid access, safety conditions and commercially acceptable terms. We may need to coordinate with property\nowners, parking lot operators, landlords, property managers, utility providers, local communities, government authorities and other third\nparties to obtain site access, electrical upgrades, grid connections, construction approvals, fire safety clearances and other permits\nor consents.\n\n \n\nWe may not be able to secure\nsuitable sites on commercially reasonable terms or at all. Certain sites may require electrical upgrades, grid modifications or construction\nwork that is costly, time-consuming or technically difficult. We may also face delays or restrictions due to landlord objections, property\nmanagement rules, local government approvals, grid capacity limitations, fire safety requirements or changes in applicable laws and policies.\nIf we are unable to secure or retain suitable sites or obtain required approvals in a timely and cost-effective manner, our ability to\nexpand our electric vehicle charging business could be materially and adversely affected.\n\n** **\n\n**We may incur substantial\ncosts before our electric vehicle charging business generates meaningful revenue or cash flow.**\n\n** **\n\nThe electric vehicle charging\nbusiness may require substantial upfront investment in charging equipment, electrical infrastructure, site preparation, installation,\noperating platforms, software systems, maintenance, personnel, insurance, marketing, regulatory compliance and customer support. These\ncosts may be incurred before the relevant charging infrastructure generates meaningful utilization, revenue or cash flow.\n\n \n\nOur costs may exceed our expectations\ndue to inflation, equipment shortages, supply chain disruptions, labor shortages, site-specific installation challenges, electricity infrastructure\nrequirements, changes in technical standards, regulatory requirements, maintenance needs or higher electricity costs. We may not be able\nto recover these costs through charging fees, platform service fees, revenue-sharing arrangements or other income. If our costs are higher\nthan expected or revenue develops more slowly than anticipated, our liquidity, financial condition and results of operations could be\nmaterially and adversely affected.\n\n** **\n\n**Our electric vehicle\ncharging operating platforms may experience outages, defects, cybersecurity incidents, payment failures or data compliance issues.**\n\n** **\n\nOur electric vehicle charging\nbusiness is expected to involve the development and operation of charging infrastructure and related operating platforms. These platforms\nmay include user interfaces, remote monitoring, payment processing, pricing functions, data analytics, customer accounts, maintenance\nmanagement and other digital tools. Any software defect, system outage, network interruption, payment processing failure, cybersecurity\nincident, data loss or platform instability could disrupt charging services and negatively affect customer experience.\n\n \n\nIn addition, the operation\nof charging platforms may involve the collection, storage, processing and analysis of user, vehicle, payment, location, charging behavior\nand electricity consumption data. We may be subject to cybersecurity, data privacy, consumer protection and related regulatory requirements\nin the PRC and other jurisdictions in which we may operate. If we fail to protect user data, comply with applicable cybersecurity and\ndata protection laws, or maintain reliable platform operations, we may face regulatory investigations, penalties, litigation, reputational\nharm and increased compliance costs.\n\n** **\n\n**We may be subject to fire safety, electrical\nsafety, product liability, personal injury and property damage risks in connection with our electric vehicle charging business.**\n\n** **\n\nElectric vehicle charging\ninfrastructure involves inherent electrical and fire safety risks, particularly where charging facilities are installed in residential\ncommunities, commercial properties, parking lots, garages, public areas or other high-density locations. Safety incidents may arise from\nequipment defects, improper installation, inadequate maintenance, electrical faults, grid instability, user misuse, battery defects, weather\nconditions, vandalism or third-party actions.\n\n \n\nAny actual or alleged safety\nincident, even if not caused by us, could result in personal injury, property damage, regulatory investigations, lawsuits, customer claims,\ninsurance claims, equipment recalls, site shutdowns, increased insurance premiums, loss of site partners, reputational harm or reduced\ncustomer confidence. We may also be required to incur significant costs to inspect, repair, replace or upgrade charging equipment. Any\nsuch incident could materially and adversely affect our business, financial condition and results of operations.\n\n \n\n31\n\n \n\n**If the Operating Subsidiaries fail to improve\nour services to keep up with the rapidly changing demands, preferences, electric vehicle charging trends, or technologies in the electric\nvehicle charging industry, our revenue and growth could be adversely affected.**\n\n \n\nWe consider the electric vehicle\ncharging industry to be dynamic, as the Operating Subsidiaries face (i) constant changes in customers’ interests, preferences, and\nreceptiveness over different electric vehicle charging designs, (ii) evolution of the needs of electric vehicle charging in response to\nshifts in their business needs and marketing strategies, and (iii) innovations in technologies developed in this industry. As a result,\nthe Operating Subsidiaries’ success depends not only on their ability to offer creative of electric vehicle charging designs, deliver\nhigh-quality electric vehicle charging equipment, and provide efficient maintenance services, but also on their abilities to adapt to\nrapidly changing electric vehicle charging trends and technologies to enhance the quality of existing products and services and to develop\nand introduce advanced electric vehicle charging technologies and solutions to address customers’ changing demands.\n\n \n\nAdditionally, the markets for\nelectric vehicle charging infrastructure, new-energy two-wheeled vehicle charging and charging operating platforms are highly competitive\nand rapidly evolving. We may compete with charging network operators, battery-swapping operators, utilities, energy companies, property\nmanagement technology companies, parking operators, EV manufacturers, software platform providers and other smart city infrastructure\nproviders. Some of our competitors may have greater financial resources, more advanced technology, stronger operating experience, better\naccess to sites, stronger relationships with local governments or property owners, larger user bases, lower electricity procurement costs\nor more established brands. Competitive pressures may require us to reduce service fees, offer more favorable commercial terms to site\npartners, increase capital investment, subsidize users, accelerate network deployment, or incur higher marketing and technology costs.\nIf we are unable to compete effectively, differentiate our charging infrastructure and operating platforms, maintain competitive pricing,\nor respond to technological and market changes, our business, financial condition and results of operations could be materially and adversely\naffected.\n\n \n\n**Changes in electricity prices, electricity\nsupply, utility policies or energy regulations may adversely affect our electric vehicle charging business.**\n\n \n\nElectricity costs are expected\nto be a significant component of the operating costs of our electric vehicle charging business. Our ability to generate profits may depend\non the difference between electricity procurement costs and the fees charged to users. Electricity prices, demand charges, grid connection\ncosts, peak-hour pricing, utility tariffs, taxes, subsidies and local energy policies may change from time to time.\n\n \n\nIf electricity prices or grid\nconnection costs increase, or if applicable regulations restrict the pricing, operation or profitability of charging services, we may\nnot be able to pass these increased costs on to users without reducing demand. In addition, limited grid capacity, power outages, energy\nrationing, local permitting constraints or changes in utility policies may delay or limit our ability to deploy or operate charging infrastructure.\nAny of these factors could materially and adversely affect our margins and results of operations.\n\n** **\n\n**The efforts and investments in technology\ndevelopment may not always produce the expected results.**\n\n \n\nThe Operating Subsidiaries\nare continually developing and seeking to develop technologies that are closely related to virtual technology that will be used in the\nservices. As of the date of this annual report, the core research and development team consisted of a total of 3 employees. The research\nand development (“R&D”) team has been working on developing proprietary communication protocols for charging equipment\nand charging platform. However, we cannot assure you that the future efforts to develop related technologies will be successful, in which\ncase the products may lose their competitive edge.\n\n \n\nIn addition, we cannot assure\nyou that the technologies the Operating Subsidiaries develop will be well accepted by customers, in which case the business, financial\ncondition, results of operations and prospects may be materially and adversely affected.\n\n \n\n32\n\n \n\n**The success of our business depends on the\ncontinuing efforts of the senior management and key employees of the Operating Subsidiaries.**\n\n \n\nThe future success of our\nbusiness is significantly dependent upon the continued service of the senior management and other key employees of the Operating Subsidiaries.\nIf we lose their service, the Operating Subsidiaries may not be able to locate suitable or qualified replacements and may incur additional\nexpenses to recruit and train new staff, which could severely disrupt the business and growth. The founder, Chief Executive Officer, Director\nand Chairman of the Board of the Company, Mr. Bin Lu, and other management members are critical to our vision, strategic direction,\nculture and overall business success. If there is any internal organizational structure change or change in responsibilities for the management\nor key personnel, or if one or more of the senior management members are unable or unwilling to continue in their present positions, the\noperation of the business and the business prospects may be adversely affected. The employees, including members of the management, may\nchoose to pursue other opportunities. If the Operating Subsidiaries are unable to motivate or retain key employees, the business may be\nseverely disrupted, and the prospects could suffer. In addition, although the Operating Subsidiaries have entered into confidentiality\nand non-competition agreements with our management, there is no assurance that the management members would not join the competitors or\nform a competing business. Suppose any dispute arises between the current or former officers and the Operating Subsidiaries. In that case,\nthe Operating Subsidiaries may have to incur substantial costs and expenses in order to enforce such agreements in China or the Operating\nSubsidiaries may not be able to enforce them at all.\n\n \n\n**The Operating Subsidiaries are expanding\nfast. If the Operating Subsidiaries are unable to recruit, train and retain talents, the business may be materially and adversely affected.**\n\n \n\nThe Operating Subsidiaries\nare expanding fast. Although the Operating Subsidiaries have adopted assembly line, the Operating Subsidiaries still face the risk of\nlosing key talents in the future. We believe the future success depends on our continued ability to attract, develop, motivate, and retain\nqualified and skilled employees. Competition for personnel with expertise in virtual technology, digital marketing, and digital asset\ndevelopment is extremely intense in China. The Operating Subsidiaries may not be able to hire and retain these personnel at compensation\nlevels consistent with the existing compensation and salary structure. Some of the companies with which the Operating Subsidiaries compete\nfor experienced employees have greater resources than the Operating Subsidiaries have and may be able to offer more attractive terms of\nemployment. In addition, the Operating Subsidiaries invest significant time and resources in training the employees, which increases their\nvalue to competitors who may seek to recruit them. If the Operating Subsidiaries fail to retain our employees, the Operating Subsidiaries\ncould incur significant expenses in hiring and training new employees, and the ability to serve users and business partners could diminish,\nresulting in a material adverse effect on the business.\n\n \n\n**We expect fluctuations in our financial\nresults, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with\nrespect to our results of operations, our share price and the value of your investment could decline.**\n\n \n\nOur results of operations\nhave fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our\ncontrol. As a result, our past results may not be indicative of our future performance. In addition to the other risks described herein,\nfactors that may affect our results of operations include the following:\n\n \n\n \n●\nfluctuations in demand for our electric vehicle charging solutions and equipment structural parts;\n\n \n\n \n●\nincreases in marketing, sales, and other operating expenses that we may incur to grow and expand the operations and to remain competitive;\n\n \n\n \n●\nthe ability to successfully expand our business and penetrate key demographics;\n\n \n\n \n●\nthe ability to maintain operating margins, cash used in operating activities, and free cash flow;\n\n \n\n \n●\nadverse litigation judgments, settlements, or other litigation and dispute-related costs;\n\n \n\n \n●\nchanges in the legislative or regulatory environment, including with respect to privacy and data protection, consumer protection, and user-uploaded content, or enforcement by government regulators, including fines, orders, or consent decrees;\n\n \n\n33\n\n \n\n \n●\nfluctuations in currency exchange rates and changes in the proportion of our revenue, bookings and expenses denominated in foreign currencies;\n\n \n\n \n●\nfluctuations in the market values of our portfolio investments and interest rates or impairments of any assets on our balance sheet;\n\n \n\n \n●\nchanges in our effective tax rate;\n\n \n\n \n●\nchanges in accounting standards, policies, guidance, interpretations, or principles; and\n\n \n\n \n●\nchanges in domestic and global business or macroeconomic conditions.\n\n \n\nAny of these and other factors,\nor the cumulative effect of some of these factors, may cause our results of operations to vary significantly. If our results of operations\nfall below the expectations of investors and securities analysts who follow our securities, the price of our Class A Ordinary Shares could\ndecline substantially, and we could face costly lawsuits, including securities class action suits.\n\n \n\n**The business is highly dependent on the\nbrand strength and reputation, and if the Operating Subsidiaries fail to maintain and enhance the brand and reputation, consumer recognition\nof and trust in the services could be materially and adversely affected.**\n\n \n\nThe brand recognition and\nreputation of our “Huachen” brand and the successful maintenance and enhancement of the brand and reputation have contributed\nand will continue to contribute significantly to our success and growth.\n\n \n\nThe Operating Subsidiaries\nrely heavily on our brand strength and reputation in the promotion and sale of the services. We believe that consumers recognize the corporate\nbrand and the product brands for the product quality and reliability. However, customer complaints and accidents in relation to the quality\nof services, including inappropriate behavior, intellectual property infringement or negative publicity, or media coverage, may damage\nthe brand and reputation. Any negative claims against the Operating Subsidiaries, even if unethical or unsuccessful, could distract our\nmanagement’s attention and other resources from our day-to-day business operations, adversely affecting the business, operations\nresults, and financial condition. Negative media coverage and resulting negative publicity of the services could result in a material\nadverse effect on customers’ acceptance of and trust in the Operating Subsidiaries and the services.\n\n \n\nFurther, the competitors may\nfabricate complaints or negative publicity about the brand for the purpose of vicious competition. With the increased use of social networks,\nadverse publicity can be disseminated quickly and broadly, making it increasingly difficult for the Operating Subsidiaries to respond\nand mitigate effectively. In addition, adverse publicity regarding any regulatory or legal action against the Operating Subsidiaries could\ndamage the reputation and brand image, undermine customers’ confidence and reduce long-term demand for the services, even if such\nregulatory or legal action is unfounded or insignificant to the business.\n\n \n\n**Regulatory actions, legal proceedings and\ncustomer complaints against us could harm our reputation and have a material adverse effect on our business, results of operations, financial\ncondition and prospects. Our directors, management, shareholders and employees may also from time to time be subject to legal proceedings,\nwhich could adversely affect our reputation and results of operations.**\n\n** **\n\nAlong with growth and expansion\nof our business, we may be involved in litigation, regulatory proceedings and other disputes arising in or outside the ordinary course\nof our business. In general, such litigation and disputes may result in claims for actual damages, freezing of our assets, diversion of\nour management’s attention and reputational damage to us and our management, and the probability and amount of liability, if any,\nmay remain unknown for long periods of time. Given the uncertainty, complexity and scope of many of these litigation matters, their outcome\ngenerally cannot be predicted with any reasonable degree of certainty. Moreover, even if we eventually prevail in these matters, we could\nincur significant legal fees or suffer significant reputational harm, which may negatively affect our operating results if changes to\nour business operations are required. There may also be negative publicity associated with litigation that could decrease consumer acceptance\nof our product offerings, regardless of whether the allegations are valid or whether we are ultimately found liable. In addition, our\ndirectors, management, shareholders and employees may from time to time be subject to litigation, regulatory investigations, proceedings\nand/or negative publicity or otherwise face potential liability and expense in relation to commercial, labor, employment, securities or\nother matters, which could adversely affect our reputation and results of operations. As a result, litigation may adversely affect our\nbusiness, financial condition, results of operations or liquidity.\n\n \n\n34\n\n \n\n**The Operating Subsidiaries may fail to make\nnecessary or desirable strategic alliances, acquisitions, or investments, and we may not be able to achieve the benefits we expect from\nthe alliances, acquisitions, or investments we make.**\n\n \n\nThe Operating Subsidiaries\nmay pursue selected strategic alliances and potential strategic acquisitions that are supplemental to the business and operations, including\nopportunities that can help further expand the product and service offerings and improve the technology system. However, strategic alliances\nwith third parties could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance\nor default by counterparties, and increased expenses in establishing these new alliances, any of which may materially and adversely affect\nthe business. In addition, the Operating Subsidiaries may have limited ability to control or monitor the actions of the strategic partners.\nTo the extent a strategic partner suffers any negative publicity due to its business operations, the reputation of the Operating Subsidiaries\nmay be negatively affected by the association with such a party.\n\n \n\nThe costs of identifying\nand consummating strategic acquisitions may be significant and subsequent integrations of newly acquired companies, businesses, assets,\nand technologies would require significant managerial and financial resources and could result in a diversion of resources from our existing\nbusiness, which in turn could have an adverse effect on our growth and business operations. In addition, investments and acquisitions\ncould result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, and exposure to potential\nunknown liabilities of the acquired business. The acquired businesses or assets may not generate the financial results we expect and\nmay incur losses. The cost and duration of integrating newly acquired businesses could also materially exceed our expectations. If our\nportfolio does not perform as we expect, our results of operation and profitability may be adversely affected.\n\n** **\n\n**We may not be able to raise additional capital\nwhen desired, on favorable terms, or at all.**\n\n \n\nWe need to make continued\ninvestments in facilities, hardware, software, technological systems and to retain talents to remain competitive. Due to the unpredictable\nnature of the capital markets and our industry, there can be no assurance that we will be able to raise additional capital on terms favorable\nto us, if and when required, especially if we experience disappointing operating results. If adequate capital is not available to us as\nrequired, our ability to fund the operations, take advantage of unanticipated opportunities, develop, or enhance our infrastructure or\nrespond to competitive pressures could be significantly limited. If we do raise additional funds through the issuance of equity or convertible\ndebt securities, the ownership interests of our shareholders could be significantly diluted. These newly issued securities may have rights,\npreferences, or privileges on par with or senior to those of existing shareholders.\n\n** **\n\n**If we fail to implement and maintain an\neffective system of internal controls to remediate our material weaknesses over financial reporting, we may be unable to accurately report\nour results of operations, meet our reporting obligations, or prevent fraud.**\n\n \n\nPrior to our initial public\noffering, we had been a private company with limited accounting personnel and other resources with which to address our internal control\nover financial reporting. In connection with the audits of our consolidated financial statements included in this annual report, we and\nour independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting.\nAs defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness”\nis a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility\nthat a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.\n\n \n\nThe material weaknesses identified\nrelate to (i) our lack of sufficient financial reporting and accounting personnel with appropriate knowledge of the U.S. GAAP and the\nSEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review consolidated financial statements\nand related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements and (ii) our lack of comprehensive accounting policies\nand procedures manual in accordance with U.S. GAAP. Neither we nor our independent registered public accounting firm undertook a comprehensive\nassessment of our internal control for purposes of identifying and reporting material weaknesses and other deficiencies in our internal\ncontrol over financial reporting. Had we performed a formal assessment of our internal control over financial reporting or had our independent\nregistered public accounting firm performed an audit of our internal control over financial reporting, additional deficiencies may have\nbeen identified.\n\n \n\nFollowing the identification\nof the material weaknesses and control deficiencies, we have taken the following remedial measures: (i)  engaging an external consulting\nfirm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control; and (ii) adopting\ndirectors’ resolutions to appoint independent directors, establish an audit committee, and strengthen corporate governance.\n\n \n\nWe plan to take additional\nremedial measures, including (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience\nand qualifications to strengthen the financial reporting function and to set up a financial and system control framework; and (ii) implementing\nregular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel.\n\n \n\n35\n\n \n\nHowever, the implementation\nof these measures may not fully address the material weaknesses in our internal control over financial reporting. Our failure to correct\nthe material weaknesses or our failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies\nin our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory\nfilings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading\nprice of our Class A Ordinary Shares, may be materially and adversely affected. Moreover, ineffective internal control over financial\nreporting significantly hinders our ability to prevent fraud.\n\n \n\nWe are subject to the reporting\nrequirements of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley\nAct of 2002 (the “Sarbanes-Oxley Act”) as well as rules and regulations of the Nasdaq Stock Exchange. The Sarbanes-Oxley\nAct requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting.\nWe are required by Section 404 of the Sarbanes-Oxley Act to perform system and process evaluation and testing of our internal controls\nover financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Form 20-F\nbeginning with our annual report in our second annual report after becoming a public company. We may experience difficulty in meeting\nthese reporting requirements in a timely manner.\n\n \n\nOur management may conclude\nthat our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control\nover financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing,\nmay issue an adverse report if it is not satisfied with our internal controls or the level at which our controls are documented, designed,\noperated or reviewed, or if it interprets the relevant requirements differently from us.\n\n \n\nIf we are not able to comply\nwith the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain the adequacy of\nour internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not\nbe able to produce timely and accurate financial statements and may not be able to conclude on an ongoing basis that we have effective\ninternal control over financial reporting in accordance with Section 404. If that were to happen, we could suffer material misstatements\nin our financial statements and fail to meet our reporting obligations, which could lead to a decline in the market price of our Class\nA Ordinary Shares, and we could be subject to sanctions or investigations by SEC or other regulatory authorities. We may also be required\nto restate our financial statements for prior periods.\n\n** **\n\n**We may incur losses or experience disruption\nof the operations as a result of act of God, unforeseen or catastrophic events, including pandemics, terrorist attacks, or natural disasters.**\n\n \n\nThe business could be materially\nand adversely affected by catastrophic events or other business continuity problems, such as natural or man-made disasters, pandemics\nsuch as COVID-19, fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, political unrest,\nterrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures, technology platform failures or\nInternet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect\nour ability to operate, including communicating with customers and the relevant listing authorities. For example, epidemics threaten people’s\nlives and may adversely affect their livelihood as well as their living and consumption patterns. The occurrence of an epidemic is beyond\nour control, and we cannot assure you that the outbreak of coronavirus (including COVID-19), severe acute respiratory syndrome, the H5N1\nstrain of avian influenza, the H1N1 strain of swine flu, the Zika virus or any other epidemics or pandemics will not happen.\n\n \n\nAny epidemic or pandemic occurring,\nsuch as the most recent outbreak of COVID-19, in the PRC, Hong Kong, Taiwan and Macau, or even in areas outside of the PRC, Hong Kong,\nTaiwan and Macau, may severely affect and restrict the level of economic activity as the government may impose regulatory administrative\nmeasures quarantining affected areas or other measures to control the outbreak of the disease, which in turn may adversely affect the\nbusiness, financial condition and results of operations. Mainly due to the impact of the COVID-19 pandemic, the Operating Subsidiaries\nhad no new cubic parking garage projects in 2022 and needed sufficient funds to maintain their daily operation. By the second half of\n2022, the negative impact of the COVID-19 pandemic was waning. While the Company had no new projects in 2022, previously postponed projects\nwere all accepted, and revenue was recognized in the second half of 2022. As a result, our revenue for the fiscal year 2022 increased\nby approximately 147.8% compared to the previous year, and we got a net profit of nearly $5.51 million. By 2023, the COVID-19 pandemic\nhas had essentially no impact on the Company. By the first half of 2024, the Company got a net profit of nearly $2.5 million, compared\nto the first half of 2023, the net profit increased by approximately 157%. Compared to the first half of 2023, the Company’s revenue\nin 2024 increased by 184%. However, we cannot assure you that our business will not be affected by an outbreak of COVID-19 in the future.\n\n \n\n36\n\n \n\nThe headquarters of the Operating\nSubsidiaries are in the PRC, where most of our directors and management and all of our employees currently reside. Consequently, the Operating\nSubsidiaries are highly susceptible to factors adversely affecting China. A disaster or a disruption in the infrastructure that supports\nthe businesses, a disruption involving electronic communications or other services used by us or third parties with whom the Operating\nSubsidiaries conduct business, or a disruption that directly affects our headquarter, could have a material adverse impact on the ability\nto continue to operate the business without interruption. The business could also be adversely affected if the employees are affected\nby pandemics. In addition, our results of operations could be adversely affected to the extent that any pandemic harms the Chinese economy\nin general. The incidence and severity of disasters or other business continuity problems are unpredictable, and the inability to timely\nand successfully recover could materially disrupt the businesses and cause material financial loss, regulatory actions, reputational harm,\nor legal liability.\n\n \n\nFurthermore, the ongoing\narmed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused\nand could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East and the\nUnited States. The hostilities and sanctions resulting from those hostilities have adversely affected and could continue to adversely\naffect global financial markets and thus could affect our client’s business and our business, even though we do not have any direct\nexposure to Russia, Israel, or the adjoining geographic regions. However, we cannot predict the progress or outcome of the situation in\nUkraine, or Israel, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest, intensified\nmilitary activities, or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and\nsuch effect could in turn, have a material adverse effect on the operations, results of operations, financial condition, liquidity and\nbusiness outlook of our business.\n\n \n\nAdditionally, continued turbulence\nin the international financial markets may adversely affect our ability to access the capital markets to meet liquidity needs. Financial\nmarkets and economic conditions could be negatively impacted by many factors, both economically and politically, beyond our control, such\nas the inability to access capital markets, control of the foreign exchange, changes in exchange rates, rising interest rates or inflation,\nslowing or negative growth rate, government involvement in the allocation of resources, inability to meet financial commitments in a timely\nmanner, terrorism, pandemics such as the COVID-19 pandemic, political uncertainty, Russo — Ukraine war, the outcome of\nthe Sino — US trade dispute, Israel — Hamas conflict, civil unrest, fiscal or other economic policy of the PRC or\nother governments, and the timing and nature of any regulatory reform.\n\n \n\n**The Operating Subsidiaries’ businesses\nare geographically concentrated, which subjects it to greater risks from changes in local or regional conditions.**\n\n \n\nAll of the Operating Subsidiaries’\ncurrent operations are located in China. Due to this geographic concentration, our financial condition and operating results are subject\nto greater risks from changes in general economic and other conditions in China, than the operations of more geographically diversified\ncompetitors. These risks include:\n\n \n\n \n●\nchanges in economic conditions and unemployment rates;\n\n \n\n \n●\nchanges in laws and regulations;\n\n \n\n \n●\nchanges in the competitive environment; and\n\n \n\n \n●\nadverse weather conditions and natural disasters.\n\n \n\nAs a result of the geographic\nconcentration of the Operating Subsidiaries’ businesses, we face a greater risk of a negative impact on our business, financial\ncondition, results of operations, and prospects in the event that China is more severely impacted by any such adverse condition, as compared\nto other countries.\n\n \n\n37\n\n \n\n**We have limited insurance coverage, and\nany claims beyond our insurance coverage may result in our incurring substantial costs and a diversion of resources.**\n\n \n\nWe maintain insurance policies\nthat are required under applicable laws and regulations as well as insurance based on our assessment of our operational needs and industry\npractice. However, our insurance coverage may be insufficient to cover any claim for product liability, damage to our fixed assets or\nemployee injuries. Any liability or damage to, or caused by, our facilities or our personnel beyond our insurance coverage may result\nin our incurring substantial costs and a diversion of resources.\n\n \n\nWe also expect that operating\nas a public company will make it more expensive for us to obtain director and officer liability insurance, since we may be required to\naccept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it\nmay be more difficult for us to attract and retain qualified people to serve on our Board of Directors, our board committees or as our\nexecutive officers. We do not know, however, if we will be able to maintain existing insurance with adequate levels of coverage. Any significant\nuninsured liability may result in a substantial amount of payments, which would adversely affect our cash position and results of operations.\n\n \n\n**We may not be able to ensure the successful\nimplementation of our future plans and strategies, resulting in reduced financial performance.**\n\n \n\nPreviously, we also used to\nprovide customized smart parking solutions to optimize efficiency in limited parking spaces, covering smart cubic parking garage design,\ncubic parking equipment manufacturing, sales, installation, and maintenance. In 2024, the decelerating economic growth in China, overbuilding\nand overborrowing by property developers, and increased government regulations on borrowing caused challenging market conditions in the\nreal estate and construction sectors, resulting in a contraction in real estate investment, new constructions by property developers,\nand construction project completion rate. Therefore, the demand for cubic parking garages in new real estate projects weakened, reducing\nthe number of high-quality projects available for us to undertake. The Company decided to scale down the cubic parking garage business\nand expand the production and sales of equipment structural parts. Following a strategic realignment of our core business objectives,\nwe have successfully transitioned into a specialized seller of equipment structural components and a comprehensive provider of electric\nvehicle (“EV”) charging solutions.\n\n \n\nThere is no assurance that\nany future plan can be successfully implemented as the successful execution could depend on several factors, including the availability\nof our operating funds, market demand, and regulatory changes, some of which are not within our control. Failure to successfully implement\nour future plans or to effectively manage costs may lead to a material adverse change in our operation or affect our ability to respond\nto market or industry changes, resulting in reduced financial performance. If the economic growth in China continue to decelerate and\nthe contraction in real estate investment continues, we may not be able to expand our EV charging business, which would adversely affect\nour cash position and results of operations.\n\n \n\n**Heightened tensions in international relations,\nparticularly between the United States and China, may adversely impact our business, financial condition, and results of operations.**\n\n \n\nRecently there have been heightened\ntensions in international relations, particularly between the United States and China, but also as a result of the war in Ukraine and\nsanctions on Russia. These tensions have affected both diplomatic and economic ties among countries. Heightened tensions could reduce\nlevels of trade, investments, technological exchanges, and other economic activities between the major economies. The existing tensions\nand any further deterioration in the relationship between the United States and China may have a negative impact on the general, economic,\npolitical, and social conditions in both countries and, given our reliance on the Chinese market, adversely impact our business, financial\ncondition, and results of operations.\n\n \n\n38\n\n \n\nOn August 9, 2023, the Biden\nadministration released an executive order and an advanced notice of proposed rule-making (the “ANPRM”) providing a conceptual\nframework for outbound investment controls focused on China. Further to this ANPRM, on June 21, 2024, the U.S. Department of the Treasury\n(the “Treasury”) issued a proposed rule on outbound U.S. investments involving China that generally follows the ANPRM. On\nOctober 28, 2024, the Treasury issued a Final Rule to implement the executive order of August 9, 2023. The Final Rule became effective\non January 2, 2025. The Final Rule targets investments involving persons and entities associated with “countries of concern,”\nincluding China, and it imposes investment prohibition and notification requirements on a wide range of investments in companies engaged\nin activities relating to three sectors: (1) advanced microchips and microelectronics, (2) quantum computing, and (3) artificial intelligence\nsystems, with persons from countries of concern engaged in these technologies defined as “Covered Foreign Persons.” Investments\nby U.S. persons subject to the Final Rule, which are defined as “covered transactions,” include acquisitions of equity interests,\ncertain debt financing, joint ventures, and certain investments as a limited partner in a non-U.S. person pooled investment fund. The\nFinal Rule excludes some investments from the scope of covered transactions, including those in publicly traded securities listed on a\nnational stock exchange. The Final Rule is aimed at exerting greater U.S. government oversight over U.S. direct and indirect investments\ninvolving China, and may introduce new hurdles and uncertainties for cross-border collaborations, investments, and funding opportunities\nof China-based issuers including us. We do not believe we are a Covered Foreign Person under the Final Rule. However, to the extent that\nwe are deemed a Covered Foreign Person engaged in the development of specified artificial intelligence technologies and services, the\nFinal Rule could limit our ability to raise capital from U.S. investors generally, in which case our ability to raise such capital may\nbe significantly and negatively affected, which could be detrimental to our capital raising capacity and our business, financial condition\nand prospects.\n\n \n\n**Risks Related to Our Public Offering and Ownership of Our Class\nA Ordinary Shares**\n\n \n\n**Our CEO has control\nover key decision making as a result of his control of a majority of our voting shares.**\n\n \n\nOur Chief Executive Officer,\nDirector and Chairman of the Board, Mr. Bin Lu, together with his wife, Ms. Liping Zhu, has voting rights with respect to an aggregate\nof 5,951,000 Class A Ordinary Shares and 16,000,000 Class B Ordinary Shares, representing 96.17% of the voting power of our issued and\noutstanding Ordinary Shares as of the date of this annual report. As a result, Mr. Lu has the ability to control the outcome of matters\nsubmitted to our shareholders for approval, including the election of directors and any sale of all or substantially all of our assets.\nIn addition, Mr. Lu has the ability to control the management and affairs of our Company due to his position as our CEO and his ability\nto control the election of our directors. Additionally, in the event that Mr. Lu controls our Company at the time of his death, control\nmay be transferred to a person or entity that he designates as his successor. As a board member and officer, Mr. Lu owes a fiduciary duty\nto our Company and must act in good faith in a manner he reasonably believes to be in the best interests of our Company. Mr. Lu must also\nexercise his powers for a proper purpose. As a beneficial shareholder, even a controlling beneficial shareholder, Mr. Lu is entitled to\nvote his shares, and shares over which he has voting control as a result of voting agreements, in his own interests, which may not always\nbe in the interests of our shareholders generally.\n\n \n\n**As a “controlled company” under\nthe rules of the Nasdaq Capital Market, we may choose to exempt our Company from certain corporate governance requirements that could\nhave an adverse effect on our public shareholders.**\n\n \n\nOur directors and officers\nbeneficially own a majority of the voting power of our issued and outstanding Ordinary Shares. Under the Rule 4350(c) of the Nasdaq Capital\nMarket, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled\ncompany” and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of\nour directors be independent, as defined in the Nasdaq Capital Market Rules, and the requirement that our compensation and nominating\nand corporate governance committees consist entirely of independent directors. Although we do not intend to rely on the “controlled\ncompany” exemption under the Nasdaq listing rules, we could elect to rely on this exemption in the future. If we elect to rely on\nthe “controlled company” exemption, a majority of the members of our Board of Directors might not be independent directors\nand our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly,\nduring any time while we remain a controlled company relying on the exemption and during any transition period following a time when we\nare no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to\nall of the Nasdaq Capital Market corporate governance requirements. Our status as a controlled company could cause our Class A Ordinary\nShares to look less attractive to certain investors or otherwise harm our trading price.\n\n \n\n39\n\n \n\n**We are an “emerging growth company,”\nand we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A Ordinary\nShares less attractive to investors.**\n\n** **\n\nWe are an “emerging\ngrowth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be\nan emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public\ncompanies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of\nSection 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy\nstatements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval\nof any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could\nlose that status sooner if our revenues exceed $1.235 billion, if we issue more than $1 billion in non-convertible debt in a three-year\nperiod, or if the market value of our Class A Ordinary Shares held by non-affiliates exceeds $700 million before that time, in which case\nwe would no longer be an emerging growth company as of the following December 31. We cannot predict if investors will find our Class A\nOrdinary Shares less attractive because we may rely on these exemptions. If some investors find our Class A Ordinary Shares less attractive\nas a result, there may be a less active trading market for our Class A Ordinary Shares and our stock price may be more volatile.\n\n \n\nUnder the JOBS Act, emerging\ngrowth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.\nWe have elected to avail our company of this exemption from new or revised accounting standards and, therefore, will be subject to accounting\nstandards that are available to emerging growth companies.\n\n \n\n**We are a “foreign private issuer,”\nand our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information\nas U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate\nour performance and prospects.**\n\n** **\n\nHuachen Cayman is a foreign\nprivate issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we are\nsubject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies.\nFor example, we will not be required to issue quarterly reports or proxy statements. We are not required to disclose detailed individual\nexecutive compensation information. Furthermore, our directors and executive officers will not be required to report equity holdings under\nSection 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime. As a foreign\nprivate issuer, we will also be exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure\nthat select groups of investors are not privy to specific information about an issuer before other investors. However, we will still be\nsubject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure\nobligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect\nto receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies.\n\n \n\n40\n\n \n\n**Because we are a foreign private issuer\nand are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly\nfrom the Nasdaq listing rules, you will have less protection than you would have if we were a domestic issuer.**\n\n \n\nNasdaq Listing Rules require\nlisted companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we\nare permitted to, and we may follow home country practice in lieu of certain requirements regarding corporate governance, or we may choose\nto comply with such requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands,\ndoes not require a majority of our Board of Directors to consist of independent directors. Thus, although a director must act in the best\ninterests of the Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight\non the management of our company may decrease as a result. In addition, the Nasdaq Listing Rules also require U.S. domestic issuers to\nhave a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee\nwith a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. The Nasdaq Listing Rules also\nrequire shareholder approval for U.S. domestic issuers in connection with: (i) the acquisition of the stock or assets of another company;\n(ii) equity-based compensation of officers, directors, employees or consultants; (iii) a change of control; and (iv) issuance of\n20% or more of our outstanding ordinary shares in transactions other than public offerings.  We\nhave elected to follow home country practice in Cayman Islands in lieu of Nasdaq Capital Market Listing Rule 5600 with the exception of\nthose rules which are required to be followed pursuant to the provisions of Listing Rule 5615(a)(3). See “*Item 16G. Corporate\nGovernance.*” Following our home country governance practices as opposed to the requirements that would otherwise apply to a\nU.S. company listed on the Nasdaq Capital Market may provide less protection to you than what is accorded to investors under the applicable\nrules of the Nasdaq Capital Market applicable to domestic U.S. issuers.\n\n \n\n**Nasdaq may apply additional and more stringent\ncriteria for our initial and continued listing because we plan to have a small public offering and insiders will hold a large portion\nof the company’s listed securities.**\n\n** **\n\nNasdaq Listing Rule 5101 provides\nNasdaq with broad discretionary authority over the initial and continued listing of securities in Nasdaq and Nasdaq may use such discretion\nto deny initial listing, apply additional or more stringent criteria for the initial or continued listing of particular securities, or\nsuspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes initial or continued\nlisting of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated\ncriteria for initial or continued listing on Nasdaq. In addition, Nasdaq has used its discretion to deny initial or continued listing\nor to apply additional and more stringent criteria in the instances, including but not limited to: (i) where the company engaged an auditor\nthat has not been subject to an inspection by the PCAOB, an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated\nsufficient resources, geographic reach, or experience to adequately perform the company’s audit; (ii) where the company planned\na small public offering, which would result in insiders holding a large portion of the company’s listed securities. Nasdaq was concerned\nthat the Offering size was insufficient to establish the company’s initial valuation, and there would not be sufficient liquidity\nto support a public market for the company; and (iii) where the company did not demonstrate sufficient nexus to the U.S. capital market,\nincluding having no U.S. shareholders, operations, or members of the Board of Directors or management. Our public offering will be relatively\nsmall and the insiders of our Company will hold a large portion of the company’s listed securities. Nasdaq might apply the additional\nand more stringent criteria for our initial and continued listing, which might cause delay or even denial of our listing application.\n\n \n\n**If we cannot satisfy, or continue to satisfy,\nthe initial listing requirements and other rules of Nasdaq Capital Market, although we exempt from certain corporate governance standards\napplicable to US issuers as a Foreign Private Issuer, our securities may not be listed or may be delisted, which could negatively impact\nthe price of our securities and your ability to sell them.**\n\n \n\nIn order to maintain our listing\non the Nasdaq Capital Market, we are required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum\nshareholders’ equity, minimum share price and certain corporate governance requirements. We may not be able to continue to satisfy\nthese requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our\nClass A Ordinary Shares could be subject to delisting.\n\n \n\nIf the Nasdaq Capital Market\ndelists our securities from trading, we could face significant consequences, including:\n\n \n\n \n●\na limited availability for market quotations for our securities;\n\n \n\n \n●\nreduced liquidity with respect to our securities;\n\n \n\n41\n\n \n\n \n●\na determination that our Class A Ordinary Shares is a “penny stock,” which will require brokers trading in our Class A Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Class A Ordinary Shares;\n\n \n\n \n●\nlimited amount of news and analyst coverage; and\n\n \n\n \n●\na decreased ability to issue additional securities or obtain additional financing in the future.\n\n \n\n**The market price of our Class A Ordinary\nShares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above\nthe public offering price.**\n\n** **\n\nThe public offering price\nfor our Class A Ordinary Shares will be determined through negotiations between the underwriter and us and may vary from the market price\nof our Class A Ordinary Shares following our public offering. If you purchase our Class A Ordinary Shares in our public offering, you\nmay not be able to resell those shares at or above the public offering price. Further, an inactive trading market for our Class A Ordinary\nShares may also impair our ability to raise capital by selling our Class A Ordinary Shares or enter into strategic partnerships and transactions\nby issuing our Class A Ordinary Shares as consideration. If an active trading market for our Class A Ordinary Shares does not develop,\nor is not sustained, you may not be able to sell your shares quickly or at the market price, or at all, and it may be difficult for you\nto sell your shares without depressing the market price for our Class A Ordinary Shares. The market price of our Class A Ordinary Shares\nmay fluctuate significantly in response to numerous factors, many of which are beyond our control, including:\n\n \n\n \n●\nactual or anticipated fluctuations in our revenue and other operating results;\n\n \n\n \n●\nthe financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;\n\n \n\n \n●\nactions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;\n\n \n\n \n●\nannouncements by us or the competitors of significant services or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;\n\n \n\n \n●\nprice and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;\n\n \n\n \n●\nlawsuits threatened or filed against us; and\n\n \n\n \n●\nother events or factors, including those resulting from war or incidents of terrorism, or responses to these events.\n\n \n\nIn addition, the stock markets\nhave experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities\nof many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance\nof those companies. In the past, shareholders have filed securities class action litigation following periods of market volatility. If\nwe were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management\nfrom the business, and adversely affect the business.\n\n \n\n**We may experience extreme stock price volatility,\nincluding any stock-run up, unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult\nfor prospective investors to assess the rapidly changing value of our Class A Ordinary Shares.**\n\n \n\nIn addition to the risks addressed\nabove in “— The market price of our Class A Ordinary Shares may be volatile or may decline regardless of our operating performance,\nand you may not be able to resell your shares at or above the public offering price,” our Class A Ordinary Shares may be subject\nto extreme volatility that is seemingly unrelated to the underlying performance of the business. In particular, our Class A Ordinary Shares\nmay be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices, given that we\nwill have relatively small public floats. Such volatility, including any stock-run up, may be unrelated to our actual or expected\noperating performance, financial condition or prospects.\n\n \n\n42\n\n \n\nHolders of our Class A Ordinary\nShares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading.\nBroad market fluctuations and general economic and political conditions may also adversely affect the market price of our Class A Ordinary\nShares. As a result of this volatility, investors may experience losses on their investment in our Class A Ordinary Shares. Furthermore,\nthe potential extreme volatility may confuse the public investors of the value of our stock, distort the market perception of our stock\nprice and our company’s financial performance and public image, negatively affect the long-term liquidity of our Class A Ordinary\nShares, regardless of our actual or expected operating performance. If we encounter such volatility, including any rapid stock price increases\nand declines seemingly unrelated to our actual or expected operating performance and financial condition or prospects, it will likely\nmake it difficult and confusing for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares and understand\nthe value thereof.\n\n \n\n**We have broad discretion in the use of the\nnet proceeds from our public offering and may not use them effectively.**\n\n \n\nTo the extent (i) we raise\nmore money than required for the purposes explained in the section titled “*Use of Proceeds*” or (ii) we determine that\nthe proposed uses set forth in that section are no longer in the best interests of our Company, we cannot specify with any certainty the\nparticular uses of such net proceeds that we will receive from our public offering. Our management will have broad discretion in the application\nof such net proceeds, including working capital, possible acquisitions, and other general corporate purposes, and we may spend or invest\nthese proceeds in a way with which our shareholders disagree. The failure by our management to apply these funds effectively could harm\nthe business and financial condition. Pending their use, we may invest the net proceeds from our public offering in a manner that does\nnot produce income or that loses value.\n\n \n\n**We do not intend to pay dividends for the\nforeseeable future.**\n\n \n\nWe currently intend to retain\nany future earnings to finance the operation and expansion of the business, and we do not expect to declare or pay any dividends in the\nforeseeable future. As a result, you may only receive a return on your investment in our Class A Ordinary Shares if the market price of\nour Class A Ordinary Shares increases.\n\n \n\n**There may not be an active, liquid trading\nmarket for our Class A Ordinary Shares.**\n\n \n\nYou may not be able to sell\nyour shares at the market price, if at all, if trading in our shares is not active. The public offering price was determined by negotiations\nbetween us and the underwriter based upon a number of factors. The public offering price may not be indicative of prices that will prevail\nin the trading market.\n\n \n\n**We will incur additional costs for being\na public company, which could negatively impact our net income and liquidity.**\n\n \n\nWe are a public company in\nthe United States. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private\ncompany. In addition, Sarbanes-Oxley and rules and regulations implemented by the SEC and the Nasdaq Capital Market require significantly\nheightened corporate governance practices for public companies. We expect that these rules and regulations will increase our legal, accounting\nand financial compliance costs and will make many corporate activities more time-consuming and costly. We do not expect to incur materially\ngreater costs as a result of becoming a public company than those incurred by similarly sized U.S. public companies. If we fail to comply\nwith these rules and regulations, we could become the subject of a governmental enforcement action, investors may lose confidence in us,\nand the market price of our Class A Ordinary Shares could decline.\n\n \n\n**Exercise of the share options or restricted\nshares granted will increase the number of Class A Ordinary Shares in circulation, which may adversely affect the market price of our\nClass A Ordinary Shares.**\n\n \n\nOn August 12, 2024, Huachen\nCayman adopted the 2024 Equity Incentive Plan, or the 2024 Plan, for the purpose of granting share based compensation awards to current\nor prospective employees, directors, officers, advisors or consultants of the Company or its affiliates and align their interests with\nours. The maximum aggregate number of Class A Ordinary Shares which may be issued pursuant to all awards under the 2024 Plan was 3,000,000\nClass A Ordinary Shares.\n\n \n\nOn March 28, 2025, Huachen\nCayman’s board of directors and compensation committee approved and adopted an amended and restated 2024 Equity Incentive Plan,\npursuant to which the maximum aggregate number of Class A Ordinary Shares authorized for issuance under the 2024 Plan was increased from\n3,000,000 to 3,172,500 Class A Ordinary Shares. As of the date of this annual report, all 3,172,500 Class A Ordinary Shares have been\ngranted under the 2024 Plan. We may adopt other share incentive plans in the future that permits granting of share-based compensation\nawards to employees and directors, which will result in significant share-based compensation expenses to us.\n\n \n\nCompetition for highly skilled\npersonnel is often intense and we may incur significant costs or not be successful in attracting, integrating, or retaining qualified\npersonnel to fulfill our current or future needs. We have, from time to time, experienced, and we expect to continue to experience, difficulty\nin hiring and retaining highly skilled employees with appropriate qualifications. Our ability to attract or retain highly skilled employees\nmay be adversely affected by declines in the perceived value of our equity or equity awards. Furthermore, there are no assurances that\nthe number of shares reserved for issuance under our share incentive plans are sufficient to grant equity awards adequate to recruit new\nemployees and to compensate existing employees.\n\n \n\n43"}