{"url_path":"/sec/ifbd/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","topic":"sec","document":{"doc_type":"20-F/A","doc_date":"2026-06-12","source_url":"https://www.sec.gov/Archives/edgar/data/1815566/0001731122-26-000847-index.html","accession_number":"0001731122-26-000847","cik":"0001815566","ticker":"IFBD","issuer_name":"Infobird Co., Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1815566/0001731122-26-000847-index.html","primary_entity_key":"0001815566","primary_entity_name":"Infobird Co., Ltd"},"word_count":24393,"has_tables":true,"body_markdown":"**ITEM 4. INFORMATION ON THE COMPANY**\n\n \n\n**A. History and Development of the Company**\n\n \n\nOur company, Infobird Co., Ltd,\nor Infobird Cayman, is a holding company incorporated on March 26, 2020 under the laws of the Cayman Islands. We have no substantive operations\nother than holding all of the outstanding share capital of Infobird International Limited, or Infobird HK, which was established in Hong\nKong on April 21, 2020. Infobird HK is also a holding company holding all of the outstanding equity of Infobird Digital Technology (Beijing)\nCo., Ltd, or Infobird WFOE, which was established on May 20, 2020 under the laws of the PRC.\n\n \n\nOn September 9, 2022, we effected\na 1-for-5 share consolidation, or the share consolidation, of our ordinary shares pursuant\nto our second amended and restated memorandum and articles of association. We have retroactively restated all share and per share\ndata for all of the periods presented pursuant to ASC 260 to reflect the share consolidation.\n\n \n\nOn December 15, 2022, our shareholders\napproved the adoption of our third amended and restated memorandum and articles of association. The new memorandum and articles increase\nthe maximum number of shares the Company is authorized to issue from US$50,000 divided into 10,000,000 ordinary shares of US$0.005 par\nvalue each to US$25,000,000 divided into 5,000,000,000 ordinary shares of US$0.005 par value each, by the creation of an additional 4,990,000,000\nunissued ordinary shares of a par value of US$0.005 each to rank pari passu in all respects with the existing ordinary shares.\n\n \n\nOn December 23, 2022, we issued\nthe convertible notes (the “2022 CB”) in the aggregate principal amount of US$6.25 million pursuant to the convertible note\npurchase agreement dated November 25, 2022, under which the holder of the 2022 CB (the “2022 CB Holder”) may subscribe at\neighty percent of the face value up to US$12.5 million in aggregate principal amount of our two-year convertible notes. On the same date\nof the 2022 CB issuance, the 2022 CB Holder elected to convert the 2022 CB at the conversion price of US$0.5, representing the floor price\nof the conversion price, resulting in the issuance of 12.5 million ordinary shares. Immediately following the issuance, the Company had\n19,093,315 ordinary shares outstanding.\n\n \n\n46\n\n \n\n \n\nOn February 28, 2023, we sold\n3,846,000 Units at a per Unit price of $1.30. Each Unit comprises: (1) one ordinary share, par value US$0.005 per share, and (2) 0.65\nof a warrant to purchase one ordinary share (the “Ordinary Share Warrant”). In a concurrent private placement, we sold unregistered\nwarrants to purchase 2,884,500 ordinary shares (the “Private Warrants”). The proceeds of the transaction will be used for\nworking capital and general working purposes. The transactions yielded gross proceeds to us of approximately $5,000,000, before payment\nof commissions and expenses.\n\n \n\nOn May 12, 2023, we effected\na 1-for-5 share consolidation of our ordinary shares pursuant to our fourth amended and restated memorandum and articles of association.\nWe have retroactively restated all share and per share data for all of the periods presented pursuant to ASC 260 to reflect the share\nconsolidation.\n\n \n\nOn August 11, 2023, Infobird\nCo., Ltd, a Cayman Island exempted company (the “Company”), entered into an equity transfer agreement (the “Agreement”)\nwith CRservices Limited (“CRservices”), a Mahé Island limited company and a shareholder of the Company, pursuant to\nwhich, the Company agreed to sell all the issued shares of Infobird HK, a limited company incorporated under the laws of Hong Kong and\na wholly owned subsidiary of the Company, for a consideration of HK$10,000. Infobird HK owns 100% of the equity interests of Infobird\nWFOE, which, in turn, controls Infobird Beijing, the variable interest entity (the “VIE”) and its subsidiaries, through a\nseries of contractual arrangements in the PRC. Infobird HK, through the VIE and its subsidiaries, is engaged in the SaaS business, providing\nAI-powered, or artificial intelligence enabled, customer engagement solutions in China, held substantially all of the assets of the Company\nand generated substantially all of the revenues of the Company prior to the Sale. Pursuant to the Agreement, upon execution of the Agreement,\nthe Company will no longer be involved in the business operation of Infobird HK and relinquish all rights and interests in the allocation\nof Infobird HK’s property and profits. On August 11, 2023, the Sale was completed. After the Sale, we had no substantive operations\nother than holding all of the outstanding share capital of Inforbird Technologies Limited, or Inforbird Technologies, which was established\nin Hong Kong on July 12, 2023. Inforbird Technologies is also a holding company with no operations and do not hold any of the outstanding\nequity of an entity.\n\n \n\nOn November 15, 2023, we effected\na 1-for-20 share consolidation of our ordinary shares pursuant to our fifth amended and restated memorandum and articles of association.\nWe have retroactively restated all share and per share data for all of the periods presented pursuant to ASC 260 to reflect the share\nconsolidation.\n\n \n\nOn March 4, 2024, we effected\na 1-for-8 share consolidation of our ordinary shares pursuant to ordinary resolutions passed at the extraordinary general meeting of the\nCompany held on February 20, 2024. We have retroactively restated all share and per share data for all of the periods presented pursuant\nto ASC 260 to reflect the share consolidation.\n\n \n\nOn May 2, 2024, we effected a\ncapital reduction to reduce the par value of each of the then issued Consolidated Shares from US$4.00 to US$0.00001 by cancelling the\npaid-up capital of the Company to the extent of US$3.99999 on each of the then issued Consolidated Shares (the “Capital Reduction”).\nImmediately following the Capital Reduction, the Company sub-divided the balance of each unissued Consolidated Share in the authorized\nshare capital of the Company into 400,000 ordinary shares with par value of US$0.00001 each in the share capital of the Company (the “Share\nSubdivision”). Immediately following the Capital Reduction and Share Subdivision, the authorized share capital of the Company was\nchanged to US$50,000,000 divided into 5,000,000,000,000 ordinary shares of par value US$0.00001 each through the cancellation of excess\nauthorized but unissued shares.\n\n \n\nAfter the completion of the Sale\non August 11, 2023, we, Infobird Cayman, are a Cayman Islands holding company, and we may rely principally on dividends and other distributions\non equity paid by our subsidiaries for cash and financing requirements we may have, including the funds necessary to pay dividends and\nother cash distributions to our shareholders and service any debt we may incur. If any of our subsidiaries incur debt on their own behalf\nin the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. As we\nconduct our operations in Hong Kong primarily through our subsidiary, our ability to pay dividends to the shareholders and to service\nany debt we may incur may depend upon dividends paid by our subsidiary. There can be no assurance that the PRC government will not intervene\nor impose restrictions to prevent the cash maintained in Hong Kong from being transferred out or restrict the deployment of the cash into\nour business or for the payment of dividends.\n\n \n\n47\n\n \n\n \n\nAfter the completion of the Sale\non August 11, 2023, there have been no distributions or dividends by any of our direct or indirectly previously held subsidiaries to Infobird.\nDuring that same period, Infobird has not declared any dividends or made any distributions to its shareholders, including its U.S. investors,\nand we do not anticipate declaring a dividend in the foreseeable future. No assets other than cash are transferred within our organization.\nFor more details, please see the section headed “Cash and Asset Flows through Our Organization After the Sale” above.\n\n \n\nOn June 28, 2024 and July 31,\n2024, Infobird Co., Ltd entered into an equity acquisition agreement and an amendment to the equity acquisition agreement (the “Equity\nAcquisition Agreement”) with Shangri-La Trading Limited (the “Seller”), in a single transaction, to acquire 65% of the\nissued and outstanding equity of Pure Tech at closing. Pure Tech which in turn indirectly wholly controls Pinmu Century, a variable interest\nentity, and its subsidiaries (“Pinmu Century”), and Zhenxi Brand, a variable interest entity, and its subsidiaries. The aggregate\npurchase price for the equity acquisition was approximately $40.0 million, inclusive of transaction costs, and was funded using the cash\non hand of $33 million and a promissory note of $7 million. The acquisition closed in November 2024.\n\n \n\nOn December 6, 2024, we entered\ninto an equity acquisition agreement with One One Business Limited, in a single transaction, to acquire 32% of the issued and outstanding\nequity of Pure Tech. The acquisition closed in December 2024. The Company paid $19.8 million in cash and issued a senior convertible note\nin the principal amount of US$5,953,095. After closing, the Company has become the legal and beneficial owner of 97% of the issued and\noutstanding equity of Pure Tech.\n\n \n\n**Contractual Arrangements**\n\n \n\nDue to legal restrictions on\nforeign ownership and investment in, among other areas, the development and operation of information technology in China, including cloud\ncomputing and big data analytics, we operate our businesses in which foreign investment is restricted or prohibited in the PRC through\ncertain PRC domestic companies through the Contractual Arrangements. Neither we nor our subsidiaries own any equity interest in Pinmu\nCentury. As such, Pinmu Century is controlled through the Contractual Arrangements in lieu of direct equity ownership by Infobird Cayman\nor any of its subsidiaries. Such Contractual Arrangements consist of a series of three agreements, along with shareholders’ powers\nof attorney, or POAs, and spousal consent letters, which were signed on May 27, 2020.\n\n \n\nOur affiliation with Pinmu Century\nis managed through the Contractual Arrangements, which agreements may not be as effective in providing us with control over Pinmu Century\nand its subsidiaries as direct ownership in controlling entities organized in the PRC, which often hold the licenses necessary to conduct\nbusiness in the PRC. The Contractual Arrangements are not equivalent to equity ownership in the business of the VIE. Neither the investors\nin Infobird Cayman, the Cayman Islands holding company, nor Infobird Cayman itself have an equity ownership in, direct foreign investment\nin, or control of, through such ownership or investment, the VIE. Further, the Contractual Arrangements have not been tested in a court\nof law, including in China courts. The Contractual Arrangements are governed by and would be interpreted in accordance with the laws of\nthe PRC. If Pinmu Century fails to perform the obligations under the Contractual Arrangements, we may have to rely on legal remedies under\nthe laws of the PRC, including seeking specific performance or injunctive relief and claiming damages. There is a risk that we may be\nunable to obtain any of these remedies, which could affect our investors and the value of their investment. The legal environment in the\nPRC is not as developed as in other jurisdictions. As a result, uncertainties in the PRC legal system could limit our ability to enforce\nthe Contractual Arrangements, or could affect the validity of the Contractual Arrangements. Thus, the Contractual Arrangements may be\nless effective than direct ownership and we may incur substantial costs to enforce the terms of the Contractual Arrangements. See “Item\n3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We depend upon the Contractual Arrangements\nin conducting our business in China, which may not be as effective as direct ownership.” In addition, such Contractual Arrangements\nhave not been tested in a court of law, including China courts, and we may face challenges enforcing these Contractual Arrangements due\nto legal uncertainties and jurisdictional limits, and thus there are uncertainties regarding the status of the rights of the Cayman Islands\nholding company with respect to the Contractual Arrangements with the VIE and its shareholders. See also “Item 3. Key Information—D.\nRisk Factors—Risks Related to Our Corporate Structure—We conduct our business through Pinmu Century by means of Contractual\nArrangements. If the PRC courts or administrative authorities determine that these Contractual Arrangements do not comply with applicable\nregulations, we could be subject to severe penalties and our business could be adversely affected. In addition, changes in or different\ninterpretations of such PRC laws and regulations may also materially and adversely affect our business.”\n\n \n\n48\n\n \n\n \n\nThe significant terms of the\nContractual Arrangements are as follows:\n\n \n\n*Exclusive Business Cooperation Agreement*\n\n \n\nPursuant to the exclusive business\ncooperation agreement between Pure Media and Pinmu Century, Pure Media has the exclusive right to provide Pinmu Century with technical\nsupport services, consulting services and other services, including technical support and training, business management consultation,\nconsultation, collection and research of technology and market information, marketing and promotion services, customer order management\nand customer services, lease equipment or properties, provide legitimate rights to use software license, provide deployment, maintenances\nand upgrade of software, design installation, daily management, maintenance and updating network system, hardware and database, and other\nservices requested by Pinmu Century from time to time to the extent permitted under PRC law. In exchange, Pure Media is entitled to a\nservice fee equal to all of the consolidated net income of the Pinmu Century. However, the service fee may be adjusted by Pure Media based\non the actual scope of services rendered by Pure Media and the operational needs and expanding demands of Pinmu Century.\n\n \n\nThe exclusive business cooperation\nagreement remains in effect unless terminated in accordance with the following provision of the agreement or terminated in writing by\nPure Media.\n\n \n\nDuring the term of the exclusive\nbusiness cooperation agreement, Pure Media and Pinmu Century shall renew the operation term prior to the expiration thereof so as to enable\nthe exclusive business cooperation agreement to remain effective. The exclusive business cooperation agreement shall be terminated upon\nthe expiration of the operation term of either Pure Media or Pinmu Century if the application for renewal of the operation term is not\napproved by relevant government authorities. If an application for renewal of the operation term is not approved, according to the PRC\nCompany Law, the expiration of the operation term may lead to the dissolution and cancellation of such PRC company.\n\n \n\n*Exclusive Option Agreements*\n\n \n\nPursuant to the exclusive option\nagreements among Pure Media, Pinmu Century and the shareholders who collectively owned all of Pinmu Century, such shareholders jointly\nand severally grant Pure Media an option to purchase their equity interests in Pinmu Century. The purchase price shall be the lowest price\nthen permitted under applicable PRC laws. Pure Media or its designated person may exercise such option at any time to purchase all or\npart of the equity interests in Pinmu Century until it has acquired all equity interests of Pinmu Century, which is irrevocable during\nthe term of the agreements.\n\n \n\nThe exclusive option agreements\nremain in effect until all equity interest held by shareholders in Pinmu Century has been transferred or assigned to Pure Media and/or\nany other person designated by the Pure Media in accordance with such agreement.\n\n \n\n *Equity Interest Pledge Agreements*\n\n \n\nPursuant to the equity interest\npledge agreements, among Pure Media, Pinmu Century, and the shareholders who collectively owned all of Pinmu Century, such shareholders\npledge all of the equity interests in Pinmu Century to Pure Media as collateral to secure the obligations of Pinmu Century under the exclusive\nbusiness cooperation agreement and exclusive option agreements. These shareholders are prohibited from transferring the pledged equity\ninterests without the prior consent of Pure Media unless transferring the equity interests to Pure Media or its designated person in accordance\nto the exclusive option agreements.\n\n \n\nThe equity interest pledge agreements\nshall come into force the date on which the pledged interests are recorded, which is within three (3) days after signing of the agreements\non May 27, 2020, under Pinmu Century’s register of shareholders and are registered with the competent Administration for Market\nRegulation of Pinmu Century until all of the obligations to Pure Media have been fulfilled completely by Pinmu Century. Nineteen shareholders\nof Pinmu Century have registered the pledges of equity interest with the competent Administration for Market Regulation in accordance\nwith the Civil Code of the PRC.\n\n \n\n49\n\n \n\n \n\n*Shareholders’ POAs*\n\n \n\nPursuant to the shareholders’\nPOAs, the shareholders of Pinmu Century give Pure Media an irrevocable proxy to act on their behalf on all matters pertaining to Pinmu\nCentury and to exercise all of their rights as shareholders of Pinmu Century, including the (i) right to attend shareholders meeting;\n(ii) to exercise voting rights and all of the other rights including but not limited to the sale or transfer or pledge or disposition\nof the shares held in part or in whole; and (iii) designate and appoint on behalf of the shareholder the legal representative, the directors,\nsupervisors, the chief executive officer and other senior management members of Pinmu Century, and to sign transfer documents and any\nother documents in relation to the fulfillment of the obligations under the exclusive option agreements and the equity interest pledge\nagreements. The shareholders’ POAs shall remain in effect while the shareholders of Pinmu Century hold the equity interests in Pinmu\nCentury.\n\n \n\n*Spousal Consent Letters*\n\n \n\nPursuant to the spousal consent\nletters, the spouses of the shareholders of Pinmu Century commit that they have no right to make any assertions in connection with the\nequity interests of Pinmu Century, which are held by the shareholders. In the event that the spouses obtain any equity interests of Pinmu\nCentury, which are held by the shareholders, for any reasons, the spouses of the shareholders shall be bound by the exclusive option agreement,\nthe equity interest pledge agreement, the shareholder POA and the exclusive business cooperation agreement and comply with the obligations\nthereunder as a shareholder of Pinmu Century. The letters are irrevocable and shall not be withdrawn without the consent of Pure Media.\n\n \n\nBased on the foregoing Contractual\nArrangements, which grant Pure Media effective control of Pinmu Century and subsidiaries and enable Pure Media to receive all of their\nexpected residual returns, we account for Pinmu Century as a VIE. Accordingly, we consolidate the accounts of Pinmu Century and subsidiaries\nfor the periods presented herein, in accordance with Regulation S-X-3A-02 promulgated by the SEC, and Accounting Standards Codification,\nor ASC, 810-10, Consolidation.\n\n \n\nPure Media, the VIE and its consolidated\nsubsidiaries, or investors transfer funds through our organization under the applicable PRC laws and regulations. To the extent our cash\nin the business is in the PRC or a PRC entity, the funds may not be available to distribute dividends to our investors, or for other use\noutside of the PRC, due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries,\nor the VIE by the PRC government to transfer cash. As of the date of this annual report, none of Infobird Cayman, its subsidiaries, the\nVIE or its subsidiaries has written cash management policies or procedures in place that dictate how funds are transferred. Rather, the\nfunds can be transferred in accordance with the applicable PRC laws and regulations.\n\n \n\nWe, Infobird Cayman, are a Cayman\nIslands holding company, and we may rely principally on dividends and other distributions on equity paid by our subsidiaries for cash\nand financing requirements we may have, including the funds necessary to pay dividends and other cash distributions to our shareholders\nand service any debt we may incur. If any of our subsidiaries incur debt on their own behalf in the future, the instruments governing\nthe debt may restrict their ability to pay dividends or make other distributions to us. As we conduct our operations in China primarily\nthrough our subsidiaries, the VIE and its subsidiaries, our ability to pay dividends to the shareholders and to service any debt we may\nincur may depend upon dividends paid by our subsidiaries and license and service fees paid by the VIE. Remittance of dividends by a wholly\nforeign-owned enterprise out of China is also subject to examination by the banks designated by SAFE. In addition, our subsidiaries, the\nVIE and its subsidiaries in China are required to set aside at least 10% of their after-tax profits each year, if any, to fund a statutory\nreserve until such reserve reaches 50% of its registered capital. For more details, see “Item 3 Key Information—D. Risk Factors—Risks\nRelated to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund\nany cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could\nhave a material and adverse effect on our ability to conduct our business.”\n\n \n\n50\n\n \n\n \n\nCash transfers within our organization\nare effected by means of bank wires. As between Infobird Cayman, our Cayman Islands holding company, and its subsidiaries, cash is generally\ntransferred by means of capital contributions and/or interest-free intercompany loans. Cash transferred or settled Infobird Cayman and\nits subsidiaries, on the one hand, and the consolidated VIE, on the other hand, is typically transferred through payments for fees under\nour Contractual Arrangements, expense reimbursements, or intercompany borrowings between Infobird Cayman or one of its subsidiaries and\nthe consolidated VIE. All such loans are interest-free, unsecured and payable on demand. As a general matter, Pure Media is entitled to\na service fee equal to all of the consolidated net income of the VIE. However, the service fee may be adjusted by Pure Media based on\nthe actual scope of services rendered by Pure Media and the operational needs and expanding demands of the consolidated VIE. The enforceability\nand treatment of the intercompany agreements within our organization, including the intercompany borrowings and the contractual arrangement\nwith the VIE, have not been tested in court. Likewise, to the extent cash and/or assets in the business are in the PRC and/or Hong Kong\nor our PRC and/or Hong Kong entities, such funds and/or assets may not be available to fund operations or for other use outside of the\nPRC and/or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries\nby the PRC government to transfer cash and/or assets. There are no tax consequences for intercompany borrowings or the payment for intercompany\nservices, except for the standard value added taxes and/or income taxes for the revenues and/or profits generated from such services.\n\n \n\nThe proceeds of any transactions\nwithin our organization, including with the VIE, are recorded on our books as “Inter-Company due,” and are eliminated in our\nconsolidated financial statements. For more details, please refer to the principles of consolidation set forth in the notes to our consolidated\nfinancial statements for the years ended December 31, 2025, 2024 and 2023 as set forth in this annual report. Cash transferred outside\nof our organization to satisfy our obligations to third parties are also effected via wire transfer.\n\n \n\nDuring the fiscal year ended\nDecember 31, 2025:\n\n \n\n \n●\napproximately\n$510,000 was transferred from Pure Media to Infobird Cayman;\n\n \n \n \n\n \n●\napproximately $330,000\nwas transferred from Infobird Cayman to Inforbird Technologies; and\n\n \n \n \n\n \n●\napproximately $330,000\nwas transferred from Inforbird Technologies to Guangnianzhiyuan.\n\n \n\nDuring the three years preceding\nthe date of this annual report, there have been no distributions or dividends by any of our direct or indirectly held subsidiaries to\nInfobird. During that same period, Infobird has not declared any dividends or made any distributions to its shareholders, including its\nU.S. investors, and we do not anticipate declaring a dividend in the foreseeable future. No assets other than cash are transferred within\nour organization. For more details, please see the section headed “Cash and Asset Flows through Our Organization” above.\n\n \n\nOn April 22, 2021, we completed\nour initial public offering, and since April 20, 2021, our ordinary shares have been listed on the Nasdaq Capital Market under the symbol\n“IFBD”.\n\n \n\nOur principal executive office\nis located at Room 706, 7/F, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Central, Hong Kong. Our telephone number\nis 86-010-52411819. Our registered office in the Cayman Islands is located at the office of Campbells Corporate Services Limited, Floor\n4, Willow House, Cricket Square, Grand Cayman KY1-9010, Cayman Islands.\n\n \n\nThe SEC maintains a website that\ncontains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on http://www.sec.gov.\nYou can also find information on our website located at http://www.infobird.com. Information contained on, or that can be accessed through,\nour website is not a part of, and shall not be incorporated by reference into, this annual report.\n\n \n\n51\n\n \n\n \n\n**B. Business Overview**\n\n \n\nOn August 11, 2023, the Company\nentered into the Agreement with CRservices, a Mahé Island limited company and a shareholder of the Company, pursuant to which,\nthe Company agreed to sell all the issued shares of Infobird HK, for a consideration of HK$10,000. Infobird HK owns 100% of the equity\ninterests of the WFOE, which, in turn, controls the VIE and its subsidiaries, through a series of contractual arrangements in the PRC\nInfobird HK, through the VIE and its subsidiaries, is engaged in the software-as-a-service, or SaaS business, providing AI-powered, or\nartificial intelligence enabled, customer engagement solutions in China, held substantially all of the assets of the Company and generated\nsubstantially all of the revenues of the Company prior to the Sale. Pursuant to the Agreement, upon execution of the Agreement, the Company\nwill no longer be involved in the business operation of Infobird HK and relinquish all rights and interests in the allocation of Infobird\nHK’s property and profits. The sale was completed on the same day. Upon completion, the Company ceased to have any business operation\nin mainland China. As previously announced, in July 2023, the Company formed Inforbird Technologies Limited, a Hong Kong corporation and\nwholly owned subsidiary, through which the Company commenced operations in Hong Kong.\n\n \n\n**Recent Developments**\n\n \n\nOn June 28, 2024 and July 31,\n2024, Infobird Co., Ltd entered into an equity acquisition agreement and an amendment to the equity acquisition agreement (the “Equity\nAcquisition Agreement”) with Shangri-La Trading Limited (the “Seller”), in a single transaction, to acquire 65% of the\nissued and outstanding equity of Pure Tech at closing. Pure Tech which in turn indirectly wholly controls Pinmu Century, a variable interest\nentity, and its subsidiaries, and Zhenxi Brand, a variable interest entity, and its subsidiaries. The aggregate purchase price for the\nequity acquisition was approximately $40.0 million, inclusive of transaction costs, and was funded using the cash on hand of $33 million\nand a promissory note of $7 million. The acquisition closed in November 2024.\n\n \n\nOn December 6, 2024, we entered\ninto an equity acquisition agreement with One One Business Limited, in a single transaction, to acquire 32% of the issued and outstanding\nequity of Pure Tech. The acquisition closed in December 2024. The Company paid $19.8 million in cash and issued a senior convertible note\nin the principal amount of US$5,953,095. After closing, the Company has become the legal and beneficial owner of 97% of the issued and\noutstanding equity of Pure Tech.\n\n \n\nPure Tech and its subsidiaries\nare a technology company specializing in digital advertising and marketing campaign for customers. With Pure Tech’s digital technologies,\nwe strive to develop effective and efficient online marketing strategies for customers. Based on the software and technology advantages\nbuilt by years of research and development investments, as well as years of accumulated experience in digital marketing and intelligent\ncustomer service, our Group plans to vertically expands the market in the maternal and infant vertical field within the same industry,\nexplores more customer opportunities, and enhances the company’s value and competitiveness in the industry.\n\n \n\nOur current emphasis and goals\nprimarily include implementing precision targeting and personalized audience engagement through data analytic and online multi-platforms\nvia our Acquisitions. Our service portfolio includes social media marketing, search engine optimization, and strategic content distribution,\nall designed to optimize customer acquisition, campaign performance, and conversion rate enhancement.\n\n \n\n*Pure Tech Overview*\n\n \n\nPure Tech demonstrates cross-domain\nexpertise spanning brand strategy, creative development, public relations, and digital marketing operations, providing end-to-end digital\nadvertising solutions.\n\n \n\nPure Tech dedicates itself to\ncrafting distinctive and impactful digital brand identities for corporate customers. Through rigorous market research and data analytic,\nPure Tech precisely identifies target audience insights and emerging market trends to establish scientifically validated brand positioning.\nPure Tech’s integrated digital branding ecosystem encompasses strategic brand conceptualization, visual identity design, and multichannel\ncommunication planning. This systematic approach enables enterprises to differentiate themselves in competitive digital markets while\nenhancing brand visibility and market penetration.\n\n \n\n52\n\n \n\n \n\nPure Tech maintains a robust\nteam of creative professionals and digital marketing specialists. The creative division delivers customized marketing solutions through\ninnovative thinking and imaginative approaches, excelling in advertising concepts, content production, and event ideation to capture consumer\nattention. Complemented by digital execution capabilities, Pure Tech implements precision targeting and personalized audience engagement\nthrough data analytic and online multi-platforms. The service portfolio of Pure Tech includes social media marketing, search engine optimization,\nand strategic content distribution, all designed to optimize customer acquisition, campaign performance, and conversion rate enhancement.\n\n \n\nPure Tech’s media collaborations\nare categorized into maternity vertical channels, and cross-industry channels. Maternity vertical channels include Kaiwang (Hangzhou)\nTechnology Co., Ltd. (“Qinbaobao”), Beijing Zhongming Century Technology Co., Ltd. Jiangsu Branch (“BabyTree”)\nand Ji’an Shengcheng Media Co., Ltd. (“Mama Network”); and cross-Industry channels include Renotes, Douyin (TikTok),\nand other social media platforms.\n\n \n\nPure Tech’s customers are\nprimarily from the maternal and infant care sector, with Customer A and Customer B. being the key accounts. As of December 31, 2025, their\nrevenue contributions accounted for 80.7% and 11.3%, respectively.\n\n \n\n**Regulations**\n\n \n\n**Hong Kong**\n\n \n\nAfter the completion of the Sale\nin August 2023, set forth is a summary of the most significant rules and regulations that affect our business in a material jurisdiction,\nHong Kong.\n\n \n\n**Business registration**\n\n \n\nThe Business Registration Ordinance\n(Chapter 310 of the Laws of Hong Kong) (“BRO”) requires that every person carrying on any business shall make application\nto the Commissioner of Inland Revenue in the prescribed manner for the registration of that business. The Commissioner of Inland Revenue\nmust register each business for which a business registration application is made or is deemed to be made under the BRO as soon as practicable\nafter the prescribed business registration fee and levy are paid and issue a business registration certificate or branch registration\ncertificate for the relevant business or the relevant branch as the case may be.\n\n \n\n**Supply of services**\n\n \n\nThe Supply of Services (Implied\nTerms) Ordinance (Chapter 457 of the Laws of Hong Kong) (“SOSO”) which aims to consolidate and amend the law with\nrespect to the terms to be implied in contracts for the supply of services (including a contract for the supply of a service whether or\nnot goods are also transferred or to be transferred, or bailed or to be bailed by way of hire under the contract) provides that:\n\n \n\n****\n\n \n(a)\nwhere the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill; and\n\n** **\n\n \n(b)\nwhere the supplier is acting in the course of a business, the time for service to be carried out is not fixed by the contract, is not left to be fixed in a manner agreed by the contract or is not determined by the course of dealing between the parties, there is an implied term that the supplier will carry out the service within a reasonable time.\n\n \n\nWhere a supplier is dealing with\na party to a contract for supply of service who deals as a consumer, the supplier cannot, by reference to any contract term, exclude or\nrestrict any liability of his arising under the contract by virtue of the SOSO. Otherwise, where any right, duty or liability would arise\nunder a contract for the supply of a service by virtue of the SOSO, it may (subject to the Control of Exemption Clauses Ordinance (Chapter\n71 of the Laws of Hong Kong)) be negatived or varied by express agreement, or by the course of dealing between the parties, or by such\nusage as binds both parties to the contract.\n\n \n\n53\n\n \n\n \n\n**Control of exemption clauses**\n\n \n\nThe Control of Exemption Clauses\nOrdinance (Chapter 71 of the Laws of Hong Kong) (“CECO”), which aims to limit the extent to which civil liability for breach\nof contract, or for negligence or other breach of duty, can be avoided by means of contract terms and otherwise, among others, provides\nthat:\n\n \n\n****\n\n \n(a)\nunder section 7, a person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence and in the case of other loss or damage, a person cannot exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness.\n\n \n \n \n\n \n(b)\nunder section 8, as between contracting parties where one of them deals as consumer or on the other’s written standard terms of business, as against that party, the other cannot by reference to any contract term (i) when himself in breach of contract, exclude or restrict any liability of his in respect of the breach, or (ii) claim to be entitled to render a contractual performance substantially different from that which was reasonably expected of him, or (iii) claim to be entitled in respect of the whole or any part of his contractual obligation, to render no performance at all, except in so far as the contract term satisfies the requirement of reasonableness.\n\n** **\n\n \n(c)\nunder section 9, a person dealing as a consumer cannot by reference to any contract term be made to indemnify another person (whether a party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract, except in so far as the contract term satisfies the requirement of reasonableness; and\n\n \n \n \n\n \n(d)\nunder section 11, as against a person dealing as consumer, the liability for breach of the obligations arising under sections 15, 16 and 17 of the Sales of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) cannot be excluded or restricted by reference to any contract term, and as against person dealing otherwise than as consumer, the liability arising under sections 15, 16 and 17 of the Sales of Goods Ordinance can be excluded or restricted by reference to a contract term, but only in so far as the terms satisfy the requirement of reasonableness.\n\n** **\n\n****\n\nSections 7, 8 and 9 of the\nCECO do not apply to, among others, any contract so far as it relates to the creation or transfer of a right or interest in any patent,\ntrade mark, copyright, registered design, technical or commercial information or other intellectual property, or relates to the termination\nof any such right or interest.\n\n \n\nIn relation to a contract term,\nthe requirement of reasonableness for the purpose of the CECO is satisfied only if the court or arbitrator determines that the term was\na fair and reasonable one to be included having regarded to the circumstances which were, or ought reasonably to have been, known to or\nin the contemplation of the parties when the contract was made.\n\n \n\n**Employment**\n\n \n\nPursuant to the Employment Ordinance\n(Chapter 57 of the Laws of Hong Kong) (“EO”), which came into full effect in Hong Kong on September 27,\n1968, all employees covered by the EO are entitled to basic protection under the EO including but not limited to payment of wages, restrictions\non wages deductions and the granting of statutory holidays.\n\n \n\nPursuant to the Mandatory Provident\nFund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) (“MPFSO”), which came into full effect in Hong Kong\non December 1, 2000, every employer of an employee covered by the MPFSO must take all practicable steps to ensure that the employee\nbecomes a member of a registered Mandatory Provident Fund (“MPF”) scheme. An employer who, without reasonable excuse, fails\nto comply with such a requirement may face a fine and imprisonment. The MPFSO provides that an employer who is employing a relevant employee\nmust, for each contribution period, from the employer’s own funds, contribute to the relevant MPF scheme the amount determined in\naccordance with the MPFSO.\n\n \n\n54\n\n \n\n \n\nPursuant to the Employees’\nCompensation Ordinance (Chapter 282 of the Laws of Hong Kong) (“ECO”), which came into full effect in Hong Kong\non December 1, 1953, all applicable employers are required to take out insurance policies to cover their liabilities under the ECO\nand at common law for injuries at work in respect of all of their employees. An employer failing to do so may be liable to a fine and\nimprisonment.\n\n \n\nPursuant to the Minimum Wage\nOrdinance (Chapter 608 of the Laws of Hong Kong) (“MWO”), which came into full effect in Hong Kong on May 1,\n2011, an employee covered by the MWO is entitled to be paid wages no less than the statutory minimum wage rate during the wage period.\nWith effect from May 1, 2019, the statutory minimum hourly wage rate is HK$37.5 (approximately US$4.8). Failure to comply with MWO\nconstitutes an offence under EO.\n\n \n\n**Personal data protection**\n\n \n\nThe data protection regime in\nHong Kong is governed by the Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) (“PDPO”), as amended,\nsupplemented or otherwise modified from time to time.\n\n \n\nThe Data Protection Principles\n(“DPPs” or “DPP”), which form part of the PDPO, outline the obligations imposed by the PDPO on data users and\nhow data users should collect, handle and use personal data, which are summarized below:\n\n \n\n \n(a)\nDPP1 (purpose and manner of collection): personal data should only be collected by fair means and for lawful purpose related to a function or activity of the data user, data collected should be necessary but not excessive, and the data subjects must be informed of the purpose of the collection.\n\n \n\n \n(b)\nDPP2 (accuracy and duration of retention): all personal data should be accurate and not kept any longer than is necessary for the fulfillment of the purpose for which the data is used.\n\n \n\n \n(c)\nDPP 3 (use of data): personal data should not be used for a different purpose unless with the consent of the data subject.\n\n \n\n \n(d)\nDPP 4 (data security): all practicable steps should be taken to protect the personal data collected against unauthorized or accidental access, processing, erasure, loss or use.\n\n \n\n \n(e)\nDPP 5 (openness and transparency): all practicable steps should be taken to ensure the public knows the kind of personal data held and the main purposes for holding it.\n\n \n\n \n(f)\nDPP 6 (access and correction): a data subject should be provided with the right to request access to and correction of their own personal data.\n\n \n\nNon-compliance with a data\nprotection principle may lead to a complaint to the Privacy Commissioner for Personal Data (the “Commissioner”). A claim for\ncompensation may also be made by a data subject who suffers damage by reason of a contravention of a requirement under the PDPO. When\nthe Commissioner receives a complaint or has reasonable grounds to believe there may be a contravention of PDPO, the Commissioner may\nconduct an investigation. If the relevant data user is found to be in breach of the provisions under the PDPO after investigation, the\nCommissioner may issue an enforcement notice to the data user directing remedial and/or preventive steps to be taken. Contravention of\nan enforcement notice issued by the Commissioner is also an offence which may result in a maximum fine of $50,000 and imprisonment for\ntwo years, with a daily penalty of $1,000. Subsequent convictions can result in a maximum fine of $100,000 and imprisonment for 2 years,\nwith a daily penalty of $2,000. The Commissioner may carry out criminal investigation and institute prosecution for offences under section\n64 of the PDPO as well as certain relevant offences. Depending on the severity of the cases, the Commissioner will decide whether to exercise\nthe prosecution power in his or her own name, or refer cases involving suspected commission of other offences to the Police or the Department\nof Justice for following up.\n\n \n\n55\n\n \n\n \n\nOn the other hand, data subjects\nmay also seek compensation by civil action from data users for damages caused by contravention of the PDPO.\n\n \n\n**Copyright and intellectual property**\n\n \n\nPursuant to the Copyright Ordinance\n(Chapter 528 of the Laws of Hong Kong), a person may incur civil liability for “secondary infringement” if that\nperson possesses, sells, distributes or deals with a copy of a work which is, and which he knows or has reason to believe to be, an infringing\ncopy of the work for the purposes of or in the course of any trade or business without the consent of the copyright owner.\n\n \n\nPursuant to the Trade Marks Ordinance\n(Chapter 559 of the Laws of Hong Kong), trademarks must be registered with the Trade Marks Registry of the Intellectual Property\nDepartment under the Trade Marks Ordinance and the Trade Marks Rules (Chapter 559A of the Laws of Hong Kong) in order to enjoy\nprotection by the laws of Hong Kong. Any use of the trade mark by third parties without the consent of the registered owner is an\ninfringement of the trade mark.\n\n \n\n**Competition**\n\n \n\nThe competition law in Hong Kong\nis primarily governed by the Competition Ordinance (Chapter 619 of the Laws of Hong Kong) (“Competition Ordinance”)\nwhich has been enacted since December 14, 2015 to (i) prohibit conduct that prevents, restricts or distorts competition in Hong Kong;\n(ii) prohibit mergers that substantially lessen competition in Hong Kong; and (iii) provide for incidental and connected matters. The\nCompetition Ordinance prohibits restrictions on competition through three rules, namely, the First Conduct Rule, the Second Conduct Rule,\nand the Merger Rule.\n\n \n\nThe First Conduct Rule provides\nthat an undertaking must not: (a) make or give effect to an agreement; (b) engage in a concerted practice; or (c) act as a member of an\nassociation of undertakings, or make or give effect to a decision of the association, if the object or effect of the agreement, concerted\npractice or decision is to prevent, restrict or distort competition in Hong Kong. The First Conduct Rule applies to an agreement, concerted\npractice or decision preventing, restricting or distorting competition in Hong Kong even if the agreement, decision or concerted practice\nis made outside of Hong Kong or if any party to the agreement, concerted practice, any undertaking or association of undertakings is outside\nHong Kong.\n\n \n\nThe Second Conduct Rule provides\nthat an undertaking having a substantial degree of market power in a market must not abuse that power by engaging in conduct that has\nas its object or effect the prevention, restriction or distortion of competition in Hong Kong. Conducts under the Second Conduct Rule\nmay constitute an abuse if it involves predatory behavior towards competitors or limiting production, markets or technical development\nto the prejudice of consumers. When determining whether an undertaking has a substantial degree of market power in a market, factors which\nmay be taken into account for such determination include the market share of the undertaking, the undertaking’s power to make pricing\nand other decisions and any barriers to entry to competitors into the relevant market. As with the First Conduct Rule, the Second Conduct\nRule also applies even if the undertaking engaging in the conduct is outside of Hong Kong or the conduct is engaged in outside of Hong\nKong.\n\n \n\nThe Merger Rule prohibits undertakings\nfrom directly or indirectly carrying out a merger that has, or is likely to have, the effect of substantially reduce the level of competition\nin Hong Kong. This rule is only applicable to telecommunication carrier licensees. There is no general merger control regime in Hong Kong.\n\n \n\nIn Hong Kong, breach of\nthe Competition Ordinance is not a criminal offence, except for providing false information and obstructing investigation by the Competition\nCommission. The Competition Commission (or the Communications Authority, for the telecommunications industry) is the principal law enforcement\nbody. The Competition Tribunal is a specialized court within the Hong Kong High Court with the power to impose sanctions and order\nredress in cases brought before it by the Competition Commission or the Communications Authority. In general, the Competition Tribunal\nmay impose financial and non-financial sanctions which include:\n\n \n\n56\n\n \n\n \n\n \n●\nfines not exceeding 10% of the turnover obtained in Hong Kong for each year of infringement up to a maximum of 3 years\n\n \n\n \n●\ninterim injunctions during investigations or proceedings\n\n \n\n \n●\ndisqualification orders against directors for up to 5 years\n\n \n\n \n●\ndisqualification orders against directors for up to 5 years\n\n \n\n \n●\nawards of damages to aggrieved parties as a result of the contravention\n\n \n\nThe Competition Ordinance has extraterritorial reach\nin that it applies to activities conducted outside Hong Kong if they have the object or effect of preventing, restricting or distorting\ncompetition in Hong Kong.\n\n \n\nThere is no standalone private action. Individuals\nwho have suffered damages may bring a follow-on private action following the ruling by the Competition Tribunal.\n\n \n\n**People’s Republic of China**\n\n \n\nAfter the completion of the Acquisitions\nin November 2024 and December 2024, respectively, set forth is a summary of the most significant rules and regulations that affect our\nbusiness in a material jurisdiction, People’s Republic of China.\n\n \n\n**Regulations on Value-added Telecommunications Services**\n\n \n\nThe Telecommunications Regulations\nof the PRC, or the Telecom Regulations, implemented on September 25, 2000 and amended on July 29, 2014 and February 6, 2016, are the primary\nPRC law governing telecommunications services and set out the general framework for the provision of both “basic telecommunication\nservices” and “value-added telecommunication services” by domestic PRC companies. “Value-added telecommunication\nservices” is defined as telecommunications and information services provided through public networks, and, according to the Telecom\nRegulations, operators of value-added telecommunications services shall obtain operating licenses prior to commencing operations from\nthe MIIT, or its provincial level counterparts. Enterprises operating telecommunication business in absence of operating license shall\nbe ordered by the MIIT, or its provincial level counterparts, to rectify the violations, the illegal income shall be confiscated, and\na penalty between three times and five times of the illegal income shall be imposed. If there is no illegal income or the illegal income\nis lower than RMB 50,000 (approximately $7,100), a penalty between RMB 100,000 (approximately $14,200) and RMB 1,000,000 (approximately\n$142,000) shall be imposed. In a serious case, the business shall be suspended.\n\n \n\nThe Catalogue of Telecommunications\nBusiness, or the Catalogue, which was issued as an attachment to the Telecom Regulations and revised and promulgated on June 6, 2019,\nfurther identifies information services and online data processing and transaction processing services as value-added telecommunications\nservices. Pursuant to the Catalogue, the call center business refers to the provision of business consultation, information consultation\nand data query services to users, with the entrustment of enterprises or institutions, based on the call center system and database technology\nconnected to public communication network or the internet and the information database established by information collection, processing\nand storage. We engage in business activities that are value-added telecommunications services as defined and described by the Telecom\nRegulations and the Catalogue.\n\n \n\n57\n\n \n\n \n\nOn March 5, 2009, the MIIT issued\nthe Measures on the Administration of Telecommunications Business Operating Permits, or the Telecom License Measures, which initially\nbecame effective on April 10, 2009 and was amended on July 3, 2017, effective on September 1, 2017, to supplement the Telecom Regulations.\nThe Telecom License Measures provide that there are two types of telecommunications operating licenses, or the VAT Licenses for operators\nin China, one for basic telecommunications services and one for value-added telecommunications services. A distinction is also made to\nlicenses for value-added telecommunications services as to whether a license is granted for “intra-provincial” or “trans-regional”\n(inter-provincial) activities. An appendix to each license granted will detail the permitted activities of the enterprise to which it\nwas granted. An approved telecommunications services operator must conduct its business (whether basic or value-added) in accordance with\nthe specifications recorded in its VAT License.\n\n \n\nOn January 8, 2021, the CAC promulgated\nthe Internet Information Services Measures (Revised Draft for Comments), which sets forth detailed rules on the internet information service\nactivities. As of the date of this annual report, the draft remains in draft form and has not been formally adopted.\n\n \n\n**Regulations on Foreign Direct Investment in Value-Added\nTelecommunications Companies**\n\n \n\nForeign direct investment in\ntelecommunications companies in China is governed by the Provisions on the Administration of Foreign-Invested Telecommunications Enterprises,\nor the FITE Regulations, which were issued by the State Council on December 11, 2001, became effective on January 1, 2002 and recently\namended on March 29, 2022 and took effect on May 1, 2022, and the Catalog of Industries for Encouraging Foreign Investment (2020 Version),\nor the Encouragement Catalogue, which were promulgated by the NDRC and the MOFCOM on December 27, 2020 and became effective on January\n27, 2021, and the Special Management Measures (Negative List) for the Access of Foreign Investment (2021 Version), or the Negative List,\nwhich were issued by NDRC, and the MOFCOM, on December 27, 2021. Under the aforesaid regulations, foreign invested telecommunications\nenterprises in the PRC, or FITEs, are generally required to be established as Sino-foreign equity joint ventures with limited exceptions.\nIn general, the foreign party to a FITE engaging in value-added telecommunications services may hold up to 50% of the equity of the FITE\nwith limited exceptions, of which the geographical area it may conduct telecommunications services is provided by the MIIT in accordance\nwith relevant provisions as mentioned above.\n\n \n\nOn June 30, 2016, the MIIT issued\nan Announcement of the Ministry of Industry and Information Technology on Issues concerning the Provision of Telecommunication Services\nin Mainland China by Service Providers from Hong Kong and Macau, or the MIIT Announcement, which provides that investors from Hong Kong\nand Macau may hold no more than 50% of the equity in FITEs engaging in certain specified categories of value-added telecommunications\nservices.\n\n \n\nOn July 13, 2006, the MIIT issued\nthe Notice of the Ministry of Information Industry on Intensifying the Administration of Foreign Investment in Value-added Telecommunications\nServices, or the MIIT Notice, which reiterates certain provisions of the FITE Regulations. In addition to the provisions stated in FITE\nRegulations, the MIIT Notice further provide that a domestic company that holds a value-added telecommunications license, is prohibited\nfrom leasing, transferring or selling the value-added telecommunications license to foreign investors in any form, and from providing\nany assistance, including providing resources, sites or facilities, to foreign investors to conduct value-added telecommunications businesses\nillegally in China. The MIIT Notice also requires each value-added telecommunications license holder to have appropriate facilities for\nits approved business operations and to maintain such facilities in the regions covered by its license, and specifically, with regard\nto the domain names and trademarks, the MIIT Notice required that trademarks and domain names that are used in the provision of Internet\ncontent services must be owned by the VAT License holder or its shareholders.\n\n \n\n**Regulations on Internet Information Services**\n\n \n\nThe Administrative Measures on\nInternet Information Services, or the Internet Information Measures, which was issued by the State Council on September 25, 2000 and amended\non January 8, 2011, set out guidelines on the provision of internet information services. Pursuant to the Internet Information Measures,\n“internet information services” are defined as services that provide information to online users through the internet. The\nInternet Information Measures classifies internet information services into commercial internet information services and non-commercial\nInternet information services. The commercial internet information services refer to services that provide information or services to\ninternet users with charge. The Internet Information Measures requires commercial internet information services operators to obtain a\nvalue-added telecommunications business operating license, or the ICP License, from the relevant government authorities before engaging\nin any commercial internet information services operations in China.\n\n \n\n58\n\n \n\n \n\nIn addition, internet information\nservice providers are required to monitor their websites to ensure that they do not contain content prohibited by laws or regulations.\nInternet information service providers are prohibited from producing, copying, publishing or distributing information that is humiliating\nor defamatory to others or that infringes the legal rights of others. The PRC government may require corrective actions to address non-compliance\nby ICP License holders or revoke their ICP License for serious violations. Furthermore, the MIIT Circular on Regulating the Use of Domain\nNames in Internet Information Services, issued on November 27, 2017 and that took effect on January 1, 2018, requires internet information\nservice providers to register and own the domain names they use in providing internet information services.\n\n \n\n**Regulations on Mobile Internet Application Information\nServices**\n\n \n\nThe Cyberspace Administration\nof China, or CAC issued the Administrative Provisions on Mobile Internet Application Information Services on June 28, 2016, which took\neffect on August 1, 2016, requiring internet information service providers, or ICPs, who provide information services through mobile internet\napplications, or APPs, i.e. mobile application providers, to authenticate the identity of the registered users, establish procedures for\nprotection of user information, establish procedures for information content censorship and management, ensure that users are given adequate\ninformation concerning an APP and are able to choose whether an APP is installed and whether or not to use an installed APP and its functions,\nprotect intellectual property rights concerned and keep records of users’ logs for sixty (60) days. Mobile application providers\nand application store service providers are prohibited from engaging in any activity that may endanger national security, disturb the\nsocial order, or infringe the legal rights of third parties, and may not produce, copy, issue or disseminate through mobile applications\nany content prohibited by laws and regulations. If an ICP violates these regulations, mobile app stores through which the ICP distributes\nits APPs may issue warnings, suspend the release of its APPs, or terminate the sale of its APPs, and/or report the violations to governmental\nauthorities.\n\n \n\nICPs are also required under\nthe Interim Measures on the Administration of Pre-Installation and Distribution of Applications for Mobile Smart Terminals, which was\nissued on December 16, 2016 and took effect on July 1, 2017, to ensure that APPs, as well as its ancillary resource files, configuration\nfiles and user data, can be conveniently uninstalled by a user, unless it is a basic function software (i.e., software that supports the\nnormal functioning of hardware and operating system of a mobile smart device).\n\n \n\n**Regulations Relating to Information Security and\nPrivacy Protection**\n\n \n\n**Regulations on Information Security**\n\n \n\nIn recent years, PRC government\nauthorities have enacted laws and regulations with respect to internet information security and protection of personal information from\nabusing or unauthorized disclosure. Pursuant to the Decision on the Maintenance of Internet Security issued by the NPC Standing Committee\non December 28, 2000, which was amended on August 27, 2009, persons may be subject to criminal liabilities in China for any attempt to:\n(i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information;\n(iii) leak state secrets; (iv) spread false commercial information; (v) infringe upon intellectual property rights or damage business\ncredit or reputation of others; (vi) intentionally make, spread computer viruses and other destructive programs, attack computer systems\nand communication networks which lead to damages to such systems and networks; (vii) carry out theft, fraud, racketeering through internet;\nand (viii) other activities prohibited by relevant laws and regulations.\n\n \n\nThe Administration Measures on\nthe Security Protection of Computer Information Network with International Connections, issued by the Ministry of Public Security of the\nPRC, or MPS, on December 16, 1997 and amended by the State Council on January 8, 2011, prohibits using the internet in ways that result\nin a leak of state secrets or a spread of socially destabilizing content. The MPS has supervision and inspection powers and relevant local\nsecurity bureaus may also have jurisdiction. If a value-added-telecommunications service license holder violates these measures, the government\nof the PRC may revoke its value-added-telecommunications service license and shut down its websites.\n\n \n\n59\n\n \n\n \n\nThe Administrative Provisions\non Mobile Internet Application Information Services, issued by the CAC on June 28, 2016, which took effect on August 1, 2016, providing\nthat mobile Internet application providers are prohibited from engaging in any activity that may endanger national security, disturb social\norder or infringe the legal rights of third parties, and may not produce, copy, release or disseminate through mobile Internet applications\nany content prohibited by laws and regulations.\n\n \n\nOn November 7, 2016, the NPC\nStanding Committee promulgated the Cyber Security Law of the PRC, or the PRC Cyber Security Law, which took effect on June 1, 2017, pursuant\nto which, network operators must comply with laws and regulations and fulfil their obligations to safeguard security of the network when\nconducting business and providing services. Those who provide services through networks must take technical measures and other necessary\nmeasures pursuant to laws, regulations and compulsory national requirements to safeguard the safe and stable operation of the networks,\nrespond to network security incidents effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality\nand usability of network data. It also states that network operator may not collect personal information that is irrelevant to the services\nit provides or collect or use the personal information in violation of the provisions of laws or agreements between both parties. Under\nthe Cyber Security Law, network operators are subject to various security protection-related obligations, including:\n\n \n\n \n●\ncomplying with security protection obligations in accordance with tiered requirements with respect to maintenance of the security of Internet systems, which include formulating internal security management rules and developing manuals, appointing personnel who will be responsible for internet security, adopting technical measures to prevent computer viruses and activities that threaten Internet security, adopting technical measures to monitor and record status of network operations, holding Internet security training events, retaining user logs for at least six (6) months, and adopting measures such as data classification, key data backup, and encryption for the purpose of securing networks from interference, vandalism, or unauthorized visits, and preventing network data from leakage, theft, or tampering;\n\n \n \n \n\n \n●\nverifying users’ identities before signing agreements or providing services such as network access, domain name registration, landline telephone or mobile phone access, information publishing, or real-time communication services;\n\n \n \n \n\n \n●\nclearly indicating the purposes, methods and scope of the information collection, the use of information collection, and obtain the consent of those from whom the information is collected when collecting or using personal information;\n\n \n \n \n\n \n●\nstrictly preserving the privacy of user information they collect, and establish and maintain systems to protect user privacy; and\n\n \n \n \n\n \n●\nstrengthening management of information published by users. When the network operators discover information prohibited by laws and regulations from publication or dissemination, they shall immediately stop dissemination of that information, including taking measures such as deleting the information, preventing the information from spreading, saving relevant records, and reporting to the relevant governmental agencies.\n\n \n\nOn November 15, 2018, the CAC\nissued the Provisions on Security Assessment of the Internet Information Services with Public Opinion Attributes or Social Mobilization\nCapacity, which came into effect on November 30, 2018. The provisions require Internet information providers to conduct security assessments\non their Internet information services if their services include forums, blogs, microblogs, chat rooms, communication groups, public accounts,\nshort-form videos, online live-streaming, information sharing, mini programs or other functions that provide channels for the public to\nexpress opinions or have the capability of mobilizing the public to engage in specific activities. Internet information providers must\nconduct self-assessment on, among other things, the legality of new technology involved in the services and the effectiveness of security\nrisk prevention measures, and file the assessment report with the local competent cyberspace administration authority and public security\nauthority.\n\n \n\n60\n\n \n\n \n\nThe Regulations on Cyber Security\nSupervision and Inspection of Public Security Organs, which was issued by the MPS on September 15, 2018 and came into effect on November\n1, 2018, is an important basis for the Public Security Bureau to strengthen the enforcement of the Cyber Security Law.\n\n \n\nInternet security in China is\nalso regulated and restricted from a national security standpoint. On July 1, 2015, the SCNPC promulgated the new National Security Law,\nwhich took effect on the same date and replaced the former National Security Law promulgated in 1993. According to the new National Security\nLaw, the state shall ensure that the information system and data in important areas are secure and controllable. In addition, according\nto the new National Security Law, the state shall establish national security review and supervision institutions and mechanisms, and\nconduct national security reviews of key technologies and IT products and services that affect or may affect national security. There\nare uncertainties on how the new National Security Law will be implemented in practice.\n\n \n\nPursuant to the Ninth Amendment\nto the Criminal Law issued by the NPC Standing Committee on August 29, 2015, which took effect on November 1, 2015, any Internet service\nprovider that fails to fulfil the obligations related to internet information security administration as required by applicable laws and\nrefuses rectification orders is subject to criminal liability for (i) any dissemination of illegal information in large scale, (ii) any\nsevere effect due to leakage of the client’s information, (iii) any serious loss of criminal evidence, or (iv) other severe situation.\nThese amendments also state that any individual or entity that (i) sells or provides personal information to others that violates applicable\nlaw, or (ii) steals or illegally obtains any personal information, is subject to criminal penalty for severe violations.\n\n \n\nOn October 21, 2019, the Supreme\nPeople’s Court and the Supreme People’s Procuratorate jointly issued the Interpretations on Certain Issues Regarding the Applicable\nof Law in the Handling of Criminal Case Involving Illegal Use of Information Networks and Assisting Committing Internet Crimes, which\ncame into effect on November 1, 2019, and further clarifies the meaning of Internet service provider and the severe situations of the\nrelevant crimes.\n\n \n\nOn July 6, 2021, the relevant\nPRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law, which emphasized\nthe need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas\nlistings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems, will be taken to\ndeal with the risks and incidents of China-based overseas listed companies.\n\n \n\nOn June 10, 2021, for purpose\nof further regulating data processing activities, safeguarding data security, promoting data development and utilization, protecting the\nlawful rights and interests of individuals and organizations, and maintaining national sovereignty, security, and development interests,\nthe SCNPC published the PRC Data Security Law, which took effect on September 1, 2021. The Data Security Law requires data processing,\nwhich includes the collection, storage, use, processing, transmission, provision and publication of data, to be conducted in a legitimate\nand proper manner. The Data Security Law provides for data security and privacy obligations on entities and individuals carrying out data\nprocessing activities. The Data Security Law also introduces a data classification and hierarchical protection system based on the importance\nof data in economic and social development, and the degree of harm it may cause to national security, public interests, or legitimate\nrights and interests of individuals or organizations if such data are tampered with, destroyed, leaked, illegally acquired or illegally\nused. The appropriate level of protection measures is required to be taken for each respective category of data. For example, a processor\nof important data is required to designate the personnel and the management body responsible for data security, carry out risk assessments\nof its data processing activities and file the risk assessment reports with the competent authorities. State core data, i.e., data having\na bearing on national security, the lifelines of national economy, people’s key livelihood and major public interests, shall be\nsubject to stricter management system. Moreover, the Data Security Law provides a national security review procedure for those data processing\nactivities which affect or may affect national security and imposes export restrictions on certain data and information. In addition,\nthe Data Security Law also provides that any organization or individual within the territory of the PRC shall not provide any foreign\njudicial body and law enforcement body with any data stored within the territory of the PRC without the approval of the competent PRC\ngovernmental authorities.\n\n \n\n61\n\n \n\n \n\nOn August 17, 2021, the State\nCouncil promulgated the Regulations on Security Protection of Critical Information Infrastructure, which became effective on September\n1, 2021. Pursuant to the Regulations on Protection of Critical Information Infrastructure, critical information infrastructure refers\nto any important network facilities and information systems of an important industry and field such as public communication and information\nservice, energy, transport, water conservation, finance, public services, e-government affairs and national defense related science and\ntechnology industry, and other industries and fields that may seriously endanger national security, people’s livelihood and public\ninterest in case of damage, function loss or data leakage. In addition, relevant administration departments of each important industry\nand field are responsible for formulating eligibility criteria and determining the critical information infrastructure in the respective\nindustry or field. The operators will be informed about the final determination as to whether they are categorized as critical information\ninfrastructure operators.\n\n \n\nOn December 31, 2021, the CAC,\ntogether with the MIIT, the MPS and the SAMR, jointly issued the Administrative Provisions on Algorithm Recommendation of Internet Information\nServices, with effect from March 1, 2022, which provides that algorithm recommendation service providers are not allowed to use algorithms\nto register false user accounts, block information, give excessive recommendations, and that users should be given the option to easily\nturn off algorithm recommendation services.\n\n \n\nOn October 29, 2021, the CAC\npublished the Measures for the Security Assessment of Outbound Data (Draft for Comments), which intends to regulate the outbound transfer\nof (including cross-border assess to) important data and/or personal information collected or generated in domestic operations within\nthe People’s Republic of China. The security assessment requirement was initially introduced in the PRC Cybersecurity Law against\nthe critical information infrastructure operators only, but the Measures for the Security Assessment of Outbound Data (Draft for Comments)\nhas extended the security assessment obligation to all data processors, and provides two types of security assessment to be undertaken\nbefore providing data from China to overseas, namely risk self-assessment and security assessment by CAC. The Measures for the Security\nAssessment of Outbound Data were formally adopted on September 1, 2022.\n\n \n\nOn November 14, 2021, the CAC\npublished the Draft Administration Regulations on Cyber Data Security, which further regulate the internet data processing activities\nand emphasize the supervision and management of network data security, and further stipulate the obligations of internet platform operators,\nsuch as to establish a system for disclosure of platform rules, privacy policies and algorithmic strategies related to data, and timely\ndisclosure of formulation procedures and adjudication procedures and more. Specifically, the draft regulations require data processors\nto, among others, (i) adopt immediate remediation measures when finding that network products and services they use or provide have security\ndefects and vulnerabilities, or threaten national security or endanger public interest, and (ii) follow a series of detailed requirements\nwith respect to processing of personal information, management of important data and proposed overseas transfer of data. In addition,\nsuch draft regulations require data processors handling important data or the data processors listed overseas to complete an annual data\nsecurity assessment and file a data security assessment report to applicable regulators. Such annual assessment, as required by the draft\nregulations, would encompass areas including but not limited to the status of important data processing, data security risks identified\nand the measures adopted, the effectiveness of data protection measures, the implementation of national data security laws and regulations,\ndata security incidents that occurred and their handling, and a security assessment with respect to sharing and provision of important\ndata overseas. As of the date of this annual report, the Network Data Security Administration Regulations (the final version) were officially\npromulgated on September 24, 2024, and took effect on January 1, 2025.\n\n \n\nOn January 4, 2022, the CAC and\nother twelve PRC regulatory authorities jointly revised and promulgated the Measures for Cybersecurity Review, or the Cybersecurity Review\nMeasures, which came into effect on February 15, 2022 and the Measures for Cybersecurity Review which took effect on June 1, 2020 was\nabolished at the same time. The Cybersecurity Review Measures requires that critical information infrastructure operators that purchase\nnetwork products and services shall anticipate the potential national security risk of products and services after they enter operation.\nIf they affect or may affect national security, a cybersecurity review shall be reported to the Cybersecurity Review Office.\n\n \n\n62\n\n \n\n \n\nOn July 7, 2022, the CAC promulgated\nthe Security Assessment Measures for Cross-border Data Transfers with effect from September 1, 2022, pursuant to which a data processor\nshall declare security assessment for its outbound data transfer where: (i) it provides critical data abroad; (ii) it is a critical information\ninfrastructure operator or a data processor processing the personal information of more than one million individuals, and it provides\npersonal information abroad; (iii) it has provided personal information of 100,000 individuals or sensitive personal information of 10,000\nindividuals in total abroad since January 1 of the previous year; or (iv) any other circumstances prescribed by the CAC. On March 22,\n2024, the CAC promulgated the Promotion and Regulation of Cross-Border Data Flow Provisions, which relaxed certain conditions for cross-border\ndata transfers and narrowed the scope of mandatory security assessments.\n\n \n\n**Regulations on Privacy Protection**\n\n \n\nOn December 13, 2005, the MPS\nissued the Regulations on Technological Measures for Internet Security Protection, or the Internet Protection Measures, which took effect\non March 1, 2006, requiring internet service providers to utilize standard technical measures for internet security protection. and to\nkeep records of certain information about their users (including user registration information, log-in and log-out time, IP address, content\nand time of posts by users) for at least sixty (60) days and submit the above information as required by laws and regulations.\n\n \n\nUnder the Several Provisions\non Regulating the Market Order of Internet Information Services issued by the MIIT on December 29, 2011 and that took effect on March\n15, 2012, ICPs are also prohibited from collecting any personal user information or providing any information to third parties without\nthe consent of the user. The Cyber Security Law provides an exception to the consent requirement where the information is anonymous, not\npersonally identifiable and unrecoverable. ICPs must expressly inform the users of the method, content and purpose of the collection and\nprocessing of user personal information and may only collect information necessary for its services. ICPs are also required to properly\nmaintain user personal information, and in case of any leak or likely leak of user personal information, ICPs must take remedial measures\nimmediately and report any material leak to the telecommunications regulatory authority.\n\n \n\nIn addition, the Decision on\nStrengthening Network Information Protection issued by the NPC Standing Committee on December 28, 2012 emphasizes the need to protect\nelectronic information that contains individual identification information and other private data. The decision requires ICPs to expressly\ninform their users of the internet service providers’ collection and use of user personal information, establish and publish policies\nregarding the purpose, manner and scope of Internet service providers’ collection and use of personal electronic information standards,\ncollect and use user personal information only with the consent of the users and only within the scope of such consent and to take necessary\nmeasures to ensure the security of the information and to prevent leakage, damage or loss. The decision also mandates that Internet services\nproviders and their employees must keep strictly confidential user personal information that they collect.\n\n \n\nFurthermore, MIIT’s Order\non Protection of Personal Information of Telecommunications and Internet Users, or the Order, which was issued on July 16, 2013 and took\neffect on September 1, 2013, contains detailed requirements on the use and collection of personal information as well as the security\nmeasures to be taken by ICPs. Most of the requirements under the Order that are relevant to Internet services providers are consistent\nwith the requirements already established under the MIIT provisions discussed above, except that under the Order the requirements are\nmore strict and have a wider scope. If an Internet services provider wishes to collect or use personal information, it may do so only\nif such collection is necessary for the services it provides. Further, it must disclose to its users the purpose, method and scope of\nany such collection or use, and must obtain consent from the users whose information is being collected or used. Internet services providers\nare also required to establish and publish their protocols relating to personal information collection or use, keep any collected information\nstrictly confidential, and take technological and other measures to maintain the security of such information. Internet services providers\nare also required to cease any collection or use of the user personal information, and de-register the relevant user account, when a given\nuser stops using the relevant Internet service. Internet services providers are further prohibited from divulging, distorting or destroying\nany such personal information, or selling or providing such information unlawfully to other parties. The Order states, in broad terms,\nthat violators may face warnings, fines, and disclosure to the public and, in the most severe cases, criminal liability.\n\n \n\n63\n\n \n\n \n\nOn January 5, 2015, the SAIC\npromulgated the Measures on Punishment for Infringement of Consumer Rights, which was revised on October 23, 2020, pursuant to which business\noperators collecting and using personal information of consumers must comply with the principles of legitimacy, propriety and necessity,\nspecify the purpose, method and scope of collection and use of the information, and obtain the consent of the consumers whose personal\ninformation is to be collected. Business operators may not (i) collect or use personal information of consumers without their consent,\n(ii) unlawfully divulge, sell or provide personal information of consumers to others or (iii) send commercial information to consumers\nwithout their consent or request, or when a consumer has explicitly declined to receive such information.\n\n \n\nOn May 8, 2017, the Supreme People’s\nCourt and the Supreme People’s Procuratorate released the Interpretations of the Supreme People’s Court and the Supreme People’s\nProcuratorate on Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement of Citizens’\nPersonal Information, which took effect on June 1, 2017. It clarifies several concepts regarding the crime of “infringement of citizens’\npersonal information,” including “citizen’s personal information,” “provision,” and “unlawful\nacquisition.”\n\n \n\nPursuant to the Announcement\nof Conducting Special Supervision against the Illegal Collection and Use of Personal Information by APP, which was issued on January 23,\n2019, APP operators should collect and use personal information in compliance with the Cyber Security Law and should be responsible for\nthe security of personal information obtained from users and take effective measures to strengthen the personal information protection.\nFurthermore, APP operators should not force their users to make authorization by means of bundling, suspending installation or in other\ndefault forms and should not collect personal information in violation of laws, regulations or breach of user agreements. Such regulatory\nrequirements were emphasized by the Notice on the Special Rectification of APPs Infringing upon User’s Personal Rights and Interests,\nwhich was issued by MIIT on October 31, 2019. On November 28, 2019, the CAC, MIIT, the MPS and SAMR jointly issued the Measures to Identify\nIllegal Collection and Usage of Personal Information by Apps, which lists six types of illegal collection and usage of personal information,\nincluding “failure to publish rules on the collection and usage of personal information,” “failure to expressly state\nthe purpose, manner and scope of the collection and usage of personal information,” “collecting and using personal information\nwithout obtaining consents from users,” “collecting personal information irrelevant to the services provided,” “providing\npersonal information to other parties without obtaining consent” and “failure to provide the function of deleting or correcting\npersonal information as required by law or failure to publish the methods for complaints and reports or other information.”\n\n \n\nIn addition, the Civil Code of\nthe PRC, which was issued by the NPC on May 28, 2020 and took effect on January 1, 2021, requires personal information of individuals\nto be protected. Any organization or individual requiring personal information of others shall obtain such information legally and ensure\nthe security of such information, and shall not illegally collect, use, process, or transmit such personal information, or illegally buy,\nsell, provide, or publish such personal information.\n\n \n\nOn August 22, 2019, the CAC promulgated\nthe Provisions on the Cyber Protection of Children’s Personal Information, which took effect on October 1, 2019, requiring that\nbefore collecting, using, transferring or disclosing the personal information of a child, any Internet service operator should inform\nthat child’s guardians in a noticeable and clear manner and obtain their consents. Meanwhile, Internet service operators should\ntake measures like encryption when storing children’s personal information.\n\n \n\nAccording to the Law of the PRC\non the Protection of Minors (2020 Revision), which took effect on June 1, 2021, information processors must follow the principles of legality,\nlegitimacy and necessity when processing personal information of minors via internet, and must obtain consent from minors’ parents\nor other guardians when processing personal information of minors under age of 14. In addition, internet service providers must promptly\nalert upon the discovery of publishing private information by minors via the internet and take necessary protective measures.\n\n \n\n64\n\n \n\n \n\nOn August 20, 2021, the SCNPC\npromulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights\nand privacy protection and took effect on November 1, 2021. The Personal Information Protection Law raises the protection requirements\nfor processing personal information, and specifies the rules for processing sensitive personal information, which refers to personal information\nthat, once leaked or illegally used, may easily cause harm to the dignity of natural persons or cause harm to the safety of people or\nproperty, including information on biometric characteristics, financial accounts, individual location tracking and others, as well as\npersonal information of minors under the age of 14. Personal information processors shall bear responsibility for their personal information\nprocessing activities, and adopt necessary measures to safeguard the security of the personal information they process. Otherwise, the\npersonal information processors will be subject to correction of its operations, suspension or termination of the provision of services,\nconfiscation of illegal income, fines or other penalties.\n\n \n\nOn March 12, 2021, the CAC and\nother governmental authorities promulgated Necessary Personal Information Range Provisions of Common Types of Apps, effective on May 1,\n2021, which specify the scope of necessary personal information for common types of mobile apps. Several subsequent regulations have been\nformally adopted to further strengthen privacy protection, including the Measures for the Administration of Compliance Audits of Personal\nInformation Protection (effective May 1, 2025), the Measures for the Administration of Security of Facial Recognition Technology Applications\n(effective June 1, 2025), and the Cybersecurity Law (2025 Amendment) (effective January 1, 2026), which introduced enhanced penalties\nand AI governance provisions.\n\n \n\n**Regulations Relating to Product Liability**\n\n \n\nManufacturers and vendors of\ndefective products in the PRC may incur liability for losses and injuries caused by such products. Under the Civil Code of the PRC, which\nwas promulgated on May 28, 2020 and became effective on January 1, 2021, manufacturers or retailers of defective products that cause property\ndamage or physical injury to any person will be subject to civil liability.\n\n \n\nThe Product Quality Law of the\nPRC (as amended in 2000, 2009 and 2018) and the Law of the PRC on the Protection of the Rights and Interests of Consumers (as amended\nin 2009 and 2013), which were enacted to protect the legitimate rights and interests of end-users and consumers and to strengthen the\nsupervision and control of the quality of products. If our products are defective and cause any personal injuries or damage to assets,\nour customers have the right to claim compensation from us.\n\n \n\n** Regulations on Intellectual Property in the PRC**\n\n \n\n**Copyright**\n\n \n\nPursuant to the Copyright Law\nof the PRC, which was first promulgated by the Standing Committee of the National People’s Congress on September 7, 1990 and became\neffective from June 1, 1991, and was last amended on November 11, 2020 and became effective as of June 1, 2021, copyrights include personal\nrights such as the right of publication and that of attribution as well as property rights such as the right of production and that of\ndistribution. Reproducing, distributing, performing, projecting, broadcasting or compiling a work or communicating the same to the public\nvia an information network without permission from the owner of the copyright therein, unless otherwise provided in the Copyright Law\nof the PRC, constitute infringements of copyrights. The amended Copyright Law extends copyright protection to Internet activities, products\ndisseminated over the internet and software products. In addition, there is a voluntary registration system administered by the China\nCopyright Protection Center.\n\n \n\n65\n\n \n\n \n\nIn order to further implement\nthe Computer Software Protection Regulations, promulgated by the State Council on June 4, 1991 and amended on January 30, 2013, the National\nCopyright Administration, or the NCA, issued the Computer Software Copyright Registration Procedures on April 6, 1992 and amended on February\n20, 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights. The China Copyright\nProtection Center shall grant registration certificates to the computer software copyrights applicants which meet the requirements of\nboth the software copyright registration procedures and the computer software protection regulations.\n\n \n\n**Trademark**\n\n \n\nPursuant to the Trademark Law\nof the PRC, or the Trademark Law, which was first promulgated by the Standing Committee of the National People’s Congress on August\n23, 1982 and became effective from March 1, 1983, and was most recently amended on April 23, 2019 and became effective on November 1,\n2019, the right to exclusive use of a registered trademark shall be limited to trademarks which have been approved for registration and\nto goods and/or services for which the use of such trademark has been approved. The period of validity of a registered trademark shall\nbe ten years, counted from the day the registration is approved, and may be renewed for another ten years provided relevant application\nprocedures have been completed within twelve (12) months before the end of the validity period. According to this law, using a trademark\nthat is identical to or similar to a registered trademark in connection with the same or similar goods and/or services without the authorization\nof the owner of the registered trademark constitutes an infringement of the exclusive right to use a registered trademark.\n\n \n\nThe Implementation Regulation\nfor the Trademark Law promulgated by the State Council came into effect on September 15, 2002 and was further amended on April 29, 2014.\nUnder the Trademark Law and the implementing regulation, the Trademark Office of the State Administration for Market Regulation, or the\nTrademark Office, is responsible for the registration and administration of trademarks. The Trademark Office handles trademark registrations.\nAs with patents, China has adopted a “first-to-file” principle for trademark registration. If two or more applicants apply\nfor registration of identical or similar trademarks for the same or similar commodities, the application that was filed first will receive\npreliminary approval and will be publicly announced. A registrant may apply to renew a registration within twelve (12) months before the\nexpiration date of the registration. If the registrant fails to apply in a timely manner, a grace period of six (6) additional months\nmay be granted. If the registrant fails to apply before the grace period expires, the registered trademark shall be deregistered. Renewed\nregistrations are valid for ten years.\n\n \n\nIn addition to the above, a Trademark\nReview and Adjudication Board was established for resolving trademark disputes. According to the Trademark Law, within three (3) months\nsince the date of the announcement of a preliminarily validated trademark, if a titleholder is of the view that such trademark in application\nis identical or similar to its registered trademark for the same type of commodities or similar commodities which violates relevant provisions\nof the Trademark Law, such titleholder may raise an objection to the Trademark Office within the aforesaid period. In such event, the\nTrademark Office shall consider the facts and grounds submitted by both the dissenting party and the party being challenged and shall\ndecide on whether the registration is allowed within twelve (12) months upon the expiration of the announcement after investigation and\nverification, and notify the dissenting party and the person challenged in writing.\n\n \n\n**Patent**\n\n \n\nPursuant to the Patent Law of\nthe PRC, which was promulgated by the Standing Committee of the National People’s Congress on March 12, 1984 and became effective\nfrom April 1, 1985, and was most recently amended on October 17, 2020 and became effective on June 1, 2021, patents in China are classified\ninto three categories, namely, inventions, utility models and designs. The protection period of a patent right is 10 years for utility\nmodels, 15 years for designs, and 20 years for inventions from the date of application. A patentable invention, utility model or design\nmust meet three conditions: novelty, inventiveness and practical applicability. Patents cannot be granted for scientific discoveries,\nrules and methods for intellectual activities, methods used to diagnose or treat diseases, animal and plant breeds or substances obtained\nby means of nuclear transformation. The Patent Office under the State Intellectual Property Office is responsible for receiving, examining\nand approving patent applications. A patent is valid for a twenty-year term for an invention, a ten-year term for a utility model and\na fifteen-year term for a design, starting from the application date. After the grant of the patent right for an invention or utility\nmodel, except where otherwise provided for in the Patent Law, no entity or individual may, without the authorization of the patent owner,\nexploit the patent, that is, make, use, offer to sell, sell or import the patented product, or use the patented process, or use, offer\nto sell, sell or import any product which is a direct result of the use of the patented process, for production or business purposes.\nAnd after a patent right is granted for a design, no entity or individual shall, without the permission of the patent owner, exploit the\npatent, that is, for production or business purposes, manufacture, offer to sell, sell, or import any product containing the patented\ndesign.\n\n \n\n66\n\n \n\n \n\n**Domain Name**\n\n \n\nPursuant to the Administrative\nMeasures on Internet Domain Names of China, which was recently amended by the MIIT on August 24, 2017 and became effective on November\n1, 2017, “domain name” shall refer to the character mark of hierarchical structure, which identifies and locates a computer\non the internet and corresponds to the internet protocol (IP) address of that computer. The principle of “first come, first serve”\nis followed for the domain name registration service. Applicants for registration of domain names shall provide the true, accurate and\ncomplete information of their identifications to domain name registration service institutions. After completing the domain name registration,\nthe applicant becomes the holder of the domain name registered by him/it. Furthermore, the holder shall pay operation fees for registered\ndomain names on schedule. If the domain name holder fails to pay the corresponding fees as required, the original domain name registrar\nshall write it off and notify the holder of the domain name in written form.\n\n \n\n**Laws and Regulations on Labor Protection\nin the PRC**\n\n \n\nAccording to the Labor Law of\nthe PRC, or the Labor Law, which was promulgated by the Standing Committee of the NPC on July 5, 1994, came into effect on January 1,\n1995, and was most recently amended on December 29, 2018, an employer shall develop and improve its rules and regulations to safeguard\nthe rights of its workers. An employer shall develop and improve its labor safety and health system, stringently implement national protocols\nand standards on labor safety and health, conduct labor safety and health education for workers, guard against labor accidents and reduce\noccupational hazards. Labor safety and health facilities must comply with relevant national standards. An employer must provide workers\nwith the necessary labor protection gear that complies with labor safety and health conditions stipulated under national regulations,\nas well as provide regular health checks for workers that are engaged in operations with occupational hazards. Laborers engaged in special\noperations shall have received specialized training and have obtained the pertinent qualifications. An employer shall develop a vocational\ntraining system. Vocational training funds shall be set aside and used in accordance with national regulations and vocational training\nfor workers shall be carried out systematically based on the actual conditions of the company.\n\n \n\nThe Labor Contract Law of the\nPRC, which was promulgated by the SCNPC on June 29, 2007, came into effect on January 1, 2008, and was amended on December 28, 2012 and\nbecame effective as of July 1, 2013, and the Implementation Regulations on Labor Contract Law, which was promulgated on September 18,\n2008, and became effective since the same day, regulate both parties through a labor contract, namely the employer and the employee, and\ncontain specific provisions involving the terms of the labor contract. It is stipulated under the Labor Contract Law and the Implementation\nRegulations on Labor Contract Law that a labor contract must be made in writing. if labor relationships are to be or have been established\nbetween employers and the employees An employer and an employee may enter into a fixed-term labor contract, an un-fixed term labor contract,\nor a labor contract that concludes upon the completion of certain work assignments, after reaching agreement upon due negotiations. An\nemployer may legally terminate a labor contract and dismiss its employees after reaching agreement upon due negotiations with the employee\nor by fulfilling the statutory conditions. Labor contracts concluded prior to the enactment of the Labor Law and subsisting within the\nvalidity period thereof shall continue to be honored. With respect to a circumstance where a labor relationship has already been established\nbut no formal written contract has been made, a written labor contract shall be entered into within one (1) month from the commencement\ndate of the employment. Employers are prohibited from forcing employees to work above certain time limit and employers shall pay employees\nfor overtime work in accordance to national regulations. In addition, employee wages shall be no lower than local standards on minimum\nwages and shall be paid to employees timely.\n\n \n\nAccording to the Interim Regulations\non the Collection and Payment of Social Insurance Premiums, the Regulations on Work Injury Insurance, the Regulations on Unemployment\nInsurance and the Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in the PRC shall provide benefit plans for\ntheir employees, which include basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical\ninsurance. An enterprise must provide social insurance by processing social insurance registration with local social insurance agencies,\nand shall pay or withhold relevant social insurance premiums for or on behalf of employees. The Law on Social Insurance of the PRC, which\nwas promulgated by the Standing Committee of the National People’s Congress on October 28, 2010, and became effective on July 1,\n2011, and was most recently updated on December 29, 2018, has consolidated pertinent provisions for basic pension insurance, unemployment\ninsurance, maternity insurance, work injury insurance and basic medical insurance, and has elaborated in detail the legal obligations\nand liabilities of employers who do not comply with relevant laws and regulations on social insurance. Where an employer fails to fully\npay social insurance premiums, relevant social insurance collection agency shall order it to make up for any shortfall within a prescribed\ntime limit, and may impose a late payment fee at the rate of 0.05% per day of the outstanding amount from the due date. If such employer\nstill fails to make up for the shortfalls within the prescribed time limit, the relevant administrative authorities shall impose a fine\nof one to three times the outstanding amount upon such employer.\n\n \n\n67\n\n \n\n \n\nAccording to the Interim Measures\nfor Participation in the Social Insurance System by Foreigners Working within the Territory of China, which was promulgated by the Ministry\nof Human Resources and Social Security of the PRC on September 6, 2011, and became effective on October 15, 2011, or the Interim Measures\nfor Foreigners, employers who employ foreigners shall participate in the basic pension insurance, unemployment insurance, basic medical\ninsurance, occupational injury insurance, and maternity insurance in accordance with the relevant law, with the social insurance premiums\nto be contributed respectively by the employers and foreigner employees as required. In accordance with Interim Measures for Foreigners,\nthe social insurance administrative agencies shall exercise their right to supervise and examine the legal compliance of foreign employees\nand employers and the employers who do not pay social insurance premiums in conformity with the laws shall be subject to the administrative\nprovisions provided in the Social Insurance Law and the relevant regulations and rules mentioned above.\n\n \n\nAccording to the Regulations\non the Administration of Housing Provident Fund, which was promulgated by the State Counsel and became effective on April 3, 1999, and\nwas amended on March 24, 2002 and was partially revised on March 24, 2019 by Decision of the State Council on Revising Some Administrative\nRegulations (Decree No. 710 of the State Council), housing provident fund contributions by an individual employee and housing provident\nfund contributions by his or her employer shall belong to the individual employee. Registration by PRC companies at the applicable housing\nprovident fund management center is compulsory and a special housing provident fund account for each of the employees shall be opened\nat an entrusted bank.\n\n \n\nThe employer shall timely pay\nup and deposit housing provident fund contributions in full amount and late or insufficient payments shall be prohibited. Under the circumstances\nwhere financial difficulties do exist due to which an employer is unable to pay or pay up house provident funds, permission of labor union\nof the employer and approval of the local house provident funds commission must first be obtained before the employer can suspend or reduce\ntheir payment of house provident funds. The employer shall process housing provident fund payment and deposit registrations with the housing\nprovident fund administration center. The minimum standard for housing provident funds is 5% of employees’ average monthly salary\nof the preceding year, and such percentage rate may be uplifted by the local housing provident funds management commissions if examined\nby the people’s government of same level and approved by people’s government of provincial, or autonomous region or municipality\nlevel. With respect to companies who violate the above regulations and fail to process housing provident fund payment and deposit registrations\nor open housing provident fund accounts for their employees, such companies shall be ordered by the housing provident fund administration\ncenter to complete such procedures within a designated period. Those who fail to process their registrations within the designated period\nshall be subject to a fine ranging from RMB 10,000 (approximately $1,400) to RMB 50,000 (approximately $7,100). When companies breach\nthese regulations and fail to pay up housing provident fund contributions in full amount as due, the housing provident fund administration\ncenter shall order such companies to pay up within a designated period, and may further apply to the People’s Court for mandatory\nenforcement against those who still fail to comply after the expiry of such period.\n\n \n\n**Regulations on Tax\nin the PRC**\n\n \n\n**Income Tax**\n\n \n\nIn January 2008, the PRC Enterprise\nIncome Tax Law took effect, which was last amended by the Standing Committee of the National People’s Congress on December 29, 2018.\nOn December 6, 2007, the State Council enacted the Regulations for the Implementation of the Law on Enterprise Income Tax, which was recently\namended on April 23, 2019, together with the PRC Enterprise Income Tax Law, the EIT Law. Under the EIT Law, both resident enterprises\nand non-resident enterprises are subject to tax in the PRC. Resident enterprises are defined as enterprises that are established in China\nin accordance with PRC laws, or that are established in accordance with the laws of foreign countries but are actually or in effect controlled\nwithin the PRC. Non-resident enterprises are defined as enterprises that are organized under the laws of foreign countries and whose “de\nfacto management body” is conducted outside the PRC, but have established institutions or premises in the PRC, or have no such established\ninstitutions or premises but have income generated from inside the PRC. The EIT Law applies a uniform 25% enterprise income tax rate to\nboth resident enterprises and non-resident enterprises, except where tax incentives are granted to special industries and projects. However,\nif non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent establishment\nor premises in the PRC but there is no actual relationship between the relevant income derived in the PRC and the established institutions\nor premises set up by them, enterprise income tax is set at the rate of 20% with respect to their income sourced from inside the PRC.\nAccording to the EIT Law and the Announcement on Issues concerning the Implementation of the Preferential Income Tax Policies regarding\nHigh-Tech Enterprises promulgated by the SAT on June 19, 2017, enterprises qualified as “high-tech enterprises” are entitled\nto a 15% enterprise income tax rate rather than the 25% uniform statutory tax rate. The preferential tax treatment continues as long as\nan enterprise can retain its “high-tech enterprise” status.\n\n \n\n68\n\n \n\n \n\nThe implementation rules define\nthe term “de facto management body” as the body that exercises full and substantial control and overall management over the\nbusiness, productions, personnel, accounts, and properties of an enterprise. Under the EIT Law, dividends generated from the business\nof a PRC subsidiary after January 1, 2008, and payable to its foreign investor may be subject to a withholding tax rate of 10 percent\nif the PRC tax authorities determine that the foreign investor is a non-resident enterprise which do not have an establishment or place\nof business in the PRC, or which have such establishment or place of business but the relevant income is not effectively connected with\nthe establishment or place of business, to the extent such dividends are derived from sources within the PRC, unless there is a tax treaty\nwith China that provides for a preferential withholding tax rate. Distributions of earnings generated before January 1, 2008, are exempt\nfrom PRC withholding tax.\n\n \n\nIn January 2009, the SAT promulgated\nthe Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises, or the Non-resident\nEnterprises Measures, which was repealed by Announcement of the State Administration of Taxation on Issues Relating to Withholding at\nSource of Income Tax of Non-resident Enterprises in December 2017. According to the new announcement, which was amended on June 15, 2018,\nit shall apply to handling of matters relating to withholding at source of income tax of non-resident enterprises pursuant to the provisions\nof Article 37, Article 39 and Article 40 of the Enterprise Income Tax Law. According to Article 37, Article 39 of the Enterprise Income\nTax Law, income tax over non-resident enterprise income pursuant to the provisions of the third paragraph of Article 3 shall be subject\nto withholding at the source, where the payer shall act as the withholding agent. The tax amount for each payment made or due shall be\nwithheld by the withholding agent from the amount paid or payable. Where a withholding agent fails to withhold tax or perform tax withholding\nobligations pursuant to the provisions of Article 37, the taxpayer shall pay tax at the place where the income is derived. Where the taxpayer\nfails to pay tax pursuant to law, the tax authorities may demand payment of the tax amount payable, from a payer of the taxpayer with\npayable tax amounts from other taxable income items in China.\n\n \n\nOn April 30, 2009, the Ministry\nof Finance of the PRC, or the MOF, and the SAT jointly issued the Circular on Issues Concerning Treatment of Enterprise Income Tax in\nEnterprise Restructuring Business, or Circular 59, which became effective retroactively as of January 1, 2008 and was partially revised\non January 1, 2014. By promulgating and implementing this circular, the PRC tax authorities have enhanced their scrutiny over the direct\nor indirect transfer of equity interests in a PRC resident enterprise by a non-resident Enterprise.\n\n \n\nOn February 3, 2015, the SAT\nissued the Announcement of the State Administration of Taxation on Several Issues Relating to Enterprise Income Tax on Indirect Transfers\nof Assets by Non-resident Enterprises, or SAT Bulletin 7, which was partially abolished on December 1, 2017 and December 29, 2017. SAT\nBulletin 7 extends its tax jurisdiction to transactions involving transfer of immovable property in China and assets held under the establishment,\nand placement in China, of a foreign company through the offshore transfer of a foreign intermediate holding company. SAT Bulletin 7 also\naddresses transfer of the equity interest in a foreign intermediate holding company broadly. In addition, SAT Bulletin 7 introduces safe\nharbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee\nof the indirect transfer as they have to assess whether the transaction should be subject to PRC tax and to file or withhold the PRC tax\naccordingly.\n\n \n\nOn October 17, 2017, the SAT\nissued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income\nTax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017 and was revised on June 15, 2018. The SAT Bulletin 37 further\nclarifies the practice and procedure of withholding of non-resident enterprise income tax and provides that:\n\n \n\n69\n\n \n\n \n\n \n●\nfor the income from equity investment assets, the competent tax authority for the income tax of the invested enterprise shall be the competent tax authority, while for the income from the dividends, extra dividends and other equity investment, the competent tax authority for the income tax of the enterprise distributing the income shall be the competent tax authority;\n\n \n \n \n\n \n●\nthe withholding obligator shall declare and pay the withheld tax to the competent tax authority in the place where such withholding obligator is located within seven (7) days from the date of occurrence of the withholding obligation;\n\n \n \n \n\n \n●\nwhere the income obtained by the withholding obligator and required to be withheld at source is in the form of dividends, extra dividends or any other equity investment gains, the date of occurrence of the obligation for withholding relevant payable tax is the date of actual payment of the dividends, extra dividends or other equity investment gains;\n\n \n \n \n\n \n●\nfor the income tax required to be withheld under Article 37 of the Enterprise Income Tax Law, if the withholding obligator fails to withhold in accordance with the law or is unable to perform withholding obligation, the non-resident enterprise obtaining the income shall declare and pay the tax not withheld to the competent tax authority of the place of the occurrence of the income in accordance with Article 39 of the Enterprise Income Tax Law and complete the Form of Report on Withholding of Enterprise Income Tax of the People’s Republic of China; where the non-resident enterprise fails to declare and pay tax in accordance with Article 39 of the Enterprise Income Tax Law, the tax authority may order it to pay the tax within a specified time limit and the non-resident enterprise shall declare and pay the tax within the time limit determined by the tax authority; the non-resident enterprise that declares and pays the tax voluntarily before the tax authority orders it to pay tax within a specified time limit shall be deemed as having paid tax as scheduled;\n\n \n \n \n\n \n●\nthe competent tax authority may require the taxpayer, withholding obligator and relevant parties with knowledge of relevant information to provide the contracts and other relevant materials relating to the withholding of tax;\n\n \n\nwhere the withholding obligator\nfails to withhold the tax required to be withheld under Article 37 of the Enterprise Income Tax Law, the competent tax authority of the\nplace where the withholding agent is located shall order the withholding obligator to make up for the withholding of tax in accordance\nwith Article 23 of the Administrative Punishment Law of the People’s Republic of China and hold the withholding agent liable in\naccordance with the law; if recovery of tax payment from the taxpayer is necessary, the competent tax authority of the place where the\nincome occurs shall implement the recovery in accordance with the law. If the place where the withholding obligator is located is different\nfrom the place where the income occurs, the competent tax authority of the place of occurrence of the income that is responsible for recovering\nthe tax payment shall give notice to the competent tax authority of the place where the withholding obligator is located for verifying\nrelevant information. The competent tax authority of the place where the withholding agent is located shall, within five (5) working days\nfrom the date.\n\n \n\nIf non-resident investors were\ninvolved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose,\nwe and our non-resident investors may be at risk of being required to file a return and be taxed under SAT Bulletin 7 and we may be required\nto expend valuable resources to comply with SAT Bulletin 7 or to establish that we should not be held liable for any obligations under\nSAT Bulletin 7.\n\n \n\n70\n\n \n\n \n\nPursuant to an Arrangement Between\nthe Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal\nEvasion with respect to Taxes on Income, or the Double Tax Avoidance Arrangement promulgated by the State Administration of Taxation on\nAugust 21, 2006, and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to\nhave satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10%\nwithholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%. However,\nbased on the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties, or the SAT Circular 81,\nissued on February 20, 2009 by the SAT, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from\nsuch reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential\ntax treatment.\n\n \n\n**Value-Added Tax**\n\n \n\nAccording to the Temporary Regulations\non Value-added Tax, which was promulgated by the State Council on December 13, 1993 and was most recently amended on November 19, 2017,\nand the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was promulgated by the MOF on December 25,\n1993 and was amended on October 28, 2011, and became effective on November 1, 2011, all taxpayers selling goods, providing processing,\nrepair or replacement services or importing goods within the PRC shall pay Value-Added Tax. The tax rate of 17% shall be levied on general\ntaxpayers selling or importing various goods and providing processing, repairing or replacement service; the applicable rate for the export\nof goods and cross-border sale of services and intangible assets by domestic organizations and individuals within the scope stipulated\nby the State Council shall be nil, unless otherwise stipulated. On April 4, 2018, the MOF and the SAT jointly issued the Notice of Adjustment\nof Value-added Tax Rates which declared that the VAT tax rate in regard to the sale of goods, provision of processing, repairs and replacement\nservices and importation of goods into China shall be reduced from the previous 17% to 16% from May 1, 2018. According to the PRC VAT\nRegulations, the VAT rate for sale of services and sale of intangible properties is 6% unless otherwise specified.\n\n \n\nFurthermore, according to the\nTrial Scheme for the Conversion of Business Tax to Value-added Tax, which was promulgated by the MOF and the SAT on November 16, 2011,\nthe PRC began to launch taxation reforms in a gradual manner from January 1, 2014, whereby the collection of value-added tax in lieu of\nbusiness tax items was implemented on a trial basis in regions showing significant radiating effects in economic development and providing\noutstanding reform examples, beginning with production service industries such as transportation and certain modern service industries.\n\n \n\nIn accordance with the Circular\non Notice of Comprehensive Promotion of Conversion of Business Tax to Value-added Tax promulgated by the SAT and the MOF which took effect\non May 1, 2016, upon approval of the State Council, the pilot program of the collection of value-added tax in lieu of business tax shall\nbe promoted nationwide in a comprehensive manner starting May 1, 2016, and all taxpayers of business tax engaged in the building industry,\nthe real estate industry, the financial industry and the life service industry shall be included in the scope of the pilot program with\nregard to payment of value-added tax instead of business tax. Our main business is included in the scope of the pilot program with regard\nto payment of value-added tax instead of business tax.\n\n \n\nOn November 19, 2017, the State\nCouncil promulgated the Decision of State Council on Abolition of the Provisional Regulations of the PRC on Business Tax and Revision\nof the Provisional Regulations of the PRC on Value-added Tax, which took effective on the same date, to formally abolish the Provisional\nRegulations of the People’s Republic of China on Business Tax and amend the Temporary Regulations on Value-added Tax accordingly.\n\n \n\n71\n\n \n\n \n\n**Regulations on Foreign\nExchange**\n\n \n\n**Foreign Currency\nExchange**\n\n \n\nPursuant to the Foreign Currency\nAdministration Rules, as amended, and various regulations issued by SAFE and other relevant PRC government authorities, Renminbi is freely\nconvertible to the extent of current account items, such as trade related receipts and payments, interest and dividends. Capital account\nitems, such as direct equity investments, loans and repatriation of investment, unless expressly exempted by laws and regulations, still\nrequire prior approval from SAFE or its provincial branch for conversion of Renminbi into a foreign currency, such as U.S. dollars, and\nremittance of the foreign currency outside of the PRC. Payments for transactions that take place within the PRC must be made in Renminbi.\nForeign currency revenues received by PRC companies may be repatriated into China or retained outside of China in accordance with requirements\nand terms specified by SAFE. Foreign exchange proceeds under the current accounts may be either retained or sold to a financial institution\nengaged in settlement and sale of foreign exchange pursuant to relevant SAFE rules and regulations. For foreign exchange proceeds under\nthe capital accounts, approval from the SAFE is generally required for the retention or sale of such proceeds to a financial institution\nengaged in settlement and sale of foreign exchange.\n\n \n\nPursuant to the Circular of the\nSAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, or the SAFE Circular 59 promulgated\nby SAFE on November 19, 2012, which became effective on December 17, 2012 and was further amended on May 4, 2015 and October 10, 2018\nand was partially abolished on December 30, 2019, approval is not required for opening a foreign exchange account and depositing foreign\nexchange into the accounts relating to the direct investments. SAFE Circular 59 also simplified foreign exchange-related registration\nrequired for the foreign investors to acquire the equity interests of PRC companies and further improve the administration on foreign\nexchange settlement for FIEs.\n\n \n\nOn February 13, 2015, the SAFE\npromulgated the Circular on Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, or the SAFE Circular\n13, effective from June 1, 2015, which cancels the administrative approvals of foreign exchange registration of direct domestic investment\nand direct overseas investment. In addition, SAFE Circular 13 simplifies the procedure of foreign exchange-related registration, under\nwhich investors shall register with banks for direct domestic investment and direct overseas investment.\n\n \n\nOn April 10, 2020 the SAFE issued\nthe Notice of the SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business, or the SAFE\nCircular 8. The SAFE Circular 8 provides that under the condition that the use of the funds is genuine and compliant with current administrative\nprovisions on use of income relating to capital account, enterprises are allowed to use income under capital account such as capital funds,\nforeign debts and overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing\nthe veracity of such payment. The bank in charge shall conduct post spot checking in accordance with the relevant requirements.\n\n \n\n**Dividend Distribution**\n\n \n\nThe principal laws and regulations\nregulating the dividend distribution of dividends by FIEs in the PRC include the Company Law of the PRC, as recently amended in 2018 and\nForeign Investment Law promulgated by SCNPC on March 15, 2019 and recently came into effect on January 1, 2020.\n\n \n\n Wholly foreign-owned enterprises\nand Sino-foreign equity joint ventures in the PRC may pay dividends only out of their accumulated profits, if any, as determined in accordance\nwith PRC accounting standards and regulations. Additionally, these FIEs may not pay dividends unless they set aside at least 10% of their\nrespective accumulated profits after tax each year, if any, to fund certain reserve funds, until such time as the accumulative amount\nof such fund reaches 50% of the enterprise’s registered capital. These reserves are not distributable as cash dividends. A PRC company\nshall not distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may\nbe distributed together with distributable profits from the current fiscal year. In addition, these companies also may allocate a portion\nof their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion.\n\n \n\n72\n\n \n\n \n\n**Regulations Related\nto Mergers and Acquisitions and Overseas Listings**\n\n \n\nOn August 8, 2006, six PRC regulatory\nagencies, including the CSRC, promulgated the M&A Rules, which took effect on September 6, 2006 and was amended on June 22, 2009.\nThe M&A Rules, among other things, require offshore special purpose vehicles formed for overseas listing purposes through acquisitions\nof PRC domestic companies and controlled by PRC domestic enterprises or individuals to obtain the approval of the CSRC prior to the listing\nand trading of such special purpose vehicle’s securities on an overseas stock exchange. In September 2006, the CSRC published on\nits official website procedures regarding its approval of overseas listings by special purpose vehicles.\n\n \n\nOn July 6, 2021, the State Council\nand General Office of the CPC Central Committee issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance\nwith the Law. The opinions emphasize the need to strengthen the administration over illegal securities activities and the supervision\non overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant\nregulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.\n\n \n\nOn February 17, 2023, the CSRC\npromulgated the Overseas Listing Trial Measures and relevant five guidelines, which became effective on March 31, 2023. The Overseas Listing\nTrial Measures comprehensively improve and reform the existing regulatory regime for overseas securities offering and listing of PRC domestic\ncompanies by adopting a filing-based regulatory regime. According to the Overseas Listing Trial Measures, PRC domestic companies that\nseek to offer and list securities in overseas markets, either directly or indirectly, are required to fulfill the filing procedure with\nthe CSRC and report relevant information.\n\n \n\nThe Overseas Listing Trial Measures\nprovide that if the issuer meets both of the following criteria, the overseas securities offering and listing conducted by such issuer\nwill be deemed as an indirect overseas offering and listing by PRC domestic companies: (i) more than 50% of any of the issuer’s\noperating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most\nrecent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted\nin mainland China, or its main place(s) of business are located in mainland China, or the majority of senior management staff in charge\nof its business operations and management are PRC citizens or have their usual place(s) of residence located in mainland China. Where\nan issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within\nthree business days after such application is submitted. The Overseas Listing Trial Measures also requires subsequent reports to be filed\nwith the CSRC on material events, such as change of control, having been investigated or penalized by overseas securities regulatory authorities\nor other competent authorities, converting the listing status or listing board, or voluntary or forced delisting of the issuer(s) which\nhave completed overseas offerings and listings.\n\n \n\nIn addition, the Overseas Listing\nTrial Measures provide that an overseas listing or offering is explicitly prohibited under any of the following circumstances: (i) such\nsecurities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii)\nthe intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under\nthe State Council in accordance with laws; (iii) the domestic company intending to make the securities offering and listing, or its controlling\nshareholder(s) and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of\nproperty or undermining the order of the socialist market economy during the latest three years; (iv) the domestic company intending to\nmake the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws\nand regulations, and no conclusion has yet been made thereof; or (v) there are material ownership disputes over equity held by the domestic\ncompany’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual\ncontroller.\n\n \n\n73\n\n \n\n \n\nAt a press conference held for\nthese new regulations, officials from the CSRC clarified that the domestic companies that have already been listed overseas before the\neffective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as the Existing Issuers. Existing Issuers\nare not required to complete the filling procedures immediately, and they shall be required to file with the CSRC when subsequent matters\nsuch as follow-on offerings are involved. Furthermore, according to the officials from the CSRC, domestic companies that have obtained\napproval from overseas regulatory authorities or securities exchanges (for example, a contemplated offering and/or listing on the U.S.\nstock exchange has been declared effective) for their indirect overseas offering and listing prior to the effective date of the Overseas\nListing Trial Measures (i.e. March 31, 2023) but have not yet completed their indirect overseas issuance and listing, are granted a six-month\ntransition period from March 31, 2023. Those who complete their overseas offering and listing within such six months are deemed as Existing\nIssuers. Within such six-month transition period, however, if such domestic companies need to reapply for offering and listing procedures\nto the overseas regulatory authority or securities exchanges, or if they fail to complete their indirect overseas issuance and listing,\nsuch domestic companies shall complete the filling procedures with the CSRC. According to the Overseas Listing Trial Measures, where a\nPRC domestic company fails to fulfill filing procedure in respect of its overseas offering and listing, the CSRC may order rectification,\nissue warnings to such PRC domestic company, and impose a fine ranging from RMB1,000,000 to RMB10,000,000. Also the directly responsible\nperson-in-charge and other directly responsible persons of such PRC domestic company may be warned and imposed a fine up to RMB 5,000,000,\nand the controlling shareholders and the actual controllers of such PRC domestic company that organize or instruct the aforementioned\nviolations shall be imposed a fine up to RMB10,000,000. Further, if the PRC domestic company that is not an Existing Issuer fails to fulfill\nthe required filing procedure, such an issuer may ultimately be forced to delist its securities that have already been listed. In addition,\nsince the Overseas Listing Trial Measures and relevant guidelines were newly promulgated, their interpretation, application and enforcement\nremain unclear. Any failure of us to fully comply with the Overseas Listing Trial Measures may significantly limit or completely hinder\nour ability to offer or continue to offer our ordinary shares, hinder our ability to remain listed on Nasdaq or any other U.S. securities\nexchange, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely\naffect our financial condition and results of operations and cause our ordinary shares to significantly decline in value or become worthless.\n\n \n\nOn February 24, 2023, the CSRC,\nthe Ministry of Finance, the National Administration of State Secrets Protection and the National Archives Administration jointly issued\nthe Confidentiality and Archives Provisions, which became effective on March 31,2023. The Confidentiality and Archives Provisions specify\nthat during the overseas issuance of securities and listing activities of domestic enterprises, domestic enterprises and securities companies\nand securities service institutions that provide relevant securities services shall, by strictly abiding by the relevant laws and regulations\nof the PRC and the requirements therein, establish sound confidentiality and archives management systems, take necessary measures to implement\nconfidentiality and archives management responsibilities, and shall not leak state secrets, work secrets of governmental agencies and\nundermine national and public interests. Work manuscripts generated in the PRC by securities companies and securities service institutions\nthat provide relevant securities services for overseas issuance and listing of securities by domestic enterprises shall be kept in the\nPRC. Without the approval of relevant competent authorities, it shall not be transferred overseas. Where archives or copies need to be\ntransferred outside of the PRC, it shall be subject to the approval procedures in accordance with relevant PRC regulations.\n\n \n\n**Regulations Relating\nto Foreign Exchange Registration of Overseas Investment by PRC Residents**\n\n \n\nThe Circular of the State Administration\nof Foreign Exchange on Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip\nInvestment by Domestic Residents via Special Purpose Vehicles, or the SAFE Circular 37, issued by SAFE and effective on July 4, 2014,\nregulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs by PRC residents or entities to seek offshore\ninvestment and financing and conduct round trip investment in China. Under Circular 37, a SPV refers to an offshore entity established\nor controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment,\nusing legitimate domestic or offshore assets or interests, while “round trip investment” refers to the direct investment in\nChina by PRC residents or entities through SPVs, namely, establishing foreign invested enterprises to obtain the ownership, control rights\nand management rights. SAFE Circular 37 requires that, before establishing, controlling and making contribution into a SPV, PRC residents\nor entities are required to complete foreign exchange registration with the SAFE or its local branch.\n\n \n\n74\n\n \n\n \n\nPRC residents or entities who\nhave contributed legitimate domestic or offshore interests or assets to SPVs but have yet to obtain SAFE registration before the implementation\nof SAFE Circular 37 shall register their ownership interests or control in such SPVs with SAFE or its local branch. An amendment to the\nregistration is required if there is a material change in the registered SPV, such as any change of basic information (including change\nof such PRC “resident’s name” and operation term), increases or decreases in investment amounts, transfers or exchanges\nof shares, or mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37, or making misrepresentation\non or failure to disclose controllers of a FIE that is established through round-trip investment, may result in restrictions on the foreign\nexchange activities of the relevant FIEs, including payment of dividends and other distributions, such as proceeds from any reduction\nin capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may\nalso subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations. On February 13, 2015,\nSAFE further promulgated the Circular on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct\nInvestment, or SAFE Circular 13, which took effect on June 1, 2015. SAFE Circular 13 has amended SAFE Circular 37 by requiring PRC residents\nor entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of\nan offshore entity established for the purpose of overseas investment or financing.\n\n \n\nAs of the date of this annual\nreport, to our knowledge, all of our shareholders had registered according to SAFE Circular 37.\n\n \n\nOn March 30, 2015, the SAFE promulgated\nCircular 19, which came into effect on June 1, 2015 and was partially repealed on December 30, 2019. According to Circular 19, the foreign\nexchange capital of FIEs shall be subject to the Discretional Foreign Exchange Settlement. The Discretional Foreign Exchange Settlement\nrefers to the foreign exchange capital in the capital account of a FIE for which the rights and interests of monetary contribution has\nbeen confirmed by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks) can be settled\nat the banks based on the actual operational needs of the FIE. The proportion of Discretional Foreign Exchange Settlement of the foreign\nexchange capital of a FIE is temporarily determined to be 100%. The Renminbi converted from the foreign exchange capital will be kept\nin a designated account and if a FIE needs to make further payment from such account, it still needs to provide supporting documents and\ngo through the review process with the banks. Circular 19 allows all foreign-invested enterprises established in China to use their foreign\nexchange capitals to make equity investment and prohibits foreign-invested enterprises from, among other things, using Renminbi fund converted\nfrom its foreign exchange capitals for expenditure beyond its business scope and providing entrusted loans or repaying loans between non-financial\nenterprises.\n\n \n\nSAFE issued the Circular on Reforming\nand Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or Circular 16, on June 9, 2016, which became\neffective simultaneously. Pursuant to Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign\ncurrency to Renminbi on a discretionary basis. Circular 16 provides an integrated standard for conversion of foreign exchange under capital\naccount items (including foreign currency capital and foreign debts) on a discretionary basis which applies to all enterprises registered\nin the PRC. Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not\nbe directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, while such converted Renminbi\nshall not be provided as loans to its non-affiliated entities. As SAFE has not provided detailed guidelines with respect to its interpretation\nor implementations, it is uncertain how these rules will be interpreted and implemented. Circular 19, Circular 16 and other related regulations\nmay delay or limit us from using the proceeds of offshore offerings to make additional capital contributions or loans to our PRC subsidiaries\nand any violations of these circulars could result in severe monetary or other penalties.\n\n \n\n**Regulations on\nloans to and direct investment in the PRC entities by offshore holding companies**\n\n \n\nAccording to the Implementation\nRegulations on Statistics and Supervision of Foreign Debt promulgated by SAFE on September 24, 1997 and the Interim Measures on the Management\nof Foreign Debts promulgated by SAFE, the NDRC and the MOF and effective from March 1, 2003, loans by foreign companies to their subsidiaries\nin China, which accordingly are FIEs, are considered foreign debt, and such loans must be registered with the local branches of the SAFE.\nUnder the provisions, the total amount of accumulated medium-term and long-term foreign debt and the balance of short-term debt borrowed\nby a FIE is limited to the difference between the total investment and the registered capital of the foreign invested enterprise.\n\n \n\n75\n\n \n\n \n\nOn January 12, 2017, the People’s\nBank of China promulgated the Circular of the People’s Bank of China on Matters relating to the Macro-prudential Management of Comprehensive\nCross-border Financing, or PBOC Circular 9, which took effect on the same date. The PBOC Circular 9 established a capital or net assets-based\nconstraint mechanism for cross-border financing. Under such mechanism, a company may carry out cross-border financing in Renminbi or foreign\ncurrencies at their own discretion. The total cross-border financing of a company shall be calculated using a risk-weighted approach and\nshall not exceed an upper limit. The upper limit is calculated as capital or assets multiplied by a cross-border financing leverage ratio\nand multiplied by a macro-prudential regulation parameter.\n\n \n\nIn addition, according to PBOC\nCircular 9, as of the date of the promulgation of PBOC Circular 9, a transition period of one year is set for foreign-invested enterprises\nand during such transition period, FIEs may apply either the current cross-border financing management mode, namely the mode provided\nby Implementation Rules for the Provisional Regulations on Statistics and Supervision of Foreign Debt and the Interim Provisions on the\nManagement of Foreign Debts, or the mode in this PBOC Circular 9 at its sole discretion. After the end of the transition period, the cross-border\nfinancing management mode for FIEs will be determined by the People’s Bank of China and SAFE after assessment based on the overall\nimplementation of this PBOC Circular 9. On October 25, 2022, the PBOC and SAFE raised the cross-border macro prudential adjustment ratio\nfor corporate and financial institutions from 1 to 1.25, making it easier for domestic firms to raise funds from overseas markets. Domestic-invested\nenterprises, have only been subject to the Net Assets Limit in calculating the maximum amount of foreign debt they may hold from the date\nof promulgation of PBOC Circular 9.\n\n \n\n**Regulations Relating to Foreign Investment**\n\n \n\n**The Guidance Catalogue of Industries for Foreign\nInvestment**\n\n \n\nInvestment activities in the\nPRC by foreign investors are governed by the Catalogue for the Encouragement of Foreign Investment Industries (2020 Edition), or the Encouragement\nCatalogue and the Negative List, which were both promulgated by the MOFCOM and the NDRC and each became effective on January 27, 2021\nand January 1, 2022. The Negative List stipulates the encouraged, prohibited and restricted industries for foreign investment. The Encouragement\nCatalogue stipulates the encouraged industries for foreign investment. If the investment falls within the “encouraged” category,\nforeign investment can be conducted through the establishment of a wholly foreign-owned enterprise. If the investment falls within the\n“restricted” category, foreign investment may be conducted through the establishment of a wholly foreign-owned enterprise\nif certain requirements are met or in some cases must be conducted through the establishment of a joint venture enterprise, with varying\nminimum shareholdings for the Chinese party, depending on the particular industry. If the investment falls within the “prohibited”\ncategory, foreign investment of any kind is not allowed. Any investment that occurs within an industry not falling into any of these categories\nis classified as a permitted industry for foreign investment unless otherwise specifically restricted by other PRC rules and regulations.\nAccording to the Negative List, other than E-commerce, domestic multiparty communication, store and forward, and call center services,\nthe permitted foreign investment in value-added telecommunications service providers may not be more than 50%.\n\n \n\n**The Foreign Investment Law**\n\n \n\nOn March 15, 2019, the National\nPeople’s Congress approved the Foreign Investment Law, which took effect on January 1, 2020 and replaced three existing laws on\nforeign investments in China, namely, the PRC Sino-foreign Equity Joint Ventures Law, the PRC Sino-foreign Cooperative Enterprises Law\nand the PRC Wholly Foreign-owned Enterprises Law. The Foreign Investment Law embodies an expected PRC regulatory trend to rationalize\nits foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate\nlegal requirements for both foreign and domestic invested enterprises in China. The Foreign Investment Law establishes the basic framework\nfor the access to, and the promotion, protection and administration of foreign investments in view of investment protection and fair competition.\n\n \n\n76\n\n \n\n \n\nAccording to the Foreign Investment\nLaw, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons,\nbusiness entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within\nChina, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other\ninvestors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares\nin assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with\nother investors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations,\nor the State Council.\n\n \n\nAccording to the Foreign Investment\nLaw, the State Council will publish or approve to publish the “negative list” for special administrative measures concerning\nforeign investment. The Foreign Investment Law grants national treatment to FIEs, except for those FIEs that operate in industries deemed\nto be either “restricted” or “prohibited” in the “negative list”. The Foreign Investment Law provides\nthat FIEs operating in foreign restricted industries will require market entry clearance and other approvals from relevant PRC governmental\nauthorities. If a foreign investor is found to invest in any prohibited industry in the “negative list”, such foreign investor\nmay be required to, among other aspects, cease its investment activities, dispose of its equity interests or assets within a prescribed\ntime limit and have its income confiscated. If the investment activity of a foreign investor is in breach of any special administrative\nmeasure for restrictive access provided for in the “negative list”, the relevant competent department shall order the foreign\ninvestor to make corrections and take necessary measures to meet the requirements of the special administrative measure for restrictive\naccess.\n\n \n\nOn December 26, 2019, the State\nCouncil issued Implementation Regulations for the Foreign Investment Law of the PRC, or the Implementation Rules, which came into effect\non January 1, 2020, and replaced the Implementing Rules of the Sino-foreign Equity Joint Ventures Enterprises Law of the PRC, the Implementing\nRules of the Sino-foreign Co-operative Enterprises Law of the PRC and the Implementing Rules of the Wholly Foreign-invested Enterprise\nLaw of the PRC. According to the Implementation Rules, in the event of any discrepancy between the Foreign Investment Law, the Implementation\nRules and the relevant provisions on foreign investment promulgated prior to January 1, 2020, the Foreign Investment Law and the Implementation\nRules shall prevail. The Implementation Rules also set forth that foreign investors that invest in sectors on the Negative List in which\nforeign investment is restricted shall comply with special management measures with respect to, among others, shareholding and senior\nmanagement personnel qualification in the Negative List. Pursuant to the Foreign Investment Law and the Implementation Rules, the existing\nforeign-invested enterprises established prior to the effective date of the Foreign Investment Law are allowed to keep their corporate\norganization forms for five years from the effectiveness of the Foreign Investment Law before such existing foreign-invested enterprises\nchange their organization forms and organization structures in accordance with the PRC Company Law, the Partnership Enterprise Law of\nthe PRC and other applicable laws.\n\n \n\nOn December 27, 2020, the NDRC\nand the MOFCOM promulgated the Catalog of Industries for Encouraging Foreign Investment (2020 Version), or the Encouragement Catalogue,\nwhich became effective on January 27, 2021, replacing the previous encouragement catalogue. On December 27, 2021, the NDRC and the MOFCOM\npromulgated the Special Management Measures (Negative List) for the Access of Foreign Investment (2021 Version), or the Negative List,\nwhich became effective on January 1, 2022, replacing previous negative list. According to the Negative List and the Encouragement Catalogue,\nthe value-added telecommunications business that we are operating, other than call center business, falls into the restricted category.\n\n \n\nOn December 30, 2019, the MOFCOM\nand the State Administration for Market Regulation (formerly known as the State Administration for Industry and Commerce) jointly promulgated\nthe Measures for Reporting of Foreign Investment Information, or the Foreign Investment Reporting Measures, which came into effect on\nJanuary 1, 2020 and replaced the Interim Administrative Measures for the Record-filing of the Establishment and Modification of Foreign-invested\nEnterprises. The Foreign Investment Reporting Measures establish an online reporting system for foreign investment instead of the previous\nrequirement of the Ministry of Commerce of the PRC filing and/or approval procedures. Pursuant to the Foreign Investment Reporting Measures,\nfor foreign investment carried out directly or indirectly within the mainland China, foreign investors or foreign-invested enterprises\nshall submit investment information for establishments, modifications and dissolution and annual reports of the foreign-invested enterprises\non the online. Meanwhile, the PRC establishes foreign investment security review system under which the security review shall be conducted\non foreign investments affecting or likely to affect the state security, a decision legally made on security review will be considered\nas final. Furthermore, the Foreign Investment Law provides that FIEs established according to the previous PRC Sino-foreign Equity Joint\nVentures Law, the PRC Sino-foreign Cooperative Enterprises Law and the PRC Wholly Foreign-owned Enterprises Law before the Foreign Investment\nLaw took effect may maintain their structure and corporate governance within five years after the implementing of the Foreign Investment\nLaw.\n\n \n\n77\n\n \n\n \n\nIn addition, the Foreign Investment\nLaw also provides several protective rules and principles for foreign investors and their investments in the PRC, including, among others,\nthat a foreign investor may freely transfer into or out of China, in Renminbi or a foreign currency, its contributions, profits, capital\ngains, income from disposition of assets, royalties of intellectual property rights, indemnity or compensation lawfully acquired, and\nincome from liquidation, among others, within China; local governments shall abide by their commitments to the foreign investors; governments\nat all levels and their departments shall enact local normative documents concerning foreign investment in compliance with laws and regulations\nand shall not impair legitimate rights and interests, impose additional obligations onto FIEs, set market access restrictions and exit\nconditions, or intervene with the normal production and operation activities of FIEs; except for special circumstances, in which case\nstatutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition\nof the investment of foreign investors is prohibited; and mandatory technology transfer is prohibited.\n\n \n\nOn December 19, 2020, the NDRC\nand the MOFCOM promulgated Measures for Security Review of Foreign Investment, with an effective date of January 18, 2021. The Foreign\nInvestment Security Review Mechanism (the “Security Review Mechanism”) in charge of organization, coordination and guidance\nof foreign investment security review is thereunder established. A working mechanism office shall be established under the NDRC and led\nby the NDRC and the Ministry of Commerce to undertake routine work on the security review of foreign investment. According to the Security\nReview Mechanism, foreign investment activities falling in the scope such as important cultural products and services, important information\ntechnologies and Internet products and services, important financial services, key technologies and other important fields that concern\nstate security while obtaining the actual control over the enterprises invested in, a foreign investor or a party concerned in the PRC\nshall take the initiative to make a declaration to the working mechanism office prior to making the investment.\n\n \n\n**Company Law**\n\n \n\nPursuant to the PRC Company Law,\npromulgated by the Standing Committee of the National People’s Congress on December 29, 1993, effective as of July 1, 1994, and\nas revised on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 and October 26, 2018, the establishment, operation\nand management of corporate entities in the PRC are governed by the PRC Company Law. The PRC Company Law defines two types of companies:\nlimited liability companies and companies limited by shares. Our PRC operating subsidiary is a limited liability company. Unless otherwise\nstipulated in the related laws on foreign investment, foreign invested companies are also required to comply with the provisions of the\nPRC Company Law.\n\n \n\n**Laws and Regulations on the Protection of Consumer\nRights and Interests**\n\n \n\nBusiness operators in the business\nof supplying and selling manufactured goods or services to consumers, shall comply with the Law of the PRC on the Protection of Consumer\nRights and Interests, or the Consumer Rights Protection Law, promulgated by the SCNPC on October 31, 1993, and effective as of January\n1, 1994, and revised on August 27, 2009 and October 25, 2013.\n\n \n\nAccording to the Consumer Rights\nProtection Law, business operators must ensure that the goods or services provided by them meet the requirements for safeguarding personal\nand property safety. For goods and services that may endanger personal and property safety, consumers should be provided with a true description\nand an explicit warning, as well as a description and indication of the proper way to use the goods or accept the services and the methods\nof preventing the occurrence of a hazard. If the goods or services provided by the business operators cause personal injuries to consumers\nor third parties, the business operators shall compensate the injured parties for their losses.\n\n \n\n78\n\n \n\n \n\n**Laws on Contracts**\n\n \n\nOn May 28, 2020, the Civil Code\nof the PRC was issued by the NPC and became effective on January 1, 2021 and replaced the General Principles of the Civil Law of the PRC,\nthe Security Law of the PRC, the Contract Law of the PRC, the Real Right Law of the PRC, the General Rules of the Civil Law of the PRC\nand several other basic civil laws in the PRC. All of our contracts are subject to the Civil Code of the PRC. Under the Civil Code of\nthe PRC, a natural person, legal person or other legally established organization shall have full capacity of civil right and civil conduct\nin order to enter into a valid contract. Except as otherwise required by other laws and regulations, the formation, validity, performance,\nmodification, assignment, termination, and liability for breach of a contract are governed by the Civil Code of the PRC. A contracting\nparty who failed to perform or failed to fulfill its contractual obligation shall bear the responsibility of a continued duty to perform\nor to provide remedies and compensation as provided by PRC laws.\n\n \n\n**Standardization Law of the People’s Republic\nof China**\n\n \n\nStandardization Law of the People’s\nRepublic of China was passed by the fifth session of the Standing Committee of the Seventh National People’s Congress on December\n29, 1988, and revised on November 4, 2017. This law is formulated for the purposes of enhancing standardization work, promoting scientific\nand technological advancement, improving the quality of products and services, safeguarding personal health and life and property security,\nprotecting state security and ecological environmental security, raising the level of economic and social development. This law applies\nto technical requirements that need to be unified for agricultural field, industrial field, service industry, social undertakings industry,\nand others. Enterprises which manufacture, sell, import products or provide services that fail to meet the mandatory standards, and enterprises\nwhich manufacture products or provide services that fail to meet the technical requirements under their publicized standardization, shall\nundertake civil liabilities.\n\n \n\n**Regulations of the People’s Republic of China\non Certification and Accreditation**\n\n \n\nRegulations of the People’s\nRepublic of China on Certification and Accreditation became effective as of September 3, 2003, and was later revised on November 29, 2020.\nThis regulation is formulated for the purposes of standardizing certification and accreditation, improving the quality of products and\nservices and management standard. This regulation applies to all certification agencies, certification services and accreditation services\nin the PRC, excluding certification on quality management standardization of enterprises engaging in pharmaceutical productions and/or\noperations, certification on quality of laboratory animals, certification of military products, accreditation on laboratories and personnel\nengaging in the calibration and testing of military products.\n\n \n\n79\n\n \n\n \n\n**C. Organizational Structure**\n\n \n\nThe charts below summarize our\ncorporate legal structure and identify our subsidiaries, the VIE and its subsidiaries:\n\n \n\n \n\n**Name**\n \n**Background**\n \n**Ownership**\n\n \n \n \n \n \n\nInforbird Technologies Limited\n● A Hong Kong company\n\n● Incorporated on July 12, 2023\n\n● Software developing that provides software as a service (SaaS)\n \n \n100% owned by Infobird Co., Ltd\n\nLightyear Technology Pte. Ltd.\n● A Singapore company\n\n● Incorporated on July 25, 2023\n\n● A holding company\n \n \n100% owned by Infobird Co., Ltd\n\nGuangnian Zhiyuan (Beijing) Technology Co., Ltd\n● A PRC company\n\n● Incorporated on July 6, 2023\n\n● Registered capital of $1,379,310 (RMB 10,000,000)\n\n● Software developing that provides software as a service (SaaS)\n \n \n100% owned by Inforbird New HK\n\nBeijing Suowangda Technology Development Co., Ltd\n\n \n\n \n\n● A PRC limited liability company\n\n● Incorporated on June 13, 2010\n\n● Registered capital of $68,794 (RMB 470,000)\n\n● A cost center\n\n \n \n100% owned by Guangnian Zhiyuan\n\nPure Tech Global Limited\n\n \n\n \n\n● A BVI company\n\n● Incorporated on February 5, 2024\n\n●A holding company\n \n \n\n97% owned by\n\n \n\nInfobird Co., Ltd\n\nPure Media Limited\n\n \n\n \n\n● A Hong Kong company\n\n● Incorporated on March 14, 2024\n\n●A holding company\n \n \n\n100% owned by\n\n \n\nPure Tech\n\nPinmu Century (Beijing) Marketing Technology Co., Ltd\n\n● A PRC limited liability company\n\n● Incorporated on April 17, 2012\n\n● Registered capital of $1,581,243 (RMB 10,000,000)\n\n● Digital advertising and marketing campaign service\n\n \n \nVIE of Pure Media\n\nZhenxi Brand Marketing Consulting (Shanghai) Centre\n\n●a PRC wholly owned enterprise\n\n● Incorporated on July 4, 2019\n\n● Digital advertising and marketing campaign service\n\n \n \nVIE of Pure Media\n\n \n\n80\n\n \n\n \n\n**D. Property, Plants and Equipment**\n\n \n\nOur principal executive office\nis located at Room 706, 7/F, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Central, Hong Kong, where we lease one\nunit under a monthly lease, consisting of approximately 10 square meters (approximately 108 sq. ft) of office space. We also leased 1\noffice in Beijing with the following description:\n\n \n\nOffice\n \n**Address**\n \n**Rental Term**\n \n**Space**\n\nBeijing office\n \nRoom 309, 3/F, Block C, Building 7, Shuguang Building, No. 5, Jingshun Road, Chaoyang District, Beijing, China\n \nApril 10, 2024 – July 9, 2027\n \n\nApproximately \n\n12,487 sq. ft\n\n \n\nWe believe that our facilities\nare adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available on\ncommercially reasonable terms to accommodate any such expansion of our operations."}