{"url_path":"/sec/nwgl/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 **","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/1948294/0001493152-26-019023-index.html","accession_number":"0001493152-26-019023","cik":"0001948294","ticker":"NWGL","issuer_name":"CL Workshop Group Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1948294/0001493152-26-019023-index.html","primary_entity_key":"0001948294","primary_entity_name":"CL Workshop Group Ltd"},"word_count":10558,"has_tables":true,"body_markdown":"**ITEM\n4.**\n**INFORMATION\nON THE COMPANY**\n\n \n\n**4.A.\nHistory and Development of the Company**\n\n \n\nWith\nmore than 15 years of experience in forest land operation, our Group has become a diversified enterprise integrating the production and\nsales of a range of wood products, including logs, decking, flooring, sawn timber and carbon credits. Our Group has a supply chain throughout\nUSA, South America, Africa and Europe.\n\n \n\nWith\nMr. Hok Pan Se becoming our principal shareholder in June 2016, he pursued his vision of developing our Group into a vertically-integrated\nforestry company by acquiring more new forests with a view to reducing the impact of our business from market fluctuations on raw materials.\n\n \n\nAs\npart of these earlier vertical integration efforts, our Group expanded downstream capabilities by acquiring wood processing facility\nin Peru (in January 2017 and June 2020, respectively). These steps enabled the introduction of ready-to-use decking products sold directly\nto end customers—unlike the flooring products handled prior to 2017, which generally required further reprocessing—as well\nas supporting business growth for a period and facilitating the launch of essential oils in November 2020, a new product line refined\nfrom forest resources and exported to customers.\n\n \n\nHowever,\namid challenging global conditions including a downturn in the home building and renovation markets, ongoing geopolitical conflicts affecting\ntrade, and weakness in key demand drivers such as the Chinese property sector, our forests and processing facilities operations in Peru\n(held through Peru Forestry Management Co., Limited and its subsidiaries) incurred persistent losses over recent years. In June 2025,\nour Group completed the disposal of the entire issued share capital of Peru Forestry Management Co., Limited and its subsidiaries. This\ntransaction eliminated the ongoing negative impact of these losses on our Group’s overall profitability and cash flows, while allowing\nmanagement to refocus resources on a more agile business model centered on trading of wood products, exploring new opportunities, and\noptimizing the product mix in a volatile industry environment.\n\n \n\nIn\nOctober 2025, Mr. Se Hok Pan, Easy Bliss Limited, Linking Stars Limited, More Choice Global Limited, Mr. Chan Wing Luk and Mr. Huang\nQing Cai completed the transfer of an aggregate of 114,974,179 Ordinary Shares, representing approximately 86.82% of the Company’s\nissued and outstanding Ordinary Shares, to TUTU Business Services Limited, Ms. Liang Yanxia, Mr. Li Xianfeng, Ms. Miao Huiping, Mr. Wang\nLei and Mr. Wang Gang, pursuant to a share purchase agreement dated October 22, 2025. This transaction was effected by private sale of\nexisting Ordinary Shares. The Company did not issue any new shares and was not a party to the share purchase agreement. Following closing,\nTUTU Business Services Limited became the controlling shareholder of our Group.\n\n \n\nIn\nDecember 2025, following approval by the shareholders at the Company’s Annual General Meeting, the name of the Company was officially\nchanged from “Nature Wood Group Limited” to “CL Workshop Group Limited”, with the corresponding foreign (Chinese)\nname updated from “大自然林業集團有限公司” to “刺梨工坊公司”.\nThe change reflects the Company’s evolution under new strategic direction and ownership structure following recent developments.\n\n \n\n17\n\n \n\n \n\n**4.B.\nBusiness Overview**\n\n \n\n**BUSINESS**\n\n \n\n**Overview**\n\n \n\nWe\nare a forestry company headquartered in Macau that focuses on trading of wooden product. We offer a broad line of products, including\nlogs, decking and flooring, primarily through our sales network in Europe, South Asia, South America, North America and China.\n\n \n\n**Our\nProducts**\n\n \n\nWe\nsell a broad line of products, mainly logs, decking, flooring and sawn timber. The table below sets out our revenue by product type during\nthe years ended December 31, 2025, 2024 and 2023:\n\n \n\n  \nFor the year ended\nDecember 31, 2025  \nFor the year ended\nDecember 31, 2024  \nFor the year ended\nDecember 31, 2023 \n\n  \n$ (‘000)  \n%  \n$ (‘000)  \n%  \n$ (‘000)  \n% \n\nLogs \n5,633  \n 38.6% \n 12,161  \n 74.4% \n 10,024  \n 56.8%\n\nFlooring \n 7,524  \n 51.6% \n 745  \n 4.6% \n 2,124  \n 12.0%\n\nDecking \n 1,157  \n 7.9% \n 3,376  \n 20.7% \n 5,393  \n 30.5%\n\nSawn timber \n 270  \n 1.9% \n 53  \n 0.3% \n 132  \n 0.7%\n\nCarbon credits \n -  \n -  \n 6  \n 0.1% \n -  \n -\n\nTotal \n$14,584  \n 100.0% \n$16,341  \n 100.0% \n$17,673  \n 100.0%\n\n \n\n**Customers**\n\n \n\nDuring\nthe years ended December 31, 2025, 2024 and 2023, we sold our wood products principally to our customers located in China, Europe, South\nAmerica, North America and Asia. The following table sets out our revenue by the location of our customers:\n\n \n\n  \nFor the year ended\nDecember 31, 2025  \nFor the year ended\nDecember 31 2024  \nFor the year ended\nDecember 31 2023 \n\n  \n$ *(‘000)*  \n%  \n$ (‘000)  \n%  \n$ (‘000)  \n% \n\nLocation of customers \n    \n    \n    \n    \n    \n   \n\nChina \n 6,503  \n 44.6  \n 7,651  \n 46.8  \n 10,303  \n 58.3 \n\nEurope \n 1,968  \n 13.5  \n 4,091  \n 25.0  \n 6,036  \n 34.2 \n\nSouth America \n 16  \n 0.1  \n -  \n -  \n 896  \n 5.1 \n\nNorth America \n 317  \n 2.2  \n 515  \n 3.2  \n 43  \n 0.2 \n\nAsia \n 5,531  \n 37.9  \n 4,057  \n 24.8  \n 395  \n 2.2 \n\nAfrica \n 249  \n 1.7  \n 27  \n 0.2  \n -  \n - \n\n  \n    \n    \n    \n    \n    \n   \n\nTotal \n$14,584  \n 100.0  \n$16,341  \n 100.0  \n$17,673  \n 100.0 \n\n \n\n**Pricing**\n\n \n\nOur\nGroup has adopted a pricing policy largely based on production costs, transportation costs, profit margin and the market price of similar\nproducts, taking into account factors such as costs of major raw materials, in particular logs and flooring, the prices of which may\nfluctuate from time to time.\n\n \n\n18\n\n \n\n \n\n**Sales\nand Marketing**\n\n \n\nWe\nbelieve that based on our proven track record, our relationships with our customers, our extensive supply network, our reputation and\nour years of experience in the wood industry, we do not rely heavily on marketing and promotional activities. Our sales and marketing\nteam is generally responsible for liaising and maintaining our relationships with customers and keeping abreast of market developments\nand potential business opportunities.\n\n \n\n**Competition**\n\n \n\nCompetition\nin the international timber market will become more intense in the future. Environmental protection-related policies have been introduced\none after another, and the number of countries restricting log exports has increased again, implying that the competition in the international\nseller’s timber market is bound to be more intense.\n\n \n\nIt\nis believed that there will still be a number of restrictions on the export trade of forest products in export markets in the near future\nand exports of forest products will continue to be hampered by trade obstacles like formaldehyde, tariffs, and double anti-barriers.\nTo get around these obstacles, businesses will have to invest in third-party nations while also stepping up their R&D efforts to\ncreate more innovative and value-added products.\n\n \n\n**Seasonality**\n\n \n\nWe\nare exposed to fluctuations in quarterly sales volumes due to seasonal factors. These seasonal factors are common in the building products\nindustry. Seasonal changes in levels of building activity affect our building products businesses, which are dependent on housing, repair\nand remodeling activities and light commercial construction activities. We typically report lower sales in the first and fourth quarters\ndue to the impact of poor weather on the construction market, and we generally have higher sales in the second and third quarters, reflecting\nan increase in construction due to more favorable weather conditions. In addition, the sales volumes and selling price of decking would\ngenerally increase a few months before the summer holiday and Christmas holiday, i.e. from February to May and from October to December.\nThere would also be a surge in demand for flooring products in the second and third quarters of each year.\n\n \n\n**Properties**\n\n \n\nOur\nheadquarters are located at Avenida da Amizade no. 1287, Chong Fok Centro Comercial, 13 E Macau S.A.R. The following table sets forth\nthe location, use and size of our owned and leased facilities as of December 31, 2025:\n\n \n\n**Location**\n \n**Use**\n \n**Leased/Owned**\n \n**Approximate\nArea**\n\nLima,\nPeru\n \nOffice\n \nOwned\n \n619\nm2\n\nVal\nde Marne, France\n \nOffice\n \nLeased\n \n60\nm2\n\nGuangdong,\nChina\n \nOffice\n \nLeased\n \n318\nm2\n\n \n\n**Intellectual\nProperty**\n\n \n\nAs\nof December 31, 2025, we registered the following domain name:\n\n \n\n**Domain\nname**\n \n**Registered\nowner**\n \n**Registration\ndate**\n \n**Expiry\ndate**\n\n \n \n \n \n \n \n \n\nwww.nature-wood.com\n \nFoshan\nCity Linjia Technology Company Limited\n \nDecember\n27, 2018\n \nDecember\n27, 2026\n\n \n\nDuring\nthe years ended December 31, 2023, 2024 and 2025, we were not involved in any proceedings with regard to, and we did not receive notice\nof any claim of, infringement of any intellectual property rights that may be threatened or pending in which we may be involved either\nas a claimant or respondent which would have a material impact on our business, financial conditions or results of operations.\n\n \n\n19\n\n \n\n \n\n**Legal\nand Regulatory Compliance**\n\n \n\nDuring\nthe years ended December 31, 2023, 2024 and 2025, we obtained the certificates that are required and material for our business and operations,\nwhich demonstrates our commitment to sustainable forest management. Further, we have complied in all material aspects with the relevant\nlaws and regulations and there was no incident relating to our material certificates that are material to our business and operations\nwhich constitutes non-compliance during the years ended December 31, 2023, 2024 and 2025. The following table sets out the details of\nthe material certificates held by our Group as of December 31, 2025:\n\n \n\n**Certificate**\n \n**Holding\nentity**\n \n**Issuing\nauthority**\n \n**Certification\ncode**\n \n**Date\nof grant**\n \n**Date\nof expiry**\n\n \n \n \n \n \n \n \n \n \n \n \n\nFSC\nCoC certification\n \nSwift\nTop Capital Resources Limited, Foshan City Linjia Technology Company Limited and Choi Chon Investment Company Limited\n \nFSC\n \nBV-COC-207557\n \nSeptember\n13, 2024\n \nSeptember\n12, 2029\n\n \n\n**REGULATIONS**\n\n \n\nThis\nsection sets forth a summary of the most significant rules and regulations that affect our business activities in Peru, France and the\nPRC.\n\n \n\n**Overview\nof the Laws and Regulations Relating to Our Business and Operations in Peru**\n\n \n\n*The\nfollowing sets forth a summary of the major laws and regulations applicable to our business in relation to forestry business in Peru.*\n\n \n\nRegulations\nrelating to forestry operation\n\n \n\nIn\nPeru the forestry regulations are published at the national (Congress of the Republic, Executive Branch, Ministries), regional and local\n(Municipal) levels. Resolutions and circulars intended for administrations may complete this regulatory system.\n\n \n\nProvisions\nwith a national scope are integrated in:\n\n \n\n \n-\nthe\nOrganic Law for the Sustainable Use of Natural Resources (“Ley Orgánica para el Aprovechamiento Sostenible de los Recursos\nNaturales”), approved by Law No. 26821;\n\n \n \n \n\n \n-\nthe\nForest and Wildlife Law (“Ley Forestal y de Fauna Silvestre”), approved by Law No. 29763, and its implementing regulations,\nincluding the Regulation for Forest Management approved by Supreme Decree No. 018-2015-MINAGRI, as amended; and\n\n \n \n \n\n \n-\nin\naddition, forestry activities are subject to complementary sectoral, environmental, territorial, and local rules, including zoning\nrules and the specific title enabling the relevant activity.\n\n \n\nThe\nlegislation relating to forest exploitation is relatively complex given the numerous regulations that coexist and apply under specific\ncriteria (e.g., forest zoning, the kind of forest, the surface area of the cut to be carried out, the presence or absence of native and\nrural communities, etc.).\n\n \n\nForestry\nactivities in Peru generally require an applicable enabling title, permit, authorization, concession or other operating right, depending\non the nature of the activity, the legal status of the relevant land, and the applicable regulatory regime. Such rights are subject to\nmanagement, operational, reporting, compensation and supervisory requirements.\n\n \n\nThe\nPeruvian Forestry Supervisory Agency (Organismo de Supervisión de los Recursos Forestales y de Fauna Silvestre, or “OSINFOR”)\nsupervises compliance with obligations associated with forestry titles within its legal mandate. OSINFOR’s supervisory role is\ncomplemented by the National Forest and Wildlife Service (Servicio Nacional Forestal y de Fauna Silvestre, or “SERFOR”) and\nregional forestry authorities, which exercise administrative, regulatory and permitting functions within their respective competences.\n\n \n\n20\n\n \n\n \n\nHolders\nof forestry concessions are required to pay economic compensation in favour of the Peruvian government for the right of use granted over\nthe forest, calculated on the basis of payment per area and/or payment for the exploitation value of the natural resource. In addition,\nconcessionaires must maintain a guarantee of faithful compliance throughout the concession period, in the form of a standby letter of\ncredit (carta fianza), surety bond (póliza de caución), cash deposit, or security interest over assets, as provided by\nthe forestry regulations.\n\n \n\nRegulations\non Environmental Matters\n\n \n\nPeruvian\noperations are subject to environmental laws and regulations, including the framework established by Law No. 27446 and its implementing\nregulations. Projects requiring environmental certification may not commence until the competent authority has issued the corresponding\napproval. Depending on the anticipated level of environmental impact, a project may be required to obtain a Declaration of Environmental\nImpact (DIA), a Semi-detailed Environmental Impact Study (EIA-sd) or a Detailed Environmental Impact Study (EIA-d).\n\n \n\nOperations\nare also subject to obligations relating to emissions, effluents, noise, vibrations, solid waste management and environmental remediation,\nincluding obligations arising under applicable environmental management instruments and administrative orders. OEFA (“Organismo\nde Evaluación y Fiscalización Ambiental”) is responsible for supervising compliance with applicable environmental\nobligations and may impose fines, corrective measures or other administrative sanctions, including the suspension of activities in certain\ncircumstances.\n\n \n\nRegulations\nRelating to Dividend Distributions\n\n \n\nAccording\nto the General Companies Law (“Ley General de Sociedades”), approved by Law No. 26887 and its amendments, companies duly\nincorporated under Peruvian law may pay dividends only if the general shareholders’ meeting (junta general de accionistas) approves\nthe distribution of up to one hundred percent (100%) of their accumulated profit (after payment of income tax).\n\n \n\nPeruvian\nregulations require that at least ten percent (10%) of the company’s after-tax profit be set aside as a legal reserve, until such\nreserve equals one-fifth (20%) of the paid-in capital (capital social), pursuant to Article 229 of the General Companies Law.\n\n \n\nAdditionally,\naccording to Article 40 of the General Companies Law, in order to distribute dividends, profits must be determined in accordance with\nthe individual financial statements of the company duly approved by the general shareholders’ meeting of the company.\n\n \n\nFinally,\ndividend distributions to non-domiciled shareholders (whether individuals or legal entities) are subject to a five percent (5%) withholding\ntax in Peru. Dividend distributions between Peruvian-domiciled legal entities are not subject to withholding tax.\n\n \n\nRegulations\nRelating to Foreign Investments and Foreign Exchange Control\n\n \n\nThe\nofficial currency of Peru is the SOL. The country has a free-floating exchange rate regime, with the central bank occasionally intervening\nonly for purposes of inflation control. There are no restrictions or limitations on the number of bank accounts in foreign currency or\nthe remittance of funds abroad that an individual or legal entity may make.\n\n \n\nAccording\nto Legislative Decree No. 662 and its regulations, foreign investments made by non-domiciled individuals and/or legal entities must be\nchannelled through (i) companies of the Peruvian financial system or (ii) non-domiciled banking or financial companies. In addition,\nunder the TUO of Law No. 28194, approved by Supreme Decree No. 150-2007-EF, certain transactions must be made through the Peruvian financial\nsystem for purposes of traceability and formalization. Thus, the transfer of funds from foreign territories (i.e. USA, PRC, France, BVI\nor offshore) to Peru should be exercisable without any significant restriction that could otherwise render the operation unviable.\n\n \n\nAs\nconsequence of the aforementioned, the financial relations between Peruvian and foreign individuals are free due to the lack of exchange\ncontrol or restrictive currency regulations.\n\n \n\n21\n\n \n\n \n\nRegulations\nRelating to Labor\n\n \n\nPeruvian\nlabour regime is a sum of specific regulations that regulate the hiring, labour conditions and benefits and extinction of the labour\ncontract, among others. This regulation is complemented by collective agreements – signed with labour unions – and/or individual\nagreements, signed directly with the employee.\n\n \n\nAmong\nthe most important regulation of the private sector, we have regulations that govern the minimum wage, compensation for time of service,\nlegal bonus, paid leave, weekly rest, maximum working time and overtime, profit sharing, family allowance, and contributions and taxes\nlevied on the remuneration of employees.\n\n \n\nCompanies\nperforming forestry activities under the regime of Law No. 31110, as amended by Law No. 32434, are also subject to a special labour regime\nwhich provides differentiated rules regarding compensation for time of service (CTS), profit sharing (7.5% of the company’s pre-tax\nprofits for 2024 through 2026, and 10% from 2027 onwards), and other employment benefits.\n\n \n\nRegulations\nRelating to Foreign Trade\n\n \n\nAccording\nto the General Customs Law (“Ley General de Aduanas”**)**, approved by Legislative Decree No. 1053, as amended, and its\nRegulations, SUNAT (“Superintendencia Nacional de Aduanas y Administración Tributaria”) administers and enforces Peru’s\ncustoms regime. Companies engaging in import or export operations must be duly registered with the taxpayers’ registration number\n(“Registro Único de Contribuyente” or the “RUC”) and comply with the customs formalities applicable to\nthe relevant operation, including the customs declaration, transport document, invoice or equivalent proof of transfer, and any additional\ndocument required by the nature of the goods.\n\n \n\nThe\nGeneral Customs Law and its regulations govern customs infractions and their respective sanctions, which are classified as fines and\nadministrative sanctions: (i) suspension; (ii) cancellation; and (iii) disablement. It is essential to mention that SUNAT has the power\nto apply the sanctions objectively or subjectively.\n\n \n\nPeruvian\ncompanies must obtain a valid single RUC before they can carry out trade operations, such as import and export. The primary documents\nrequired by the administration for the definitive export of goods out of the country are as follows:\n\n \n\n \n-\nCustoms\ndeclaration of goods.\n\n \n \n \n\n \n-\nTransport\ndocument, depending on the mode of transport.\n\n \n \n \n\n \n-\nInvoice,\ndocument of the participant or operator, or ballot sale, or any other proof of transfer of goods to a customer domiciled abroad;\nor affidavit of value and description of goods where there is no sale.\n\n \n \n \n\n \n-\nA\ndocument testifying to the power vested in the customs clearance agent: transport document duly endorsed or special power of attorney.\n\n \n \n \n\n \n-\nAny\nother document required for export due to the nature of the goods.\n\n \n\nOn\nApril 28, 2009, Peru executed a free trade agreement with the PRC, which entered into force on March 1, 2010. Customs affairs and trade\nfacilitation are covered in such agreement, helping Peruvian products enter the Chinese market under more competitive conditions by eliminating\nand/or reducing tariffs applicable to certain goods.\n\n \n\nTax\nRegime applicable to Forestry Activities\n\n \n\nPursuant\nto the Fourteenth Complementary Final Rule of Law No. 29763, persons carrying out forestry activities may enjoy the preferential income\ntax regime originally set forth in Law No. 31110 for agricultural companies. The tax regime applicable to the forestry sector has been\nsubstantially modified by Law No. 32434 (“Ley que promueve la transformación productiva, competitiva y sostenible del sector\nagrario con protección social hacia la agricultura moderna”), published on September 10, 2025 and effective as of January\n1, 2026.\n\n \n\n22\n\n \n\n \n\nUnder\nLaw No. 32434, the income tax rates applicable to companies engaged in forestry activities (classified as “empresas agrarias”\nunder the new law) are as follows:\n\n \n\n \n(a)\nFor\nthe period from January 1, 2026 through December 31, 2035, a preferential income tax rate of 15% applies to all qualifying companies,\nregardless of revenue level.\n\n \n \n \n\n \n(b)\nFrom\nJanuary 1, 2036 onwards, the general income tax rate of 29.5% shall apply.\n\n \n\nThe\namount of the tax unit (“Unidad Impositiva Tributaria” or the “UIT”) is set by the Peruvian government on a yearly\nbasis. For 2026, the UIT is S/ 5,500, as established by Supreme Decree No. 301-2025-EF.\n\n \n\nPrior\nto the enactment of Law No. 32434, Law No. 31110 had established escalating income tax rates for companies with net revenues exceeding\n1,700 UIT (15% for 2021–2022, 20% for 2023–2024, 25% for 2025–2027, and 29.5% from 2028 onwards). Law No. 32434 replaced\nthis escalating structure with a flat 15% rate for all qualifying companies through 2035.\n\n \n\nAdditionally,\npursuant to Law No. 32434, companies performing forestry activities may enjoy an accelerated depreciation rate of 20% per annum on investments\nin infrastructure works related to hydraulic infrastructure and irrigation acquired or constructed between 2026 and 2035. This benefit\nreplaces and extends the prior accelerated depreciation regime under Law No. 31110, which expired on December 31, 2025.\n\n \n\nIncompatibility\nwith Other Tax Regimes\n\n \n\nLaw\nNo. 32434 expressly provides that its beneficiaries may not simultaneously avail themselves of other preferential tax regimes, including:\n(a) the MYPE Tax Regime; (b) the income tax regime under Law No. 27037 (“Ley de Promoción de la Inversión en la Amazonía”);\n(c) the benefits under Law No. 27688 (Zona Franca de Tacna); (d) certain benefits under Article 10 of Law No. 31110; and (e) the benefits\nunder Article 8 of Law No. 31969.\n\n \n\nSeparately,\ncompanies located in the departments of Loreto and Madre de Dios, and in the districts of Iparia and Masisea of the Coronel Portillo\nprovince, and in the provinces of Atalaya and Purus of the department of Ucayali, may enjoy a 5% preferential income tax rate under Law\nNo. 27037 (Ley de Promoción de la Inversión en la Amazonía) so long as they carry out forest extraction activities\n(a benefit set to expire in 2048). However, under Law No. 32434, the Amazonia regime and the agrarian/forestry regime are mutually exclusive.\n\n** **\n\n**Overview\nof the Laws and Regulations Relating to Our Business and Operations in France**\n\n \n\n*The\nfollowing sets forth a summary of the major laws and regulations applicable to our business in relation to forestry business in France.*\n\n \n\nRegulations\nRelating to Forestry Operation\n\n \n\nIn\nthe field of forestry, regulations are published at the national (Council of State, ministries), regional and departmental (prefectures)\nor communal (town councils) level. Their scope of application is therefore broad. Circulars intended for administrations may complete\nthis regulatory system.\n\n \n\nThe\nprovisions with a national scope are integrated in:\n\n \n\n \n-\nthe\nForestry Code;\n\n \n \n \n\n \n-\nthe\nEnvironment Code; and\n\n \n \n \n\n \n-\nthe\nRural and Maritime Fishing Code.\n\n \n\nConcerning\npublic forests, it is necessary to mention the National Book of Forestry Prescriptions (CNPEF), which is mandatory for all those involved\nin public forests - service providers or clients purchasing wood - for forestry operations. This booklet replaces the National Forestry\nRegulations (RNEF) for all new agreements signed from 2020 onwards and lists all the applicable requirements in terms of environmental\npreservation, protection of forest stands, safety, the conduct of the operation and details the responsibilities of the operator and\nthe repair of damage.\n\n \n\n23\n\n \n\n \n\nThe\nlegislation relating to forest exploitation is relatively complex from the point of view of both the owner of the parcel and the operator,\ngiven the numerous rules that coexist and apply under specific criteria (e.g. the size of the property, the nature of the stand, the\nsurface area of the cut to be carried out, the presence or absence of a document or directive of forest management, etc.).\n\n \n\nIt\nis noteworthy that the activity of logging is not subject, as such, to the obtaining by the operator of a specific license of general\nscope. Instead, any logging on public domain is subject to obtaining a logging permit issued by the National Forestry Organization (under\nthe supervision of the Ministry of Agriculture and the Ministry of the Environment) for a particular cut / parcel. With respect to logging\nwithin a private forest, it is the responsibility of the forest owner, depending on the situation, either to set up a Simple Management\nPlan approved by the Regional Center of Forest Ownership (CRPF), or to obtain a prior administrative authorization (from the prefecture\nor from the town council) in order to enable harvesting on his property.\n\n \n\nIn\naddition to the legal provisions, there are a number of standards:\n\n \n\n \n-\nat\nthe European level, the “EN” standards known as “harmonized standards”, give presumption of conformity of\na product in relation to the European Directives concerned; they are taken over in France by the AFNOR (French Association for Standardization);\n\n \n \n \n\n \n-\nat\nthe worldwide level, the “ISO” standards.\n\n \n\nA\nstandard only becomes mandatory if a regulatory text refers to it. In the other cases, it is simply a technical specification of voluntary\napplication. As mentioned in the “Business” section above, our French subsidiary, PARQUET NATURE (FRANCE), holds a certificate\nof conformity issued by the PEFC. This certificate establishes that our subsidiary meets the requirements for PEFC Chain of Custody according\nto several standards within the scope of round woods and sawn woods – Physical Separation Method.\n\n \n\nLastly,\nthere are prescriptions fixed by the general sales clause, in the case of purchase of standing timber from a forest owner. These clauses\nimpose, for example, the respect of the infrastructures and timber of the remaining stand. They are not of a regulatory nature but contractual\nbetween the seller (forest owner or his representative) and the buyer (forest operator).\n\n \n\nRegulations\nRelating to Foreign Investments and Foreign Exchange Control\n\n \n\nFinancial\nrelations between France and foreign countries are free. As an exception, in a limited number of sectors related to national defense\nor likely to jeopardize public order and activities that are essential to guaranteeing the country’s interests, Article L. 151-3\nof the Monetary and Financial Code requires prior authorization for foreign investments.\n\n \n\nForeign\ninvestments in France by non-residents must be reported to the French Treasury under certain circumstances. In accordance with Article\nR152-3 of the Monetary and Financial Code, if a non-resident acquires 10% or more of the equity or voting rights in a resident company,\nor if foreign-held equity or voting rights in a company rise above the 10% threshold, a return must be filed by a non-resident (for statistical\nreasons) with the Banque de France if the amount of the transactions exceeds EUR 15 million.\n\n \n\nLastly,\na foreign investment is subject to authorization under the IEF procedure if three conditions are cumulatively met: condition relating\nto the source of the investment; condition relating to the nature of the planned transaction; condition relating to the nature of the\ntarget company’s activity, such as aerospace, civil protection, cybersecurity, artificial intelligence, robotics, some data centers,\nsome semiconductors. If one of these conditions is not met, the investment is not subject to authorization. These criteria are provided\nfor in the Monetary and Financial Code.\n\n \n\nThere\nare no exchange control or currency regulations.\n\n \n\nRegulations\nRelating to Labor\n\n \n\nEmployment\nrelationships in France are mainly regulated by:\n\n \n\n \n-\nEU\nregulations.\n\n \n \n \n\n \n-\nThe\nLabor Code.\n\n \n \n \n\n \n-\nIndustry\nand company collective bargaining agreements.\n\n \n \n \n\n \n-\nInternal\nregulations and practices.\n\n \n \n \n\n \n-\nIndividual\ncontractual terms.\n\n \n\n24\n\n \n\n \n\nEmployment\ncontracts must be drawn up for each specific job category, according to employment legislation and collective agreements in force. Statutory\nrights including notice period, minimum salaries, severance payment etc. are frequently enhanced by national industry sector collective\nbargaining agreements, which may apply simply on the basis of the company’s business activity and location.\n\n \n\nThe\nFrench social security system requires contributions from both employers and employees. Employees’ social security contributions\nare withheld from salary by the employer.\n\n \n\n*Staff\nrepresentation*\n\n \n\nThe\nworkers in small and medium sized enterprises have the right to be represented by a collective body: the members of the “Comité\nSocial et Economique”, who are elected by the employees. The CSE is mandatory for all enterprises with at least 11 employees. The\nnumbers of the elects increase with the enterprise’s size.\n\n \n\nRegulations\nRelating to Business Operation\n\n \n\n*Registration*\n\n \n\nPrior\nto the commencement of business operations in France, any company must be registered with the Trade and Companies Register (*Registre\ndu commerce et des sociétés*) (RCS). Each establishment operated by any company must also be declared and registered\nas a secondary establishment with the relevant Trade and Companies Register.\n\n* *\n\n*Reporting\nRequirements*\n\n \n\nEvery\nFrench commercial company, including French branches of foreign companies, must comply with accounting requirements and keep annual financial\nstatements (balance sheet, profit and loss account, and, if required, management reports, minutes of the annual meeting regarding the\napproval of the accounts and allocation of profit), which must be filed with the registry of the competent commercial court.\n\n \n\nFrench\nlaw imposes beneficial ownership reporting requirements on all unlisted companies and foreign companies with a French branch. These companies\nmust identify and disclose the identity of any individual who:\n\n \n\n \n-\nDirectly\nor indirectly owns more than 25% of the company’s capital or voting rights, or otherwise\n\n \n \n \n\n \n-\nExercises\ncontrol over the company within the meaning of the Commercial Code.\n\n \n\n*Statutory\nAuditors*\n\n \n\nAn\nauditor must be appointed by commercial companies that exceed at least two of the three following thresholds.\n\n \n\nThe\nrules governing the mandatory appointment of statutory auditors in commercial companies have been amended following Decree No. 2024-152\nof 28 February 2024.\n\n \n\n \n-\nBefore\n1 March 2024: (i) turnover of 8 million Euros, (ii) total balance sheet of 4 million Euros and (iii) 50 employees);\n\n \n \n \n\n \n-\nAfter\n1 March 2024: (i) turnover of 10 million Euros, (ii) total balance sheet of 5 million Euros and (iii) 50 employees.\n\n \n\nIf\na statutory auditor has already been appointed, their mandate continues for its full term, even if the company no longer meets the applicable\nthresholds.\n\n \n\nThe\nmandate of the statutory auditor of our French subsidiary, PARQUET NATURE (FRANCE), was renewed at the Ordinary General Meeting held\non 30 June 2021 for a period of six financial years, in accordance with the applicable legal provisions. This mandate will expire at\nthe General Meeting to be held in 2027 to approve the financial statements for the financial year ending in 2026.\n\n \n\n25\n\n \n\n \n\nRegulations\nRelating to Personal Data Protection\n\n \n\nOrganizations\nprocessing personal data (which includes employee data, customer data, and business contact information) must comply with the Regulation\n(EU) 2016/679 of 27 April 2016 (General Data Protection Regulation - GDPR), applicable since May 25, 2018, and with the French law n°78-17\nof January 6, 1978 on Data Processing, Data Files and Individual Liberties, as amended in June 2018.\n\n \n\nOrganizations\nare also encouraged to appoint a Data Protection Officer we will oversees compliance with data protection obligations.\n\n \n\nAn\nindependent administrative authority is responsible for monitoring compliance with the legislation and has the power to impose sanctions,\nnamely the Commission nationale de l’informatique et des libertés (CNIL).\n\n \n\nRegulations\nRelating to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF)\n\n \n\nBeginning\nin 2016, France has taken several important steps to strengthen its approach to anti-money laundering. These steps included incorporating\nEU Directives into the country’s laws.\n\n \n\nIn\nparticular, France transposed Directive (EU) 2018/843 of 3 May 2018 (the Fifth EU AMLD) by Ordinance No. 2020-115 of 12 February 2020.\n\n \n\nProvisions\nrelating to the fight against AML/CFT are found primarily in the Criminal Code and the Monetary and Financial Code (CMF).\n\n \n\nThe\nCMF imposes the following main obligations on financial institutions and other designated businesses concerning AML/CTF requirements:\n\n \n\n \n-\nCustomer\ndue diligence, with a duty to clearly: (i) identify/verify the customer’s identity, (ii) identify/verify the beneficial owner’s\nidentity, (iii) obtain information on the nature and purpose of the business relationship to establish the customer’s risk\nprofile, (iv) establish ongoing monitoring to report risky transactions and to maintain and update customer information.\n\n \n \n \n\n \n-\nObligation\nto keep information record for five years from the account closure date or from the termination date of the business relationship.\n\n \n \n \n\n \n-\nObligation\nto report specific transactions or suspicious operations and activities, where applicable.\n\n \n \n \n\n \n-\nObligation\nto implement AML procedures and policies, as well as internal controls and compliance programs.\n\n \n\nThe\nIntelligence Processing and Action against Illicit Financial Networks Unit (“**TRACFIN**”) is the designated financial\nintelligence unit and the national reporting authority for collecting, analyzing, and enriching information reported by, *inter alia*,\nfinancial institutions and other businesses subject to AML requirement. The designated businesses subject to AML requirements are listed\nunder Article L. 561-2 of the Monetary and Financial Code. Amongst the non-financial entities subject to AML requirements include real\nestate agents, accountants, auditors, auction sellers, notaries, gambling and betting operators, sports agents, art and antiques dealers\nand lawyers.\n\n \n\nAside\nfrom the above-mentioned specific requirements, all companies and economic interest groups registered in France, all foreign commercial\ncompanies with a branch in France and all other legal entities registered in France are required to file at the Trade and Companies Registry\na document identifying their beneficial owners, and the type of control over the legal entity such owners exercise.\n\n \n\nOur\nFrench subsidiary, PARQUET NATURE (FRANCE) is not deemed to be a reporting institution. Nevertheless,\nwe are required to comply with the provisions relating to the fight against AML/CFT.\n\n \n\nRegulations\nRelating to Intellectual Property\n\n \n\nFrench\nlaw on intellectual property rights is the result of national statutory and regulatory provisions, including those implementing international\nand multilateral agreements, and European regulations having direct effect in France as a Member State of the European Union.\n\n \n\n26\n\n \n\n \n\nIn\nthis respect, France is a party to the Paris Convention for the Protection of Industrial Property of 20 March 1883, which introduces\nkey mechanisms, such as the priority right.\n\n \n\nFrance\nis also a party to a number of special agreements. Some of these allow for an international filing of applications for registered intellectual\nproperty rights: including trademarks, patents and designs, the Madrid Agreement Concerning the International Registration of Marks of\n14 April 1891 and the Madrid Protocol of 27 June 1989.\n\n \n\nThe\nimplementation of these international rules and the articulation of French law and notably French intellectual property law with these\ninternational rules is codified with French national substantive law in the French Intellectual Property Code (CPI).\n\n \n\nFrench\nlaw as codified in the CPI provides for specific provisions regarding several intellectual property rights, including trademarks. Trade\nsecrets law is codified in the French Commerce Code.\n\n \n\nRegulations\nRelating to the Commercial Relationships\n\n \n\nIn\nFrance, commercial relationships between professionals are mainly regulated by the Commercial Code.\n\n \n\nThis\nCode establishes the obligations to be respected by professionals in relationships between professionals (B2B relationships) at the several\nsteps of the commercial relationships: negotiation, billing, payment.\n\n \n\nDuring\nnegotiations, the seller is required to communicate his general terms and conditions of sale to any business customer who requests them,\nhowever, the establishment of these general conditions of sale is not an obligation.\n\n \n\nIf\ngeneral terms and conditions of sale are issued, some mandatory mentions must appear such as (the list is not exhaustive): terms of sale\nand payment, the elements for determining the price, such as the unit price scale and any price reductions.\n\n \n\nThe\nissuing of invoices is also regulated. Several mandatory mentions must appear on the invoice such as:\n\n \n\n \n-\nParties’\nname and address;\n\n \n \n \n\n \n-\nDate\nof sale or service;\n\n \n \n \n\n \n-\nQuantity\nand precise name of products or services;\n\n \n \n \n\n \n-\nUnit\nprice before tax and possible discounts;\n\n \n \n \n\n \n-\nDue\ndate for payment and penalties for late payment;\n\n \n \n \n\n \n-\nInvoice\naddress, if different from the customer’s, and purchase order number if applicable.\n\n \n\nOther\nmentions are set out in the Commercial Code relating to the identification of the company (i.e.: registration number, registered office).\n\n \n\nIt\nshould be noted that in addition to the rules of the Commercial Code on this topic, there are those of tax law.\n\n \n\nThe\npayment is also subject to regulations, this latter must respect the deadlines set out in the Commercial Code failure to do so may result\nin sanctions (i.e.: administrative fine, interest on arrears, fixed compensation for recovery costs).\n\n \n\n**Overview\nof the Laws and Regulations Relating to Our Business and Operations in China**\n\n \n\nRegulations\nRelated to Foreign Investment\n\n \n\nInvestment\nactivities in China by foreign investors are principally governed by the Catalog of Industries for Encouraging Foreign Investment (the\n“**Encouraged Industries Catalog**”) and the Special Management Measures (**Negative List**) for the Access of Foreign\nInvestment (the “Negative List”), which were promulgated and are amended from time to time by the Ministry of Commerce (“**MOFCOM**”)\nand the National Development and Reform Commission (the “**NDRC**”), and together with the PRC Foreign Investment Law\n(the “**FIL**”), and their respective implementation rules and ancillary regulations. The Encouraged Industries Catalog\nand the Negative List lay out the basic framework for foreign investment in China, classifying businesses into three categories in terms\nof the level of participation permitted to foreign investment: “encouraged”, “restricted” and “prohibited.”\nIndustries not listed in the Encouraged Industries Catalog are generally deemed as falling into a fourth category of “permitted”\nindustries unless specifically restricted by other PRC laws.\n\n \n\n27\n\n \n\n \n\nOn\nDecember 15, 2025, MOFCOM and the NDRC released the Encouraged Industries Catalogue (2025 Version), which became effective on February\n1, 2026, to replace the then existing Encouraged Industries Catalog. On September 6, 2024, MOFCOM and the NDRC released Negative List\n(2024 Version), which became effective on November 1, 2024, to replace the then existing Negative List. The Negative List (2024 Version)\nsets forth the industries in which foreign investments are restricted or prohibited. Industries that are not listed in the Negative List\n(2024 Version) are generally permitted to foreign investment unless otherwise specifically restricted by other PRC rules and regulations.\n\n \n\nOn\nMarch 15, 2019, the National People’s Congress (the “**NPC**”) promulgated the FIL, which became effective on January\n1, 2020 and replaced the main body of laws and regulations then governing foreign investment in China. Pursuant to the FIL, “foreign\ninvestments” refer to investment activities conducted by foreign investors directly or indirectly in China, which include any of\nthe following circumstances: (1) foreign investors setting up foreign-invested enterprises in China solely or jointly with other investors,\n(2) foreign investors obtaining shares, equity interests, interests in property or other similar rights and interests of enterprises\nwithin China, (3) foreign investors investing in new projects in China solely or jointly with other investors, and (4) investment by\nother means as specified in laws, administrative regulations, or as stipulated by the State Council.\n\n \n\nAccording\nto the FIL, foreign investment shall enjoy pre-entry national treatment, except for those foreign invested entities that operate in industries\ndeemed to be either “restricted” or “prohibited” in the Negative List. The FIL provides that foreign invested\nentities operating in “restricted” or “prohibited” industries will require entry clearance and other approvals.\n\n \n\nOn\nDecember 26, 2019, the State Council promulgated the Implementing Rules of Foreign Investment Law, which became effective on January\n1, 2020. The implementation rules further clarified that the state encourages and promotes foreign investment, protects the lawful rights\nand interests of foreign investors, regulates foreign investment administration, continues to optimize foreign investment environment,\nand advances a higher-level of openness.\n\n \n\nOn\nDecember 30, 2019, MOFCOM and the State Administration for Market Regulation (the “**SAMR**”) jointly promulgated the\nMeasures for Information Reporting on Foreign Investment, which became effective on January 1, 2020. Pursuant to the Measures for Information\nReporting on Foreign Investment, where a foreign investor carries out investment activities in China directly or indirectly, the foreign\ninvestor or the foreign-invested enterprise shall submit information relating to the investment to the competent commerce department.\n\n \n\nRegulations\nRelated to Foreign Exchange\n\n \n\n*General\nAdministration of Foreign Exchange*\n\n \n\nAccording\nto the Regulations on the Control of Foreign Exchange, which were promulgated by the State Council on January 29, 1996, came into effect\non April 1, 1996, and were amended on January 14, 1997, and August 5, 2008, payments for transactions that take place within the PRC\nmust be made in RMB. RMB is convertible into other currencies for current account items, such as trade-related receipts and payments\nand payment of interest and dividends. The conversion of RMB into other currencies and remittance of the converted foreign currency outside\nthe PRC for capital account items, such as direct equity investments, loans and repatriation of investment, requires the prior approval\nfrom the SAFE or its local office.\n\n \n\n*SAFE\nCircular No. 59*\n\n \n\nPursuant\nto the Circular of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment,\npromulgated by SAFE on November 19, 2012, which became effective on December 17, 2012, and was further amended on May 4, 2015, October\n10, 2018 and December 30, 2019, approval is not required for opening a foreign exchange account and depositing foreign exchange into\nthe accounts relating to the direct investments. SAFE Circular No. 59 also simplified foreign exchange-related registration required\nfor the foreign investors to acquire the equity interests of Chinese companies and further improve the administration on foreign exchange\nsettlement for FIEs.\n\n \n\n*SAFE\nCircular No. 13*\n\n \n\nPursuant\nto the Circular on Further Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, effective from June\n1, 2015, and was further amended on December 30, 2019, which cancels the administrative approvals of foreign exchange registration of\ndirect domestic investment and direct overseas investment and simplifies the procedure of foreign exchange-related registration,\nthe investors shall register with banks for direct domestic investment and direct overseas investment.\n\n \n\n28\n\n \n\n* *\n\n*SAFE\nCircular No. 19*\n\n \n\nThe\nNotice of the State Administration of Foreign Exchange on Reforming the Mode of Management of Settlement of Foreign Exchange Capital\nof Foreign-Funded Enterprises, or the SAFE Circular No.19, which was promulgated by the SAFE on March\n30, 2015, and became effective on June 1, 2015, and was further amended on December 30, 2019 and March 23, 2023, provides that\na foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital\nin its capital account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and\ninterests (or for which the bank has registered the injection of the monetary capital contribution into the account), and cancelled the\nrestriction prohibiting the settlement of foreign exchange funds held in special accounts for inbound overseas margin deposits and domestic\nmargin deposits. Pursuant to the SAFE Circular No.19, for the time being, FIEs are allowed to settle 100% of their foreign exchange capitals\non a discretionary basis; a foreign- invested enterprise shall truthfully use its capital for its own operational purposes within the\nscope of business; where an ordinary foreign- invested enterprise makes domestic equity investment with the amount of foreign exchanges\nsettled, the invested enterprise shall first go through domestic re-investment registration and open a corresponding account for foreign\nexchange settlement pending payment with the foreign exchange administration or the bank at the place where it is registered.\n\n \n\nBased\non the foregoing, when setting up a new foreign-invested enterprise, the foreign invested enterprise shall register with the bank located\nat its registered place after obtaining the business license, and if there is any change in capital or other changes relating to the\nbasic information of the foreign-invested enterprise, including without limitation any increase in its registered capital or total investment,\nthe foreign invested enterprise shall register such changes with the bank located at its registered place after obtaining the approval\nfrom or completing the filing with competent authorities. Pursuant to the relevant foreign exchange laws and regulations, the above-mentioned\nforeign exchange registration with the banks will typically take less than four weeks upon the acceptance of the registration application.\nIf we intend to provide funding to our WFOE through capital injection at or after their establishment, we shall register the establishment\nof and any follow-on capital increase in our wholly foreign owned subsidiaries with the SMAR or its local counterparts, file such and\nregister such with the local banks for the foreign exchange related matters.\n\n \n\n*Offshore\nInvestment*\n\n \n\nUnder\nthe Circular of the State Administration of Foreign\nExchange on Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment\nby Domestic Residents via Special Purpose Vehicles, or the SAFE Circular 37, issued by the SAFE and effective on July 4, 2014, PRC residents\nare required to register with the local SAFE branch prior to the establishment or control of an offshore special purpose vehicle, or\nSPV, which is defined as offshore enterprises directly established or indirectly controlled by PRC residents for offshore equity financing\nof the enterprise assets or interests they hold in China. An amendment to registration or subsequent filing with the local SAFE branch\nby such PRC resident is also required if there is any change in basic information of the offshore company or any material change with\nrespect to the capital of the offshore company. At the same time, the SAFE has issued the Operation Guidance for the Issues Concerning\nForeign Exchange Administration over Round-trip Investment regarding the procedures for SAFE registration under the SAFE Circular 37,\nwhich became effective on July 4, 2014, as an attachment of Circular 37. On February 13, 2015, SAFE promulgated the SAFE Circular No.\n13, effective from June 1, 2015, which further amended SAFE Circular 37 by requiring domestic residents to register with qualified banks\nrather than SAFE or its local branches in connection with their establishment or control of an offshore entity established for the purpose\nof overseas investment or financing.\n\n \n\nUnder\nthe relevant rules, failure to comply with the registration procedures set forth in SAFE Circular 37 may result in bans on the foreign\nexchange activities of the relevant onshore company, including the injection of capital, payment of dividends and other distributions\nto its offshore parent or affiliates, and may also subject relevant PRC residents and onshore company to penalties under PRC foreign\nexchange administration regulations. In addition, the failure of the Chinese resident shareholders to complete Circular 37 registration\nmay subject each of the shareholders to fines of less than RMB50,000. Ms. Liying Wang, our director and controlling shareholder, who\nis a citizen of China, is required to comply with the applicable PRC laws and regulations for the overseas foreign investments. We cannot\nassure you that each of our Chinese resident shareholders has completed or will complete the registration process as required by the\napplicable PRC laws and regulations, including but not limited to the SAFE Circular 37.\n\n \n\n29\n\n \n\n \n\nRegulations\nRelated to Dividend Distributions\n\n \n\nThe\nprincipal laws and regulations regulating the dividend distribution of dividends by foreign-invested enterprises in China include the\nPRC Company Law and the FIL. The PRC company law was recently amended on December 29, 2023 and will come into force on July 1, 2024.\nUnder the current regulatory regime in China, foreign-invested enterprises in China may pay dividends only out of their accumulated profit,\nif any, determined in accordance with PRC accounting standards and regulations. A PRC company, including foreign-invested enterprise,\nis required to set aside as general reserves at least 10% of its after-tax profit, until the cumulative amount of such reserves reaches\n50% of its registered capital unless the provisions of laws regarding foreign investment otherwise provided, and shall not distribute\nany profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together\nwith distributable profits from the current fiscal year.\n\n \n\nRegulations\non Intellectual Property Rights\n\n \n\nRegulations\non Trademarks\n\n \n\nAccording\nto the current Chinese trademark law and regulations,\na trademark which has been approved and registered by the trademark office is a registered trademark, including a trademark of goods,\nservices, collective trademark and certification trademark. The trademark registrant shall enjoy the exclusive right to use the trademark\nand the protections afforded by law. The trademark law also specifies the scope of registered trademarks, procedures for registration\nof trademarks and the rights and obligations of trademark owners.\n\n \n\nRegulations\non Domain Names\n\n \n\nThe\nMinistry of Industry and Information Technology of the PRC, or the MIIT, promulgated the Measures on Administration of Internet Domain\nNames, or the Domain Name Measures, on August 24, 2017, which took effect on November 1, 2017 and replaced the Administrative Measures\non China Internet Domain Name promulgated by the MIIT on November 5, 2004. According to the Domain Name Measures, the MIIT is in charge\nof the administration of PRC internet domain names. The domain name registration follows a first-to-file principle. Applicants for registration\nof domain names shall provide true, accurate and complete information of their identities to the domain name registration service institutions.\nThe applicant will become the holder of such domain names upon completion of the registration procedure.\n\n \n\nRegulations\non Employment and Social Welfare\n\n \n\n*Labor\nContract Law*\n\n \n\nThe\nLabor Contract Law of the PRC, or the Labor Contract Law, which was promulgated on June 29, 2007 and amended on December 28, 2012, is\nprimarily aimed at regulating the rights and obligations of employers and employees, including the establishment, performance and termination\nof such relationship. Pursuant to the Labor Contract Law, labor contracts shall be concluded in writing if labor relationships are to\nbe or have been established between employers and the employees. Employers are prohibited from forcing employees to work above certain\ntime limit and employers shall pay employees for overtime work in accordance with certain national regulations. In addition, employee\nwages shall be no lower than local standards on minimum wages and shall be paid to employees timely.\n\n \n\n*Social\nInsurance and Housing Fund*\n\n \n\nUnder\nthe Social Insurance Law of the PRC that was promulgated by the SCNPC on October 28, 2010, and came into force as of July 1, 2011, and\nmost recently amended on December 29, 2018, together with other laws and regulations, employers are required to pay basic pension insurance,\nunemployment insurance, basic medical insurance, employment injury insurance, maternity insurance, and other social insurance for its\nemployees at specified percentages of the salaries of the employees, up to a maximum amount specified by the local government regulations\nfrom time to time. When an employer fails to pay social insurance premiums in full, relevant social insurance collection agency shall\norder it to make up for any shortfall within a prescribed time limit, and may impose a late payment fee at the rate of 0.05% per day\nof the outstanding amount from the due date. If such employer still fails to make up for the shortfalls within the prescribed time limit,\nthe relevant administrative authorities shall impose a fine of one to three times the outstanding amount upon such employer.\n\n \n\nIn\naccordance with the Regulations on the Management of Housing Fund which was promulgated by the State Council in April 3, 1999 and recently\namended in March 24, 2019, employers must register at the designated administrative centers and open bank accounts for depositing employees’\nhousing funds. Employer and employee are also required to pay and deposit housing funds, with an amount no less than 5% of the monthly\naverage salary of the employee in the preceding year in full and on time.\n\n \n\n30\n\n \n\n \n\nRegulations\non Tax\n\n \n\n*Enterprise\nIncome Tax*\n\n \n\nOn\nMarch 16, 2007, the National People’s Congress promulgated the PRC Enterprise Income Tax Law, which was amended on February 24,\n2017 and December 29, 2018. On December 6, 2007, the State Council enacted the Regulations for the Implementation of the Enterprise Income\nTax Law, which became effective on January 1, 2008 and was amended on April 23, 2019 and January 20, 2025. Under the Enterprise Income\nTax Law and the relevant implementing regulations, both resident enterprises and non-resident enterprises are subject to tax in China.\nResident enterprises are defined as enterprises that are established in China in accordance with PRC laws, or that are established in\naccordance with the laws of foreign countries but are actually or in effect controlled from within China. Non-resident enterprises are\ndefined as enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside China,\nbut have established institutions or premises in China, or have no such established institutions or premises but have income generated\nfrom inside China. Under the Enterprise Income Tax Law and relevant implementing regulations, a uniform corporate income tax rate of\n25% is applied. However, if non-resident enterprises have not formed permanent establishments or premises in China, or if they have formed\npermanent establishments or premises in China but there is no actual relationship between the relevant income derived in China and the\nestablished institutions or premises set up by them, withholding income tax is set at the rate of 10% with respect to their income sourced\nfrom inside the PRC.\n\n \n\n*Withholding\nIncome Tax*\n\n \n\nThe\nEnterprise Income Tax Law and its implementation rules provide that since January 1, 2008, an income tax withholding rate of 10% will\nnormally apply to dividends declared to non-PRC resident investors that do not have an establishment or place of business in China, or\nthat have such establishment or place of business but the relevant income is not effectively connected with the establishment or place\nof business, to the extent such dividends are derived from sources within China.\n\n \n\nPursuant\nto the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation\nand the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, and other applicable PRC laws, if a Hong Kong resident\nenterprise is determined by the competent PRC tax authority to have met the relevant conditions and requirements under this arrangement\nand other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise\nmay be reduced to 5%. However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax\nTreaties issued on February 20, 2009, 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\npreferential tax treatment. Pursuant to the Circular on Several Questions regarding the “Beneficial Owner” in Tax Treaties,\nwhich was issued on February 3, 2018 by SAT and became effective on April 1, 2018, when determining the applicant’s status as the\n“beneficial owner” regarding tax treatment in connection with dividends, interest, or royalties in the tax treaties, several\nfactors, including, without limitation, whether the applicant is obligated to pay more than 50% of his or her income in twelve months\nto residents in a third country or region, whether the business operated by the applicant constitutes the actual business activities,\nand whether the counterparty country or region to the tax treaties does not levy any tax or grant any tax exemption on relevant incomes\nor levy tax at an extremely low rate, will be taken into account, and such factors will be analyzed according to the actual circumstances\nof the specific cases.\n\n \n\n*Value-Added\nTax*\n\n \n\nThe\nPRC Provisional Regulations on Value-Added Tax were promulgated by the State Council on December 13, 1993, became effective on January\n1, 1994, and were subsequently amended from time to time. On December 25, 2024, the SCNPC promulgated the Value-added Tax Law of the\nPRC, or the VAT Law, and the State Council promulgated the Implementation Regulations of the VAT Law, which both came into effect on\nJanuary 1, 2026, and the PRC Provisional Regulations on Value-added Tax were simultaneously abolished. Pursuant to the VAT Law and its\nimplementation regulations, entities and individuals (including individual industrial and commercial proprietors) selling goods, services,\nintangible assets, real estate and importing goods within the territory of the PRC are taxpayers of Value-added Tax, or VAT and shall\npay VAT in accordance with the provisions of the law. On January 30, 2026 and February 1, 2026, the Ministry of Finance, the State Administration\nof Taxation, or SAT, and the General Administration of Customs separately or jointly issued a number of announcements on various matters\nfor the implementation of the VAT Law, such as matters concerning the transition of VAT preferential policies following the implementation\nof the VAT Law, the specific scope of VAT levying, the filing of VAT returns, the input VAT credit and others related matters. Pursuant\nto these laws, regulations and announcements, the generally applicable VAT rate is 13%, except as otherwise specified, and in certain\nspecific circumstances, the VAT rates are 9%, 6%, and 0%, and the VAT rate applicable to small-scale taxpayers is 3%. If a small-scale\ntaxpayer’s total monthly sales amount does not exceed RMB100 thousand and its quarterly sales volume does not exceed RMB300 thousand,\nthe VAT will be exempted.\n\n \n\n31\n\n \n\n \n\n*Tax\non Indirect Transfer*\n\n \n\nOn\nFebruary 3, 2015, SAT issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non PRC Resident Enterprises,\nor Bulletin 7. Pursuant to Bulletin 7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise,\nby non-PRC resident enterprises, may be recharacterized and treated as a direct transfer of PRC taxable assets if such arrangement does\nnot have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result,\ngains derived from such indirect transfer may be subject to PRC enterprise income tax. When determining whether there is a “reasonable\ncommercial purpose” in the transaction arrangement, features to be taken into consideration include, inter alia, whether the main\nvalue of the equity interest of the relevant offshore enterprise derives directly or indirectly from PRC taxable assets; whether the\nassets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income is mainly derived\nfrom China; and whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have a real commercial\nnature which is evidenced by their actual function and risk exposure. Pursuant to Bulletin 7, where the payer fails to withhold any or\nsufficient tax, the transferor shall declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment\nof applicable tax will subject the transferor to default interest. Bulletin 7 does not apply to transactions of sale of shares by investors\nthrough a public stock exchange where such shares are acquired on a public stock exchange. On October 17, 2017, SAT issued the Announcement\nof the State Administration of Taxation on Issues Concerning the Withholding of Non- resident Enterprise Income Tax at Source, or Bulletin\n37, which was amended by the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents issued\non June 15, 2018 by SAT. Bulletin 37 further elaborates the relevant implemental rules regarding the calculation, reporting, and payment\nobligations of the withholding tax by the non-resident enterprises. Nonetheless, there remain uncertainties as to the interpretation\nand application of Bulletin 7. Bulletin 7 may be determined by the tax authorities to be applicable to our offshore transactions or sale\nof our shares or those of our offshore subsidiaries where non-resident enterprises, being the transferors, are involved.\n\n \n\nRegulations\nRelated to Securities Offering and Listing Overseas\n\n \n\nOn\nFebruary 17, 2023, the CSRC published the Overseas Listing Measures, which became effective on March 31, 2023, and was subsequently supplemented\nby seven Guidelines on the Application of Regulatory Rules to date. Pursuant to these Measures and Guidelines, PRC domestic companies\nthat directly or indirectly offer or list their securities in an overseas market are required to file with the CSRC within three business\ndays after submitting their listing application documents to the regulator in the place of intended listing. In addition, a domestic\ncompany that seeks to directly or indirectly list its domestic assets in overseas markets through single or multiple acquisitions, share\nswaps, transfers of shares or other means, shall also fulfil the filing procedure within three business days after the application submission.\nWhere overseas application documents are not required, the filing shall be made within 3 business days after the first public disclosure\nof the specifics of the transaction is made by the listed company. The identification of indirect overseas offering and listing by a\ndomestic enterprise shall follow the principle of substance over form, where an issuer falls under both of the following conditions,\nit shall be deemed as indirect overseas offering and listing by a domestic enterprise, if:(i) 50% or more of the issuer’s operating\nrevenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent\naccounting year is accounted for by domestic companies, and (ii) the main parts of the issuer’s business activities are conducted\nin the Chinese Mainland, or its main places of business are located in the Chinese Mainland, or the senior managers in charge of its\nbusiness operation and management are mostly Chinese citizens or domiciled in the Chinese mainland. If a PRC domestic company fails to\ncomplete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic company\nmay be subject to penalties or administrative actions, such as order to rectify, warnings, fines, and its controlling shareholders, actual\ncontrollers, the person directly in charge and other directly liable persons may also be subject to penalties, such as warnings and fines.\n\n \n\nRegulation\non Data Protection and Cybersecurity\n\n \n\n*Personal\nInformation Protection Law*\n\n \n\nAccording\nto the Personal Information Protection Law of PRC, which came into force on November 1, 2021, no organization or individual may illegally\ncollect, use, process, or transmit any personal information of another person, or illegally deal in, provide, or disclose any personal\ninformation of another person. Any personal information processor to provide personal information abroad shall meet certain conditions\nand take necessary measure to ensure that the activities carried out by overseas recipients on such personal information shall meet the\nsame standards of protection provided in this Law.\n\n \n\n*Cybersecurity\nLaw*\n\n \n\nAccording\nto Cybersecurity Law of the People’s Republic of China, which came into force on June 1, 2017, and was amended effective January\n1, 2026, the network operators shall neither collect personal information unrelated to the service they provide, collect or use personal\ninformation in violation of the PRC laws and regulations, disclose, distort or damage personal information they collect, nor provide\nsuch information to others without the agreement of the person whose information is collected except on certain circumstances provided\nin this Law.\n\n \n\n*Data\nSecurity Law*\n\n \n\nAccording\nto Data Security Law of the People’s Republic of China, which came into force on September 1, 2021, the government shall establish\na classified and graded data protection system to protect the data security. Any organization or individual collecting data shall adopt\nlawful and proper methods and shall not steal data or obtain them by other illegal means.\n\n \n\n32\n\n \n\n \n\n**4.C.\nOrganizational Structure**\n\n \n\nThe\nfollowing diagram illustrates our corporate structure as of the date of this report.\n\n \n\n \n\nAll\nof the entities held by our Group below are direct or indirect subsidiaries of our Company.\n\n \n\nNotes:\n\n \n\n1.\nSouth\nAmerican Wood S.A.C. and NATURE CARBON PERÚ S.A.C. are both held 90% by Nature Flooring (Europe) Company Ltd. and 10% by Choi\nChon Investment Company Limited respectively.\n\n \n\n33\n\n \n\n \n\n**Our\nSubsidiaries**\n\n \n\nBranching\nfrom our corporate structure above, our subsidiaries as of the date of this prospectus are set forth in the table below.\n\n \n\n**Name**\n \n**Background**\n \n**Ownership**\n \n**Principal\nActivities**\n\nNature\nCarbon Sink Limited\n \nA\nBVI company incorporated on April 18, 2024\n \n100%\nowned by our Company\n \nTrading\nof carbon credits\n\nNature\nFlooring (Europe) Company Limited\n \nA\nBVI company incorporated on October 4, 2011\n \n100%\nowned by our Company\n \nInvestment\nholding\n\nSwift\nTop Capital Resources Limited\n \nA\nHong Kong company incorporated on November 20, 2012\n \n100%\nowned by Nature Flooring (Europe) Company Limited\n \nTrading\nof logs\n\nParquet\nNature (France) S.A.R.L.\n \nA\nFrench company incorporated on August 21, 2012\n \nOwned\nas to 99% and 1% by Nature Flooring (Europe) Company Limited and Swift Top Capital Resources Limited, respectively\n \nTrading\nof logs\n\nFoshan\nCity Linjia Technology Company Limited\n \nA\nPRC company incorporated on December 20, 2018\n \n100%\nowned by Swift Top Capital Resources Limited\n \nIT\nconsultancy, and business consultancy\n\nChoi\nChon Investment Company Limited\n \nA\nMacau company incorporated on March 12, 2015\n \nOwned\nas to 96.67% and 3.33% by Swift Top Capital Resources Limited and Nature Flooring (Europe) Company Limited, respectively\n \nTrading\nof wood products\n\nSouth\nAmerican Wood S.A.C.\n \nA\nPeruvian company incorporated on December 16, 2019\n \nOwned\nas to 90% and 10% by Nature Flooring (Europe) Company Limited and Swift Top Capital Resources Limited, respectively\n \nTrading\nof wood products\n\nNature\nCarbon Peru S.A.C.\n \nA\nPeruvian company incorporated on May 6, 2025\n \nOwned\nas to 90% and 10% by Nature Flooring (Europe) Company Limited and Swift Top Capital Resources Limited, respectively\n \nTrading\nof wood products\n\nFoshan\nLinquan Forestry Co., Ltd.\n \nA\nPRC company incorporated on August 15, 2024\n \n100%\nowned by Swift Top Capital Resources Limited\n \nInactive\n\nLucky\nYield Limited\n \nA\nBVI company incorporated on February 16, 2026\n \n100%\nowned by our Company\n \nInactive\n\nRising\nFame Trading Limited\n \nA\nHong Kong company incorporated on March 2, 2026\n \n100%\nowned by Lucky Yield Limited\n \nInactive\n\n \n\n**4.D.\nProperty, plant and equipment**\n\n \n\nWe\nown and lease the following properties from independent third parties for our operations:\n\n \n\n**Location**\n \n**Use**\n \n**Leased/Owned**\n \n**Approximate\nArea**\n\nLima,\nPeru\n \nOffice\n \nOwned\n \n619\nm2\n\nVal\nde Marne, France\n \nOffice\n \nLeased\n \n60\nm2\n\nGuangdong,\nChina\n \nOffice\n \nLeased\n \n318\nm2"}