{"url_path":"/sec/ocg/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-14","source_url":"https://www.sec.gov/Archives/edgar/data/1776067/0001213900-26-056688-index.html","accession_number":"0001213900-26-056688","cik":"0001776067","ticker":"OCG","issuer_name":"Oriental Culture Holding LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1776067/0001213900-26-056688-index.html","primary_entity_key":"0001776067","primary_entity_name":"Oriental Culture Holding LTD"},"word_count":31827,"has_tables":true,"body_markdown":"**ITEM 3. KEY INFORMATION**\n\n \n\n**Our Holding Company Structure and Contractual\nArrangements with the Consolidated VIE and Its Individual Shareholders in China**\n\n** **\n\nWe are a Cayman Islands holding company without material operations\nand our business is conducted by our subsidiaries in Hong Kong China and this structure involves unique risks to investors. We are not\na Chinese operating company and that our business in China is conducted through contractual arrangements with the VIE and its subsidiaries\nbefore November 11, 2025 and through our subsidiaries in China after that as we terminated our VIE agreements and structure effective\non November 11, 2025. See “*Item 3. Key Information—D. Risk Factors— “Uncertainties and quick change in the\ninterpretation and enforcement of Chinese laws and regulations with little advance notice could result in a material and negative impact\non our business operations, decrease the value of our securities and limit the legal protections available to you and us.”*\n\n** **\n\n1\n\n \n\n \n\nThere are legal and operational risks associated with being based in\nand having all of our operations in Hong Kong and China. In recent years, the PRC government has initiated a series of regulatory actions\nand statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the\nsecurities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting\nnew measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On July 6, 2021, the\nGeneral Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued an announcement\nto crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among\nother things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation,\nto enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application\nof the PRC securities laws. On December 28, 2021, Cybersecurity Review Measures were published by Cyberspace Administration of China or\nthe CAC, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, Ministry\nof State Security, Ministry of Finance, Ministry of Commerce, People’s Bank of China, State Administration for Market Regulation,\nState Administration of Radio and Television, China Securities Regulatory Commission (“CSRC”), State Secrecy Administration\nand State Cryptography Administration and became effective on February 15, 2022, which provides that: (i) cyberspace operators with personal\ninformation of more than 1 million users who want to list abroad to file a cybersecurity review with the Office of Cybersecurity Review\nand (ii) Critical Information Infrastructure Operators (“CIIOs”) that purchase internet products and services and Online Platform\nOperators engaging in data processing activities that affect or may affect national security shall be subject to the cybersecurity review\nby the Cybersecurity Review Office. On July 7, 2022, CAC promulgated the Measures for the Security Assessment of Data Cross-border Transfer,\neffective on September 1, 2022, which requires the data processors to apply for data cross-border security assessment coordinated by the\nCAC under the following circumstances: (i) any data processor transfers important data to overseas; (ii) any critical information infrastructure\noperator or data processor who processes personal information of over 1 million people provides personal information to overseas; (iii)\nany data processor who provides personal information to overseas and has already provided personal information of more than 100,000 people\nor sensitive personal information of more than 10,000 people to overseas since January 1st of the previous year; and (iv) other circumstances\nunder which the data cross-border transfer security assessment is required as prescribed by the CAC. On September 24, 2024, CAC published\nthe Administration Measures for Cyber Data Security, or the “Cyber Data Security Measure”, which requires a network data handler\nmay transmit personal information abroad if it meets certain conditions including without limitation that pass the security assessment\nfor data cross-border transmission organized by the state cyberspace administration, certified by a specialized agency in respect of the\nprotection of personal information, enter into standard contract for cross-border transmission of personal information as developed by\nthe state cyberspace administration and etc. On February 17, 2023, China Securities Regulatory Commission (“CSRC”) released\nTrial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “New Overseas Listing Rules”)\nwith five interpretive guidelines, which took effect on March 31, 2023. The New Overseas Listing Rules require Chinese domestic enterprises\nto complete filings with CSRC and report related information under certain circumstances, such as: a) an issuer making an application\nfor initial public offering and listing in an overseas market; b) an issuer making an overseas securities offering after having been listed\non an overseas market; c) a domestic company seeking an overseas direct or indirect listing of its assets through single or multiple acquisition(s),\nshare swap, transfer of shares or other means. According to the Notice on Arrangements for Overseas Securities Offering and Listing by\nDomestic Enterprises, published by the CSRC on February 17, 2023, a company that (i) has already completed overseas listing or (ii) has\nalready obtained the approval for the offering or listing from overseas securities regulators or exchanges but has not completed such\noffering or listing before effective date of the new rules but completed the offering or listing before September 30, 2023 are considered\nas an existing listed company and is not required to make any filing until it conducts a new offering in the future. Furthermore, upon\nthe occurrence of any of the material events specified below after an issuer has completed its offering and listed its securities on an\noverseas stock exchange, the issuer shall submit a report thereof to the CSRC within 3 business days after the occurrence and public disclosure\nof the event: (i) change of control; (ii) investigations or sanctions imposed by overseas securities regulatory agencies or other competent\nauthorities; (iii) change of listing status or transfer of listing segment; or (iv) voluntary or mandatory delisting. The New Overseas\nListing Rules stipulate the legal consequences to the companies for breaches, including failure to fulfill filing obligations or filing\ndocuments having false statement or misleading information or material omissions, which may result in administrative penalties such as\norder to rectify, warnings and a fine ranging from RMB1 million to RMB10 million, and in cases of severe violations, the controlling shareholders,\nactual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such\nas warnings and fines and may be barred from entering the securities market. On February 24, 2023, the CSRC, the Ministry of Finance,\nthe National Administration of State Secretes Protection and the National Archives Administration released the Provisions on Strengthening\nthe Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Companies, or the\nConfidentiality and Archives Administration Provisions, which took effect on March 31, 2023. PRC domestic enterprises seeking to offer\nsecurities and list in overseas markets, either directly or indirectly, shall establish and improve the system of confidentiality and\narchives work, and shall complete approval and filing procedures with competent authorities, if such PRC domestic enterprises or their\noverseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets of state organs\nto relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals. It\nfurther stipulates that (i) providing or publicly disclosing documents and materials which may adversely affect national security or public\ninterests, and accounting records or photocopies thereof to relevant securities companies, securities service institutions, overseas regulatory\nagencies and other entities and individuals shall be subject to corresponding procedures in accordance with relevant laws and regulations;\nand (ii) any working papers formed in the territory of the PRC by securities companies and securities service agencies that provide domestic\nenterprises with securities services relating to overseas securities issuance and listing shall be stored in the territory of the PRC,\nthe outbound transfer of which shall be subject to corresponding procedures in accordance with relevant laws and regulations. As\nof the date of this report, these new laws and guidelines that became effective have not impacted the Company’s ability to conduct\nits business, accept foreign investment or list on a U.S. or other foreign stock exchange except for the filing requirement under New\nOverseas Listing Rules. The Company has timely filed with CSRC for its private placement offering and ATM offerings conducted after effectiveness\nof the New Overseas Listing Rules but has not received final clearance from CSRC as of the date of this report. As advised by our\nPRC counsel, Tahota (Nanjing) Law Firm, our offerings will be subject to the New Overseas Listing Rules but such offerings are not contingent\nupon receipt of approval from the CSRC as the new rules only require the Company to file with CSRC within three business days after the\ncompletion of the overseas offering since the Company is already listed on an oversea exchange before the effective date of the New Overseas\nListing Rules. However, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could materially\nand adversely impact our business and financial outlook, may impact our ability to accept foreign investments, offer our securities to\ninvestors or continue to list on a U.S. or other foreign exchange, and could impact our ability to conduct our business. Any change in\nforeign investment regulations, and other policies in China or related enforcement actions by China government could result in a material\nchange in our operations and the value of our securities and could significantly limit or completely hinder our ability to offer our securities\nto investors or cause the value of our securities to significantly decline or be worthless.\n\n \n\n2\n\n \n\n \n\nThe Holding Foreign Companies Accountable Act, or the HFCA Act, was\nenacted on December 18, 2020. In accordance with the HFCA Act, trading in securities of any registrant on a national securities exchange\nor in the over-the-counter trading market in the United States may be prohibited if the PCAOB determines that it cannot inspect or\nfully investigate the registrant’s auditor for three consecutive years beginning in 2021, and, as a result, an exchange may determine\nto delist the securities of such registrant. On December 29, 2022, a legislation entitled “Consolidated Appropriations Act, 2023”\n(the “Consolidated Appropriations Act”) was signed into law by President Biden, which has shorten the Holding Foreign Companies\nAccountable Act’s timeline for a potential trading prohibition from three years to two years, thus reducing the time period before\nour securities may be prohibited from trading or delisted if our auditor is unable to meet the PCAOB inspection requirement. The Company’s\nauditor, Wei, Wei & Co., LLP is headquartered in the U.S. and the Public Company Accounting Oversight Board (United States) (the “PCAOB”)\ncurrently has access to inspect the working papers of our auditor and our auditor is not subject to the determinations announced by the\nPCAOB on December 16, 2021, which determinations were vacated on December 15, 2022. The Holding Foreign Companies Accountable Act and\nrelated regulations currently do not affect the Company as the Company’s auditor is subject to PCAOB’s inspection and investigation.\n\n** **\n\n**Permissions Required from the PRC Authorities\nfor Our Operations**\n\n \n\nOur current PRC operating subsidiaries are incorporated and operating\nin mainland China, and have received all required permissions from Chinese authorities to operate their current business in China, which\nare their business licenses. Other than the business licenses, our current PRC subsidiaries are not required to obtain additional permit\nand approval from Chinese authorities to operate our business while the Company is subject to New Overseas Listing Rules for offering\nthe securities to investors. We, our subsidiaries, or our current PRC operating entities are not covered by permissions requirements from\nthe China Securities Regulatory Commission (CSRC), Cyberspace Administration of China (CAC) or any other governmental agency to conduct\nour business and operations. On November 11, 2025, we terminated our VIE Agreement and structure and Jiangsu Yanggu, our former VIE is\nno longer a VIE or consolidated entity of the Company since then.\n\n \n\n**Dividend Distribution and Cash Transfer\nBetween the Holding Company and its Subsidiaries.**\n\n** **\n\nWe are an online provider of collectibles and\nartwork e-commerce services, facilitating trading of collectibles, artworks, and certain commodities on our online platform owned by\nour Hong Kong subsidiary, China International Assets and Equity of Artworks Exchange Limited (“International Culture”).\n\n \n\nSubsequent to the completion of the termination and dismantle of the\nVIE structure on November 11, 2025, we provide integrated marketing, warehousing, and technical maintenance services to our customers\nthrough our wholly owned operating subsidiaries in mainland China. These PRC operating entities generate revenue in RMB. Under our current\ncorporate structure, to satisfy our cash and financing needs, the Company primarily relies on cash flow generated by our directly held\nPRC operating subsidiaries and our Hong Kong subsidiary, International Culture. Dividends and distributions from these entities are expected\nto be the source of funds for us to meet our working capital and general corporate requirements, in each case in compliance with applicable\nPRC foreign exchange regulations and relevant tax laws.\n\n \n\n3\n\n \n\n \n\nUnder existing PRC foreign exchange regulations,\npayments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made\nin foreign currencies without prior approval from State Administration of Foreign Exchange or SAFE by complying with certain procedural\nrequirements. Therefore, our PRC subsidiary, WFOE is able to pay dividends in foreign currencies to us without prior approval from SAFE,\nsubject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign\nexchange regulations, such as the overseas investment registrations by the shareholders of the Company who are PRC residents. Approval\nfrom or registration with appropriate government authorities is, however, required where the RMB is to be converted into foreign currency\nand remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government\nmay also at its discretion restrict access in the future to foreign currencies for current account transactions. For our Hong Kong subsidiaries,\nour subsidiary in British Virgin Islands and the holding company (“Non-PRC Entities”), there is no restrictions on foreign\nexchange for such entities and they are able to transfer cash among these entities, across borders and to US investors. Also, there is\nno restrictions and limitations on the abilities of Non-PRC Entities to distribute earnings from their businesses, including from subsidiaries\nto the parent company or from the holding company to the U.S. investors as well as the abilities to settle amounts owed.\n\n \n\nWe are a holding company, and we rely on dividends and other distributions\non equity paid by our subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash\ndistributions to our shareholders and service any debt we may incur. If any of our subsidiaries incurs debt on its own behalf in the future,\nthe instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Current PRC regulations\npermit our WFOE to pay dividends to the Company only out of its accumulated profits, if any, determined in accordance with Chinese accounting\nstandards and regulations. In addition, our subsidiaries, and its subsidiaries in China are required to set aside at least 10% of their\nafter-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each such entity\nin China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount\nto be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among\nother ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies,\nthe reserve funds are not distributable as cash dividends except in the event of liquidation. In addition, the Enterprise Income Tax Law\nand its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies\nto non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and the governments of\nother countries or regions where the non-PRC resident enterprises are tax resident. Pursuant to the tax agreement between mainland China\nand the Hong Kong Special Administrative Region, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to\na Hong Kong enterprise may be reduced to 5% from a standard rate of 10%. However, if the relevant tax authorities determine that our transactions\nor arrangements are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable\nwithholding tax in the future. Accordingly, there is no assurance that the reduced 5% withholding rate will apply to dividends received\nby our Hong Kong subsidiary from our PRC subsidiaries. This withholding tax will reduce the amount of dividends we may receive from our\nPRC subsidiaries.\n\n \n\nAs of the date of this report, neither the WFOE nor any of our subsidiaries\nin Hong Kong has made any dividends or distributions to the Company. Under the Cayman Islands law, a Cayman Islands company may pay a\ndividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend be paid if this\nwould result in the company being unable to pay its debts due in the ordinary course of business. We currently do not have cash management\npolicies and procedures in place that dictate how funds are transferred through our organization. Rather, the funds can be transferred\nin accordance with the applicable laws and regulations.   \n\n \n\nOn January 8, 2026, the Board approved a special cash dividend to all\nshareholders of the Company to commemorate the fifth anniversary of the Company’s Nasdaq listing and to reward shareholders for\ntheir long-term support. The dividend amount is US$0.05 per share, the record date was January 22, 2026 and payment date was February\n9, 2026. All the shareholders of the Company as of the record date are entitled to receive the special cash dividend. As of the date of\nthis report, such dividend has been paid to the shareholders of the Company.\n\n \n\nTo the extent cash and/or assets in the business are in the PRC and/or\nHong Kong or our PRC and/or Hong Kong entities, including International Exchange, Oriental Culture HK, such funds and/or assets may not\nbe available to fund operations or for other use outside of the PRC and/or Hong Kong due to interventions in or the imposition of restrictions\nand limitations on the ability of us or our subsidiaries by the PRC government to transfer cash and/or assets. The cash transfer between\nthe holding company and its subsidiaries are typically transferred through payment for intercompany services or intercompany borrowing\nbetween holding company and subsidiaries. There are no tax consequences for the intercompany borrowings and 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\n**Selected Condensed Consolidated Financial\nSchedule of the Company and Its Subsidiaries and VIE**\n\n \n\nSet forth below is selected consolidating statements of income and\ncash flows for the years ended December 31, 2025 and 2024 and selected balance sheet information as of December 31, 2025 and 2024 showing financial\ninformation for the Company (excluding the former VIE), the former VIE, eliminating entries and consolidated information.\n\n \n\n4\n\n \n\n \n\n**ORIENTAL CULTURE HOLDING LTD AND SUBSIDIARIES**\n\n**UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS**\n\n**FOR THE YEAR ENDED DECEMBER 31, 2025**\n\n \n\n  \nHolding  \nHK\n\nSubsidiaries  \nBVI  \nElimination  \nTotal\n\noutside\nPRC  \nWFOE  \nElimination  \nTotal\n\ninside\nPRC  \nElimination  \nConsolidated \n\nASSETS \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\n  \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\nCURRENT\nASSETS \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\nCash\nand cash equivalents \n$28,494,997  \n$950  \n$-  \n -  \n$28,495,947  \n$3,827,262  \n$-  \n$3,827,262  \n$-  \n$32,323,209 \n\nRestricted\ncash \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n - \n\nShort-term\ninvestment \n 3,015,800  \n -  \n -  \n -  \n 3,015,800  \n -  \n -  \n -  \n -  \n 3,015,800 \n\nRestricted\ninvestment \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n - \n\nAccounts\nreceivable, net \n -  \n -  \n -  \n -  \n -  \n 376,725  \n -  \n 376,725  \n -  \n 376,725 \n\nInventory \n -  \n -  \n -  \n -  \n -  \n 567,513  \n -  \n 567,513  \n -  \n 567,513 \n\nOther\nreceivables and prepaid expenses \n 24,685  \n 6,807  \n -  \n -  \n 31,492  \n 270,766  \n -  \n 270,766  \n -  \n 302,258 \n\nOther\nreceivable - intercompany \n 3,020,833  \n 1,000,000  \n -  \n -  \n 4,020,833  \n 28,298,452  \n (18,833,360)(b) \n 9,465,092  \n (13,485,925)(c) \n - \n\nOther\nreceivable - related parties \n -  \n -  \n -  \n -  \n -  \n 20,360,293  \n -  \n 20,360,293  \n -  \n 20,360,293 \n\nTotal\ncurrent assets \n 34,556,315  \n 1,007,757  \n -  \n -  \n 35,564,072  \n 53,701,011  \n (18,833,360) \n 34,867,651  \n (13,485,925) \n 56,945,798 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nPROPERTY\nAND EQUIPMENT, NET \n -  \n -  \n -  \n -  \n -  \n 8,513,675  \n -  \n 8,513,675  \n -  \n 8,513,675 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nOTHER\nASSETS \n    \n    \n    \n    \n  \n\nInvestment \n -  \n -  \n -  \n -  \n -  \n 1,033,508  \n (109,474)(b) \n 924,034  \n -  \n 924,034 \n\nIntangible\nassets, net \n -  \n -  \n -  \n -  \n -  \n 6,208  \n -  \n 6,208  \n -  \n 6,208 \n\nInvestment\nin subsidiaries \n 39,631,127  \n -  \n 41,288,898  \n (40,095,160)(a) \n 40,824,865  \n -  \n -  \n -  \n (40,824,865)(b) \n - \n\nDeferred\ntax assets,net \n -  \n -  \n -  \n -  \n -  \n 138,185  \n -  \n 138,185  \n -  \n 138,185 \n\nTotal\nother assets \n 39,631,127  \n -  \n 41,288,898  \n (40,095,160) \n 40,824,865  \n 9,691,576  \n (109,474) \n 9,582,102  \n (40,824,865) \n 9,582,102 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nTotal\nassets \n$74,187,442  \n$1,007,757  \n$41,288,898  \n $(40,095,160) \n$76,388,937  \n$63,392,587  \n$(18,942,834) \n$44,449,753  \n$(54,310,790) \n$66,527,900 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nLIABILITIES\nAND SHAREHOLDERS’ EQUITY \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nCURRENT\nLIABILITIES \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nAccounts\npayable \n$-  \n$-  \n$-  \n$-  \n$-  \n$1,028,330  \n$-  \n$1,028,330  \n$-  \n$1,028,330 \n\nAccounts\npayable - related parties \n -  \n -  \n -  \n -  \n -  \n 296,672  \n -  \n 296,672  \n -  \n 296,672 \n\nDeferred\nrevenue \n    \n    \n    \n    \n -  \n 3,841  \n -  \n 3,841  \n -  \n 3,841 \n\nOther\npayables and accrued liabilities \n 128,317  \n -  \n -  \n -  \n 128,317  \n 372,060  \n -  \n 372,060  \n -  \n 500,377 \n\nTaxes\npayable \n -  \n -  \n -  \n -  \n -  \n 59,998  \n -  \n 59,998  \n -  \n 59,998 \n\nOther\npayable - intercompany \n 9,420,441  \n 2,201,495  \n -  \n -  \n 11,621,936  \n 20,233,314  \n (18,833,360)(b) \n 1,399,954  \n (13,021,890)(c) \n - \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nTotal\ncurrent liabilities \n 9,548,758  \n 2,201,495  \n -  \n -  \n 11,750,253  \n 21,994,215  \n (18,833,360) \n 3,160,855  \n (13,021,890) \n 1,889,218 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nTotal\nliabilities \n 9,548,758  \n 2,201,495  \n -  \n -  \n 11,750,253  \n 21,994,215  \n (18,833,360) \n 3,160,855  \n (13,021,890) \n 1,889,218 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nCOMMITMENTS\nAND CONTINGENCIES \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nSHAREHOLDERS’\nEQUITY \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nCapital \n 47,562,607  \n -  \n -  \n -  \n 47,562,607  \n 1,199,781  \n (109,474)(b) \n 1,090,307  \n (1,090,309)(d) \n 47,562,605 \n\nStatutory\nreserves \n 178,303  \n -  \n -  \n -  \n 178,303  \n 178,303  \n    \n 178,303  \n (178,303)(d) \n 178,303 \n\nRetained\nearnings \n 18,371,787  \n (1,192,415) \n 43,442,878  \n (42,250,463) \n 18,371,787  \n 42,174,268  \n -  \n 42,174,268  \n (42,174,268)(d) \n 18,371,787 \n\nAccumulated\nother comprehensive income (loss) \n (1,474,013) \n (1,323) \n (2,153,980) \n 2,155,303  \n (1,474,013) \n (2,153,980) \n -  \n (2,153,980) \n 2,153,980(d) \n (1,474,013)\n\nTotal\nshareholders’ equity \n 64,638,684  \n (1,193,738) \n 41,288,898  \n (40,095,160) \n 64,638,684  \n 41,398,372  \n (109,474) \n 41,288,900  \n (41,288,898)(d) \n 64,638,682 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nTotal\nliabilities and shareholders’ equity \n$74,187,442  \n$1,007,757  \n$41,288,898  \n$(40,095,160) \n$76,388,937  \n$63,392,587  \n (18,942,834) \n$44,449,753  \n$(54,310,790) \n$66,527,900 \n\n \n\n(a)\nTo eliminate holding company’s\ninvestment of subsidiaries outside PRC.\n\n \n\n(b)\nTo eliminate holding company’s\ninvestment of WFOE.\n\n \n\n(c)\nTo eliminate intercompany\nbalances\n\n  \n\n(d)\nTo eliminate inside PRC\ncapital.\n\n \n\n5\n\n \n\n \n\n**ORIENTAL CULTURE HOLDING LTD AND\nSUBSIDIARIES**\n\n**UNAUDITED CONDENDSED CONSOLIDATED\nSTATEMENTS OF LOSS**\n\n**FOR THE YEAR ENDED DECEMBER 31, 2025**\n\n \n\n  \nHolding  \nHK Subsidiaries  \nBVI  \nElimination  \nTotal\noutside PRC  \nWFOE  \nFormer\nVIE  \nElimination  \nTotal\ninside PRC  \nElimination  \nConsolidated \n\nOperating revenues \n$-  \n$-  \n$-  \n$-  \n$0  \n$1,229,277  \n$659,571  \n$-  \n$1,888,848  \n$-  \n$1,888,848 \n\nCost of revenues \n (204,000) \n -  \n -  \n -  \n (204,000) \n (66,828) \n -  \n -  \n (66,828) \n -  \n (270,828)\n\nGross profit \n (204,000) \n -  \n -  \n -  \n (204,000) \n 1,162,449  \n 659,571  \n -  \n 1,822,020  \n -  \n 1,822,020 \n\nOperating\nexpenses \n (5,808,792) \n (2,486) \n -  \n -  \n (5,811,278) \n (1,010,280) \n (174) \n -  \n (1,010,454) \n -  \n (6,\n821,732)\n\nLoss (income) from\noperations \n (6,012,792) \n (2,486) \n -  \n -  \n (6,015,278) \n 152,169  \n 659,397  \n -  \n 811,566  \n -  \n (5,203,712)\n\nOther income \n 589,228  \n -  \n -  \n -  \n 589,228  \n 483,732  \n 99,695  \n -  \n 583,427  \n -  \n 1,172,655 \n\nIncome from deconsolidation\nof VIE \n -  \n -  \n -  \n -  \n -  \n 63,056  \n -  \n -  \n 63,056  \n -  \n 63,056 \n\nBenefit for income tax \n -  \n    \n -  \n -  \n -  \n 110,031  \n -  \n -  \n 110,031  \n -  \n 110,031 \n\nIncome from former VIE \n -  \n -  \n -  \n -  \n    \n 759,092  \n -  \n (759,092)(b) \n -  \n -  \n - \n\nIncome from subsidiaries \n 1,565,594  \n -  \n 1,568,080  \n (1565,594)(a) \n 1,568,080  \n -  \n -  \n -  \n -  \n (1,568,080)(c) \n - \n\nNet\n(loss) income \n$(3,857,970) \n$ (2,486) \n$ 1,568,080  \n$ (1565,594) \n$ (3,857,970) \n$ 1,568,080  \n$ 759,092  \n$ (759,092) \n$ 1,568,080  \n$ (1,568,080) \n$ (3,857,970)\n\n \n\n(a)\nto eliminate outside PRC\nsubsidiaries income from Holding\n\n \n\n(b)\nto eliminate income by\nWFOE\n\n \n\n(c)\nto eliminate WFOE investment\nincome by Holding\n\n \n\n6\n\n \n\n \n\n**ORIENTAL CULTURE HOLDING LTD AND\nSUBSIDIARIES**\n\n**UNAUDITED CONDENSED CONSOLIDATED\nSTATEMENTS OF CASH FLOWS**\n\n**FOR THE YEAR ENDED DECEMBER 31, 2025**\n\n \n\n  \nHolding  \nHK Subsidiaries  \nBVI  \nWFOE  \nTotal  \nElimination  \nConsolidated \n\nNet cash (used in) provided by operating activities \n$(928,209) \n$               614  \n$                 -  \n$1,004,698  \n$77,103  \n$               -  \n$77,103 \n\nNet cash provided by (used in)  investing activities \n 1,256,000  \n -  \n -  \n (6,428,565) \n (5,172,565) \n -  \n (5,172,565)\n\nNet cash provided by financing activities \n 13,755,817  \n -  \n -  \n -  \n 13,755,817  \n -  \n 13,755,817 \n\nEffect of exchange rate \n -  \n -  \n -  \n 119,308  \n 119,308  \n -  \n 119,308 \n\nNet increase (decrease) in cash and cash equivalents \n 14,083,608  \n 614  \n -  \n (5,304,559) \n 8,779,663  \n -  \n 8,779,664 \n\nCASH AND CASH EQUIVELENTS, beginning of year \n 14,411,389  \n 336  \n -  \n 9,131,821  \n 23,543,546  \n -  \n 23,543,546 \n\nCASH AND CASH EQUIVELENTS, end of year \n$28,494,997  \n$950  \n$-  \n$3,827,262  \n$32,323,209  \n$-  \n$32,323,209 \n\n \n\n7\n\n \n\n \n\n**ORIENTAL\nCULTURE HOLDING LTD AND SUBSIDIARIES**\n\n**UNAUDITED\nCONDENSED CONSOLIDATED BALANCE SHEETS**\n\n**FOR\nTHE YEAR ENDED DECEMBER 31, 2024**\n\n \n\n  \nHolding  \nHK Subsidiaries  \nBVI  \nElimination  \nTotal\noutside PRC  \nWFOE  \nVIE  \nElimination  \nTotal\ninside PRC  \nElimination  \nConsolidated \n\nASSETS \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\n  \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\nCURRENT ASSETS \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\nCash and cash\nequivalents \n$14,411,389  \n$336  \n$-  \n$-  \n$14,411,725  \n$95,779  \n$2,560,768  \n$-  \n$2,656,547  \n$-  \n$17,068,272 \n\nRestricted cash \n -  \n -  \n -  \n -  \n -  \n 834,366  \n 5,640,908  \n -  \n 6,475,274  \n -  \n 6,475,274 \n\nShort-term investment \n 5,256,000  \n -  \n -  \n -  \n 5,256,000  \n -  \n 38,952  \n -  \n 38,952  \n -  \n 5,294,952 \n\nRestricted investment \n -  \n -  \n -  \n -  \n -  \n -  \n 10,794,296  \n -  \n 10,794,296  \n -  \n 10,794,294 \n\nAccounts receivable, net \n -  \n -  \n -  \n -  \n -  \n -  \n 278  \n -  \n 278  \n -  \n 278 \n\nInventory \n -  \n -  \n -  \n -  \n -  \n 1,231,335  \n -  \n -  \n 1,231,335  \n -  \n 1,231,335 \n\nOther receivables and prepaid\nexpenses \n 67,529  \n 9,931  \n -  \n -  \n 77,460  \n 160,380  \n 835,404  \n -  \n 995,784  \n -  \n 1,073,244 \n\nOther receivable - intercompany \n 1,944,260  \n 1,000,000  \n -  \n (1,944,260)(d1) \n 1,000,000  \n 229,996  \n 10,489,506  \n -  \n 10,719,502  \n (1,000,000)(e) \n - \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n (8,720,467)(d2) \n   \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n (233,231)(d3) \n   \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n (1,765,804)(d4) \n   \n\nOther\nreceivable - VIE \n 275,530  \n -  \n -  \n -  \n 275,530  \n 37,832,568  \n -  \n (37,832,568)(b) \n -  \n (275,530)\n(d2) \n - \n\nTotal\ncurrent assets \n 21,954,708  \n 1,010,267  \n -  \n (1,944,260) \n 21,020,715  \n 40,384,424  \n 30,360,112  \n (37,832,568) \n 32,911,968  \n (11,995,032) \n 41,937,651 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nPROPERTY\nAND EQUIPMENT, NET \n -  \n -  \n -  \n -  \n -  \n -  \n 8,647,932  \n -  \n 8,647,932  \n -  \n 8,647,932 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nOTHER ASSETS \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nInvestment \n -  \n -  \n -  \n -  \n -  \n -  \n 903,518  \n -  \n 903,518  \n -  \n 903,518 \n\nIntangible assets, net \n 1,500,000  \n -  \n -  \n -  \n 1,500,000  \n -  \n 46,565  \n -  \n 46,565  \n -  \n 1,546,565 \n\nInvestment in subsidiaries \n 37,324,008  \n -  \n 38,814,027  \n (37,621,995)(a) \n 38,516,040  \n -  \n -  \n -  \n -  \n (38,516,040)(c) \n - \n\nOther\nreceivable - intercompany \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n - \n\nTotal\nother assets \n 38,824,008  \n -  \n 38,814,027  \n (37,621,995) \n 40,016,040  \n -  \n 950,083  \n -  \n 950,083  \n (38,516,040) \n 2,450,083 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nTotal\nassets \n$60,778,716  \n$1,010,267  \n$38,814,027  \n$(39,566,255) \n$61,036,755  \n$40,384,424  \n$39,958,127  \n$(37,832,568) \n$42,509,983  \n$(50,511,072) \n$53,035,666 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nLIABILITIES AND SHAREHOLDERS’\nEQUITY \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nCURRENT LIABILITIES \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nAccounts payable \n$1,000,000  \n$-  \n$-  \n$-  \n$1,000,000  \n$-  \n$1,417,587  \n$-  \n$1,417,587  \n$-  \n$2,417,587 \n\nAccounts payable - related\nparties \n -  \n -  \n -  \n -  \n -  \n -  \n 502  \n -  \n 502  \n -  \n 502 \n\nDeferred revenue \n -  \n -  \n -  \n -  \n -  \n -  \n 78,427  \n -  \n 78,427  \n -  \n 78,427 \n\nOther payables and accrued\nliabilities \n 300,007  \n -  \n -  \n -  \n 300,007  \n 34,164  \n 282,169  \n -  \n 316,333  \n -  \n 616,340 \n\nTaxes payable \n -  \n -  \n -  \n -  \n -  \n 425  \n 13,073  \n -  \n 13,498  \n -  \n 13,498 \n\nOther payable - intercompany \n -  \n 1,951,275  \n -  \n (1,951,275)(d1) \n -  \n -  \n 333,801  \n -  \n 333,801  \n (103,805)(d2) \n - \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n (229,996\n)(d4) \n   \n\nOther payable - VIE \n 9,569,397  \n 251,024  \n -  \n -  \n 9,820,421  \n 1,535,808  \n -  \n -  \n 1,535,808  \n (9,569,397)\n(d2) \n - \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n (251,024)(d3) \n   \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n (1,535,808)\n(d4) \n   \n\nTotal\ncurrent liabilities \n 10,869,404  \n 2,202,299  \n -  \n (1,951,275) \n 11,120,428  \n 1,570,397  \n 2,125,559  \n -  \n 3,695,956  \n (11,690,030) \n 3,126,354 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nTotal\nliabilities \n 10,869,404  \n 2,202,299  \n -  \n (1,951,275) \n 11,120,428  \n 1,570,397  \n 2,125,559  \n -  \n 3,695,956  \n (11,690,030) \n 3,126,354 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nCOMMITMENTS AND CONTINGENCIES \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nSHAREHOLDERS’ EQUITY \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nCapital \n 29,716,788  \n -  \n -  \n -\n(a) \n 29,716,788  \n 1,000,000  \n 113,299  \n (113,299)(b) \n 1,000,000  \n (1,000,000)(e) \n 29,716,788 \n\nStatutory reserves \n 155,313  \n -  \n -  \n -\n(a) \n 155,313  \n 9,543  \n 145,770  \n (145,770)(b) \n 9,543  \n (9,543)(c) \n 155,313 \n\nRetained earnings \n 22,252,747  \n (1,189,929) \n 41,637,352  \n (40,447,423)(a) \n 22,252,747  \n 40,627,809  \n 40,519,683  \n (40,519,683)(b) \n 40,627,809  \n (40,627,809)(c) \n 22,252,747 \n\nAccumulated\nother comprehensive income (loss) \n (2,215,536) \n (2,103) \n (2,823,325) \n 2,832,443\n(a)(d1) \n (2,208,521) \n (2,823,325) \n (2,946,184) \n 2,946,184(b) \n (2,823,325) \n 2,816,310\n(c)(d2-d4) \n (2,215,536)\n\nTotal\nshareholders’ equity \n 49,909,312  \n (1,192,032) \n 38,814,027  \n (37,614,980) \n 49,916,327  \n 38,814,027  \n 37,832,568  \n (37,832,568) \n 38,814,027  \n (38,821,042) \n 49,909,312 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n -  \n    \n   \n\nTotal\nliabilities and shareholders’ equity \n$60,778,716  \n$1,010,267  \n$38,814,027  \n$(39,566,255) \n$61,036,755  \n$40,384,424  \n$39,958,127  \n$(37,832,568) \n$42,509,983  \n$(50,511,072) \n$53,035,666 \n\n \n\n(a)To\neliminate holding company’s investment of subsidiaries outside PRC.\n\n \n\n(b)To\neliminate receivable as result of contractual agreement from VIE with VIE’s equity.\n\n \n\n(c)To\neliminate holding company’s investment of WFOE.\n\n \n\n(d)To\neliminate intercompany balances:\n\n \n\n \n**Due\nfrom**\n \n**Due\nto**\n \n**Amount**\n \n \n\n(1)\nHK subsidiaries\n \nHolding\n \n1,944,260\n \nIntercompany borrowing\n\n(2)\nHolding\n \nVIE\n \n8,995,997\n \nReal estate purchase deposit\npaid by VIE, refunded to Holding\n\n(3)\nHK subsidiaries\n \nVIE\n \n233,231\n \nIntercompany balance\n\n(4)\nWFOE\n \nVIE\n \n1,765,804\n \nIntercompany balance\n\n \n\n(e)\nTo eliminate HK subsidiaries\ncapital injection to WFOE.\n\n \n\n8\n\n \n\n \n\n**ORIENTAL CULTURE HOLDING LTD AND\nSUBSIDIARIES**\n\n**UNAUDITED CONDENDSED CONSOLIDATED\nSTATEMENTS OF LOSS**\n\n**FOR THE YEAR ENDED DECEMBER 31, 2024**\n\n \n\n  \nHolding  \nHK Subsidiaries  \nBVI  \nElimination  \nTotal\noutside PRC  \nWFOE  \nVIE  \nElimination  \nTotal\ninside PRC  \nElimination  \nConsolidated \n\nOperating revenues \n$-  \n$-  \n$-  \n$-  \n$-  \n$-  \n$622,690  \n$-  \n$622,690  \n$-  \n$622,690 \n\nCost\nof revenues \n -  \n -  \n -  \n -  \n -  \n -  \n (182,181) \n -  \n (182,181) \n -  \n (182,181)\n\nGross profit \n -  \n -  \n -  \n -  \n -  \n -  \n 440,509  \n -  \n 440,509  \n -  \n 440,509 \n\nOperating\nexpenses \n (1,579,979) \n (366,127) \n -  \n -  \n (1,946,106) \n (94,441) \n (1,597,160) \n -  \n (1,691,601) \n -  \n (3,637,707)\n\nLoss from operations \n (1,579,979) \n (366,127) \n -  \n -  \n (1,946,106) \n (94,441) \n (1,156,651) \n -  \n (1,251,092) \n -  \n (3,197,198)\n\nOther income (expense) \n (1,005,878) \n 1,129,156  \n -  \n -  \n 123,278  \n 107,221  \n 533,256  \n -  \n 640,477  \n -  \n 763,755 \n\nProvision for income tax \n -  \n -  \n -  \n -  \n -  \n (93) \n -  \n -  \n (93) \n -  \n (93)\n\nLoss from VIE \n -  \n -  \n -  \n -  \n -  \n (623,395) \n -  \n 623,395(b) \n -  \n -  \n - \n\nIncome\n(loss) from subsidiaries \n 152,321  \n -  \n (610,708) \n (152,321)(a) \n (610,708) \n -  \n -  \n -  \n -  \n 610,708(c) \n - \n\nNet\n(loss) income \n$(2,433,536) \n$763,029  \n$(610,708) \n$(152,321) \n$(2,433,536) \n$(610,708) \n$(623,395) \n$623,395  \n$(610,708) \n$610,708  \n$(2,433,536)\n\n \n\n(a)\nto eliminate outside PRC\nsubsidiaries income from Holding\n\n \n\n(b)\nto eliminate VIE income\nby WFOE\n\n \n\n(c)\nto eliminate WFOE investment\nincome by Holding\n\n \n\n9\n\n \n\n \n\n**ORIENTAL CULTURE HOLDING LTD AND\nSUBSIDIARIES**\n\n**UNAUDITED CONDENSED CONSOLIDATED\nSTATEMENTS OF CASH FLOWS**\n\n**FOR THE YEAR ENDED DECEMBER 31, 2024**\n\n \n\n  \nHolding  \nHK Subsidiaries  \nBVI  \nWFOE  \nVIE  \nTotal  \nElimination  \nConsolidated \n\nNet cash (used in) provided by operating activities \n$(1,761,029) \n$(25,502) \n$             -  \n$(3,451,046) \n$1,231,202  \n$(4,006,375) \n$               -  \n$(4,006,375)\n\nNet cash (used in) provided by investing activities \n (5,756,000) \n -  \n -  \n 3,294,358  \n (52,363) \n (11,556,351) \n -  \n (11,556,351)\n\nNet cash provided by financing activities \n 6,998,517  \n -  \n -  \n -  \n -  \n 6,998,517  \n -  \n 6,998,517 \n\nEffect of exchange rate \n (49,892) \n (1,451) \n -  \n (53,697) \n (211,899) \n (316,939) \n -  \n (316,939)\n\nNet (decrease) increase in cash and cash equivalents \n (568,404) \n (26,953) \n -  \n (210,385) \n (8,075,406) \n (8,881,148) \n -  \n (8,881,148)\n\nCASH AND CASH EQUIVELENTS, beginning of year \n 14,979,793  \n 27,289  \n -  \n 1,101,579  \n 16,316,033  \n 32,424,694  \n -  \n 32,424,694 \n\nCASH AND CASH EQUIVELENTS, end of year \n$14,411,389  \n$336  \n$-  \n$891,194  \n$8,240,627  \n$23,543,546  \n$-  \n$23,543,546 \n\n \n\n10\n\n \n\n \n\n**3.A. **[Reserved]\n\n \n\n**3.B. Capitalization and Indebtedness**\n\n \n\nNot Applicable.\n\n \n\n**3.C. Reasons For The Offer And Use Of Proceeds**\n\n \n\nNot Applicable.\n\n \n\n**3.D. Risk Factors**\n\n \n\n*An investment in our ordinary shares involves\na high degree of risk. You should carefully consider the risks and uncertainties described below together with all other information\ncontained in this annual report, including the matters discussed under the headings “Forward-Looking Statements” and “Operating\nand Financial Review and Prospects” before you decide to invest in our *ordinary shares*. We are a holding company with\nsubstantial operations in Hong Kong and China and are subject to a legal and regulatory environment that in many respects differs from\nthe United States. If any of the following risks, or any other risks and uncertainties that are not presently foreseeable to us, actually\noccur, our business, financial condition, results of operations, liquidity and our future growth prospects could be materially and adversely\naffected.*\n\n* *\n\n**Summary of Risk Factors**\n\n** **\n\nAn investment in our ordinary shares involves\nsignificant risks. Below is a summary of material risks we face, organized under relevant headings. These risks are discussed more fully\nin *Item 3. Key Information—D. Risk Factors*.\n\n \n\n**Risks Related to Our Business**\n\n \n\n●We\nhave a limited operating history in an evolving market, which makes it difficult to evaluate our future prospects.\n\n \n\n●If\nwe become subject to additional scrutiny, criticism and negative publicity involving U.S.-listed China-based companies, we may have to\nexpend significant resources to investigate and resolve the matter which could harm our business operations, and our reputation and could\nresult in a loss of your investment in our ordinary shares, especially if such matter cannot be addressed and resolved favorably.\n\n \n\n●Due\nto the nature of our business, valuable works of art are stored at our contracted facilities. Such works of art could be subject to damage\nor theft, which could have a material adverse effect on our operations, reputation and brand.\n\n \n\n●System\nand network limitations or failures could harm our business.\n\n \n\n●We\nface risks related to health epidemics and other outbreaks, including the coronavirus, which has caused and may continue to\ncause business disruptions, resulting in a material adverse impact to our financial condition and results of operations.\n\n \n\n●Nan\nCounty Public Safety Bureau previously frozen certain bank accounts of the subsidiaries of Jiangsu Yanggu due to the investigation and charges\nagainst former major shareholders of the Company and its related party Nanjing Jinwang in China, which has and could continue to materially\nand negatively impact the business operations and financial results of the Company.\n\n \n\n**Risks Related to Our Corporate Structure**\n\n \n\nOur operations are conducted through directly\nowned PRC subsidiaries and Hong Kong subsidiaries. We are subject to risks related to cross-border fund transfers, foreign exchange controls,\nand PRC regulatory changes applicable to our direct ownership structure, which could materially and adversely affect our business, financial\ncondition, and results of operations. \n\n \n\n11\n\n \n\n \n\n**Risks Related to Doing Business in China**\n\n  \n\n●Uncertainties\nand quick change in the interpretation and enforcement of Chinese laws and regulations with little advance notice could result in a material\nand negative impact our business operations, decrease the value of our securities and limit the legal protections available to you and\nus.\n\n \n\n●Any\nlack of requisite approvals, licenses or permits applicable to our business may have a material and adverse impact on our business, financial\ncondition and results of operations.\n\n \n\n●If\nany company incorporated in Hong Kong operating online collectibles and/or artwork trading platform is subject to PRC current or future\nlaws and regulations regarding collectible or artwork trading businesses, our operations may be materially adversely affected due to\nthe uncertainty whether we would be able to obtain approval from the provincial government and complete the filing with “Inter-Ministerial\nJoint Meetings of Clean-up and Corrective Actions of Various Trading Platforms” (the “Joint Meeting”) led by the China\nSecurities Regulatory Commission.\n\n \n\n●Regulatory\nbodies of the United States may be limited in their ability to conduct investigations or inspections of our operations in China.\n\n \n\n●If\nwe cannot effectively secure our network, customers’ personal information, which we collect through our online platform, it may\nbe subject to leakage or theft, and if the regulators believe we have failed to fulfill our network security obligations, our online\nplatform may be required to suspend operations or to make rectification, which may have a material adverse effect on our operations and\nfinancial results due to the large amount of our daily trading conducted online.\n\n \n\n**Risks Related to Doing Business in Hong Kong**\n\n  \n\n●It\nwill be difficult to acquire jurisdiction and enforce liabilities against our officers, directors and assets based in Hong Kong.\n\n \n\n●We\nmay have difficulty establishing adequate management, legal and financial controls in Hong Kong, which could impair our planning processes\nand make it difficult to provide accurate reports of our operating results.\n\n \n\n●Our\nbusiness may be affected by the Personal Data (Privacy) Ordinance of Hong Kong.\n\n \n\n**Risks Related to Our Ordinary Shares**\n\n \n\n●Our\nordinary shares may be thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to\nraise money or otherwise desire to liquidate your shares.\n\n \n\n●You\nmay face difficulties in protecting your interests as a shareholder, as Cayman Islands law provides substantially less protection when\ncompared to the laws of the United States and it may be difficult for a shareholder of ours to effect service of process or to enforce\njudgements obtained in the United States courts.\n\n \n\n●We\nare a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions\napplicable to United States domestic public companies.\n\n \n\n12\n\n \n\n \n\n**Risks Related to Our Business**\n\n** **\n\n**We have a limited operating history in\nan evolving market, which makes it difficult to evaluate our future prospects.**\n\n \n\nWe launched our Company in 2018 and have a limited\noperating history. The success of our business depends primarily on the number of collectibles and artwork products listed and traded\non our platform. Therefore, our ability to continue to attract customers to list, sell and buy collectibles and artwork products on our\nplatform is critical to the continued success and growth of our business. This in turn will depend on several factors, including our\nability to develop new products, services and markets, manage our growth while maintaining consistent and high-quality services, and\nmake our platform more efficient and effective for our customers.\n\n \n\nAs our business develops, or in response to competition,\nwe may continue to introduce new services or make adjustments to our existing services, or make adjustments to our business model. In\nconnection with the introduction of new services, we may impose more stringent customer qualifications to ensure the quality of our customers,\nwhich may negatively affect the growth of our business. With general economic conditions in China have slowed down due to the slow recovery\nfrom COVID-19 and the negative impact by the tariff war between U.S. and China, we may have difficulties to retain existing clients and\ndevelop new clients. Any significant change to our business model may not achieve expected results and may have a material and adverse\nimpact on our financial conditions and results of operations. It is therefore difficult to effectively assess our future prospects.\n\n \n\nIf we fail to attract potential clients and educate\nthem about the value of our services, if the market for our marketplace does not develop as we expect, or if we fail to address the needs\nof our target market, our business and results of operations will be harmed.\n\n \n\n**Nan County Public Safety Bureau previously frozen\ncertain bank accounts of the subsidiaries of Jiangsu Yanggu due to the investigation of former major shareholders of the Company and\nits related party Nanjing Jinwang which has and could continue to materially and negatively impact the business operations and financial\nresults of the Company.**\n\n \n\nOn July 1, 2022, Mr. Huajun Gao and Mr. Aimin Kong, each was a major\nshareholder of the Company, were detained by Nan County Public Safety Bureau of Yiyang City, Hunan Province, China. On July 26, 2022,\nNan County People’s Procuratorate (“NCPP”) approved the arrest of Mr. Gao and Mr. Kong, charging them with assisting\nin illegal online business operation of Nanjing Jinwang Art Purchase E-commerce Co., Ltd. (“Nanjing Jinwang”) and prosecuted\nthem to Nan County People’s Court (the “Court”) in August 2023. The Court had the hearing in August 2023 and trial in\nJanuary 2024 and both of them have been released on bail waiting for the judgement of the Court since February 2024. On May 5, 2025, NCPP\nfiled to the Court to withdraw the charges against Nanjing Jinwang, Mr. Aimin Kong and Mr. Huajun Gao due to lack of evidence to press\nthe charges. On May 8, 2025, the Court ordered to grant the withdrawal of charges against Nanjing Jinwang, Mr. Kong and Mr. Gao by NCCP.\nOn May 15, 2025, Nan County Public Safety Bureau unfroze the bank accounts of Nanjing Jinwang, a related party of the Company. On May\n28, 2025, NCCP determined it would not seek to file any charges against Nanjing Jinwang, Mr. Aimin Kong and Mr. Huajun Gao.\n\n \n\nOn July 1, 2022, the bank accounts of Nanjing Jinwang were frozen by\nNan County Public Safety Bureau, including a trust account into which the customers of the Company deposit their security deposits in\norder to trade on the Company’s two online trading platforms then which the Company has entrusted Nanjing Jinwang for escrow.\n\n \n\nAlso, on July 1, 2022, Nan County Public Safety\nBureau froze certain bank accounts of Kashi Longrui Business Management Services Co., Ltd. (“Kashi Longrui”), Kashi Dongfang\nCangpin Culture Development Co., Ltd. (“Kashi Dongfang”) and Nanjing Yanyu Information Technology Co., Ltd. (“Nanjing\nYanyu”), all subsidiaries of Jiangsu Yanggu Culture Development Co., Ltd., which was the Company’s variable interest entity\n(“VIE”) in China at that time, due to their business relationships with Nanjing Jinwang.\n\n \n\nNeither the Company nor its VIE or subsidiaries of its VIE has received\nany notification for enforcement charges from Nan County Public Safety Bureau, other than cash and short-term investment in the frozen\nbank accounts with balances totaling approximately $17.3 million relating to the Nanjing Jinwang case as of December 31, 2024. On May\n15, 2025, all frozen bank accounts were fully unfrozen by Nan County Public Safety Bureau, and the Nanjing Jinwang case has been closed\nwith no further impact on the Company. Customers have been able to freely transfer their deposits and make their withdrawals based on\ntheir actual needs. Mr. Gao and Mr. Kong are not officers, directors or employees of the Company, its VIE or subsidiaries of the VIE until\nJanuary 23, 2025 when Mr. Aimin Kong was appointed as Chief Operating Officer of the Company.\n\n \n\nAlthough NCCP has withdrawn its charges against Nanjing Jinwang, Nan\nCounty Public Safety Bureau has released the funds from frozen accounts of Kashi Dongfang and Nanjing Yanyu as of the date of this report,\nwe have lost customers, have had difficult time to develop new customers and our reputation and brand name were negatively impacted during\nthe time when the accounts were frozen and investigation was ongoing. We cannot assure or provide reasonably estimate whether and when\nour business could recover from the case to the level it was before the investigation.\n\n** **\n\n13\n\n \n\n** **\n\n**The global economy and the financial markets\nmay negatively affect our business and clients, as well as the supply of and demand for works of art and collectables.** \n\n \n\nOur business is affected by global, national\nand local economic conditions since the services we provide are discretionary and we depend, to a significant extent, upon a number of\nfactors relating to discretionary consumer spending in China and Hong Kong. These factors include economic conditions and perceptions\nof such conditions by traders of collectibles and artwork, employment rates, the level of their disposable income, business conditions,\ninterest rates, availability of credit and levels of taxation in regional and local markets. There can be no assurance that our services\nwill not be adversely affected by changes in general economic conditions in China, Hong Kong and globally.\n\n \n\nIn March 2020, the World Health Organization declared the COVID-19\nas a pandemic and the global economy has also been materially negatively affected. This crisis is like no other, the impact to Chinese\neconomy is large and the recovery from such impact has been slow. The United States has recently proposed to impose multiple rounds of\ntariffs on a wide range of goods imported from multiple countries, including China, and China has responded with retaliatory tariffs.\nHistorically, tariffs have led to increased trade and political tensions, between the U.S. and China, as well as between the U.S. and\nother countries. Political tensions as a result of trade policies could reduce trade volume, cross-border investment, technological\nexchange, and other economic activities between these two major economies, resulting in a material adverse effect on China and global\neconomic conditions. It is extremely uncertain about China’s growth forecast, which could seriously affect people’s investment\ndesires in China and internationally, including investment in artwork products and collectibles, which could negatively impact our business\nand results of operations.\n\n \n\nThe artwork and collectible markets may be influenced\nover time by the overall strength and stability of the global economy and the financial markets such as war in Ukraine and mid-east,\nhigh interest rate, inflation, tariff war, and outbreak of any epidemic. In addition, political conditions and US and China relations\nmay affect our business through their effect on the economy, as well as on the willingness of potential buyers and sellers to invest\nand sell art and collectibles in the wake of economic uncertainty.\n\n \n\n**If we become subject to additional scrutiny,\ncriticism and negative publicity involving U.S.-listed China-based companies, we may have to expend significant resources to investigate\nand resolve the matter which could harm our business operations, and our reputation and could result in a loss of your investment in\nour ordinary shares, especially if such matter cannot be addressed and resolved favorably.**\n\n \n\nRecently, U.S. public companies that have substantially all of their\noperations in China and Hong Kong have been the subject of intense scrutiny, criticism and negative publicity by investors, financial\ncommentators and regulatory agencies. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting\nirregularities, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of\nadherence thereto and, in some cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly\ntraded stock of many U.S.-listed China and Hong Kong based companies has decreased in value and, in some cases, has become virtually worthless.\nMany of these companies have been subject to shareholder lawsuits and SEC enforcement actions and have conducted internal and external\ninvestigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have\non us and our business. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue,\nwe will have to expend significant resources to investigate such allegations and/or defend our Company. This situation may be a major\ndistraction to our management. If such allegations are not proven to be groundless, our business operations will be severely hindered\nand your investment in our ordinary shares could be rendered worthless.\n\n** **\n\n**The demands for art and collectibles are\nunpredictable, which may cause significant variability in our results of operations.**\n\n** **\n\nThe demand for art is influenced not only by\noverall economic conditions, but also by changing trends in the art market as to which collecting categories and artists are most sought\nafter and by the preferences of individual collectors. These conditions and trends are difficult to predict and may adversely impact\nour ability to choose the categories for listing or advertising, potentially causing significant variability in our results of operations\nfrom period to period.\n\n \n\n**A\ndecline in trading volumes of artwork products and collectibles on our platform will decrease our trading revenues.**\n\n \n\nTrading volumes of the artwork products and collectibles on our platform\nare directly affected by economic, political and market conditions, broad trends in business and finance, unforeseen closures or other\ndisruptions in trading such as office and warehouse closure and transportation restrictions imposed by the government due to outbreak\nof pandemic, which could cause the lack of artwork products and collectibles being listed on our platform for trading, the level and volatility\nof interest rates, inflation, changes in availability and price of collectibles and artwork and the overall level of investor confidence.\nIn recent years, trading volumes on our platform have fluctuated depending on market conditions and other factors beyond our control.\nBecause a significant percentage of our revenues are tied directly to the trading volumes of the items listed on our platform, it is likely\nthat a general decline in trading volumes would lower revenues and may adversely affect our operating results.\n\n** **\n\n14\n\n \n\n \n\n**Due to the nature of our business, valuable\nworks of art are stored at our contracted facilities. Such works of art could be subject to damage or theft, which could have a material\nadverse effect on our operations, reputation and brand.**\n\n** **\n\nValuable works of art are stored at our facilities.\nAlthough we maintain security measures at our premises, valuable collectibles and artwork may be subject to damage or theft. The damage\nor theft of valuable property despite these security measures could have a material adverse impact on our business and reputation.\n\n** **\n\n**System and network limitations or failures\ncould harm our business.**\n\n \n\nOur businesses depend on the integrity and performance\nof the technology, computer and communications systems supporting them. If our systems cannot expand to cope with increased demand or\notherwise fail to perform, we could experience unanticipated disruptions in service, slower response times and delays in the introduction\nof new services. These consequences could result in financial losses and decreased customer service and satisfaction. If trading volumes\nincrease unexpectedly or other unanticipated events occur, we may need to expand and upgrade our technology, transaction processing systems\nand network infrastructure. We do not know whether we will be able to accurately project the rate, timing or cost of any increases, or\nexpand and upgrade our systems and infrastructure to accommodate any increases in a timely manner. \n\n \n\n**The success of our business depends on\nour ability to market and advertise the services we provide effectively.**\n\n \n\nOur ability to establish effective marketing\ncampaigns is the key to our success. Our advertisements promote our corporate image and our services. If we are unable to increase awareness\nof our brand, the benefits of using our trading platform to invest in collectibles and artwork, and that such use of our platform is\nsecure, we may not be able to attract new traders. Our marketing activities were disrupted due to travel restrictions and public gathering\nbans for large conferences and marketing events imposed by the government due to COVID-19 during the outbreak of COVID-19 and they might\nface similar disruptions if there is a resurgence of COVID-19. Our marketing activities may not be successful in promoting our services\nor in retaining and increasing our trader base. We cannot assure you that our marketing programs will be adequate to support our future\ngrowth, which may result in a material adverse effect on our results of operations.\n\n \n\n**If we do not compete effectively, our results\nof operations could be harmed.**\n\n \n\nThe art e-commerce industry is highly fragmented\nand competitive with relatively low entry barriers. We compete primarily on the basis of our technology, comprehensive customer service\nand brand recognition. Our competitors may compete with us in the following ways:\n\n \n\n \n●\nprovide services that are\nsimilar to ours, or that are more attractive to customers than ours;\n\n \n\n \n●\nprovide products and services\nwe do not offer;\n\n \n\n \n●\noffer aggressive rebates\nto gain market share and to promote their businesses;\n\n \n\n \n●\nadapt at a faster rate\nto market conditions, new technologies and customer demands;\n\n \n\n \n●\noffer better, faster and\nmore reliable technology; and\n\n \n\n \n●\nmarket, promote and provide\ntheir services more effectively.\n\n \n\nAlthough we do not compete against other trading\nservice providers solely based on prices, if our competitors offer their services at lower prices, we may be forced to provide aggressive\ndiscounts or rebates to our customers and our commission and fees may decrease. Reduction in commissions and fees without a commensurate\nreduction in expenses would lower our profitability.\n\n \n\nIn addition, there are over 11 art e-commerce\nplatforms operating in Hong Kong, through which individual customers can open accounts and trade all kinds of artworks on those exchanges.\nCertain Internet companies also launched art e-commerce trading services.\n\n \n\n15\n\n \n\n \n\nSome of these competitors may have greater financial\nresources or a larger customer base than we do, and if we fail to compete effectively, our market position, business prospects and results\nof operations would be adversely affected.\n\n \n\nThe art e-commerce market is highly competitive and many traditional\nart galleries and auction houses may provide a platform for artwork owners to sell their collections. However, their trading model is\nsubstantially different from ours. As of December 31, 2025, there were over 12 active art e-commerce platforms operating nationwide\nin China. The trading service providers compete with each other for customers and trading volume based on factors including brand, technology,\nresearch and customer services.\n\n \n\nAlthough some of our competitors may have greater\nfinancial resources or larger customer bases than we do, we believe that our proprietary technology platform, our comprehensive customer\nservices and strong brand recognition in the industry, will enable us to compete effectively in the fast evolving art e-commerce trading\nindustry in Hong Kong and PRC.\n\n \n\nOur competitors operate with different business\nmodels, have different cost structures or participate selectively in different market segments. They may ultimately prove more successful\nor more adaptable to new regulatory, technological and other developments. Many of our current and potential competitors have significantly\nmore financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion,\nsale and support of their service offerings. Our competitors may also have longer operating histories, a more extensive client base,\ngreater brand recognition and brand loyalty and broader partner relationships than us. Additionally, a current or potential competitor\nmay acquire one or more of our existing competitors or form a strategic alliance with one or more of our competitors. Our competitors\nmay be better at developing new products, offering more attractive terms or lower fees, responding faster to new technologies and undertaking\nmore extensive and effective marketing campaigns. In response to competition and in order to grow or maintain the volume of our business,\nwe may have to charge lower fees, which could materially and adversely affect our business and results of operations. If we are unable\nto compete with such companies and meet the need for innovation in our industry, the demand for our services and products could stagnate\nor substantially decline, we could experience reduced revenues or our marketplace could fail to achieve or maintain more widespread market\nacceptance, any of which could harm our business and results of operations.\n\n  \n\n**Our annual and interim results may fluctuate\nsignificantly and may not fully reflect the underlying performance of our business.**\n\n \n\nOur annual and interim results of operations,\nincluding the levels of our net revenues, expenses, net income (loss) and other key metrics, may vary significantly in the future due\nto a variety of factors, some of which are outside of our control, and period-to-period comparisons of our operating results may not\nbe meaningful, especially given our limited operating history. Accordingly, the results for any one period are not necessarily an indication\nof future performance. Fluctuations in annual or interim results may adversely affect the market price of our ordinary shares. Factors\nthat may cause fluctuations in our financial results include:\n\n \n\n \n●\nour ability to attract\nnew clients, retain existing clients and list new products for trading on our platforms;\n\n \n\n \n●\nchanges in our mix of services\nand introduction of new services;\n\n \n\n \n●\nthe amount and timing of\noperating expenses related to the maintenance and expansion of our business, operations and infrastructure;\n\n \n\n \n●\nour decision to manage\nclient volume growth during the period;\n\n \n\n \n●\nthe impact of competitors\nor competitive products and services;\n\n \n\n \n●\nincreases in our costs\nand expenses that we may incur to grow and expand our operations and to remain competitive;\n\n \n\n \n●\nnetwork outages or security\nbreaches;\n\n \n\n \n●\nchanges in the legal or\nregulatory environment or proceedings, including with respect to security, privacy, or enforcement by government regulators, including\nfines, freeze bank accounts, orders or consent decrees;\n\n \n\n \n●\ngeneral economic, industry\nand market conditions, including changes in Chinese or global business or macroeconomic conditions; and\n\n \n\n \n●\nthe timing of expenses\nrelated to the development or acquisition of technologies or businesses.\n\n \n\n \n●\nhealth epidemics or pandemics,\nsuch as the coronavirus outbreak (COVID-19) and government’s action to contain the spread of the pandemic.\n\n \n\n16\n\n \n\n \n\n**Despite our marketing efforts, we may not\nbe able to promote and maintain our brand in an effective and cost-efficient way and our business and results of operations may be harmed\naccordingly.**\n\n \n\nWe believe that effectively developing and maintaining\nawareness of our brand is critical to attracting new and retaining existing clients. Successful promotion of our brand and our ability\nto attract quality clients depends largely on the effectiveness of our marketing efforts and the success of the channels we use to promote\nour services.  Our efforts to build our brand have caused us to incur marketing and advertising expenses in the amount of approximately\n$0.2 million in 2024 and nil in 2025 respectively. It is likely that our future marketing efforts will require us to incur significant\nadditional expenses as we expand our business. These efforts may not result in increased revenues in the immediate future or at all and,\neven if they do, any increases in revenues may not offset the expenses incurred. If we fail to successfully promote and maintain our\nbrand while incurring substantial expenses, our results of operations and financial condition would be adversely affected, which may\nimpair our ability to grow our business.\n\n \n\n**Fraudulent activity in our marketplace\ncould negatively impact our operating results, brand and reputation and cause the use of our services to decrease.**\n\n \n\nWe are subject to the risk of fraudulent activity\nboth in our marketplace and associated with traders and third parties handling their information. Our resources, technologies and fraud\ndetection tools may be insufficient to accurately detect and prevent fraud. Increases in fraudulent activity, either in our marketplace\nor associated with participants of our marketplace, could negatively impact our brand and reputation, reduce the volume of transactions\nfacilitated through our platform and lead us to take additional steps to reduce fraud risk, which could increase our costs. High profile\nfraudulent activity could even lead to regulatory intervention, and may divert our management’s attention and cause us to incur\nadditional expenses and costs. Although we have not experienced any material business or reputational harm as a result of fraudulent\nactivities in the past, we cannot rule out the possibility that any of the foregoing may occur, causing harm to our business or reputation\nin the future. If any of the foregoing were to occur, our results of operations and financial condition could be materially and adversely\naffected.\n\n  \n\n**We may not be able to prevent others from\nunauthorized use of our intellectual property, which could harm our business and competitive position.**\n\n \n\nWe regard our trademarks, domain names, know-how,\nproprietary technologies and similar intellectual property as critical to our success, and we rely on a combination of intellectual property\nlaws and contractual arrangements, including confidentiality and non-compete agreements with our employees and others, to protect our\nproprietary rights. We cannot assure you that any of our intellectual property rights will not be challenged, invalidated, circumvented\nor misappropriated, or such intellectual property will be sufficient to provide us with competitive advantages. In addition, because\nof the rapid pace of technological change, parts of our business rely on technologies developed or licensed by third parties, and we\nmay not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms, or at all.\n\n \n\nIt is often difficult to register, maintain and\nenforce intellectual property rights in China. Statutory laws and regulations are subject to judicial interpretation and enforcement\nand may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention assignment\nand non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach.\nAccordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in China.\nPreventing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent\nthe misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights,\nsuch litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance\nthat we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently\ndiscovered by, our competitors. To the extent that our employees or consultants use intellectual property owned by others in their work\nfor us, disputes may arise as to the rights in related know-how and inventions. Any failure in protecting or enforcing our intellectual\nproperty rights could have a material adverse effect on our business, financial condition and results of operations.\n\n \n\n**Our annual effective income tax rate can\nchange significantly as a result of a combination of changes in our foreign earnings and other factors, including changes in tax laws\nor changes made by regulatory authorities.**\n\n** **\n\nOur consolidated effective income tax rate is\nequal to our total income tax expense (benefit) as a percentage of total book income (loss) before tax. Losses in one jurisdiction may\nnot be used to offset profits in other jurisdictions and may cause an increase in our tax rate. Changes in statutory income tax rates\nand laws, as well as initiation of tax audits by local and foreign authorities, could impact the amount of income tax liability and income\ntaxes we are required to pay. In addition, any fluctuation in the earnings (or losses) of the jurisdictions and assumptions used in the\ncalculation of income taxes could have a significant effect on our consolidated effective income tax rate. Furthermore, our effective\ntax rate could increase if we are unable to generate sufficient future taxable income in certain jurisdictions, or if we are otherwise\nrequired to increase our valuation allowances against our deferred tax assets.** ** \n\n \n\n17\n\n \n\n \n\n**We are subject to taxation in multiple\njurisdictions. As a result, any adverse development in the tax laws of any of these jurisdictions or any disagreement with our tax positions\ncould have a material adverse effect on our business, consolidated financial condition or results of operations.**\n\n \n\nWe are subject to taxation in, and to the tax\nlaws and regulations of, multiple jurisdictions, particularly in the People’s Republic of China and Hong Kong. In addition, tax\nauthorities in any applicable jurisdiction, may disagree with the positions we have taken or intend to take regarding the tax treatment\nor characterization of any of our transactions. In the event any applicable tax authorities effectively sustained their positions which\nare different from our tax treatment of any of our transactions, it could have a significant adverse impact on our business, consolidated\nresults of our operations as well as consolidated financial condition.\n\n** **\n\n**We may be subject to intellectual property\ninfringement claims, which may be expensive to defend and may disrupt our business and operations.**\n\n \n\nWe cannot be certain that our operations or any\naspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual\nproperty rights held by third parties. We may be from time to time in the future subject to legal proceedings and claims relating to\nthe intellectual property rights of others. In addition, there may be third-party trademarks, patents, copyrights, know-how or\nother intellectual property rights that are infringed by our products, services or other aspects of our business without our awareness.\nHolders of such intellectual property rights may seek to enforce such intellectual property rights against us in China, the United States\nor other jurisdictions. If any third-party infringement claims are brought against us, we may be forced to divert management’s\ntime and other resources from our business and operations to defend against these claims, regardless of their merits.\n\n \n\nAdditionally, the application and interpretation\nof China’s intellectual property laws and the procedures and standards for granting trademarks, patents, copyrights, know-how or\nother intellectual property rights in China are still evolving and are uncertain, and we cannot assure you that PRC courts or regulatory\nauthorities would agree with our analysis. If we were found to have violated the intellectual property rights of others, we may be subject\nto liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees\nor be forced to develop alternatives of our own. As a result, our business and results of operations may be materially and adversely\naffected.\n\n \n\n**From time to time we may evaluate and potentially\nconsummate strategic investments or acquisitions, which could require significant management attention, disrupt our business and adversely\naffect our financial results.**\n\n \n\nWe may evaluate and consider strategic\ninvestments, combinations, acquisitions or alliances to further increase the value of our marketplace and better serve our clients. These\ntransactions could be material to our financial condition and results of operations if consummated. If we are able to identify an appropriate\nbusiness opportunity, we may not be able to successfully consummate the transaction and, even if we do consummate such a transaction,\nwe may be unable to obtain the benefits or avoid the difficulties and risks of such transaction.\n\n \n\nStrategic investments or acquisitions will involve\nrisks commonly encountered in business relationships, including:\n\n \n\n \n●\ndifficulties in assimilating\nand integrating the operations, personnel, systems, data, technologies, products and services of the acquired business;\n\n \n\n \n●\ninability of the acquired\ntechnologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits;\n\n \n\n \n●\ndifficulties in retaining,\ntraining, motivating and integrating key personnel;\n\n \n\n \n●\ndiversion of management’s\ntime and resources from our normal daily operations;\n\n \n\n \n●\ndifficulties in successfully\nincorporating licensed or acquired technology and rights into our service offerings to customers;\n\n \n\n18\n\n \n\n \n\n \n●\ndifficulties in maintaining\nuniform standards, controls, procedures and policies within the combined organizations;\n\n \n\n \n●\ndifficulties in retaining\nrelationships with clients, employees and suppliers of the acquired business;\n\n \n\n \n●\nrisks of entering markets\nin which we have limited or no prior experience;\n\n \n\n \n●\nregulatory risks, including\nremaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well\nas being subject to new regulators with oversight over an acquired business;\n\n \n\n \n●\nassumption of contractual\nobligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase\nour risk for liability;\n\n \n\n \n●\nfailure to successfully\nfurther develop the acquired technology;\n\n \n\n \n●\nliability for activities\nof the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial\ndisputes, tax liabilities and other known and unknown liabilities;\n\n \n\n \n●\npotential disruptions to\nour ongoing businesses; and\n\n \n\n \n●\nunexpected costs and unknown\nrisks and liabilities associated with strategic investments or acquisitions.\n\n \n\nWe may not make any investments or\nacquisitions, or any future investments or acquisitions may not be successful, may not benefit our business strategy, may not\ngenerate sufficient revenues to offset the associated acquisition costs or may not otherwise result in the intended benefits. In\naddition, we cannot assure you that any future investment in or acquisition of new businesses or technology will lead to the\nsuccessful development of new or enhanced products and services or that any new or enhanced products and services, if developed,\nwill achieve market acceptance or prove to be profitable.\n\n** **\n\n**Our business depends on the continued efforts\nof our senior management. If one or more of our key executives were unable or unwilling to continue in their present positions, our business\nmay be severely disrupted.**\n\n** **\n\nOur business operations depend on the continued\nservices of our senior management, particularly the executive officers named in this report. While we have the ability to provide different\nincentives to our management, we cannot assure you that we can continue to retain their services. If one or more of our key executives\nwere unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, our future growth\nmay be constrained, our business may be severely disrupted and our financial condition and results of operations may be materially and\nadversely affected, and we may incur additional expenses to recruit, train and retain qualified personnel. In addition, although we have\nentered into confidentiality and non-competition agreements with our management, there is no assurance that any member of our management\nteam will not join our competitors or form a competing business. If any dispute arises between our current or former officers and us,\nwe may have to incur substantial costs and expenses in order to enforce such agreements in China or Hong Kong, or we may be unable to\nenforce them at all.\n\n \n\n**We have engaged in transactions with related parties, and\nsuch transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations.**\n\n \n\nWe have entered into a number of transactions with related parties,\nincluding our shareholders, directors and executive officers. For example, we have entered into several transactions with Nanjing\nCulture and Artwork Property Exchange Co., Ltd., Jinling Cultural Property Rights Exchange Co., Ltd. and Nanjing Jinwang Art Purchase\nE-commerce Co., Ltd., which Mr. Mr. Aimin Kong is a shareholder and officer of these companies, who is our Chief Operating Officer and\nhas controlling voting power of the Company. We also entered into advertising contract with Kashi Jinwang Art  Purchase E-commerce\nCo., Ltd., as online advertising service provider that is controlled by Mr. Aimin Kong to promote our collectibles and artworks. For the\nyear ended December 31, 2024, our related parties accounts payable, other payables, net revenues, cost of revenues, selling and marketing,\nand general and administrative expenses accounted for 0.0%, 0.0%, 8.8%, 11.6%, 0.0% and 3.0% of our total accounts payable, other payables,\nnet revenues, cost of revenues, selling and marketing, and general and administrative expenses, respectively. For the year ended December\n31, 2025, our related parties accounts payable, other payables, net revenues, cost of revenues, selling and marketing, and general and\nadministrative expenses accounted for 0.0%, 0.0%, 28.0%, 0.0%, 0.0% and 0.0% of our total accounts payable, other payables, net revenues,\ncost of revenues, selling and marketing, and general and administrative expenses, respectively. See “*Item 7.B. Related Party\nTransactions*.”  We may in the future enter into additional transactions with entities in which our officers, members of\nour board of directors and other related parties hold ownership interests.\n\n \n\n19\n\n \n\n \n\nTransactions with the entities in which related\nparties hold ownership interests present potential for conflicts of interest, as the interests of these entities and their shareholders\nmay not align with the interests of the Company and our shareholders with respect to the negotiation of, and certain other matters related\nto, our lease and technology services to such entities. Conflicts of interest may also arise in connection with the exercise of contractual\nremedies under these transactions, such as the treatment of events of default.\n\n \n\nCurrently, our board of directors has authorized the audit committee\nto review and approve all related party transactions. We rely on the laws of Cayman Islands, which provide that directors owe a duty of\ncare and a duty of loyalty to our Company. Nevertheless, we may have achieved more favorable terms if such transactions had not been entered\ninto with related parties and these transactions, individually or in the aggregate, may have an adverse effect on our business and results\nof operations or may result in government enforcement actions or other litigation.\n\n** **\n\n**The relative lack of public company experience\nof our management team may put us at a competitive disadvantage.**\n\n \n\nOur management team lacks public company experience,\nwhich could impair our ability to comply with legal and regulatory requirements such as those imposed by the Sarbanes-Oxley Act of 2002,\n(“Sarbanes-Oxley”). Our senior management does not have much experience managing a publicly-traded company. Such responsibilities\ninclude complying with federal securities laws and making required disclosures on a timely basis. Our senior management may be unable\nto implement programs and policies in an effective and timely manner or that adequately respond to the increased legal, regulatory and\nreporting requirements associated with being a publicly traded company. Our failure to comply with all applicable requirements could\nlead to the imposition of fines and penalties, distract our management from attending to the management and growth of our business, result\nin a loss of investor confidence in our financial reports and have an adverse effect on our business and stock price.\n\n** **\n\n**If we fail to establish and maintain proper\ninternal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could\nbe impaired.**\n\n \n\nPursuant to Section 404 of the Sarbanes-Oxley Act, we are required\nto file a report by our management on our internal control over financial reporting and to include an attestation report on internal control\nover financial reporting issued by our independent registered public accounting firm. The presence of material weaknesses in internal\ncontrol over financial reporting could result in financial statement errors which, in turn, could lead to errors in our financial reports\nand/or delays in our financial reporting, which could require us to restate our operating results. We might not identify one or more material\nweaknesses in our internal controls in connection with evaluating our compliance with Section 404 of the Sarbanes-Oxley Act. In order\nto maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, we\nneed to expend significant resources and provide significant management oversight. Implementing any appropriate changes to our internal\ncontrols may require specific compliance training of our directors and employees, entail substantial costs in order to modify our existing\naccounting systems, take a significant period of time to complete and divert management’s attention from other business concerns.\nThese changes may not, however, be effective in achieving and maintaining the adequacy of our internal control.\n\n \n\nIf we are unable to conclude that we have effective\ninternal controls over financial reporting, investors may lose confidence in our operating results, the price of the ordinary shares\ncould decline and we may be subject to litigation or regulatory enforcement actions. In addition, if we are unable to meet the requirements\nof Section 404 of the Sarbanes-Oxley Act, we may be subject to investigation or sanctions by the SEC and our ordinary shares may not\nbe able to remain listed on the Nasdaq Capital Market.\n\n** **\n\n**We are subject to cyber security risks\nand may incur increasing costs in an effort to minimize those risks and to respond to cyber incidents.**\n\n \n\nOur online trading platform is dependent on\nthe secure operation of our website and systems as well as the operation of the internet generally. Our business involves the\nstorage of customers’ proprietary information, and security breaches could expose us to a risk of loss or misuse of this\ninformation, litigation, and potential liability. A number of large internet companies have suffered security breaches, some of\nwhich have involved intentional ransomware attacks. From time to time, we and many other internet businesses also may be subject to\na denial of service attacks wherein attackers attempt to block customers’ access to our website with ransomware. If we are\nunable to avert a denial of service attack for any significant period, we could sustain substantial loss from payment of ransom fee,\nlost sales and customer dissatisfaction. We may not have the resources or technical sophistication to anticipate or prevent rapidly\nevolving types of cyberattacks.\n\n \n\n20\n\n \n\n \n\nCyberattacks may target us, our customers, our\nsuppliers, banks, payment processors, e-commerce in general or the communication infrastructure on which we depend. If an actual or perceived\nattack or breach of our security occurs, customer and/or supplier perception of the effectiveness of our security measures could be harmed\nand we could lose customers, vendors or both. Actual or anticipated attacks and risks may cause us to incur increasing costs, including\ncosts to deploy additional personnel and protection technologies, train employees, and engage third party experts and consultants. A\nperson who is able to circumvent our security measures might be able to misappropriate our or our customers’ proprietary information,\ncause interruption in our operations, damage our computers or those of our customers, or otherwise damage our reputation and business.\nAny compromise of our security could result in a violation of applicable privacy and other laws, significant legal and financial exposure,\ndamage to our reputation, and a loss of confidence in our security measures, which could harm our business.\n\n** **\n\n**Competition for employees is intense, and\nwe may not be able to attract and retain the qualified and skilled employees needed to support our business.**\n\n \n\nWe believe our success depends on the efforts\nand talent of our employees, including risk management, information technology, financial and marketing personnel. Our future success\ndepends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly skilled\nmarketing, real estate, technical, risk management and financial personnel is extremely intense. We may not be able to hire and retain\nthese personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which\nwe compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment.\n\n \n\nIn addition, we invest significant time and expense\nin training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees,\nwe could incur significant expenses in hiring and training their replacements, and the quality of our products and services could diminish,\nresulting in a material adverse effect to our business.\n\n \n\n**Increases in labor costs in the PRC may\nadversely affect our business and results of operations.**\n\n \n\nThe economy in China has experienced increases\nin inflation and labor costs in recent years. As a result, average wages in the PRC are expected to continue to increase. In addition,\nwe are required by PRC laws and regulations to pay various statutory employee benefits, including pension, housing funds, medical insurance,\nwork-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our\nemployees. The relevant government agencies may examine whether an employer has made adequate payments to the statutory employee benefits,\nand those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. We expect that\nour labor costs, including wages and employee benefits, will continue to increase. Unless we are able to control our labor costs or pass\non these increased labor costs to our users by increasing the fees of our services, our financial condition and results of operations\nmay be adversely affected.\n\n \n\n**We do not have any business insurance coverage.**\n\n \n\nInsurance companies in China currently do not\noffer as extensive an array of insurance products as insurance companies in more developed economies. Currently, we do not have any business\nliability or disruption insurance to cover our operations. We have determined that the costs of insuring for these risks and the difficulties\nassociated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Any uninsured\nbusiness disruptions may result in our incurring substantial costs and the diversion of resources, which could have an adverse effect\non our results of operations and financial condition.\n\n  \n\n**We face risks related to health epidemics and other outbreaks, which\nmay cause business disruptions, resulting in a material, adverse impact to our financial condition and results of operations.**\n\n** **\n\nIn recent years, there have been outbreaks of epidemics in various\ncountries, including China. At the end of 2019, there was an outbreak of a novel strain of coronavirus (COVID-19) in China, which has\nspread rapidly to many parts of the world, including Hong Kong and the U.S. In March 2020, the World Health Organization declared the\nCOVID-19 a pandemic. The pandemic resulted in quarantines, travel restrictions, and the temporary closure of office buildings and facilities\nin China and in the U.S.\n\n \n\n21\n\n \n\n \n\nOur results of operations were materially adversely\naffected by the outbreak of COVID-19. During the outbreak of COVID-19 and government’s efforts to contain the spread of the pandemic,\nour ability to accept, appraise, list new products and provide warehousing services for collectibles and artwork products as well as\nour marketing activities were severely disrupted and hindered due to the office closure, travel and transportation restrictions imposed\nby the government, which caused a material negative impact on our business and results of operations. In early December 2022, Chinese\ngovernment eased the strict control measure for COVID-19, which has led to surge in increased infections and disruption in our business\noperations in December 2022 and January 2023. The business has returned to normal in China since February 2023. However, our results\nof operations will be adversely affected if there is any new COVID-19 outbreak or any other epidemic harm the Chinese and global economy.\n\n \n\nIn general, our business could be materially\nadversely affected by the effects of epidemics or pandemic, including, but not limited to, the COVID-19, avian influenza, severe acute\nrespiratory syndrome (SARS), the influenza A virus, Ebola virus, or other outbreaks. In response to an epidemic or other outbreaks, government\nand other organizations may adopt regulations and policies that could lead to severe disruption to our daily operations, including temporary\nclosure of our offices and other facilities. These severe conditions may cause us and/or our partners to make internal adjustments, including\nbut not limited to, temporarily closing down businesses, limiting business hours, and setting restrictions on travel and/or visits with\nclients and partners for a prolonged period of time. Various impacts arising from a severe condition may cause business disruptions,\nresulting in a material, adverse impact to our financial condition and results of operations.\n\n \n\n**Risks Related to Our Corporate Structure**\n\n \n\nWe are a Cayman Islands exempted company, and our operations in China\nare conducted through our PRC subsidiaries and our Hong Kong subsidiary. Our PRC subsidiaries are considered foreign-invested enterprises\nunder PRC law, and we hold 100% equity interest in each of them and in our Hong Kong subsidiary, with no reliance on any contractual control\narrangements (including variable interest entity, or VIE, structures) since November 11, 2025.\n\n \n\nIn the opinion of our PRC counsel, Tahota (Nanjing)\nLaw Firm, our current direct ownership structure, the ownership structure of our PRC subsidiaries, and our compliance with applicable\nPRC laws and regulations are valid and in compliance with existing PRC laws, rules and regulations. However, there remain substantial\nuncertainties regarding the interpretation and application of current or future PRC laws and regulations, and there can be no assurance\nthat the PRC government will not impose new requirements or restrictions that could materially and adversely affect our business, financial\ncondition and results of operations.\n\n \n\nOur operations in China are conducted through our PRC subsidiaries.\nWe are subject to risks related to changes in PRC foreign investment, foreign exchange, corporate governance and other regulatory policies\napplicable to our direct ownership structure. Any new regulatory requirements, restrictions or enforcement actions imposed by the PRC\ngovernment could materially and adversely affect our business, financial condition and results of operations.\n\n \n\n**Risks Related to Doing Business in China** \n\n \n\n**Changes in China’s economic, political\nor social conditions or government policies could have a material adverse effect on our business and results of operations.**\n\n \n\nA substantial part of our operations are located\nin China. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree\nby political, economic and social conditions in China generally and by continued economic growth in China as a whole.\n\n \n\nThe Chinese economy differs from the economies\nof most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control\nof foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization\nof market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate\ngovernance in business enterprises, a substantial portion of productive assets in China are still owned by the government. In addition,\nthe Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese\ngovernment also exercises significant control over China’s economic growth through allocating resources, controlling payment of\nforeign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.\n\n \n\n22\n\n \n\n \n\nWhile the Chinese economy has experienced\nsignificant growth over the past four decades, growth has been uneven, both geographically and among various sectors of the economy.\nThe Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of\nthese measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition\nand results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In\naddition, in the past the Chinese government has implemented certain measures, including control the online trading of collectibles.\nSince the outbreak of COVID-19, China’s economic growth has slowed down significantly and the recovery has been slow. Any\nprolonged slowdown in the Chinese economy due to the recent tariff war with United States may reduce the demand for our products and\nservices and materially and adversely affect our business and results of operations.\n\n \n\nWe previously conducted our operations in\nChina through the variable interest entity, Jiangsu Yanggu and we have terminated the VIE Agreements and dismantle the VIE structure\non November 11, 2025. Jiangsu Yanggu is no longer our consolidated variable interest entity and is no longer consolidated in our\nfinancial statements.\n\n \n\nIn the opinion of our PRC legal counsel Tahota Law Firm, (i) the prior\nVIE structures of Jiangsu Yanggu and our WFOE did not violate mandatory provisions of applicable PRC laws and regulations as in effect\nat that time; and (ii) the previous contractual arrangements among our WFOE, Jiangsu Yanggu and its shareholders were valid, binding and\nenforceable in accordance with their terms and applicable PRC laws and regulations as in effect at that time.\n\n \n\nHowever, uncertainties and changes in the interpretation\nand enforcement of PRC laws and regulations for our previous VIE structure could have a material adverse effect on our business, results\nof operations and the value of our securities. ** **\n\n** **\n\n**Uncertainties and quick change in the interpretation\nand enforcement of Chinese laws and regulations with little advance notice could result in a material and negative impact on our business\noperations, decrease the value of our securities and limit the legal protections available to you and us.**\n\n \n\nThe PRC legal system is based on written statutes, and prior court\ndecisions have limited value as precedents. Since these laws and regulations are relatively new and the PRC legal system continues to\nrapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations\nand rules involve uncertainties. The enforcement of laws and that rules and regulations in China can change quickly with little advance\nnotice and the risk that the Chinese government may intervene or influence our operations at any time, or may exert more control over\nofferings conducted overseas and/or foreign investment in China- based issuers, could result in a material change in our operations and/or\nthe value of our securities.\n\n \n\n23\n\n \n\n \n\nOn July 6, 2021, the General Office of the Communist Party of China\nCentral Committee and the General Office of the State Council jointly issued an announcement to crack down on illegal activities in the\nsecurities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental\nauthorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based\ncompanies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. On February\n17, 2023, China Securities Regulatory Commission (“CSRC”) released Trial Administrative Measures of Overseas Securities Offering\nand Listing by Domestic Companies (the “New Overseas Listing Rules”) with five interpretive guidelines, which took effect\non March 31, 2023. The New Overseas Listing Rules require Chinese domestic enterprises to complete filings with CSRC and report related\ninformation under certain circumstances, such as: a) an issuer making an application for initial public offering and listing in an overseas\nmarket; b) an issuer making an overseas securities offering after having been listed on an overseas market; c) a domestic company seeking\nan overseas direct or indirect listing of its assets through single or multiple acquisition(s), share swap, transfer of shares or other\nmeans. According to the Notice on Arrangements for Overseas Securities Offering and Listing by Domestic Enterprises, published by the\nCSRC on February 17, 2023, a company that (i) has already completed overseas listing or (ii) has already obtained the approval for the\noffering or listing from overseas securities regulators or exchanges but has not completed such offering or listing on or before effective\ndate of the new rules but completed the offering or listing before September 30, 2023 will be considered as an existing listed company\nand is not required to make any filing until it conducts a new offering in the future. Furthermore, upon the occurrence of any of the\nmaterial events specified below after an issuer has completed its offering and listed its securities on an overseas stock exchange, the\nissuer shall submit a report thereof to the CSRC within 3 business days after the occurrence and public disclosure of the event: (i) change\nof control; (ii) investigations or sanctions imposed by overseas securities regulatory agencies or other competent authorities; (iii)\nchange of listing status or transfer of listing segment; or (iv) voluntary or mandatory delisting. The New Overseas Listing Rules\nstipulate the legal consequences to the companies for breaches, including failure to fulfill filing obligations or filing documents having\nfalse statement or misleading information or material omissions, which may result in administrative penalties such as order to rectify,\nwarnings and a fine ranging from RMB1 million to RMB10 million, and in cases of severe violations, the controlling shareholders, actual\ncontrollers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as\nwarnings and fines and may be barred from entering the securities market. The Company and its offerings are subject to New Overseas Listing\nRules. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign\ninvestment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities\nto investors and cause the value of our securities to significantly decline or be worthless.\n\n \n\nOn February 15, 2022, Cybersecurity Review Measures published by Cyberspace\nAdministration of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public\nSecurity, Ministry of State Security, Ministry of Finance, Ministry of Commerce, People’s Bank of China, State Administration for\nMarket Regulation, State Administration of Radio and Television, China Securities Regulatory Commission, State Secrecy Administration\nand State Cryptography Administration became effective, which provides that: (i) cyberspace operators with personal information of more\nthan 1 million users who want to list abroad to file a cybersecurity review with the Office of Cybersecurity Review and (ii) Critical\nInformation Infrastructure Operators (“CIIOs”) that intend to purchase internet products and services and Online Platform\nOperators engaging in data processing activities that affect or may affect national security shall be subject to the cybersecurity review\nby the Cybersecurity Review Office. On April 2, 2022, the CSRC released the Provisions on Strengthening Confidentiality and Archives Administration\nof Overseas Securities Offering and Listing by Domestic Companies which became effective on March 31, 2023 and provides that a domestic\ncompany that seeks to offer and list its securities in a overseas market shall strictly abide by applicable PRC laws and regulations,\nenhance legal awareness of keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives\nadministration system, and take necessary measures to fulfill confidentiality and archives administration obligations. On July 7, 2022,\nCAC promulgated the Measures for the Security Assessment of Data Cross-border Transfer, effective on September 1, 2022, which requires\nthe data processors to apply for data cross-border security assessment coordinated by the CAC under the following circumstances: (i) any\ndata processor transfers important data to overseas; (ii) any critical information infrastructure operator or data processor who processes\npersonal information of over 1 million people provides personal information to overseas; (iii) any data processor who provides personal\ninformation to overseas and has already provided personal information of more than 100,000 people or sensitive personal information of\nmore than 10,000 people to overseas since January 1st of the previous year; and (iv) other circumstances under which the data cross-border\ntransfer security assessment is required as prescribed by the CAC. On February 24, 2023, the CSRC, the Ministry of Finance, the National\nAdministration of State Secretes Protection and the National Archives Administration released the Provisions on Strengthening the Confidentiality\nand Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Companies, or the Confidentiality and\nArchives Administration Provisions, which took effect on March 31, 2023. PRC domestic enterprises seeking to offer securities and list\nin overseas markets, either directly or indirectly, shall establish and improve the system of confidentiality and archives work, and shall\ncomplete approval and filing procedures with competent authorities, if such PRC domestic enterprises or their overseas listing entities\nprovide or publicly disclose documents or materials involving state secrets and work secrets of state organs to relevant securities companies,\nsecurities service institutions, overseas regulatory agencies and other entities and individuals. It further stipulates that (i) providing\nor publicly disclosing documents and materials which may adversely affect national security or public interests, and accounting records\nor photocopies thereof to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities\nand individuals shall be subject to corresponding procedures in accordance with relevant laws and regulations; and (ii) any working papers\nformed in the territory of the PRC by securities companies and securities service agencies that provide domestic enterprises with securities\nservices relating to overseas securities issuance and listing shall be stored in the territory of the PRC, the outbound transfer of which\nshall be subject to corresponding procedures in accordance with relevant laws and regulations. On September 24, 2024, the State Council\npublished the Administration Measures for Cyber Date Security, or the “Cyber Data Security Measure”, which requires cyber\ndata processors to file a national security review if their cyber data processing activities affect or may affect national security. As\nconfirmed by our PRC counsel Tahota (Nanjing) Law Firm, we are currently not subject to cybersecurity review with the Cyberspace Administration\nof China (“CAC”) under these new measures, because we operate our online platforms through our subsidiary in Hong Kong which\nare not subject to the laws and regulations of China, and our subsidiaries in China provide marketing, warehouse storage and technical\nmaintenance services and they are not cyberspace operators with personal information of more than 1 million users or activities that affect\nor may affect national security. Nevertheless, the aforementioned measures and any related implementation rules to be enacted may subject\nus to additional compliance requirement in the future.\n\n \n\n24\n\n \n\n \n\nWe cannot rule out the possibility that\nthe PRC government will institute a licensing regime or pre-approval requirement covering our business operations in China at some point\nin the future. If such a licensing regime or approval requirement were introduced, we cannot assure you that we would be able to obtain\nany newly required license in a timely manner, or at all, which could materially and adversely affect our business and impede our ability\nto continue our operations in China.\n\n \n\nFrom time to time, we may have to resort to\nadministrative and court proceedings to enforce our legal rights. Since PRC administrative and court authorities have significant\ndiscretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of\nadministrative and court proceedings and the level of legal protection we enjoy in the PRC legal system than in more developed legal\nsystems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not\npublished in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these\npolicies and rules until sometime after the violation. Such uncertainties, including uncertainties over the scope and effect of our\ncontractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the\nregulatory environment in China could materially and adversely affect our business and impede our ability to continue our\noperations.\n\n \n\n**The Chinese government exerts substantial\ninfluence over the manner in which we must conduct our business, and may intervene or influence our operations at any time, which could\nresult in a material change in our operations, significantly limit or completely hinder our ability to offer or continue to offer our\nsecurities to investors and, and cause the value of our securities to significantly decline or be worthless.**\n\n \n\nThe Chinese government has exercised and continues\nto exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability\nto operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations,\nland use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations\nor interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance\nwith such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support\nrecent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic\npolicies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest\nourselves of any interest we then hold in Chinese properties. \n\n \n\nAs such, our business in China is subject to\nvarious government and regulatory interferences. We could be subject to regulation by various political and regulatory entities, including\nvarious local and municipal agencies and government sub-divisions. The Company may incur increased costs necessary to comply with existing\nand newly adopted laws and regulations or penalties for any failure to comply. Our operations could be adversely affected, directly or\nindirectly, by existing or future laws and regulations relating to its business or industry, which could result in a material change\nin our operation and the value of our securities.\n\n \n\nFurthermore, according to the newly published\nNew Overseas Listing Rules, although we are currently not required to obtain permission from any of the PRC federal or local government\nand has not received any denial to list on the U.S. exchange, we are required to file with CSRC within three business days after our\nofferings. It is uncertain when and whether we will be required to obtain permission from the PRC government to list and trade on U.S.\nexchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded, which could significantly\nlimit or completely hinder our ability to offer or continue to offer our securities to investors and cause the value of our securities\nto significantly decline or be worthless.\n\n \n\n**The filing with the China Securities Regulatory\nCommission (“CSRC”) is required in connection with any offering under New Overseas Listing Rules, and we cannot assure you\nthat we will be able to timely make such filing, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for\nfailure to timely file with the CSRC for our offerings.**\n\n \n\nOn February 17, 2023, the CSRC released the New Overseas Listing Rules,\nwhich took effect on March 31, 2023. The New Overseas Listing Rules require Chinese domestic enterprises to complete filings with relevant\nCSRC and report related information under certain circumstances, such as: a) an issuer making an application for initial public offering\nand listing in an overseas market; b) an issuer making an overseas securities offering after having been listed on an overseas market;\nc) a domestic company seeking an overseas direct or indirect listing of its assets through single or multiple acquisition(s), share swap,\ntransfer of shares or other means. According to the Notice on Arrangements for Overseas Securities Offering and Listing by Domestic Enterprises,\npublished by the CSRC on February 17, 2023, a company that (i) has already completed overseas listing or (ii) has already obtained the\napproval for the offering or listing from overseas securities regulators or exchanges but has not completed such offering or listing before\neffective date of the new rules and also completes the offering or listing before September 30, 2023 are considered as an existing listed\ncompany and is not required to make any filing until it conducts a new offering in the future. Furthermore, upon the occurrence of any\nof the material events specified below after an issuer has completed its offering and listed its securities on an overseas stock exchange,\nthe issuer shall submit a report thereof to the CSRC within 3 business days after the occurrence and public disclosure of the event: (i)\nchange of control; (ii) investigations or sanctions imposed by overseas securities regulatory agencies or other competent authorities;\n(iii) change of listing status or transfer of listing segment; or (iv) voluntary or mandatory delisting. The New Overseas Listing Rules\nstipulate the legal consequences to the companies for breaches, including failure to fulfill filing obligations or filing documents having\nfalse statement or misleading information or material omissions, which may result in a fine ranging from RMB1 million to RMB10 million,\nand in cases of severe violations, the relevant responsible persons may also be barred from entering the securities market. As advised\nby our PRC counsel, our offerings are subject to the New Overseas Listing Rules. If we fail to timely file with CSRC with any of our offerings,\nwe will be subject to penalties by CSRC which could significantly limit or completely hinder our ability to offer or continue to offer\nsecurities to investors and cause the value of our securities to significantly decline or be worthless. Given the current PRC regulatory\nenvironment, it is uncertain when and whether we and our PRC subsidiaries will be required to obtain other permissions or approvals from\nthe PRC government to list on U.S. exchanges in the future, and even if and when such permissions or approvals are obtained, whether they\nwill be denied or rescinded. If we or any of our PRC subsidiaries do not receive or maintain such permissions or approvals, inadvertently\nconclude that such permissions or approvals are not required, or applicable laws, regulations, or interpretations change and we or our\nsubsidiaries are required to obtain such permissions or approvals in the future, it could significantly limit or completely hinder our\nability to offer or continue to offer our securities to investors and cause the value of our securities to significantly decline or become\nworthless.\n\n** **\n\n25\n\n \n\n** **\n\n**The Holding Foreign Companies Accountable\nAct, or the HFCA Act, and the related regulations are evolving quickly. Further implementations and interpretations of or amendments\nto the HFCA Act or the related regulations, or a PCOAB’s determination of its lack of sufficient access to inspect our auditor,\nmight pose regulatory risks to and impose restrictions on us because of our operations in mainland China. A potential consequence is\nthat our ordinary shares may be delisted by the exchange. The delisting of our ordinary shares, or the threat of our ordinary shares\nbeing delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct\nfull inspections of our auditor deprives our investors of the benefits of such inspections.**\n\n** **\n\nThe Holding Foreign Companies Accountable Act,\nor the HFCA Act, was enacted on December 18, 2020. In accordance with the HFCA Act, trading in securities of any registrant on a\nnational securities exchange or in the over-the-counter trading market in the United States may be prohibited if the PCAOB determines\nthat it cannot inspect or fully investigate the registrant’s auditor for three consecutive years beginning in 2021, and, as a result,\nan exchange may determine to delist the securities of such registrant. On June 22, 2021, the U.S. Senate passed the Accelerating Holding\nForeign Companies Accountable Act, which, would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from\ntrading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus\nreducing the time period before our securities may be prohibited from trading or delisted if our auditor is unable to meet the PCAOB\ninspection requirement. On December 29, 2022, a legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated\nAppropriations Act”), was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things,\nan identical provision to Accelerating Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection\nyears required for triggering the prohibitions under the HFCA Act from three years to two.\n\n \n\nOn November 5, 2021, the SEC adopted the PCAOB\nrule to implement HFCA Act, which provides a framework for the PCAOB to determine whether it is unable to inspect or investigate completely\nregistered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.\n\n \n\nOn December 2, 2021, SEC adopted amendments to\nfinalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants the SEC identifies\nas having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction\nand that the PCAOB is unable to inspect or investigate (the “Commission-Identified Issuers”). A Commission-Identified Issuer\nwill be required to comply with the submission and disclosure requirements in the annual report for each year in which it was identified.\nIf a registrant is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended December 31, 2021,\nthe registrant are required to comply with the submission or disclosure requirements in its annual report filing covering the fiscal\nyear ended December 31, 2022.\n\n \n\nOn December 16, 2021, the PCAOB issued its determinations\n(the “Determination”) that they are unable to inspect or investigate completely PCAOB-registered public accounting firms\nheadquartered in mainland China and in Hong Kong. The Determination includes lists of public accounting firms headquartered in mainland\nChina and Hong Kong that the PCAOB is unable to inspect or investigate completely.\n\n \n\nOn August 26, 2022, the PCAOB signed a Statement\nof Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China governing\ninspections and investigations of audit firms based in China and Hong Kong.  On December 15, 2022, the PCAOB Board determined that\nthe PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland\nChina and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise\nfail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination.\n\n \n\n26\n\n \n\n \n\nThe enactment of the HFCA Act and related regulations\nand any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information\ncould cause investors uncertainty for affected issuers and the market price of our ordinary shares could be adversely affected, and we\ncould be delisted if our auditor is unable to meet the PCAOB inspection requirement.\n\n \n\nThe lack of access to PCAOB inspections prevents\nthe PCAOB from fully evaluating audits and quality control procedures of the auditors based in China and Hong Kong. As a result, investors\nmay be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China and\nHong Kong makes it more difficult to evaluate the effectiveness of these accounting firm’s audit procedures and quality control\nprocedures as compared to auditors outside of China that are subject to the PCAOB inspections.\n\n \n\nOur auditor, Wei, Wei & Co., LLP, an\nindependent registered public accounting firm that is headquartered in the United States, as an auditor of companies that are traded\npublicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the\nPCAOB conducts inspections to assess its compliance with the applicable professional standards. Our auditor has been inspected by\nthe PCAOB on a regular basis with the last inspection in 2024 and it is not included in the PCAOB Determinations. However, we cannot\nassure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the\neffectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or\nsufficiency of resources, geographic reach, or experience as it relates to our audit. If it is later determined that the PCAOB is\nunable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction or any\nother reasons, the lack of inspection could cause the trading in our securities to be prohibited under the Holding Foreign Companies\nAccountable Act, and as a result Nasdaq may delist our securities. If our securities are unable to be listed on another securities\nexchange, such a delisting would substantially impair your ability to sell or purchase our securities when you wish to do so, and\nthe risk and uncertainty associated with a potential delisting would have a negative impact on the price of our ordinary shares.\nFurther, new laws and regulations or changes in laws and regulations in both the United States and China could affect our ability to\nlist our ordinary shares on Nasdaq, which could materially impair the market for and market price for our securities.\n\n \n\n**Regulatory bodies of the United States\nmay be limited in their ability to conduct investigations or inspections of our operations in China.**\n\n \n\nFrom time to time, the Company may receive requests\nfrom certain U.S. agencies to investigate or inspect the Company’s operations, or to otherwise provide information. While the Company\nwill be compliant with these requests from these regulators, there is no guarantee that such requests will be honored by those entities\nwho provide products or services to us or with whom we associate, especially those entities located in China. Although the authorities\nin China may establish a regulatory cooperation mechanism with its counterparts of another country or region to monitor and oversee cross-border\nsecurities activities, such regulatory cooperation with the securities regulatory authorities in the United States may not be efficient\nin the absence of a practical cooperation mechanism. Besides, according to Article 177 of the PRC Securities Law, or “Article 177,”\nwhich became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection\nactivities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide\ndocuments or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory\nauthority of the State Council and the competent departments of the State Council. While detailed interpretation of or implementing rules\nunder Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or\nevidence collection activities within China may further increase difficulties faced by you in protecting your interests. Furthermore,\nan on-site inspection of our facilities by any of these regulators may be limited or entirely prohibited. Such inspections, though permitted\nby the Company and its affiliates, are subject to the unpredictability of the Chinese enforcers, and may therefore be impossible to facilitate.\n\n \n\n27\n\n \n\n \n\n**Substantial uncertainties exist with respect\nto the interpretation and implementation of the PRC Foreign Investment Law and how it may impact our corporate governance and business\noperations.**\n\n** **\n\nOn March 15, 2019, the National People’s Congress, or the NPC,\napproved the Foreign Investment Law, which took effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment\nin China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and\nthe Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign Investment Law\nembodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international\npractice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since\nit is relatively new, uncertainties still exist in relation to its interpretation and implementation.\n\n \n\nThe Foreign Investment Law grants national treatment\nto foreign invested entities, except for those foreign invested entities that operate in industries deemed to be either “restricted”\nor “prohibited” pursuant to the “Negative List” released by or upon approval by the State Council. Foreign investors\nare prohibited from making any investments in the industries which are listed as “prohibited” in the Negative List; and, after\nsatisfying certain additional requirements and conditions as set forth in the “Negative List” (for instance, Chinese shareholders\nare required to control or hold a certain percentage of equity interest in a foreign invested enterprise), are allowed to make investments\nin industries which are listed as “restricted” in the Negative List. For any foreign investor that fails to comply with the\nNegative List, the competent authorities can ban its investment activities, require such investor to take measures to correct its non-compliance\nactivities and impose other penalties.\n\n \n\nIn the event any of our future business and operations\ncarried out are treated as a foreign investment and are classified in the “restricted” or “prohibited” industry\nin the “Negative List” under the Foreign Investment Law, we may have to dispose of such business, which could materially and\nadversely affect our business and impede our ability to continue our operations.\n\n \n\n**Any lack of requisite approvals, licenses\nor permits applicable to our business may have a material and adverse impact on our business, financial condition and results of operations.**\n\n \n\nOur business is subject to governmental supervision\nand regulation by the relevant PRC governmental authorities. Together, these government authorities promulgate and enforce\nregulations that cover many aspects of the collectibles and artwork trading and related services exchange platform. As a result, in certain\ncircumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations.\n\n \n\nWe have obtained all of the applicable licenses\nand permits for our current business in China. We cannot assure you that we will be able to obtain any new permits or licenses required\nfor conducting our business in China or will be able to maintain our existing licenses. If the PRC government determines\nthat we are operating without the proper approvals, licenses or permits or promulgates new laws and regulations that require additional\napprovals or licenses or imposes additional restrictions on the operation of any part of our business, it has the power, among other\nthings, to levy fines, confiscate our income, revoke our business licenses, and require us to discontinue the relevant parts of our business\nor to impose restrictions on the affected portion of our business. Any of these actions by the PRC government may have a material\nadverse effect on our business and results of operations.\n\n** **\n\n28\n\n \n\n** **\n\n**If any company incorporated in Hong Kong\noperating online collectibles and/or artwork trading platform is subject to PRC current or future laws and regulations regarding collectible\nor artwork trading business, our operation may be materially adversely affected due to the uncertainty whether we would be able to obtain\napproval from the provincial government and complete the filing with “Inter-Ministerial Joint Meetings of Clean-up and Corrective\nActions of Various Trading Platforms” (the “Joint Meeting”) led by the China Securities Regulatory Commission (the\n“CSRC”).**\n\n \n\nAccording to “Decision Of The State Council\nOn Cleaning Up And Rectifying Various Trading Platforms And Taking Effective Precautions Against Financial Risks” (“Decision\nNo.38”) promulgated by the State Council of the PRC on November 11, 2011 and effective on the same day, and “Opinions Of\nThe General Office Of The State Council On The Implementation Of The Clean-Up And Rectification Of Various Trading Platforms” (“Opinion\nNo.37”) promulgated by the General Office of the State Council of the PRC on July 12, 2012 and effective on the same day, any trading\nplaces and their branches that violate any of the following provisions shall be cleaned up and rectified. Such parties must not: \n\n \n\n(1)Divide\nany equity into equal shares for public offering. An “equal share public offering” is when a trading place uses its services\nand facilities to divide its equity into equal shares and sell them to investors. The relevant provisions of the company law and the\nsecurities law shall apply to the public issuance of shares by a joint stock company.\n\n \n\n(2)Adopt\ncentralized trading. The “centralized trading methods” referred to in this opinion include collective bidding, continuous\nbidding, electronic matching, anonymous trading, market makers and other trading methods, except for agreement transfers and legal auctions.\n\n \n\n(3)Continuously\nlist and trade the rights and interests in accordance with standardized trading units. The “standardized trading unit” referred\nto in this opinion refers to the minimum trading unit set for other equities other than equity, and trading at the minimum trading unit\nor integer multiples thereof. “Continuous listing transaction” refers to listing and selling the same trading variety within\n5 trading days after buying or listing, and buying the same trading variety within 5 trading days after selling.\n\n \n\n(4)Have\na cumulative number of equity holders exceeding 200. Except as otherwise provided for by laws and administrative regulations, the cumulative\nnumber of actual holders of any equity shall not exceed 200 during the term of the company’s existence, no matter in the course\nof issuance or transfer.\n\n \n\n(5)Carry\nout standardized contract trading by centralized trading. The “standardized contract” referred to in this opinion includes\ntwo situations: one is a unified contract established by the trading place with fixed terms other than price, which stipulates the delivery\nof a certain amount of the subject matter at a certain time and place in the future. The other is a contract made by the exchange that\ngives the buyer the right to buy or sell the agreed subject matter at a specified price at a certain time in the future.\n\n \n\n(6)Without\nthe approval of the relevant financial administrative department of the state council, establish either trading places for the trading\nof financial products such as insurance, credit and gold, or use any existing other trading places for the trading of financial products\nsuch as insurance, credit and gold.\n\n \n\nAdditionally, according to “Notice\nConcerning The Issuance Of Minutes Of The Special Session On The Clean-Up And Rectification Of Stamp And Commemorative Coins Trading\nPlaces” promulgated by the Office of the Joint Meeting on August 2, 2017, any stamps, coins and magcards using a stock\nissuance-like model to trading places mainly trading stamps by a concentrated bidding and “T+0” transaction method\nshould cease to operate. The stamps, coins and magcards being illegally traded must be made off-line in time. Trading places which\nhave ceased operations shall not re-start operating unless they obtain approval from the provincial government and complete the\nrequired filing with the Joint Meeting. Provincial governments should re-evaluate the necessity of transactions of stamps, coins and\nmagcards, considering the development and interests of the economic society, as well as risks, efficiencies and costs. If it is\nconsidered as necessary to maintain transactions of stamps, coins and magcards, the provincial government may appoint a stamp, coins\nand magcards exchange to organize stamps, coins and magcards transactions by way of transfer of property through agreements. Such\nexchange must have obtained permission from the provincial government, passed the examination and acceptance check of provincial\ngovernment and completed filings at relevant joint meetings. In addition, such exchange must be in strict compliance with Decision\nNo.38 and Opinion No.37 and shall not adopt or allow concentrated bidding or other types of centralized trading, and the interval\nbetween the purchase and sale of the same item or vice versa shall not be less than 5 trading days.\n\n \n\nWe operate international online trading platforms\nthat provide state-of-the-art, convenient services for various types of collectibles and artwork, incorporated in Hong Kong. We provide\nan on-line platform for our clients to trading coins, stamps, ancient coins, and other collectibles and artwork. According to Rules for\nTrading Cultural And Art Collections (interim) (the “Trading Rules”) of International Exchange, we do not provide an “equal\nshare public offering”, which means dividing a trading subject into several shares, but only allow a physical subject to be traded\nas a whole. After trading, the original owner and the successful bidder can pick up the goods from the relevant storage company.\n\n \n\n29\n\n \n\n \n\nCurrently, we use a “T+0” bidding method and allow our\nclients to centralize trading in our platform, which was not against Hong Kong current related laws and regulations regarding artwork\ntrading. As a Hong Kong online collectible and artwork trading platform, we believe those laws and regulations regulating collectible\nand artwork trading in mainland China, such as Decision No.38 and Opinion No.37, do not apply to our trading platform. However, there\nmay be substantial uncertainties regarding the interpretation and application of future PRC laws and regulations applicable to our business\nand that the PRC government or any other governmental authorities may in future impose license requirements or take further actions having\nmaterial adverse effects on our business or financial results.\n\n ** **\n\n**We may rely on dividends and other distributions on equity paid by\nour PRC subsidiaries and fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries\nto make payments to us could have a material adverse effect on our ability to conduct our business.**\n\n \n\nWe are a holding company and currently we conduct our business operations\nwithin the PRC through our PRC subsidiaries, and will rely on dividends and other distributions on equity paid by our PRC subsidiaries\nand Hong Kong subsidiary for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions\nto our shareholders and service any debt we may incur. If our subsidiaries their own behalf in the future, the instruments governing the\ndebt may restrict their ability to pay dividends or make other distributions to us.\n\n \n\nUnder PRC laws and regulations, WFOE, as a wholly foreign-owned enterprise\nin China, may pay dividends only out of its respective accumulated after-tax profits as determined in accordance with PRC accounting standards\nand regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits\neach year, if any, to fund certain statutory reserve funds, until the aggregate amount of such funds reaches 50% of its registered capital.\nAt its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards\nto staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends.\n\n \n\nAny limitation on the ability of our PRC subsidiaries to pay dividends\nor make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could\nbe beneficial to our business, pay dividends, or otherwise fund and conduct our business. See also “*Risks Related to Doing Business\nin China* —*If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result\nin unfavorable tax consequences to us and our non-PRC shareholders*.”\n\n \n\n**PRC regulation of loans to and direct investment in PRC entities by\noffshore holding companies and governmental control of currency conversion may delay or prevent us from making loans to or make additional\ncapital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand\nour business.**\n\n \n\nUnder PRC laws and regulations, we are permitted to utilize the proceeds\nfrom financings to fund our PRC subsidiaries by making loans to or additional capital contributions to our PRC subsidiaries, subject to\napplicable government registration and approval requirements.\n\n \n\nAny loans to our PRC subsidiaries, which are treated\nas foreign-invested enterprises under PRC laws, are subject to PRC regulations and foreign exchange loan registrations. For example, loans\nby us to our PRC subsidiaries to finance its activities cannot exceed statutory limits and must be registered with the local counterpart\nof the State Administration of Foreign Exchange, or SAFE. The statutory limit for the total amount of foreign debts of a foreign-invested\ncompany is the difference between the amount of total investment as approved by MOFCOM or its local counterpart and the amount of registered\ncapital of such foreign-invested company. \n\n \n\n30\n\n \n\n \n\nWe may also decide to finance our PRC subsidiaries by means of capital\ncontributions. These capital contributions must be approved by MOFCOM or its local counterpart. In addition, SAFE issued a circular in\nSeptember 2008, SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into\nRMB by restricting how the converted RMB may be used. SAFE Circular 142 provides that the RMB capital converted from foreign currency\nregistered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable\ngovernment authority and unless otherwise provided by law, may not be used for equity investments within the PRC. Although on July 4,\n2014, the SAFE issued the Circular of the SAFE on Relevant Issues Concerning the Pilot Reform in Certain Areas of the Administrative Method\nof the Conversion of Foreign Exchange Funds by Foreign-invested Enterprises, or SAFE Circular 36, which launched a pilot reform of the\nadministration of the settlement of the foreign exchange capitals of foreign-invested enterprises in certain designated areas from August 4,\n2014 and some of the restrictions under SAFE Circular 142 will not apply to the settlement of the foreign exchange capitals of the foreign-invested\nenterprises established within the designate areas and such enterprises mainly engaging in investment are allowed to use its RMB capital\nconverted from foreign exchange capitals to make equity investments, our PRC subsidiary is not established within the designated areas.\nOn March 30, 2015, SAFE promulgated Circular 19, to expand the reform nationwide. Circular 19 came into force and replaced both Circular\n142 and Circular 36 on June 1, 2015. Circular 19 allows foreign-invested enterprises to make equity investments by using RMB funds converted\nfrom foreign exchange capital. However, Circular 19 continues to prohibit foreign-invested enterprises from, among other things, using\nRMB funds converted from its foreign exchange capitals for expenditure beyond its business scope, providing entrusted loans or repaying\nloans between non-financial enterprises. In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted\nfrom foreign currency registered capital of a foreign-invested company. The use of such RMB capital may not be altered without SAFE’s\napproval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. Violations\nof these Circulars could result in severe monetary or other penalties. These circulars may significantly limit our ability to use RMB\nconverted from securities offerings to fund the establishment of new entities in China by our PRC subsidiary, to invest in or acquire\nany other PRC companies through our PRC subsidiary.\n\n \n\nIn light of the various requirements imposed by PRC regulations on\nloans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the\nnecessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans\nto our PRC subsidiary or future capital contributions by us to our PRC subsidiaries. If we fail to complete such registrations or obtain\nsuch approvals, our ability to use our overseas’ financing to capitalize or otherwise fund our PRC operations may be negatively\naffected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.\n\n \n\n**Fluctuations in exchange rates could have\na material adverse effect on our results of operations and the value of your investment.**\n\n \n\nOur reporting currency is the U.S. dollar while\nthe functional currency for our PRC subsidiaries is RMB. As a result, fluctuations in the exchange rate between the U.S. dollar and RMB\nwill affect the relative purchasing power in RMB terms of our U.S. dollar assets. Gains and losses from the remeasurement of assets and\nliabilities that are receivable or payable in RMB are included in our consolidated statements of income and comprehensive income. The\nremeasurement has caused the U.S. dollar value of our results of operations to vary with exchange rate fluctuations, and the U.S. dollar\nvalue of our results of operations will continue to vary with exchange rate fluctuations. A fluctuation in the value of RMB relative to\nthe U.S. dollar could reduce our profits from operations and the translated value of our net assets when reported in U.S. dollars in our\nfinancial statements. This could have a negative impact on our business, financial condition or results of operations as reported in U.S.\ndollars. If we decide to convert our RMB into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or\nfor other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available\nto us. In addition, fluctuations in currencies relative to the periods in which the earnings are generated may make it more difficult\nto perform period-to-period comparisons of our reported results of operations.\n\n \n\nThere remains significant international pressure\non the PRC government to adopt a flexible currency policy. Any significant appreciation or depreciation of the RMB may materially and\nadversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on, our ordinary shares in\nU.S. dollars. For example, to the extent that we need to convert U.S. dollars we receive from an offering into RMB to pay our operating\nexpenses, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion.\nConversely, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our\nearnings, which in turn could adversely affect the market price of our ordinary shares.\n\n \n\nVery limited hedging options are available in\nChina to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to\nreduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability\nand effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our\ncurrency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency.\nAs a result, fluctuations in exchange rates may have a material adverse effect on your investment.\n\n \n\n31\n\n \n\n \n\n \n\n**Governmental control of currency conversion\nmay limit our ability to utilize our net revenues effectively and affect the value of your investment.**\n\n \n\nThe PRC government imposes controls on the convertibility of the RMB\ninto foreign currencies and, in certain cases, the remittance of currency out of China. We receive a substantial part of our net revenues\nin RMB. Under our current corporate structure, our company in the Cayman Islands will rely on dividend payments from our PRC and Hong\nKong subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of\ncurrent account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign\ncurrencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our WFOE is able to pay dividends\nin foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of\nthe PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by the beneficial\nowners of our Company who are PRC residents. But approval from or registration with appropriate government authorities is required where\nRMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated\nin foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account\ntransactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency\ndemands, we may not be able to pay dividends in foreign currencies to our shareholders.\n\n \n\n**Failure to make adequate contributions to\nvarious employee benefit plans as required by PRC regulations may subject us to penalties.**\n\n \n\nWe are required under PRC laws and regulations\nto participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented\npayment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances,\nof our employees up to a maximum amount specified by the local government from time to time at locations where we operate our businesses.\nThe requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different\nlevels of economic development in different locations. As of the date of this report, we believe that we have made adequate employee benefit\npayments. If we fail to make adequate payments in the future, we may be required to make up the contributions for these plans in the amount\nof 110% of the amount in the preceding month. If we fail to make or supplement contributions of social security premiums within the stipulated\nperiod, the social security premiums collection agency may request information of the deposit accounts of the employer with banks and\nother financial institutions. In an extreme situation, where we failed to contribute social security premiums in full amount and do not\nprovide guarantee, the social security premiums collection agency may apply to a Chinese court for seizure, foreclosure or auction of\nour properties of value equivalent to the amount of social security premiums payable, and the proceeds from auction shall be used for\ncontribution of social security premiums.  If we are subject to deposit, seizure, foreclosure or auction in relation to the underpaid\nemployee benefits, our financial condition and results of operations may be adversely affected.\n\n \n\n**Our business is susceptible to fluctuations\nin the art and collectibles markets of China and Hong Kong.**\n\n \n\nWe conduct our business primarily in China. Our business depends substantially\non the conditions of the PRC and Hong Kong art and collectibles markets. Demand for collectibles and artwork in China has grown rapidly\nin the recent decade but such growth is often coupled with volatility in market conditions and fluctuation in prices. Fluctuations of\nsupply and demand in China’s art market are caused by economic, social, political and other factors, such as the outbreak of COVID-19\nand government’s action to contain the spread of the pandemic as well as its impact on the overall Chinese economy, interest rates,\ntariff war, inflation, deflation, discretionary consumer spending and investment desires in art and collectibles. Over the years, governments\nat both national and local levels have announced and implemented various policies and measures aimed to regulate the art and collectible\nmarkets. These measures have affected and may continue to affect the conditions of China’s art and collectible markets and cause\nfluctuations in collectibles and artwork prices. To the extent fluctuations in the art market may adversely affect the trading volume\non our platform, or require us to provide our services on unfavorable terms, our financial condition and results of operations may be\nmaterially and adversely affected.\n\n \n\n**Our business is susceptible to fluctuations\nof the commodities trade on our market.**\n\n  \n\nStarting in 2019, we began to list certain commodities\nsuch as teas, Yun Nan Ham and Chinese mitten crabs on our platform and currently we only have teas listed on our platform. Customer trading\nactivities are to some extent influenced by the changes in the commodity prices in international and domestic markets. As a result, our\nfuture operating results may be subject to the fluctuations of these products due to the risks related to natural disasters such as drought,\nflood, snowstorms or other abnormal temperature changes, extreme weather and health epidemics or pandemics, which are unpredictable and\nbeyond our control. Any pandemic outbreak such as COVID-19 and the government’s action to contain the spread of the pandemic could\nmaterially negatively impact our ability of listing, trading and delivery of such products. The general trading activities of these commodities\nare also directly affected by factors such as economic and political conditions, macro trends in business and finance, investors’\ninterest level in these commodity trading and legislative and regulatory changes. Any one or more of these factors, or other factors,\nmay reduce the trading activity level of these commodities on our platform and adversely affect our business and results of operations\nand cash flows.\n\n \n\n32\n\n \n\n \n\n**The legal rights we hold to use certain\nleased property could be challenged by property owners or other third parties, which could prevent us from operating our business\nor increase the costs associated with our business operations.**\n\n \n\nFor the warehouses that we are currently using,\nwe do not hold property ownership with respect to the premises under which those facilities are operated. Instead, we rely on leases\nwith the property owners. Our general practice requires us to examine the title certificates of the property owners as part of our due\ndiligence before entering into a lease with them. If we fail to identify encumbrances on the title, our leases of\nsuch properties may be challenged or even invalidated by government authority or relevant dispute resolution institutions. As a result,\nthe development or operations of our facilities on such properties could be adversely affected.\n\n \n\nIn addition, we are subject to the risks of other\npotential disputes with property owners and to the forced closure of our facilities. Such disputes and forced closures, whether resolved\nin the favor of us, may divert our management’s attention, harm our reputation, or otherwise disrupt and adversely affect our business.\n\n**  **\n\n**PRC regulations relating to offshore investment activities by PRC residents\nmay limit our WFOE’s ability to increase its registered capital or distribute profits to us or otherwise expose us or our PRC resident\nbeneficial owners to liability and penalties under PRC law.**\n\n \n\nSAFE promulgated the Circular on Relevant\nIssues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or\nSAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connection with\ntheir establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition,\nsuch PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material\nevents relating to any change of basic information (including change of such PRC citizens or residents, name and operation term),\nincreases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. SAFE Circular 37 was issued\nto replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and\nRoundtrip Investments via Overseas Special Purpose Vehicles, or SAFE Circular 75. SAFE promulgated the Notice on Further Simplifying\nand Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1,\n2015. This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE\nor its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas\ninvestment or financing.\n\n \n\nIf our shareholders who are PRC residents or entities do not complete\ntheir registration as required, our WFOE may be prohibited from distributing its profits and proceeds from any reduction in capital, share\ntransfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiaries. Moreover,\nfailure to comply with the SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign\nexchange restrictions.\n\n \n\nHowever, we may not be informed of the identities\nof all of the PRC residents or entities holding direct or indirect interest in our Company, nor can we compel our beneficial owners to\ncomply with SAFE registration requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are\nPRC residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required\nby SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the\nforeign exchange registrations of our PRC subsidiary, could subject us to fines or legal sanctions, restrict our overseas or cross-border\ninvestment activities, limit our PRC subsidiary’s ability to make distributions or pay dividends to us or affect our ownership structure,\nwhich could adversely affect our business and prospects.\n\n \n\n33\n\n \n\n \n\n**Any failure to comply with PRC regulations\nregarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other\nlegal or administrative sanctions.**\n\n \n\nIn February 2012, SAFE promulgated the Notices on Issues Concerning\nthe Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Company,\nreplacing earlier rules promulgated in March 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for\na continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject\nto a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiary of such\noverseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle\nmatters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our executive\nofficers and other employees who are PRC citizens or who have resided in the PRC for a continuous period of not less than one year will\nbe subject to these regulations when they are granted options or other awards. Failure to complete the SAFE registrations may subject\nthem to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary and limit our\nPRC subsidiary’s ability to distribute dividends to us. We may face other regulatory uncertainties that could restrict our ability\nto grant stock awards under incentive plans to our directors, executive officers and employees under PRC law. The Board of Directors of\nthe Company approved and adopted Oriental Culture Holding LTD 2021 Omnibus Equity Plan (the “Equity Plan”) on November 8,\n2021, which was approved at the stockholders’ meeting on December 16, 2021. All of the ordinary shares under the Equity Plan have\nbeen granted to the officers and directors of the Company as of the date of this report. Our executive officers, director and other employees\nwho are PRC citizens or who have resided in the PRC for a continuous period of not less than one year and receive stock awards from the\nCompany are subject to the SAFE registration requirement and some of them have not completed the registration with SAFE for such award\nyet.\n\n \n\n**If we are classified as a PRC resident enterprise\nfor PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.**\n\n \n\nUnder the PRC Enterprise Income Tax Law and its\nimplementation rules, an enterprise established outside of the PRC with a “de facto management body” within the PRC is considered\na resident enterprise and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules\ndefine the term “de facto management body” as the body that exercises full and substantial control over and overall management\nof the business, production, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation\nissued a circular, known as Circular 82, which provides certain specific criteria for determining whether the “de facto management\nbody” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore\nenterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like us, the\ncriteria set forth in the circular may reflect the State Administration of Taxation’s general position on how the “de facto\nmanagement body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular\n82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident\nby virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global\nincome only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the\nPRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by\norganizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals,\nand board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior\nexecutives habitually reside in the PRC.\n\n \n\nWe believe none of our entities outside of China\nis a PRC resident enterprise for PRC tax purposes. See “*Taxation—People’s Republic of China Taxation*.”\nHowever, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with\nrespect to the interpretation of the term “de facto management body.” As all of our executive officers are based in China,\nit remains unclear how the tax residency rule will apply to our case. If the PRC tax authorities determine that we or any of our subsidiaries\noutside of China is a PRC resident enterprise for PRC enterprise income tax purposes, then we or such subsidiary could be subject to PRC\ntax at a rate of 25% on its world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC\nenterprise income tax reporting obligations. Furthermore, if the PRC tax authorities determine that we are a PRC resident enterprise for\nenterprise income tax purposes, gains realized on the sale or other disposition of our ordinary shares may be subject to PRC tax, at a\nrate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any\napplicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our Company would\nbe able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated\nas a PRC resident enterprise. Any such tax may reduce the returns on your investment in our ordinary shares.\n\n \n\n34\n\n \n\n \n\n**Enhanced scrutiny over acquisition transactions\nby the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.**\n\n \n\nThe PRC tax authorities have enhanced their\nscrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in a PRC resident\nenterprise, by a non-resident enterprise by promulgating and implementing SAT Circular 59 and Circular 698, which became effective in\nJanuary 2008, and Circular 7 in replacement of some of the existing rules in Circular 698, which became effective in February 2015.\n\n  \n\nUnder Circular 698, where a non-resident enterprise\nconducts an “indirect transfer” by transferring the equity interests of a PRC “resident enterprise” indirectly\nby disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, may be subject\nto PRC enterprise income tax, if the indirect transfer is considered to be an abusive use of company structure without reasonable commercial\npurposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at a rate of up to 10%. Circular 698 also provides\nthat, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price\nlower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the\ntransaction.\n\n \n\nIn February 2015, the SAT issued Circular 7 to\nreplace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced a new tax regime that is significantly different\nfrom that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but\nalso transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company.\nIn addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and has introduced\nsafe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Circular 7 also\nbrings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable\nassets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly\nby disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee,\nor the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance\nover form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable\ncommercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such\nindirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer\nis obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.\n\n \n\nWe face uncertainties on the reporting and consequences\non future private equity financing transactions, share exchange or other transactions involving the transfer of shares in our Company\nby investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect\nto a filing or the transferees with respect to withholding obligations, and request our PRC subsidiaries to assist in the filing. As a\nresult, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed,\nunder Circular 59 or Circular 698 and Circular 7, and may be required to expend valuable resources to comply with Circular 59, Circular\n698 and Circular 7 or to establish that we and our non-resident enterprises should not be taxed under these circulars, which may have\na material adverse effect on our financial condition and results of operations. \n\n \n\nThe PRC tax authorities have the discretion\nunder SAT Circular 59, Circular 698 and Circular 7 to make adjustments to the taxable capital gains based on the difference between\nthe fair value of the taxable assets transferred and the cost of investment. We plan to pursue acquisitions in the future that may\ninvolve complex corporate structures. If we are considered a non-resident enterprise under the PRC Enterprise Income Tax Law and if\nthe PRC tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59 or Circular 698 and\nCircular 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on\nour financial condition and results of operations.\n\n \n\n35\n\n \n\n \n\n**If we cannot effectively secure our network,\ncustomers’ personal information, which we collect through our online platform, it may be subject to leakage or theft, and if the\nregulators believe we have failed to fulfill our network security obligations, our online platform may be required to suspend operations\nto make rectification, which may have a material adverse effect on our operations and financial results due to the large amount of our\ndaily trading conducted online.**\n\n \n\nIn China, regulatory authorities have implemented\nand are considering a number of legislative and regulatory proposals concerning data protection. The PRC Civil Code, which is issued by\nthe PRC National People’s Congress on May 28, 2020 and became effective on January 1, 2021, stipulates that the personal information\nof a natural person shall be protected by the law. Any organization or individual shall legally obtain the personal information of others\nwhen necessary and ensure the safety of such personal information, and shall not illegally collect, use, process or transmit the personal\ninformation of others, or illegally buy or sell, provide or make public the personal information of others. On November 7, 2016, the Standing\nCommittee of the National People’s Congress of the PRC (the “NPC”) promulgated the Cybersecurity Law of the PRC (“Cybersecurity\nLaw”) which became effective on June 1, 2017. Under this law, network operators must provide cybersecurity protection and protect\nthe integrity, confidentiality and availability of network data. The Cybersecurity Law also standardizes the collection and usage of personal\ninformation and requires network operators to protect users’ privacy security. If a network operator violates the Cybersecurity\nLaw, it can face various penalties, including but not limited to the suspension of related businesses, winding up, shutting down its websites,\nand revocation of its business license, all of which may be imposed by the relevant authority, along with fines up to RMB 1 million (approximately\n$1456,000) if severe damage occurred. The Personal Information Protection Law of the PRC was adopted on August 20, 2021 and became effective\non November 1, 2021 , stipulating that the personal information shall be processed with the consent of the individual on the premise of\nfull prior notification, and intensifying the punishment for illegal acts.\n\n \n\nWe collect and process the personal information of the customers who\nregister on our online platform, for the purpose of managing and maintaining our customers and their trading information. Nanjing Yanyu,\none of our wholly-owned subsidiaries, whose primary business is to provide technical support for International Exchange’s online\ncollectibles, art and commodities e-commerce platform, has established network security policies, including Data Security Management Measures,\nData Center Network Security Management Rules, Information Security Management Rules and an Information Security Emergency Plan. We also\npublish “Investor Information Protection Policy” on our online platform, to help the customers who register on our online\nplatform understand what, where and how their private information be collected and used by International Exchange and its affiliates and\nwhat measures we take to protect their personal information. Nonetheless, we cannot assure that our cybersecurity protection policies\nand related technical measures are adequate to prevent network data in our online platform from being breached, stolen or tampered with.\nIf our online platform network is at risk, we may be required by competent cybersecurity supervision authorities to suspend our online\nplatform before rectification and we may be fined up to RMB 1 million (approximately $146,000) if it is found that our online platform\nhas material security risks or if severe cybersecurity events occur due to failure of our network security protection.\n\n*  *\n\n**Although\nthe subsidiary maintains the network platform in mainland China, our main business, providing collectibles and artwork e-commerce services,\nis conducted by International Exchange in Hong Kong. Therefore, our business model may be considered involving transfer of customers’\npersonal information across borders and we may be subject to the Measures for the Security Assessment of Data Cross-border Transfer.\nWe cannot guarantee that we can pass the safety assessment for cross-border transfers of personal information required by Measures for\nthe Security Assessment of Data Cross-border Transfer. If we fail this assessment, International Exchange may not use customers’\npersonal information stored in mainland China to process its trading on the online platform, which would result in a significant adverse\nimpact on our business operations.**\n\n \n\nOn July 7, 2022, CAC promulgated the Measures\nfor the Security Assessment of Data Cross-border Transfer, effective on September 1, 2022, which requires the data processors to apply\nfor data cross-border security assessment coordinated by the CAC under the following circumstances: (i) any data processor transfers important\ndata to overseas; (ii) any critical information infrastructure operator or data processor who processes personal information of over 1\nmillion people provides personal information to overseas; (iii) any data processor who provides personal information to overseas and has\nalready provided personal information of more than 100,000 people or sensitive personal information of more than 10,000 people to overseas\nsince January 1st of the previous year; and (iv) other circumstances under which the data cross-border transfer security assessment\nis required as prescribed by the CAC.\n\n \n\nWe provide maintenance and warehouse services to our online platforms\nfor collectibles, artwork and commodities trading through the subsidiaries in mainland China and we don’t transfer customers data\ncross-border. However, if we need to transfer customers data cross-border in the future and reach the threshold requirements Measures\nfor the Security Assessment of Data Cross-border Transfer, we cannot assure that we will pass this safety assessment, which may have a\nmaterial adverse effect on our operations and financial results.\n\n \n\n36\n\n \n\n \n\n**Risks Related to Doing Business in Hong\nKong**\n\n \n\n**The Hong Kong legal system embodies uncertainties\nwhich could limit the legal protections available to you and us.**\n\n \n\nAs one of the conditions for the handover of the\nsovereignty of Hong Kong to China, China had to accept some conditions such as Hong Kong’s Basic Law before its return. The Basic\nLaw ensured Hong Kong will retain its own currency (the Hong Kong Dollar), legal system, parliamentary system and people’s rights\nand freedom for fifty years from 1997. This agreement has given Hong Kong the freedom to function in a high degree of autonomy. The Special\nAdministrative Region of Hong Kong is responsible for its own domestic affairs including, but not limited to, the judiciary and courts\nof last resort, immigration and customs, public finance, currencies and extradition. Hong Kong continues using the English common law\nsystem.\n\n \n\nHowever, if the PRC reneges on its agreement to\nallow Hong Kong to function autonomously, this could potentially impact Hong Kong’s common law legal system and may in turn bring\nabout uncertainty in, for example, the enforcement of our contractual rights. This could, in turn, materially and adversely affect our\nbusiness and operation. Additionally, intellectual property rights and confidentiality protections in Hong Kong may not be as effective\nas in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the Hong Kong legal system,\nincluding the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local\nregulations by national laws. These uncertainties could limit the legal protections available to us, including our ability to enforce\nour agreements with our customers.\n\n \n\n**It will be difficult to acquire jurisdiction\nand enforce liabilities against our officers, directors and assets based in Hong Kong.**\n\n** **\n\nCertain of our assets are located in Hong Kong\nand our officers and directors reside outside of the United States. As a result, it may not be possible for United States investors to\nenforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts\npredicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws.\n\n \n\n**We may have difficulty establishing adequate\nmanagement, legal and financial controls in Hong Kong, which could impair our planning processes and make it difficult to provide accurate\nreports of our operating results.**\n\n \n\nAlthough we will be required to implement internal\ncontrols, we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in Hong Kong in these areas.\nAs a result of these factors, we may experience difficulty in establishing the required controls, making it difficult for management to\nforecast its needs and to present the results of our operations accurately at all times. If we are unable to establish the required controls,\nmarket makers may be reluctant to make a market in our stock and investors may be reluctant to purchase our stock, which would make it\ndifficult for you to sell any shares that you may own or acquire.\n\n \n\n**Our business may be affected by the Personal\nData (Privacy) Ordinance of Hong Kong.**\n\n \n\nMembers of our leading online platforms in Hong\nKong, including China International Assets and Equity of Artworks Exchange Limited, would need to provide personal information during\nregistration and our online platforms may monitor the online behavior of the members so as to gather data for market trend analysis and\nupgrade our website. As such, our business in Hong Kong is subject to Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong\nKong) (“PDPO”), which aims to protect the privacy of individuals personal data. The PDPO imposes a statutory duty on data\nusers to comply with the requirements of the six data protection principles (the “Data Protection Principles”) contained in\nSchedule 1 to the PDPO. The PDPO provides that a data user shall not do an act, or engage in a practice, that contravenes a Data Protection\nPrinciple unless the act or practice, as the case may be, is required or permitted under the PDPO. If we violate the PDPO, we may be subject\nto fines and/or other penalties and may incur legal costs and experience negative media coverage, which could adversely affect our business,\nresults of operations and reputation. \n\n \n\n37\n\n \n\n \n\n**Risks Related to Our Ordinary Shares**\n\n \n\n**Our ordinary shares may be thinly traded\nand you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate\nyour shares.** \n\n \n\nOur ordinary shares may be “thinly-traded”,\nmeaning that the number of persons interested in purchasing our ordinary shares at or near bid prices at any given time may be relatively\nsmall or non-existent. This situation may be attributable to a number of factors, including the fact that we are relatively unknown to\nstock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume,\nand that even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company\nsuch as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned.  As a consequence,\nthere may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned\nissuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect\non share price. A broad or active public trading market for our ordinary shares may not develop or be sustained. \n\n  \n\n**The market price for our ordinary shares\nmay be volatile.** \n\n \n\nThe market price for our ordinary shares may be\nvolatile and subject to wide fluctuations due to factors such as: \n\n \n\n \n●\nthe perception of U.S. investors and regulators of U.S. listed Chinese companies;\n\n \n\n \n●\nactual or anticipated fluctuations in our operating results;\n\n \n\n \n●\nchanges in financial estimates by securities research analysts;\n\n \n\n \n●\nnegative publicity, studies or reports;\n\n \n\n \n●\nconditions in Chinese and Hong Kong art and collectible and related service markets;\n\n \n\n \n●\nour capability to catch up with the technology innovations in the industry;\n\n \n\n \n●\nchanges in the economic performance or market valuations of other collectibles and artwork trading and related services companies;\n\n \n\n \n●\nannouncements by us or our competitors of acquisitions, strategic partnerships, joint ventures or capital commitments;\n\n \n\n \n●\naddition or departure of key personnel;\n\n \n\n \n●\nfluctuations of exchange rates between RMB, Hong Kong dollar and the U.S. dollar;\n\n \n\n \n●\nLegal, economic or political conditions in China and Hong Kong; and\n\n \n \n \n\n \n●\nhealth epidemics or pandemics, such as the outbreak of COVID-19 and government’s action to contain the spread of the pandemic.\n\n \n\nIn addition, the securities market has from time-to-time\nexperienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These\nmarket fluctuations may also materially and adversely affect the market price of our ordinary shares. \n\n \n\n38\n\n \n\n \n\n**Volatility in our ordinary shares price\nmay subject us to securities litigation.**\n\n \n\nThe market for our ordinary shares may have,\nwhen compared to seasoned issuers, significant price volatility and we expect that our share price may continue to be more volatile\nthan that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action\nlitigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the\ntarget of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert\nmanagement’s attention and resources. \n\n \n\n**In order to raise sufficient funds to enhance\noperations, we may have to issue additional securities at prices which may result in substantial dilution to our shareholders.**\n\n \n\nIf we raise additional funds through the sale\nof equity or convertible debt, our current shareholders’ percentage ownership will be reduced. In addition, these transactions may\ndilute the value of ordinary shares outstanding. We may have to issue securities that may have rights, preferences and privileges senior\nto our ordinary shares. We cannot provide assurance that we will be able to raise additional funds on terms acceptable to us, if at all.\nIf future financing is not available or is not available on acceptable terms, we may not be able to fund our future needs, which would\nhave a material adverse effect on our business plans, prospects, results of operations and financial condition.\n\n \n\n**We are not likely to pay another cash dividends\nin the foreseeable future.**\n\n \n\nWe made a dividend distribution to all our shareholders in January\n2026. We currently intend to retain any future earnings for use in our operations and expansion of our business. Accordingly, we do not\nexpect to pay any cash dividends in the foreseeable future, but will review this policy as circumstances dictate. Should we determine\nto pay dividends in the future, our ability to do so will depend upon the receipt of dividends or other payments from the WFOE. The WFOE\nmay, from time to time, be subject to restrictions on its ability to make distributions to us, including restrictions on the conversion\nof RMB into U.S. dollars or other hard currency and other regulatory restrictions.\n\n \n\nOur board of directors has complete discretion\nas to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary\nresolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Under Cayman Islands law,\na Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend\nbe paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if\nour board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on,\namong other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions,\nif any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our\nboard of directors. Accordingly, the return on your investment in our ordinary shares will likely depend entirely upon any future price\nappreciation of our ordinary shares. There is no guarantee that our ordinary shares will appreciate in value or even maintain the price\nat which you purchased the ordinary shares. You may not realize a return on your investment in our ordinary shares and you may even lose\nyour entire investment in our ordinary shares.\n\n \n\n**If we were deemed to be an investment company\nunder the Investment Company Act of 1940 (the “Investment Company Act”), as amended, applicable restrictions could\nmake it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial\ncondition, and results of operations.**\n\n \n\nUnder the Investment Company Act, absent an applicable\nexemption, a company generally will be deemed to be an “investment company” if (a) it is in the business of investing, reinvesting,\nowning, holding, or trading in securities and (b) it owns or proposes to acquire “investment securities” having a value exceeding\n40% of its total assets (other than U.S. government securities and cash items) on an unconsolidated basis (such second prong, the “40%\nTest”). We do not believe that we or any of our subsidiaries are an “investment company” for purposes of the Investment\nCompany Act, including in part, because neither we nor any of our subsidiaries are in the business of investing, reinvesting, owning,\nholding, or trading in securities, as required under Section 3(a)(1)(C) of the Investment Company Act.\n\n \n\nWe are engaged primarily in providing collectible\nand artwork e-commerce online trading services, and our historical development, public representations of policy, the activity of our\nofficers and directors, the nature of our present assets, the sources of our present income, and the public perception of the nature of\nour business collectively support the conclusion that we are an operating company and not an investment company. We currently conduct,\nand intend to continue to conduct, our operations so that neither we, nor any of our subsidiaries, is required to register as an “investment\ncompany” under the Investment Company Act.\n\n \n\nWe have made, and may continue to make, investments\nin funds and securities of other entities in order to support our primary business of collectible and artwork e-commerce online trading\nservices. If a significant portion of our assets were to consist of investment securities, or if we were otherwise deemed to meet the\ndefinition of an investment company under the Investment Company Act, we would either have to register as an investment company under\nthe Investment Company Act, obtain exemptive relief from the U.S. Securities and Exchange Commission (the “SEC”), or modify\nour business and organizational structure to fall outside the definition of an investment company. Registering as an investment company\nwould subject us to substantial regulation concerning management, operations, transactions with affiliates, and portfolio composition,\nincluding restrictions with respect to diversification and industry concentration, and other matters. Accordingly, registration under\nthe Investment Company Act would significantly affect our ability to operate as contemplated.\n\n \n\n39\n\n \n\n \n\nIf we were deemed to be an investment company,\nRule 3a-2 under the Investment Company Act is a safe harbor that provides a one-year grace period for transient investment companies that\nhave a bona fide intent to be engaged primarily, as soon as is reasonably possible (in any event by the termination of such one-year period),\nin a business other than that of investing, reinvesting, owning, holding, or trading in securities, with such intent evidenced by the\ncompany’s business activities and an appropriate resolution of its board of directors. The grace period is available not more than\nonce every three years and runs from the earlier of (i) the date on which the issuer owns securities and/or cash having a value exceeding\n50% of the issuer’s total assets on either a consolidated or unconsolidated basis or (ii) the date on which the issuer owns or proposes\nto acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government\nsecurities and cash items) on an unconsolidated basis. Accordingly, the grace period may not be available at the time that we seek to\nrely on Rule 3a-2; however, Rule 3a-2 is a safe harbor and we may rely on any exemption or exclusion from investment company status available\nto us under the Investment Company Act at any given time. Furthermore, reliance on Rule 3a-2, Section 3(a)(1)(C), or Rule 3a-1 under the\nInvestment Company Act could require us to take actions to dispose of securities, limit our ability to make certain investments or enter\ninto joint ventures, or otherwise limit or change our business and operations.\n\n \n\nWe intend to conduct our operations so that we\nwill not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the Investment\nCompany Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for\nus to continue our business as contemplated and would have a material adverse effect on our business, financial condition, and results\nof operations. In addition, if we failed to register as an investment company when required to do so, we would be prohibited from engaging\nin certain business activities, and criminal and civil actions could be brought against us. Further, our contracts would be unenforceable\nunless a court were to find that under the circumstances enforcement would produce a more equitable result than non-enforcement and would\nnot be inconsistent with the purposes of the Investment Company Act.\n\n \n\nWe monitor our holdings and structure our operations with the goal\nof maintaining compliance with the Investment Company Act and avoiding the need to register as an investment company. There can be no\nassurance that we will be able to successfully avoid operating as an investment company. Potential future acquisitions, the mixture of\nour investments, changes in the value of our assets, and other factors could result in our being deemed an investment company under the\nInvestment Company Act, which could have a material adverse effect on our business.\n\n \n\n**You may face difficulties in protecting\nyour interests as a shareholder, as Cayman Islands law provides substantially less protection when compared to the laws of the United\nStates and it may be difficult for a shareholder of ours to effect service of process or to enforce judgements obtained in the United\nStates courts.**\n\n \n\nOur corporate affairs are governed by our\ncurrent memorandum and articles of association and by the Companies Act (As Revised) and common law of the Cayman Islands. The\nrights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary\nresponsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman\nIslands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands\nas well as from English common law. Decisions of the Privy Council (which is the final court of appeal for British overseas\nterritories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and\nparticularly the Supreme Court of the United Kingdom and the Court of Appeal are generally of persuasive authority but are not\nbinding on the courts of the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors\nunder Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States.\nIn particular, the Cayman Islands has a less developed body of securities laws as compared to the United States, and provide\nsignificantly less protection to investors. In addition, Cayman Islands companies may not have standing to initiate a shareholder\nderivative action before the United States federal courts. The Cayman Islands courts are also unlikely to impose liabilities against\nus in original actions brought in the Cayman Islands, based on certain civil liability provisions of United States securities\nlaws.\n\n \n\nCurrently, all of our operations are conducted\noutside the United States, and substantially all of our assets are located outside the United States. All of our directors and officers\nare nationals or residents of jurisdictions other than the United States and a substantial portion of their assets are located outside\nthe United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these\npersons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability\nprovisions of the securities laws of the United States or any state in the United States.\n\n \n\n40\n\n \n\n \n\nAs a result of all of the above, our shareholders\nmay have more difficulty in protecting their interests through actions against us or our officers, directors or major shareholders than\nwould shareholders of a corporation incorporated in a jurisdiction in the United States. \n\n \n\n**We\nmay fail to meet continued listing requirements on the NASDAQ Capital Market and our ordinary shares may be delisted from the NASDAQ\nStock Market (“NASDAQ”).**\n\n \n\nOur ordinary shares are currently listed on the Nasdaq Capital Market.\nIn order to maintain our listing, we must satisfy minimum financial and other continued listing requirements and standards, including\nthose regarding minimum stockholders’ equity, minimum share price, and certain corporate governance requirements. In particular,\nNASDAQ rules require us to maintain a minimum bid price of $1.00 per share of our ordinary shares. There can be no assurance that\nwe will be able to comply with the applicable listing standards of Nasdaq. On November 9, 2022, the Company received a letter from the\nNasdaq Stock Market (“Nasdaq”) notifying the Company that, because the closing bid price for the Company’s\nordinary shares listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company no longer meets the minimum bid price requirement\nfor continued listing on Nasdaq under Nasdaq Marketplace Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share\n(the “Minimum Bid Price Requirement”).\n\n \n\nThe notification has no immediate effect on the\nlisting of the Company’s ordinary shares. In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company had a period of\n180 calendar days from the date of notification, until May 8, 2023 (the “Compliance Period”), to regain compliance with the\nMinimum Bid Price Requirement.  On May 10, 2023, the Company received a written notification from the NASDAQ Stock Market\nListing Qualifications Staff (the “Staff”) indicating that the Company had been granted an additional 180 calendar day period\nor until November 6, 2023, to regain compliance with the $1.00 minimum closing bid price requirement for continued listing on the NASDAQ\nCapital Market pursuant to NASDAQ Listing Rule.\n\n \n\nOn October 10, 2023, the shareholders of the Company approved the resolution\nof a share consolidation (the “Share Consolidation”) of the issued and authorized ordinary shares of the Company at a ratio\nbetween one (1)-for-three (3) and one (1)-for-ten (10), accompanied by a corresponding increase in the par value of the ordinary\nshares, with the exact ratio to be set at a whole number within this range and at such time and date after the passing of the resolution\nbut before October 18, 2023, to be determined by the Board of Directors of the Company (the “Board”) in its discretion.\nOn October 10, 2023, the Board determined the ratio for Share Consolidation to be one (1)- for five -(5). The Share Consolidation was\nprimarily being effectuated to regain compliance with Nasdaq Marketplace Rule 5550(a)(2) related to the minimum bid price per share of\nthe Company’s ordinary shares. \n\n \n\nOn November 1, 2023, the Company received a written\nnotification from Nasdaq’s Listing Qualifications Department stating that the closing bid price of the Company’s common stock\nhas been $1.00 per share or greater for 10 consecutive trading days, from October 18, 2023 to October 31, 2023. Accordingly, the Company\nhas regained compliance with Nasdaq Listing Rule 5550(a)(2). \n\n \n\nOn November 28, 2025, the Company’s shareholders approved a share\nconsolidation authorization, granting the Board authority to implement share consolidations at a cumulative ratio of up to 1:4,000 within\ntwo years. Pursuant to this authority, the Board implemented a 1-for-220 share consolidation of the ordinary shares of the Company, effective\non January 16, 2026 and the share consolidation was primarily being effectuated to maintain compliance with Nasdaq Marketplace Rule 5550(a)(2)\nrelated to the minimum bid price per share of the Company’s ordinary shares.\n\n \n\nOn April 3, 2026, the Board approved a further 1-for-3 share consolidation\nof the ordinary shares of the Company pursuant to the shareholders’ approval and authorization on November 28, 2025 and the share\nconsolidation was primarily being effectuated to maintain compliance with Nasdaq Marketplace Rule 5550(a)(2) related to the minimum bid\nprice per share of the Company’s ordinary shares.\n\n \n\nIf we fail to satisfy Nasdaq’s continued\nlisting requirements, Nasdaq may take steps to delist our ordinary shares. Such a delisting would likely have a negative effect on the\nprice of our ordinary shares and would impair stockholders’ ability to sell or purchase the ordinary shares of the Company when\nthey wish to do so. In the event of a delisting, we may take actions to restore our compliance with Nasdaq’s listing requirements,\nbut we can provide no assurance that any such action taken by us would allow our ordinary shares to become listed again, stabilize the\nmarket price or improve the liquidity of our ordinary shares, prevent our ordinary shares from dropping below the Nasdaq minimum bid price\nrequirement, or prevent future non-compliance with Nasdaq’s listing requirements.\n\n \n\nIf our ordinary shares are delisted by Nasdaq, our ordinary shares\nmay be eligible to trade on an over-the-counter quotation system, such as the OTCQB or OTC Pink markets, where an investor may find it\nmore difficult to sell our stock or obtain accurate quotations as to the market value of our ordinary shares. In addition, if our ordinary\nshares are delisted, we would be subject to rules promulgated by the Securities and Exchange Commission relating to “penny stocks,”\nwhich impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers\nand institutional accredited investors. Consequently, the delisting of our ordinary shares, if it occurred, could affect the ability of\nbroker-dealers to sell our ordinary shares, which could further negatively affect the ability of stockholders or other investors to buy\nand sell our ordinary shares.\n\n41\n\n \n\n \n\n**We are a foreign private issuer within the\nmeaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public\ncompanies.** \n\n \n\nWe are a foreign private issuer within the meaning\nof the rules under the Exchange Act. As such, we are exempt from certain provisions applicable to United States domestic public companies.\nFor example:\n\n \n\n \n●\nwe are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;\n\n \n\n \n●\nfor interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies;\n\n \n\n \n●\nwe are not required to provide the same level of disclosure on certain issues, such as executive compensation;\n\n \n\n \n●\nwe are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;\n\n \n\n \n●\nwe are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and\n\n \n\n \n●\nour principal shareholders are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and  our officers and directors and principal shareholders are exempt from the short-swing profit recovery provisions contained in Section 16 of the Exchange Act.\n\n \n\nWe are required to file an annual report on Form\n20-F within four months of the end of each fiscal year. Press releases relating to financial results and material events will also be\nfurnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive\nand less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the\nsame protections or information that would be made available to you were you investing in a U.S. domestic issuer. \n\n \n\n**Because we are a foreign private issuer\nand are exempt from certain NASDAQ corporate governance standards applicable to U.S. issuers, you may have less protection than you would\nhave if we were a domestic issuer.**\n\n \n\nThe Nasdaq Listing Rules require listed companies\nto have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to\nfollow home country practice in lieu of the above requirements. On March 1, 2023, the Company has notified Nasdaq that it will follow\nits home country practice in lieu of the provisions under Rule 5620(a), Rule 5635(a)(1), Rule 5635(b), Rule 5635(c) and Rule 5635(d) of\nthe NASDAQ Stock Market Marketplace Rules (the “Rules”) by relying on the exemption provided for foreign private issuers under\nMarketplace Rule 5615(a)(3). Rule 5620(a) requires that the Company to hold an annual meeting of shareholders no later than one year after\nthe end of the Company’s fiscal year-end; Rule 5635(a)(1) of the Rules requires shareholder approval for the issuance of securities\nin connection with the acquisition of the stock or assets of another company; Rule 5635(b) of the Rules requires shareholder approval\nfor the issuance of securities when the issuance will result in a change of control of the company; Rule 5635(c) of the Rules requires\nshareholder approval for share incentive plans; and Rule 5635(d) of the Rules requires shareholder approval for the issuance of securities,\nother than in a public offering, equal to 20% or more of the voting power outstanding before the issuance for less than the greater of\nbook or market value of the stock. The corporate governance practice in our home country, the Cayman Islands, does not require the Company\nto follow or comply with the requirements of Rule 5620(a), Rule 5635(a)(1), Rule 5635(b), Rule 5635(c) and Rule 5635(d). We will comply\nwith other corporate governance requirements of the Nasdaq Listing Rules. However, we may consider following home country practice in\nlieu of additional requirements under the Nasdaq Listing Rules with respect to certain corporate governance standards in the future which\nmay afford less protection to investors.\n\n  \n\n42\n\n \n\n \n\n**We are a “controlled\ncompany” as defined under the Nasdaq Stock Market Rules. As a result, we may rely on exemptions from certain corporate\ngovernance requirements and holders of our Ordinary Shares may not have the same protections generally available to shareholders of\nother companies listed on stock exchanges in the United States.**\n\n \n\nMr. Aimin Kong, the Chief Operation Officer\nof the Company, has the control and voting power of 12 million preferred shares of the Company. Each preferred share is entitled to\nparticipate in the voting at the shareholders’ meeting and is entitled to fifteen votes. Because more than 50% of the voting\npower for the election of our directors are controlled by Mr. Kong, we are a “controlled company” as defined under Rule\n5615(c)(1) of the Nasdaq Listing Rules. As a “controlled company”, we qualify for, exemptions from several of\nNasdaq’s corporate governance requirements, including requirements that:\n\n \n\n \n●\na majority of the board of directors consist of independent directors;\n\n \n\n \n●\ncompensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee comprised solely of independent directors; and\n\n \n\n \n●\ndirector nominees be selected or recommended to the board of directors by a majority of its independent directors or by a nominating committee that is composed entirely of independent directors.\n\n \n\nWe currently do not intend to rely on the corporate\ngovernance exemptions available to “controlled companies”, however, we may choose to rely on such exemptions in the future.\nAccordingly, to the extent that we may choose to rely on one or more of these exemptions, our shareholders would not be afforded the same\nprotections generally as shareholders of other Nasdaq-listed companies as long as Mr. Kong controls more than 50% of the voting power\nof our Company and our board determines to rely upon one or more of such exemptions.\n\n \n\n**If we are classified as a passive foreign\ninvestment company, United States taxpayers who own our ordinary shares may have adverse United States federal income tax consequences.**\n\n \n\nWe will be a “passive foreign investment company,” or “PFIC,”\nif, in any particular taxable year, either (a) 75% or more of our gross income for such year consists of certain types of “passive”\nincome or (b) 50% or more of the average quarterly value of our assets (as determined on the basis of fair market value) during such\nyear produce or are held for the production of passive income (the “asset test”). Based upon our current and expected income\nand assets, including goodwill, and the value of our ordinary shares, we do not believe that we were a PFIC for the taxable year ended\nDecember 31, 2025 and we do not expect to be a PFIC for the foreseeable future. However, there can be no assurance that we will not\nbe a PFIC for the current taxable year. In addition, there can be no assurance that we will not be a PFIC for any future taxable year.\nPFIC status is a factual determination that must be tested each taxable year and will depend on the composition of our assets and income\nin each such taxable year.\n\n \n\nWe will be classified as a PFIC for any taxable\nyear if either (i) at least 75% of our gross income for the taxable year is passive income or (ii) at least 50% of the value\nof our assets (based on a quarterly value of the assets during the taxable year) is attributable to assets that produce or are held for\nthe production of passive income. In determining the average percentage value of our gross assets, the aggregate value of our assets will\ngenerally be deemed to be equal to our market capitalization (determined by the sum of the aggregate value of our outstanding equity)\nplus our liabilities. Accordingly, we could become a PFIC if our market capitalization were to decrease significantly while we hold substantial\ncash, cash equivalents or other assets that produce or are held for the production of passive income. In addition, because there are uncertainties\nin the application of the relevant PFIC rules, it is possible that the Internal Revenue Service, or IRS, may challenge our classification\nof certain income and assets as non-passive or our valuation of our tangible and intangible assets, which could result in a determination\nthat we were a PFIC for the current or subsequent taxable years.\n\n \n\n43\n\n \n\n \n\nIf we were classified as a PFIC in any taxable\nyear in which a U.S. Holder (as defined in “Item 10. Additional Information—10.E. Taxation—United States Federal Income\nTaxation”) holds the ordinary shares, the U.S. Holder would generally be subject to additional taxes and interest charges on certain\n“excess” distributions we make and on the gain, if any, recognized on the disposition or deemed disposition of such U.S. Holder’s\nordinary shares, even if we are no longer a PFIC in the year of distribution or disposition. Moreover, such U.S. Holder would also be\nsubject to special U.S. tax reporting requirements. For more information on the U.S. tax consequences to U.S. Holders that would result\nfrom our classification as a PFIC, see “*Item 10. Additional Information—10.E. Taxation—United States federal income\ntaxation—Passive foreign investment company*.”"}