{"url_path":"/sec/ocg/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","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":18814,"has_tables":true,"body_markdown":"**ITEM 4. INFORMATION ON THE COMPANY**\n\n** **\n\n**A. History and Development of the Company**\n\n \n\nWe are an online provider of collectible and artwork\ne-commerce services, which allow collectors, artists, art dealers and owners to access a much bigger art and collectable trading market\nwhere they can engage with a wider range of collectible or artwork investors than they could likely encounter without our platforms. We\ncurrently facilitate trading by individual and institutional customers of all kinds of collectibles, artwork and certain commodities on\nour online platform owned by our subsidiary in Hong Kong, namely the China International Assets and Equity of Artworks Exchange Limited.\nWe commenced our operations in March 2018 and our customer trading volume has been growing rapidly until the outbreak of COVID-19. We\nalso provide online and offline integrated marketing, storage and technical maintenance services to our customers in China. We, Oriental\nCulture Holding LTD, are a holding company with operations conducted via our subsidiaries. We previously conducted our operations in China\nthrough the variable interest entity, Jiangsu Yanggu and we have terminated the VIE Agreements and dismantle the VIE structure on November\n11, 2025. Jiangsu Yanggu is no longer a VIE or consolidated entity of the Company since then.\n\n \n\nWe were incorporated under the laws of the Cayman\nIslands as an offshore holding company on November 29, 2018, and we own 100% of the equity interest in Oriental Culture Development LTD\n(“Oriental Culture BVI”), which was incorporated on December 6, 2018 under the laws of British Virgin Islands.\n\n \n\nThrough Oriental Culture BVI, we own 100% of the\nequity interest in HK Oriental Culture Investment Development Limited (“Oriental Culture HK”), a company formed under the\nlaws of Hong Kong on January 3, 2019. Through Oriental Culture HK, we directly own 100% of the equity interest in Nanjing Rongke Business\nConsulting Service Co., Ltd. (the “WFOE” or “Nanjing Rongke”), a wholly-owned PRC subsidiary of Oriental Culture\nHK.\n\n \n\nPreviously, the WFOE entered into a series of contractual arrangements\nwith Jiangsu Yanggu and its shareholders, through which we controlled Jiangsu Yanggu as our consolidated VIE. On November\n11, 2025, Jiangsu Yanggu completed the transfer of all the equity interests of its wholly owned subsidiaries, namely Nanjing Yanqing and\nNanjing Yanyu to WFOE and completed the dismantle of the VIE structure. All VIE contractual arrangements were terminated, and Jiangsu\nYanggu is no longer consolidated in our financial statements. The WFOE now directly holds 100% equity interests in Nanjing Yanyu, Nanjing\nYanqing and their subsidiaries. \n\n \n\nOn November 22, 2013, China International Assets and Equity of Artworks\nExchange Limited (the “International Exchange”) was incorporated under Hong Kong law. International Exchange is an online\nplatform to facilitate collectible and artwork trading e-commerce and became our subsidiary as a result of the reorganization of the common\ncontrol of Oriental Culture and International Exchange.\n\n \n\nJiangsu Yanggu Culture Development Co., Ltd. was incorporated on August\n23, 2017, and was the holding company for all its wholly owned subsidiaries in China. Nanjing Yanqing Information Technology Co., Ltd.,\n(“Nanjing Yanqing”) was incorporated on May 17, 2018 and Nanjing Yanyu Information Technology Co., Ltd. (“Nanjing Yanyu”)\nwas incorporated on June 7, 2018 and commenced operations in July 2018. Their primary business is to provide technical and other support\nfor International Exchange’s online collectible, art and commodities e-commerce business, and to sell software applications and\nprovide support services to our affiliates and third parties.\n\n \n\nKashi Longrui Business Management Services Co.,\nLtd. (“Kashi Longrui”), a wholly-owned subsidiary of Nanjing Yanqing, was incorporated on July 19, 2018 and commenced operations\nin August 2018. Its primary business is to provide online and offline marketing services for our e-commerce platform’s members and\nother related services.\n\n \n\nKashi Dongfang Cangpin Culture Development Co.,\nLtd. (“Kashi Dongfang”), a wholly-owned subsidiary of Nanjing Yanqing, was incorporated on August 29, 2018 and commenced operations\nin September 2018. Its primary focus is to provide online and offline warehouse management services for our e-commerce platform’s\nmembers.\n\n \n\n44\n\n \n\n \n\nZhongcang Warehouse Co., Ltd. (“Zhongcang”)\nwas incorporated on July 19, 2018 and is a joint venture by Kashi Longrui with third parties, namely Zhonglianxin Industry Group (Hunan)\nCo., Ltd., Nanjing Zhonghao Culture Media Limited, and Zhengjiang Culture Tourism International Cultural and Creative Industry Park Development\nCo., Ltd. to provide warehouse services to our customers. Kashi Longrui owned 18% of Zhongcang.\n\n \n\nOn April 18, 2018, HKDAEx Limited (“HKDAEx”) was incorporated\nunder Hong Kong law. On May 9, 2019, we acquired all of the outstanding equity interests of HKDAEx from its original shareholder-HKFAEX\nGroup Limited (“HKFAEX”) for a consideration of 2,400,000 ordinary shares (pre forward share split in November 2019 and reverse\nstock splits after that) of the Company. Effective from May 9, 2019, HKDAEx became our wholly-owned subsidiary. HKDAEx provided our customers\nwith an online trading platform for products and commodities other than collectible and artwork in Hong Kong. The trading platform of\nHKDAEx and its related trading business ceased operation as of June 30, 2024 and the Company sold HKDAEx to an unrelated party for $1\nin December 2024.\n\n \n\nOn November 8, 2019, the shareholders of the Company adopted the Second\nAmended and Restated Articles of Association to effect a 2 for 1 forward share split of the total authorized and issued and outstanding\nshares of the Company. As a result of the 2 for 1 forward share split, the Company’s total authorized shares are 1,000,000,000 shares\ncomprising of (i) 900,000,000 ordinary shares with a par value of $0.00005 each and (ii) 100,000,000 preferred shares with a par value\nof $0.00005 each. In addition, all existing shareholders agreed to surrender to the Company as treasury shares, 12.5% of the then outstanding\nordinary shares (3,100,000 ordinary shares) for no consideration.\n\n \n\nOn May 28, 2020, all existing shareholders of\nthe Company agreed to surrender an additional 6,510,000 ordinary shares, or 30% of the Company’s then outstanding ordinary shares,\nat no consideration to be reserved as treasury shares of the Company.\n\n \n\nOn December 1, 2020, the Company completed its\nIPO of 5,065,000 ordinary shares and 59,400 option shares at a public offering price of $4.00 per share, par value US$0.00005 per share,\nresulting in net proceeds to the Company of approximately $17.3 million after deducting underwriting commission, offering costs and other\nexpenses.\n\n \n\nIn\nMarch 2022, Jiangsu Yanggu signed a Capital Increase Investment Agreement (“Agreement”) with Noble Family New Retail\nCo., Ltd. (“Noble Family”), Beijing Wen Jiao Technology Co., Ltd. (“BJWJ”) and two investors to acquire\nshares and increase capital of Beijing Jiu Yu Ling Jing Technology Co., Ltd. (“JYLJ”). Pursuant to the Agreement,\nJiangsu Yanggu acquired 11.875% equity interest of JYLJ through a cash contribution of RMB 3 million (approximately $461,538) and\nhas provided certain internet development resources and technical support to JYLJ. Noble Family and BJWJ, the existing shareholders\nof JYLJ and two new investors also made contributions in cash for an aggregate of RMB44 million (approximately $6.77 million) and\ncertain initial work and business resources to JYJL. After this capital increase, Jiangsu Yanggu became the third largest\nshareholder of JYLJ. JYLJ primarily engages in wine and alcohol product merchants and customers, as well as product launch, brand\nshowcase, marketing and promotion and it is currently in the process of developing a “Wine and Spirits” metaverse, and\nthe amount raised through increase of share capital are mainly used for this development. As of the date of this report, JYLJ has\ncompleted the development of its programs and apps and has been in operation. Currently, Nanjing Yanqing owns approximately 10.15%\nequity interest of JYLJ.\n\n \n\nOn October 10, 2023, the shareholders of the\nCompany approved the resolution of a share consolidation (the “Share Consolidation” or “Reverse Stock\nSplit”) of the issued and authorized ordinary shares of the Company at a ratio between one (1)-for-three (3) and one\n(1)-for-ten (10), accompanied by a corresponding increase in the par value of the ordinary shares, with the exact ratio to be set at\na whole number within this range and at such time and date after the passing of the resolution but before October 18, 2023, to\nbe determined by the Board of Directors of the Company (the “Board”) in its discretion. On October 10, 2023, the Board\ndetermined the ratio for Share Consolidation to be one (1)- for five -(5), accompanied by a corresponding increase in the par value\nof the ordinary shares to $0.00025. The Share Consolidation was primarily being effectuated to regain compliance with Nasdaq\nMarketplace Rule 5550(a)(2) related to the minimum bid price per share of the Company’s ordinary shares.  Upon the\neffective of the Share Consolidation, each of the issued and unissued ordinary shares with a par value of US$0.00005 to be\nconsolidated into one ordinary share with par value of $0.00025 each, such that immediately following the Share Consolidation, the\nauthorized share capital of the Company changed from (a) US$50,000 divided into 1,000,000,000 shares with a par value of US$0.00005\nper share of which (x) 900,000,000 shares are designated as ordinary shares with a par value of US$0.00005 per share and (y)\n100,000,000 shares are designated as preferred shares with a par value of US$0.00005 per share, to (b) US$50,000 divided into\n280,000,000 shares of which (x) 180,000,000 shares are designated as ordinary shares with par value of US$0.00025 per share and\n(y)100,000,000 shares are designated as preferred shares with par value of US$0.00005 per share.\n\n \n\n45\n\n \n\n \n\nOn May 31, 2024, the Company entered into a Securities\nPurchase Agreement (the “Agreement”) with certain purchasers identified on the signature page thereto (the “Purchasers”),\npursuant to which the Company agreed to sell to the Purchasers in a private placement 14,000,000 ordinary shares (the “Shares”)\nof the Company, at a purchase price of $0.50 per share for an aggregate price of $7,000,000 (the “Private Placement”). In\nconnection with offering, the Company also agreed to issue the warrants to the Purchasers to purchase up to an aggregate of 14,000,000\nordinary shares at an exercise price of $0.50 per share (the “Warrants”). The Warrants have a term of two years and are exercisable\nby the holder at any time on or after six months after the issuance date. The Private Placements were completed pursuant to the exemption\nfrom registration provided by Regulation S promulgated under the Securities Act of 1933, as amended. The Company also agreed to pay a\nservice fee to China Stamp which including $300,000 in cash and 840,000 shares of the Company’s ordinary shares pursuant to a financing\nadvisory agreement in connection with the Private Placement. As of the date of this report, 14,000,000 warrants were exercised by the\nholders on a cashless basis for 12,656,818 ordinary shares of the Company. The share numbers and exercise price in this paragraph are\nbefore the two share consolidations effected in 2026. \n\n \n\nOn January 23, 2025, the Board of Directors of\nthe Company held a meeting and approved the appointment of Mr. Aimin Kong as the Chief Operating Officer of the Company. At the Board\nmeeting, the Board also designated and granted 12,000,000 preferred shares of the Company, par value US$0.00005, to Mr. Aimin Kong or\nthe company under his control, as “Preferred Shares” such that the holder of a Preferred Share shall have 15 votes for every\nPreferred Share of which he is the holder. On May 19, 2025, the Board approved and ratified the Certificate of Designation in respect\nof the Preferred Shares (the “Certificate of Designation”) and Employment Agreement by and between Mr. Kong and the Company\ndated January 27, 2025, which includes certain vesting and earn-out terms of the 12,000,000 Preferred Shares (the “Employment Agreement”)\nand the issuance of such Preferred Shares is subject to the shareholders’ approval according to the Employment Agreement. On June\n27, 2025, the shareholders of the Company approved that 12,000,000 preferred shares of par value US$0.00005 be designated and issued to\nMr. Aimin Kong, the Chief Operating Officer of the Company or the company under his control, subject to the Certificate of Designation\nand certain vesting and earn-out terms in his Employment Agreement. On June 27, 2025, the Company confirmed the vesting and earn-out terms\nhave been met and 12 million Preferred Shares were issued to Hao Shun Investments Limited, a company under the control of Mr. Kong.\n\n \n\nOn April 28, 2025, the Board approved to move\nthe principal executive offices of the Company from Room 1402, Richmake Commercial Building, 198-200 Queen’s Road Central, Hong\nKong to Room 1310, Tower B, Harbour View Building, Eastern District, Hong Kong. The Company’s main phone number is also changed\nto 852- 3579-5532.\n\n \n\nOn April 28, 2025 (“Grant Date”),\nCompensation Committee of the Board granted stock awards of 500,000 ordinary shares, par value $0.00025, pursuant to our 2021 Omnibus\nEquity Plan, to five officers and employees of us and subsidiaries of our operating variable interest entity (the “Grantees”),\nincluding 100,000 shares to Mr. Yi Shao, the Chief Executive Officer of the Company (collectively, the “Grants”).  The\nGrants vested immediately on the Grant Date and each of the Grantees also entered into an Unrestricted Stock Award Agreement with the\nCompany on April 28, 2025. The share numbers in this paragraph are before the two share consolidations effected in 2026.\n\n \n\nOn May 15, 2025, Nan County Public Safety Bureau unfroze the bank account\nof Nanjing Jinwang, a related party of the Company. On May 15, 2025, Nan County Public Safety Bureau unfroze the bank accounts of Kashi\nLongrui, Kashi Dongfang and Nanjing Yanyu. On May 28, 2025, NCCP determined it would not seek to file any charges against Nanjing Jinwang,\nMr. Aimin Kong and Mr. Huajun Gao. The investigation and case have been officially closed according to the PRC counsel of the Company,\nTahota (Nanjing) Law Firm.\n\n \n\nOn June 26, 2025, Nanjing Yanqing incorporated a wholly owned subsidiary\nHainan Yanqing, which currently doesn’t have any operation.\n\n \n\nOn October 16, 2025, the Board of Directors of the Company approved\nto terminate the variable interest entity (“VIE”) structure of the Company to streamline its corporate structure and better\ncontrol its operating entities. In conjunction with such decision, Jiangsu Yanggu, the variable interest entity of the Company, will\ntransfer all the equity interests of its wholly owned subsidiaries, namely Nanjing Yanqing and Nanjing Yanyu to WOFE and the Company will\nterminate the Equity Pledge Agreement by and among the WFOE, Jiangsu Yanggu and Jiangsu Yanggu’s shareholders to release the pledged\nshares of Jiangsu Yanggu to its shareholders.\n\n \n\n46\n\n \n\n \n\nOn\nOctober 20, 2025, the Company, Jiangsu Yanggu, Nanjing Rongke, Nanjing Yanqing, Nanjing Yanyu and shareholders of Jiangsu Yanggu entered\ninto an Equity Restructuring for VIE Structure Dissolution and Termination Agreement of VIE Agreement (“VIE Termination Agreement”).\nPursuant to the VIE Termination Agreement, the parties agreed: (i) Jiangsu Yanggu will transfer all the equity interests of Nanjing Yanqing\nand Nanjing Yanyu to WOFE for RMB 0 (the “Equity Transfer”) and (ii) all VIE-related agreements, namely the Technical Consultation\nand Service Agreement, the Equity Pledge Agreement, as amended, the Equity Option Agreement, as amended and the Voting Rights Proxy and\nFinancial Supporting Agreements, shall be immediately terminated, with all rights and obligations permanently extinguished, effective\nfrom the date of Equity Transfer which is the date of completion of business registration change for such Equity Transfer (the “Termination”).\nOn November 11, 2025, Jiangsu Yanggu completed the Equity Transfer of 100% ownership of Nanjing Yanyu and Nanjing Yanqing to WOFE. Upon\ncompletion of the Equity Transfer and the Termination, the Company owns the equity interests in its operating entities in China through\ndirect ownership instead of through the VIE structure.\n\n \n\nOn\nNovember 25, 2025, the shareholders of the Company approved: (i) the authorized share capital of the Company be increased from (a) $50,000\ndivided into 280,000,000 shares of which (x) 180,000,000 shares are designated as ordinary shares with a nominal or par value of $0.00025\nper share and (y)100,000,000 shares are designated as preferred shares with a nominal or par value of $0.00005 per share, to (b) $500,000\ndivided into 2,080,000,000 shares of which (x) 1,980,000,000 shares are designated as ordinary shares with a nominal or par value of\n$0.00025 per share, and (y) 100,000,000 shares are designated as preferred shares with a nominal or par value of $0.00005 per share by\ncreation of 1,800,000,000 ordinary shares with a nominal or par value of $0.00025 per share (the “Share Capital Increase”);\n(ii) the Article 18.2 of the Second Amended and Restated Articles of Association of the Company to be deleted in its entirety and replaced\nwith the follows: If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon\nthe requisition of Members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week, at the same\ntime and place or to such other day and at such other time and place as the Directors may decide, and if at the adjourned meeting a quorum\nis not present within half an hour from the time appointed for the meeting, the Members present shall be a quorum, provided that no business\nshall be transacted at any adjourned meeting other than the business listed in the first written notice convening the meeting from which\nthe adjournment took place. For the avoidance of doubt, any such adjourned meeting will not follow the quorum requirement as specified\nin Articles 16.1 or 18.1 (the “Change of Adjourned Meeting”); and (iii) the third amended and restated memorandum and articles\nof association of the Company (the “Third Amended and Restated M&A”), to reflect the above Share Capital Increase, Change\nof Adjourned Meeting and other minor housekeeping amendments.\n\n \n\nOn\nNovember 28, 2025, the shareholders of the Company approved the authorization to the Board for share consolidation(s) of the ordinary\nshares of the Company  at any one time or multiple times during a period of up to two years after the date of the approval\nof the authorization by the shareholders, at the exact consolidation ratio and effective time as the Board may determine from time to\ntime in its absolute discretion, provided that the accumulative consolidation ratio for all such share consolidation(s) shall not be\nmore than 1:4,000, to be determined by the Company’s Board in its sole discretion. On December 14, 2025, the Board determined the\nratio for share consolidation to be one (1)- for- two hundred and twenty (220) and to round up the fractions of the issued consolidated\nshares resulting from the share consolidation. The share consolidation is primarily being effectuated to comply with Nasdaq Marketplace\nRule 5550(a)(2) related to the minimum bid price per share of the Company’s ordinary shares. On January 16, 2026, Nasdaq Stock\nMarket has effected the Share Consolidation at the market level. Upon the effective of the share consolidation, the authorized share\ncapital of the Company has been changed from (a) $500,000 divided into 2,080,000,000 shares of which (x) 1,980,000,000 shares are designated\nas ordinary shares with a nominal or par value of $0.00025 per share, and (y) 100,000,000 shares are designated as preferred shares with\na nominal or par value of $0.00005 per share , to (b) $500,000 divided into 109,000,000 shares of which (x) 9,000,000 shares are\ndesignated as ordinary shares with a par value of $0.055 per share and (y)100,000,000 shares are designated as preferred shares with\na nominal or par value of $0.0005 per share.\n\n \n\nOn December 11, 2025, the Company entered into a sales agreement (the\n“Sales Agreement”) with A.G.P./Alliance Global Partners (the “Agent”), with respect to an at the market offering\nprogram, under which the Company may, from time to time in its sole discretion, issue and sell through the Agent, acting as sales agent\nor principal, up to $200 million of ordinary shares of the Company, par value $0.00025 per share (the “Ordinary Shares”).\nThe issuance and sale of the Ordinary Shares by the Company under the Sales Agreement are made pursuant to a prospectus supplement, dated\nDecember 11, 2025, and a base prospectus, dated June 2, 2023, to the Company’s registration statement on Form F-3 (File No. 333-\n262398) (the “Registration Statement”), which was declared effective by the Securities and Exchange Commission (the “SEC”)\non June 30, 2023. On April 17, 2026, the Company and the Agent agreed to terminate the Sales Agreement and the ATM program, effective\nimmediately (the “Termination”). As of April 17, 2026, the Company has sold approximately 1,888,895 Ordinary Shares under\nthe ATM program pursuant to the Sales Agreement and the aggregate gross proceeds from the ATM program were approximately $32,923,807.\nShare numbers are retroactively adjusted to reflect the two share consolidations of the ordinary shares of the Company in January 2026\nand April 2026. Upon and after the Termination, no more ordinary shares have been sold under the ATM program. \n\n \n\n47\n\n \n\n \n\nOn\nMarch 20, 2026, the shareholders of the Company approved: (i) the authorized share capital of the Company be increased from (a) share\ncapital of $500,000 divided into 109,000,000 shares of which (x) 9,000,000 shares designated as ordinary shares with a par value of $0.055\nper share and (y)100,000,000 shares designated as preferred shares with a nominal or par value of $0.00005 per share to (b) $5,505,000\ndivided into shares of which (x) 100,000,000 shares are designated as ordinary shares with a par value of $0.055 per share, and (y) 100,000,000\nshares are designated as preferred shares with a nominal or par value of $0.00005 per share by creation of 91,000,000 ordinary shares\nwith par value of $0.055 per share (the “Share Capital Increase”); (ii) the approval and authorization to the Board for the\nfuture increase of the share capital and authorized shares of the Company at any one time or multiple times during a period up to two years\nafter the date of the approval of the authorization by the shareholders of the Company, with the exact increased numbers of share capital\nand authorized shares and effective time as the Board may determine from time to time in its absolute discretion provided in no event\nthe increased share capital shall exceed $500 million (the “Future Share Capital Increase”); and (iii) the registered address\nof the Company be changed to Sertus Chambers, Governors Square, Suite # 5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman,\nKY1-1104, Cayman Islands (the “Address Change”). The shareholders of the Company also approved a special resolution that\nthe fourth amended and restated memorandum and articles of association of the Company (the “Fourth Amended and Restated M&A”),\nwhich contains all the proposed amendments mentioned in the proxy statement and other changes previously approved by the shareholders\nof the Company be and are approved and adopted.\n\n \n\nOn April 3, 2026, the Board approved a further 1-for-3 share consolidation\nfor the authorized and issued ordinary shares of the Company and to round up the fractions of the issued consolidated shares resulting\nfrom the share consolidation. The Company’s ordinary shares began to trade on the NASDAQ Stock Market on the post-consolidation\nbasis on April 27, 2026. Following the share consolidation, the authorized share capital of the Company has changed from (a) $5,505,000\ndivided into shares of which (x) 100,000,000 shares are designated as ordinary shares with a par value of $0.055 per share, and (y) 100,000,000\nshares are designated as preferred shares with a nominal or par value of $0.00005 per share, to (b) $5,505,000 divided into shares of\nwhich (x) 33,333,333 shares are designated as ordinary shares with a par value of $0.165 per share and (y)100,000,000 shares are designated\nas preferred shares with a nominal or par value of $0.00005 per share.\n\n \n\nOn January 8, 2026, the Board has a special cash\ndividend to all shareholders of the Company to commemorate the fifth anniversary of the Company’s Nasdaq listing and to reward shareholders\nfor their 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 dividends have been paid to the shareholders of the Company.  \n\n \n\nOn April 20, 2026, Oriental Culture Holding LTD,\na Cayman Islands Company (the “Company”) entered into a Subscription Agreement (the “Agreement”) with Jade Cove,\nL.P., a Cayman Islands exempted limited partnership (“Jade Cove”). Jade Cove makes direct and indirect investments in internet\ntechnology companies in the fields of commerce, content and entertainment. Pursuant to the Agreement, the Company will make a subscription\nin an aggregate amount of US$10,000,000 to acquire 66.67% interest in Jade Cove and will become a limited partner of Jade Cove and be\nbound by the partnership agreement. \n\n \n\nOur principal executive offices are located at Room 1310, Tower B,\nHarbour View Building, Eastern District, Hong Kong. Our telephone number at this address is (852) 3579-5532. Our registered office in\nthe Cayman Islands is located at P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205, Cayman Islands.\nInvestors should contact us for any inquiries through the address and telephone number of our principal executive offices.\n\n \n\nThe SEC maintains a web site at www.sec.gov that\ncontains reports and other information regarding issuers that file electronically with the SEC using its EDGAR system.\n\n \n\nSee “*Item 5. Operating and Financial\nReview and Prospects — B. Liquidity and Capital Resources — Capital Expenditures*” for a discussion of our capital\nexpenditures.\n\n \n\n48\n\n \n\n \n\n**B. Business Overview** \n\n \n\nWe are an online provider of collectible and artwork\ne-commerce services, which allow collectors, artists and art dealers and owners to access a much bigger art trading market where they\ncan engage with a wider range of collectibles and artwork investors than they could likely encounter without our platforms. We currently\nfacilitate trading by individual and institutional customers of all kinds of collectibles and artwork and certain commodities on our online\nplatform owned by our subsidiary in Hong Kong, namely the China International Assets and Equity of Artworks Exchange Limited. We commenced\nour operations in March 2018 and our customer trading volume has been growing rapidly until the outbreak of COVID-19. We also provide\nonline and offline integrated marketing, storage and technical maintenance services to our customers in China.\n\n \n\nAccording to the “Report on the Development of E-commerce in\nChina in 2025” released by the Ministry of Commerce of the People's Republic of China, China's e-commerce sector experienced steady\ngrowth in 2025. Data from the National Bureau of Statistics of China shows that the national e-commerce transaction volume reached RMB\n46.73 trillion in 2025, representing a year-on-year increase of 2.5%; national online retail sales reached RMB 15.97 trillion, up 8.6%\nyear-on-year.\n\n \n\nOn many mainstream e-commerce platforms, cultural products such as\narts and crafts flourished and developed rapidly, and art and collectibles e-commerce are gradually growing. Online trading has become\na major trend of the global art and collectibles trade. As a comprehensive service provider with extensive cultural and art collection\nand collectibles market operations and marketing experience, we have taken development opportunities to provide online and offline services\nfor the domestic and international art and collectibles trading business.\n\n \n\nWe provide customers of our online platform with\ncomprehensive services, including account opening, art investment education, market information, research, real-time customer support,\nand artwork and collectibles warehousing services. Most services are delivered online through our proprietary client software and call\ncenter. Our client software provides not only market information and analysis, but also interactive functions including live discussion\nboards and instant messaging with customer service representatives, which we believe enhances our customers’ engagement. Internally,\nwe legally collect and analyze customer behavior and communications data from our client software, customer relationship management system\nand the exchanges, which allow us to better understand, attract and serve our customers.\n\n \n\nWe provide industry solutions and related software\nproducts, system development and technical support services for our e-commerce platform customers.\n\n \n\nWe strive to minimize conflicts of interest with our customers, which\nwe believe is essential for our long-term success. Under the trading rules of the trading platform we operate on, we do not set, quote\nor influence the trading prices, and cannot access our customers’ money.\n\n \n\n**Our Services**\n\n \n\nWe provide customers of our online platform with\ncomprehensive services, including the following:\n\n \n\n*Investor Education*\n\n* *\n\nWe believe that investor education is critical in preparing potential\ncustomers for online collectibles and artwork trading. We have developed a set of educational programs designed to target customers with\na variety of experience levels and investment preferences. Our education programs include basic rules and processes of online collectibles\nand artwork trading, fundamental analysis methods and technical analysis methods. Most of our educational resources are easily accessible\nthrough PC and APP versions of our client software. Certain materials are also available on our website.\n\n \n\n49\n\n \n\n \n\n*Market Information*\n\n \n\nWe provide comprehensive market information to\nour customers, including real-time price quotes, technical indicators, relevant market news and macroeconomic data and news. Market information\nis accessible by our customers and potential customers through PC and APP versions of our client software and our website.\n\n \n\n*Customer Support*\n\n \n\nWe are committed to providing high-quality customer\nsupport. Most of our services, including investor education, market information and research support services, are accessible through\nour client software, which we believe provides a positive experience for our customers due to its user-friendliness and easy access. Besides\nour client software, we have a dedicated team of customer service personnel that handles real-time customer inquiries about our software,\nmarket news and research reports, and other questions, via call, text message and online instant message.\n\n \n\nWe request all our customer representatives conduct\ncustomer communications via our communication system that is closely monitored by us.\n\n \n\nIn addition, we receive customer complaints from\ntime to time. To ensure that reasonable complaints made by each customer are adequately addressed and for risk management purposes, we\nhave established a customer complaint department at our customer service center. For a complaint received, our customer compliant officer\nwill first confirm details of the complaint with the customer and then verify the facts with the relevant department. Based on our verification\nresults and our internal policy, we seek to resolve complaints through discussions with the customer. The complaint and our response are\nrecorded in the CRM system, and feedback is also provided to relevant departments. We also report complaints to the compliance department,\nwhich will check for noncompliance and advise the relevant department to take rectification measures, if necessary.\n\n \n\n*Technology Infrastructure*\n\n* *\n\nThe client software and the CRM system comprise\nour core technology infrastructure and enable us to move each key phase of our business operation online.\n\n \n\n*Our Trading Platform*\n\n \n\nOur proprietary platform is an all-electronic\ntrading system, consisting of host computers, client-side terminals and related communication system. Our trading system supports the\ntrading and payment/settlement of collectibles, artworks and commodities. It is an electronic platform developed by a third-party software\ndevelopment company and customized for us, primarily consisting of a matching system, a transaction monitoring system, an account managing\nsystem and a settlement system.\n\n \n\nMatching is a core function of our trading platform.\nOur system concludes transactions by matching all of the transactions submitted by the traders. The transaction monitoring system is responsible\nfor monitoring the daily transactions in real-time to ensure fairness and accuracy in our trading platform. The settlement system verifies\nand reconciles daily statistical data with the banks’ transaction system, and completes the registration and settlement (or payment)\nof collectibles or artwork units once the transaction data is verified.\n\n \n\nThrough our trading platform, we provide customers\nwith timely and comprehensive market information, investor education programs, simulated trading, research reports, quantitative analysis\ntools and interactive customer support functions.\n\n \n\nThe website is important as it is the gateway\nto our trading platform. It publishes our membership and trading rules, trading information disclosure, and product introductions,\nand provides services to traders, such as account management. Traders may open, close and manage their accounts with us on our website.\nA client-end terminal may be downloaded from our website. Through the terminal, traders may access their account with us and conduct transactions\nin collectibles or artwork units, such as purchasing and selling and submitting inquiries. Data transmission between the traders and our\ntrading system is encrypted to prevent data leaks.\n\n \n\n50\n\n \n\n \n\nOur trading system hardware platform, clearing\nsystem hardware platform and disaster recovery system are hosted on Ali Cloud. The real-time data synchronization functionality which\nwe provide ensures the safety of transaction data.\n\n \n\nWe provide industry solutions and related software\nproducts, system development and technical support services for our cooperation e-commerce platform customers.\n\n* *\n\n*Offering and trading of collectibles, artwork\nand commodities on our platform* \n\n \n\nOffering and trading of collectibles, artwork\nand commodities on our platform involves a number of parties, namely, Original Owners, Offering Agents, and Traders.\n\n \n\n \n●\nAn Original Owner is the original owner of the collectible, artwork or commodity to be offered and traded on our platform. The Original Owner must have good and marketable title to the collectible or artwork and have the right to dispose of the collectible or artwork.\n\n \n\n \n●\nAn Offering Agent is an entity that is experienced with collectibles, artwork or commodity or their investment and has a good reputation. The Offering Agent is engaged by the Original Owner to assist him or her with the offering and trading of collectibles, artwork or commodity, such as preparation of listing applications and assigning an investment value, research, organizing promotions and marketing activities, communicating with potential investors, and similar functions. In general, Kashi Longrui will carry out this business.\n\n \n\n \n●\nA Trader is anyone who is 18 years or older or any entity that maintains a trading account with us through our electronic trading platform and participates in the trading of collectibles, artwork or commodity. Once a Trader acquires one or more units of collectibles and artwork, the Trader becomes the owner of that collectible and artwork.\n\n* *\n\nAdditional parties such as insurer, appraisal\nfirm and custodian for collectibles or artwork may be retained in connection with the offering and trading of collectibles or artwork\non our system.\n\n \n\nThe Original Owner and the Offering Agent are\nrequired to comply with our rules in connection with the offering of collectibles, artwork or commodity. If we discover any violation,\nwe will require that they take corrective actions. If the Offering Agent engages in fraudulent activities, such as putting out false or\nmisleading advertisements or disclosure on the collectible, artwork or commodity, it may be barred from participating in any offering\nfor up to two years, in addition to any legal liabilities.\n\n \n\n51\n\n \n\n \n\nFor the main signer to apply for the listing,\nthe process is as follows:\n\n \n\n \n\n \n\nFor publicly list collectibles and artworks hosted on our platform:\n\n \n\n \n\n \n\n52\n\n \n\n \n\nWe strive to minimize conflicts of interest with our customers, which\nwe believe is essential for our long-term success. Under the trading rules of the exchange on which we operate, we do not set, quote or\ninfluence the trading prices, and cannot access our customers’ money.\n\n \n\n*Main Trading Rules for Individual Customers*\n\n* *\n\nTraders log in to their own account through the\ncustomer platform for trading. The transaction application shall be deemed to be the transaction commission submitted by the dealer to\nthe online platform. Once the transaction is completed, the ownership of the corresponding physical object will belong to the purchaser\nof the transaction. For the completion of physical delivery for the items, the physical holder can apply for delivery or voluntarily deposit\nthe collectibles, artwork or commodity in a cooperative third-party storage company. The applicant for the transaction must fulfill the\ncorresponding obligations and settle with the other party in accordance with the method determined by these rules.\n\n \n\nWe monitor and regulate the conduct of traders\non a daily basis through our real-time monitoring system. If there are irregular trading activities that may affect the trading price\nand volume of collectible, artwork units or commodities, we will seek clarification from the trader(s) by sending inquiries and notices,\nconducting interviews, and the like. If there is any violation of our trading rules, we may take the following action:\n\n \n\n \n●\nissue oral or written warnings;\n\n \n\n \n●\nrequest that the trader submit a written commitment;\n\n \n\n \n●\nissue a reprimand;\n\n \n\n \n●\nimpose a fine;\n\n \n\n \n●\nsuspend or limit trading activities; or\n\n \n\n \n●\nrevoke the qualifications of the trader.\n\n  \n\nThe platform has not adopted any deposit-based leveraged trading system.\nCustomers can only use the funds as they are deposited.\n\n \n\n**Sales and Marketing**\n\n* *\n\nOur marketing activities include promoting our\nbrand to increase recognition, attracting new customers through targeted marketing and promoting our client software, which has a broader\nreach of users who might become our potential customers.\n\n \n\nWe market our electronic trading platform\nthrough participation in culture and art exhibitions and internet advertising, both through online and traditional marketing\nchannels. Although the in-person meetings and culture and art exhibitions were suspended in China during the outbreak of COVID-19\nduring the first half of 2020. In addition, travel restrictions, quarantine requirements and/or temporary closure of office\nbuildings and facilities were imposed by local governments due to the outbreak of Omicron variant in Hong Kong and many cities in\nChina, including Shenzhen, Xi’an, Shanghai, Guangzhou, Nanjing, Nanchang and Taiyuan in 2022. 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\nbusiness operations in December 2022 and January 2023 and our marketing activities were negatively impacted in the cities that\ngovernments have imposed such restrictions.\n\n \n\nOur online marketing relies mainly on search engine marketing. We also\nactively promote our software for clients through mobile application stores. In addition, we promote our brand and software through our\ncorporate pages on popular interactive social media such as Weibo and WeChat.\n\n \n\nWe focus on investing in cost-effective marketing\ninitiatives and continuously evaluate the effectiveness of various marketing channels to optimize the allocation of our marketing spending.\n\n \n\n53\n\n \n\n \n\nInterested persons who provide their contact information\nto us become our potential customers. We also promote our software for clients through various websites and app stores. A guest version\nof our software is free to download and use. Through simple online registration, people get free access to the user version of our client\nsoftware and become our potential customers. We do not conduct cold calls. Additionally, we encourage existing traders to introduce new\ntraders.\n\n \n\nOur customer representatives interact with potential\ncustomers regarding online collectibles, artwork and commodity trading, our software for clients and services through call, text message\nand instant messaging function in our software for clients. Our representatives begin building relationships with our customers in anticipation\nthat they will open trading accounts with us.\n\n \n\nA potential customer who opens and activates a trading account with\nus becomes our customer. We provide more services to customers compared to potential customers, including free usage of the customer version\nof the software for clients which has richer features, as well as access to more comprehensive research reports and technical analysis\ntools.\n\n \n\n**Our Customers**\n\n \n\nOur customers are the Traders and Original Owners.\nBecause we have listed 661 types of collectibles, artwork and commodities in 2025 and we are constantly marketing and increasing\nour customer base, it is difficult to ascertain if the loss of a single customer, or a few customers, would have a material adverse effect\non us. No one customer constitutes in the aggregate 10% or more of our consolidated revenue.\n\n  \n\nCustomers can open trading accounts through the online account creation\nlink on our official website, International Exchange. Before the customer can finish opening an account, our website provides Risks and\nWarnings, a Market Entry Agreement and Transaction Rules for the customer to review and confirm before they are able to move to the next\nsteps. Our transaction rules specify the qualification requirements for the customer to open and activate a trading account, as follows:\n\n \n\nA trader is a person who opens a trading account\nwith the exchange platform and participates in the trades of cultural and art collections.\n\n \n\nTrader’s Qualification\n\n \n\n(a)Natural person. A natural person who trades cultural and\nart collections and commodities on the exchange platform must provide account opening information (a personal information form, a copy\nof passport or ID card from mainland China, Hong Kong, Macao or Taiwan) and meet the following requirements:\n\n \n\n1)Meet\nthe legal age requirement in the jurisdiction where he/she is located, and have the ability and capacity to take full civil responsibility\nand assume liability;\n\n \n\n2)Have\ncertain knowledge of the cultural and art collection investment market, and have certain investment experience in the cultural and art\ncollection market;\n\n \n\n3)Have\na deep understanding of the trading model and investment risk of the cultural and art collections with the exchange’s trading platform,\nand have strong risk identification ability and risk tolerance;\n\n \n\n4)Have\ncertain internet and computer operation capabilities, abide by relevant laws and regulations, and engage in cultural and art collection\ntrading activities according to relevant laws and regulations; and\n\n \n\n5)Other\nconditions as stipulated by the exchange.\n\n \n\n54\n\n \n\n \n\n(b)Institutions. Institutions that conduct cultural and art\ncollection and commodities trading must provide various supporting materials (original and photocopy of corporate legal personhood certificate,\nbusiness license, organization code certificate, tax registration certificate, etc.) and meet the following requirements:\n\n \n\n1)Must\nbe an enterprise, legal entity or other organization that lawfully operates under laws at home and abroad, and no law, regulatory requirement,\nor the rules of this exchange platform may prohibit or restrict the investment of such entity;\n\n \n\n2)Have\na deep understanding of the trading model and investment risk of the cultural and art collections with the exchange’s trading platform,\nand have strong risk identification ability and risk tolerance; and\n\n \n\n3)Understand\nthe risks of investing in the cultural and art collections, and have completed the internal approval and authorization procedures stipulated\nby the statutes and / or company charter/bylaws.\n\n \n\nA potential customer is required to read these\nrules, and click to confirm that he/she has read such rules before he/she can proceed to the next step of opening an account.\n\n \n\nOur customer service staff will review each application\nand all materials submitted to ensure they are complete. Once an application is approved by the customer service manager, the customer\nwill receive notification and obtain a trading account number and initial login password, which are automatically generated by our system.\n\n \n\nAfter completion of the account opening\nprocess, a customer can link his or her personal bank account to his or her trading deposit account, which is an independent\ndepository account under his/her trading account. We cannot access our customers’ money, but we can monitor their trading\nactivities and account balances in real time through the platform’s information system. Customers can freely withdraw funds\nfrom their accounts so long as the minimum deposit requirements for their trading positions are met. After a trading account is\nactivated, it becomes a “tradable” account and will remain tradable until the account is closed. We define\n“active” accounts as tradable accounts that have executed at least one trade during a relevant period.\n\n \n\nWe believe that the growth of tradable accounts\nand active accounts, combined with our strategy to focus on premier customers, has historically contributed to the significant growth\nof our trading volume.\n\n* *\n\n**Competition**\n\n \n\nThe art e-commerce market is highly competitive and many traditional\nart galleries and auction houses may provide a platform for collectibles or artwork owners to sell their collections. However, their trading\nmodel is substantially 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\n**Intellectual Property**\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 trademark law, trade secret law\nand confidentiality and invention assignment agreements with our employees and others to protect our proprietary rights.\n\n \n\nWe have one registered trademark in China that\nwe acquired from a third party. This trademark is a graphic trademark with registration No. 5120703. We submitted the transfer documents\nto the Trademark Office of the State Administration for Industry and Commerce of the PRC on January 29, 2019, and the transfer of ownership\nto us was completed on July 6, 2019.\n\n \n\nWe have one software copyright registration and\nown 6 domain names. The software copyright name is “Entrusted Warehouse Management System V1.0.” which has been upgraded in\n2021. We also own the software for our app which has not been registered with Copyright Protection Center of China.\n\n \n\nDespite our efforts to protect our proprietary\nrights, unauthorized parties may attempt to copy or otherwise obtain and use our intellectual property. Monitoring unauthorized use of\nour intellectual property is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation\nof our intellectual property. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which\ncould result in substantial costs and diversion of our resources.\n\n \n\n55\n\n \n\n \n\nIn addition, third parties may initiate litigation\nagainst us alleging infringement of their proprietary rights or declaring their non-infringement of our intellectual property rights.\nIn the event of a successful claim of infringement and our failure or inability to develop non-infringing technology or license the infringed\nor similar technology on a timely basis, our business could be harmed. Moreover, even if we are able to license the infringed or similar\ntechnology, license fees could be substantial and may adversely affect our results of operations.\n\n \n\nSee\n*“Risk Factors—Risks Related to Our Business—We may not be able to prevent others from unauthorized use of our intellectual\nproperty, which could harm our business and competitive position.”*and* “—We may be subject to intellectual\nproperty infringement claims, which may be expensive to defend and may disrupt our business and operations.”*\n\n** **\n\n**Regulations**\n\n \n\nThis section sets forth a summary of the most\nsignificant rules and regulations that affect our business activities in China and Hong Kong.\n\n \n\n**PRC Regulations** \n\n** **\n\n**PRC Laws and Regulations relating to Foreign\nInvestment**\n\n** **\n\n*The PRC Foreign Investment Law*\n\n \n\nOn March 15, 2019, the National People’s\nCongress approved the Foreign Investment Law, which has taken effect on January 1, 2020 and replaced three existing laws on foreign\ninvestments in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise\nLaw and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign\nInvestment Law embodies a 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 invested enterprises in China.\nThe Foreign Investment Law establishes the basic framework for the access to, and the promotion, protection and administration\nof foreign investments in view of investment protection and fair competition.\n\n \n\nAccording to the Foreign Investment Law,\n“foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business\nentities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and\nthe investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors,\nestablishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets,\nor other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other\ninvestors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations,\nor the State Council.\n\n \n\nAccording to the Foreign Investment Law, the Foreign Investment\nLaw grants national treatment to foreign invested entities. However, it is unclear whether any updated “Negative List”\nto be published by the State Council in the future will be different from the current Special Administrative Measures for Access\nof Foreign Investment (Negative List) promulgated by the NDRC and the MOFCOM on September 6, 2024 and took effect on November 1, 2024.\nThe Foreign Investment Law provides that foreign invested entities operating in foreign restricted or prohibited industries\nwill require market entry clearance and other approvals from relevant PRC governmental authorities.\n\n \n\nFurthermore, the Foreign Investment Law provides\nthat foreign invested enterprises established according to the existing laws regulating foreign investment may maintain their structure\nand corporate governance within five years after the implementing of the Foreign Investment Law.\n\n \n\nIn addition, the Foreign Investment Law also provides several\nprotective rules and principles for foreign investors and their investments in the PRC, including, among others, that local governments\nshall abide by their commitments to the foreign investors; foreign-invested enterprises are allowed to issue stocks and corporate bonds;\nmandatory technology transfer is prohibited; and the capital contributions, profits, capital gains, proceeds out of asset disposal, licensing\nfees of intellectual property rights, indemnity or compensation legally obtained, or proceeds received upon settlement by foreign investors\nwithin China, may be freely remitted inward and outward in RMB or a foreign currency. Also, foreign investors or the foreign investment\nenterprise should be imposed legal liabilities for failing to report investment information in accordance with the requirements.\n\n \n\n56\n\n \n\n \n\n*Regulations on Overseas Listings*\n\n \n\nOn February 17, 2023, China Securities Regulatory Commission (“CSRC”)\nreleased Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “New Overseas Listing\nRules”) with five interpretive guidelines, which took effect on March 31, 2023. The New Overseas Listing Rules require Chinese domestic\nenterprises to complete filings with CSRC and report related information under certain circumstances, such as: a) an issuer making an\napplication for initial public offering and listing in an overseas market; b) an issuer making an overseas securities offering after having\nbeen listed on an overseas market; c) a domestic company seeking an overseas direct or indirect listing of its assets through single or\nmultiple acquisition(s), share swap, transfer of shares or other means. According to the Notice on Arrangements for Overseas Securities\nOffering and Listing by Domestic Enterprises, published by the CSRC on February 17, 2023, a company that (i) has already completed overseas\nlisting or (ii) has already obtained the approval for the offering or listing from overseas securities regulators or exchanges but has\nnot completed such offering or listing on or before effective date of the new rules but completed the offering or listing before September\n30, 2023 will be considered as an existing listed company and is not required to make any filing until it conducts a new offering in the\nfuture. Furthermore, upon the occurrence of any of the material events specified below after an issuer has completed its offering and\nlisted its securities on an overseas stock exchange, the issuer shall submit a report thereof to the CSRC within 3 business days after\nthe occurrence and public disclosure of the event: (i) change of control; (ii) investigations or sanctions imposed by overseas securities\nregulatory agencies or other competent authorities; (iii) change of listing status or transfer of listing segment; or (iv) voluntary or\nmandatory delisting. The New Overseas Listing Rules stipulate the legal consequences to the companies for breaches, including failure\nto fulfill filing obligations or filing documents having false statement or misleading information or material omissions, which may result\nin administrative penalties such as order to rectify, warnings and a fine ranging from RMB1 million to RMB10 million, and in cases of\nsevere violations, the controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may\nalso be subject to administrative penalties, such as warnings and fines and may be barred from entering the securities market. The\nCompany has timely filed with CSRC for its private placement offering and ATM offerings conducted after effectiveness of the New Overseas\nListing Rules but has not received final clearance from CSRC as of the date of this report.\n\n \n\n*Negative List Relating to Foreign Investment*\n\n \n\nInvestment activities in the PRC by foreign\ninvestors are principally governed by the Guidance Catalog of Industries for Foreign Investment promulgated and as amended from time\nto time by MOFCOM and National Development and Reform Commission (the “NDRC”) and MOFCOM. The NDRC and the MOFCOM\npromulgated the Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Edition) (the “2024\nNational Negative List”) on September 6, 2024, which took effect on November 1, 2024 and the Special Administrative Measures\n(Negative List) for Foreign Investment Access in Pilot Free Trade Zones (2021 Edition) (the “2021 FTZ Negative List”) on\nDecember 27, 2021, which took effect on January 1, 2022. The 2024 Negative Lists prescribe that any domestic enterprise engaging in\nbusinesses prohibited by the Negative Lists that lists, issues securities and trades shares overseas must obtain pre-approval\nconsent from relevant competent regulator; overseas investors must not engage in the operation and management of the enterprise, and\nthe percentage of foreign shareholding is subject to the relevant provisions in the administrative measures for domestic securities\ninvestments by foreign investors. The Foreign Investment Law provides that foreign invested entities operating in foreign restricted\nor prohibited industries will require market entry clearance and other approvals from relevant PRC governmental authorities.\n\n \n\nOn November 11, 2025, we completed the dismantle of the variable interest\nentity (“VIE”) structure. All contractual arrangements with the former VIE Jiangsu Yanggu were terminated, and Jiangsu Yanggu\nis no longer consolidated in our financial statements. We now conduct our operations in China through PRC subsidiaries that we have equity\nownership, and our business is not within the category in which foreign investment is currently restricted or prohibited under the Negative\nList or other PRC Laws.\n\n \n\n**PRC Laws and Regulations relating to Wholly\nForeign-owned Enterprises**\n\n \n\nThe establishment, operation and management of\ncompanies in the PRC are mainly governed by the Company Law, which was issued by the Standing Committee of the National People’s\nCongress and was last amended in December 2023. The revised Company Law will take into effect in July 2024. The Company Law applies to\nboth PRC domestic companies and foreign-invested companies. The investment activities in China of foreign investors are also governed\nby the Foreign Investment Law, which was approved by the National People’s Congress of China in March 2019 and took effect on January\n1, 2020. Along with the Foreign Investment Law, the Implementing Rules of Foreign Investment Law promulgated by the State Council and\nthe Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Foreign Investment Law promulgated\nby the Supreme People’s Court became effective on January 1, 2020. Under the Foreign Investment Law, the term “foreign investments”\nrefers to any direct or indirect investment activities conducted by any foreign investor in the PRC, including foreign individuals, enterprises\nor organizations; such investment includes any of the following circumstances: (i) foreign investors establishing foreign-invested enterprises\nin the PRC solely or jointly with other investors, (ii) foreign investors acquiring shares, equity interests, property portions or other\nsimilar rights and interests thereof within the PRC, (iii) foreign investors investing in new projects in the PRC solely or jointly with\nother investors, and (iv) other forms of investments as defined by laws, regulations, or as otherwise stipulated by the State Council.\n\n \n\n57\n\n \n\n \n\nPursuant to the Foreign Investment Law, the State\nCouncil shall promulgate or approve a list of special administrative measures for access of foreign investments. The Foreign Investment\nLaw grants treatment to foreign investors and their investments at the market access stage which is no less favorable than that given\nto domestic investors and their investments, except for the investments of foreign investors in industries deemed to be either “restricted”\nor “prohibited.” The list of industries in these two categories is sometimes referred to as the “negative list.”\nThe Foreign Investment Law provides that foreign investors may not invest in the prohibited industries and must meet such requirements\nas stipulated for making investment in restricted industries. The most recent list of restricted and prohibited industries can be found\nin the Special Entry Management Measures (Negative List) for the Access of Foreign Investment (2024 version), which was promulgated by\nthe National Development and Reform Commission and the Ministry of Commerce on September 6, 2024 and took effect on November 1, 2024.\nIndustries that are not restricted or prohibited are generally open for foreign investments unless specifically restricted by other PRC\nlaws.\n\n \n\nThe Foreign Investment Law and its implementing\nrules also provide several protective rules and principles for foreign investors and their investments in the PRC, including,\namong others, local governments shall abide by their commitments to the foreign investors; foreign-invested enterprises are allowed to\nissue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall be followed and fair and\nreasonable compensation shall be made in a timely manner; expropriation or requisition of the investment of foreign investors is prohibited;\nmandatory technology transfer is prohibited; and the capital contributions, profits, capital gains, proceeds out of asset disposal, licensing\nfees of intellectual property rights, indemnity or compensation legally obtained, or proceeds received upon settlement by foreign investors\nwithin China, may be freely remitted inward and outward in RMB or a foreign currency. Also, foreign investors or the foreign investment\nenterprise will have legal liabilities imposed for failing to report investment information in accordance with the requirements. Furthermore,\nthe Foreign Investment Law provides that foreign-invested enterprises established prior to the effectiveness of the Foreign Investment\nLaw may maintain their legal form and structure of corporate governance within five years after January 1, 2020.\n\n \n\n**PRC Laws and Regulations Related to Art Trading\nand Related Service Industry**\n\n** **\n\n*PRC Law relating to Property Rights*\n\n \n\nThe Civil Code of the People’s Republic\nof China (“Civil Code”) was released on May 28, 2020 and became effective on January 1, 2021, which has replaced Property\nRight Law of China. According to The Civil Code, the creation and transfer of property rights in movable property shall be effective upon\ndelivery. But if the parties have agreed that the transferor may continue to take possession of the property, the property right shall\nbe effective when the agreement takes effect. According to our Trading Rules, the owner of collectibles or artworks shall entrust our\ncooperative warehousing company to hold and transport the collectibles or artworks sold on our platform. In practice, the winning bidder\nwill receive delivery of the order on our platform after bid closing, and can collect the collectibles or artwork at the cooperative warehousing\ncompany by showing the delivery order. The delivery order is treated as the agreement between the owner of the collectibles or artwork\nand the bid winner to transfer the property rights in the collectibles or artwork. Accordingly, upon the winning bidder’s receipt\nof the delivery order, the winning bidder owns the property rights of the collectibles or artworks purchased on our platform.\n\n \n\n*PRC Laws and Regulations relating to Trading\nExchange*\n\n \n\nAccording to “Decision Of The State Council\nOn Cleaning Up And Rectifying Various Trading Places 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 Venues” (“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 \n(1)\nDivide any equity into equal shares for public offering. An “equal share public offering” is when a trading place uses its services and facilities to divide its equity into equal shares and sell them to investors. The relevant provisions of the company law and the securities law shall apply to the public issuance of shares by a joint stock company.\n\n \n\n \n(2)\nAdopt centralized trading. The “centralized trading methods” referred to in this opinion include collective bidding, continuous bidding, electronic matching, anonymous trading, market makers and other trading methods, except for agreement transfers and legal auctions.\n\n \n\n \n(3)\nContinuously list and trade the rights and interests in accordance with standardized trading units. The “standardized trading unit” referred to in this opinion refers to the minimum trading unit set for other equities other than equity, and trading at the minimum trading unit or integer multiples thereof. “Continuous listing transaction” refers to listing and selling the same trading variety within 5 trading days after buying or listing, and buying the same trading variety within 5 trading days after selling.\n\n \n\n58\n\n \n\n \n\n \n(4)\nHave a cumulative number of equity holders exceeding 200. Except as otherwise provided for by laws and administrative regulations, the cumulative number of actual holders of any equity shall not exceed 200 during the term of the company’s existence, no matter by the way of issuance or transfer.\n\n \n\n \n(5)\nCarry out standardized contract trading by centralized trading. The “standardized contract” referred to in this opinion includes two situations: one is a unified contract established by the trading place with fixed terms other than price, which stipulates the delivery of 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 gives 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 \n(6)\nWithout the approval of the relevant financial administrative department of the state council, establish either trading places for the trading of financial products such as insurance, credit and gold, or use any other existing trading places for the trading of financial products such as insurance, credit and gold.\n\n \n\nAdditionally, according to “Notice Concerning\nThe Issuance Of Minutes Of The Special Session On The Clean-Up And Rectification Of Stamp And Commemorative Coins Trading Places”\npromulgated by the Office of the Joint Meeting on August 2, 2017, any stamps, coins and magcards using a stock issuance-like model to\ntrading places mainly trading stamps by a concentrated bidding and “T+0” transaction method should cease to operate. The stamps,\ncoins and magcards being illegally traded must be made off-line in time. Trading places which have ceased operations shall not re-start\noperating unless they obtain approval from the provincial government and complete the required filing with the Joint Meeting. Provincial\ngovernments should re-evaluate the necessity of transactions of stamps, coins and magcards, considering the development and interests\nof the economic society, as well as risks, efficiencies and costs. Provided that a provincial government does considers it necessary to\nmaintain transactions of stamps, coins and magcards, the provincial government may appoint a stamps, coins and magcards exchange to organize\nstamps, coins and magcards transactions by way of transfer of property through agreements. Such exchange must have obtained permission\nfrom the provincial government, passed the examination and acceptance check of the provincial government and completed filings at relevant\njoint meetings. In addition, such exchange must be in strict compliance with Decision No.38 and Opinion No.37, shall not adopt or allow\nconcentrated bidding or other types of centralized trading, and the interval between sale and purchase of a same commodity shall not be\nless than 5 trading days.\n\n  \n\nMeasures Of Jiangsu Province on The Supervision\nand Administration of Trading Exchanges (“Jiangsu Trading Exchange Measures”) were issued by the Jiangsu Financial Supervision\nBureau on March 1, 2023. According to Jiangsu Trading Exchange Measures, trading exchanges that are established in the administrative\nregion of the Jiangsu province with its name contains the words “exchange” or “trading center” engaging in equity\nor commodity trading, excluding vehicles and real estate trading places and trading exchanges of financial products approved by the financial\nmanagement department of the State Council are subject to this Jiangsu Trading Exchange Measures and shall obtain prior approval. The\nbranch offices of the trading exchanges from other provinces are subject to these measures as well. The subsidiaries of the VIE in China\ndo not use any name of trading center or trading exchange and they only provide maintenance, supporting and warehouse services to the\ntrading platforms in Hong Kong. \n\n \n\nAdditionally, there is a Notice On Further\nStrengthening The Supervision Of All Kinds Of Trading Places In The Province, released by Jiangsu Financial Office on July 25, 2016,\naccording to which, the “accredited investor” in any trading place should meet the following criteria and provide assets\nproof when opening an account:\n\n \n\n \n(1)\nThe investor’s available fund balance at the time of opening an escrow account shall not be less than RMB 500,000 (approximately $70,000); and\n\n \n\n \n(2)\nThe market value of the investor’s assets shall not be less than RMB 2 million (approximately $290,000).\n\n \n\nAlso, all of the trading places in Jiangsu must\nuse Jiangsu Exchange Depository and Clearing Co., Ltd. (“JS Clearing”) to register investors and investment information and\nsettle investors’ funds.\n\n \n\n59\n\n \n\n \n\n**Regulations on Intellectual Property Rights**\n\n \n\nThe PRC has adopted comprehensive legislation\ngoverning intellectual property rights, including copyrights, patents, trademarks and domain names.\n\n \n\n**Copyrights. **The Copyright Law was\nadopted in 1990 and amended in 2001, 2010 and 2020. The amended version in 2020 came into effect on June 1, 2021. The amended Copyright\nLaw extends copyright protection to internet activities, products disseminated over the internet and software products. In addition, there\nis a voluntary registration system administered by the China Copyright Protection Center. The amended Copyright Law also requires registration\nof a copyright pledge. According to the Copyright Law, an infringer will be subject to various civil liabilities, which include stopping\nthe infringement, eliminating the damages, apologizing to the copyright owners and compensating the losses of copyright owners. The Copyright\nLaw further provides that the infringer must compensate the actual loss suffered by the copyright owner. If the actual loss of the copyright\nowner is difficult to calculate, the illegal income received by the infringer as a result of the infringement will be deemed as the actual\nloss or if such illegal income is also difficult to calculate, the court can decide the amount of the actual loss up to RMB5,000,000.\nUnder the Copyright Law, the term of protection for copyrighted software of legal persons is 50 years and ends on December 31 of the 50th year\nfrom the date of first publishing of the software.** **\n\n** **\n\n**Patents. **The Patent Law of the PRC\npromulgated in December 2008, which became effective in October 2009 and was recently amended by the Standing Committee of the National\nPeople’s Congress of China on October 17, 2020 and became effective on June 1, 2021, provides for patentable inventions, utility\nmodels and designs. An invention or utility model for which patents may be granted shall have novelty, creativity and practical applicability.\nThe State Intellectual Property Office under the State Council is responsible for examining and approving patent applications. The protection\nperiod is 20 years for inventions and 10 years for utility models and designs, all of which commence from the date of application of patent\nrights. The protection period has been slightly amended in recent amendment which became effective on June 1, 2021. The terms of protection\nfor invention and utility patents will still be 20 years and 10 years, respectively, in general. The term of protection for a design patent\nwill be extended from 10 years to 15 years. In addition, for invention patents, in situations where a patent is only granted after 4 years\nor more from its filing date or 3 years or more after a request for substantive examination date, the applicant can request for an extension\nof protection term for any unreasonable delay.\n\n** **\n\n**Trademarks**. The Trademark Law of the\nPRC promulgated in August 2013 which took effect in May 2014 (the “Trademark Law”) and was last amended on April 23,\n2019 which became effective on November 11, 2019. Its implementation rules protect registered trademarks. The Trademark Office of\nNational Intellectual Property Administration, PRC, formerly the PRC Trademark Office of the State Administration of Market\nRegulation is responsible for the registration and administration of trademarks throughout the PRC. The Trademark Law has adopted a\n“first-to-file” principle with respect to trademark registration. The validity period of registered trademarks is 10\nyears from the date of approval of trademark application, and may be renewed for another 10 years provided relevant application\nprocedures have been completed within 12 months before the end of the validity period.\n\n** **\n\n**Domain Names**. Domain names are protected\nunder the Administrative Measures for the Internet Domain Names of the PRC promulgated by the Ministry of Industry and Information Technology\nof the PRC effective on December 20, 2004 and the Administrative Measures for Internet Domain Names promulgated by MIIT, effective on\nNovember 1, 2017 (the “Domain Name Measures”). MIIT is the major regulatory body responsible for the administration of the\nPRC internet domain names. The Domain Names Measures has adopted a “first-to-file” principle with respect to the registration\nof domain names.\n\n** **\n\n**PRC Laws and Regulations Relating to Mergers\nand Acquisitions**\n\n** **\n\nThe Regulations on Mergers and Acquisitions of Domestic Companies by\nForeign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in August 2006 and amended in 2009, requires an overseas\nspecial purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or\nindividuals to obtain the approval of the China Securities Regulatory Commission, or the CSRC, prior to the listing and trading of such\nspecial purpose vehicle’s securities on an overseas stock exchange. In September 2006, the CSRC published a notice on its official\nwebsite specifying documents and materials required to be submitted to it by a special purpose vehicle seeking CSRC approval of its overseas\nlistings. The application of the M&A Rules remains unclear. Our PRC counsel has advised us based on their understanding of the current\nPRC laws, rules and regulations that the CSRC’s approval should not be required for the listing and trading of our ordinary shares\non NASDAQ, given that: (i) we established our PRC subsidiary, the WFOE, by means of direct investment rather than by merger with or acquisition\nof PRC domestic companies; and (ii) no explicit provision in the M&A Rules classifies the respective our previous contractual arrangements\nas a type of acquisition transaction falling under the M&A Rules.\n\n \n\n60\n\n \n\n \n\n**PRC Laws and Regulations Relating to Foreign\nExchange**\n\n** **\n\n*General administration of foreign exchange*\n\n* *\n\nThe principal regulation governing foreign currency\nexchange in the PRC is the *Administrative Regulations of the PRC on Foreign Exchange *(the “Foreign Exchange Regulations”),\nwhich were promulgated on January 29, 1996, became effective on April 1, 1996 and were last amended on August 5, 2008. Under these rules,\nRenminbi is generally freely convertible for payments of current account items, such as trade- and service-related foreign exchange transactions\nand dividend payments, but not freely convertible for capital account items, such as capital transfer, direct investment, investment in\nsecurities, derivative products or loans unless prior approval by competent authorities for the administration of foreign exchange is\nobtained. Under the Foreign Exchange Regulations, foreign-invested enterprises in the PRC may purchase foreign exchange without the approval\nof SAFE to pay dividends by providing certain evidentiary documents, including board resolutions, tax certificates, or for trade- and\nservices-related foreign exchange transactions, by providing commercial documents evidencing such transactions.\n\n** **\n\n*Circular No. 75, Circular No. 37 and Circular\nNo. 13*\n\n \n\nCircular 37 was released by SAFE on July 4, 2014\nand abolished Circular 75 which had been in effect since November 1, 2005. Pursuant to Circular 37, a PRC resident should apply to SAFE\nfor foreign exchange registration of overseas investments before it makes any capital contribution to a special purpose vehicle, or SPV,\nusing his or her legitimate domestic or offshore assets or interests. SPVs are offshore enterprises directly established or indirectly\ncontrolled by domestic residents for the purpose of investment and financing by utilizing domestic or offshore assets or interests they\nlegally hold. Following any significant change in a registered offshore SPV, such as capital increase, reduction, equity transfer or swap,\nconsolidation or division involving domestic resident individuals, the domestic individuals shall amend the registration with SAFE. Where\nan SPV intends to repatriate funds raised after completion of offshore financing to the PRC, it shall comply with relevant PRC regulations\non foreign investment and foreign debt management. A foreign-invested enterprise established through return investment shall complete\nrelevant foreign exchange registration formalities in accordance with the prevailing foreign exchange administration regulations on foreign\ndirect investment and truthfully disclose information on the actual controller of its shareholders.\n\n \n\nIf any shareholder who is a PRC resident (as determined\nby the Circular No. 37) holds any interest in an offshore SPV and fails to fulfil the required foreign exchange registration with the\nlocal SAFE branches, the PRC subsidiaries of that offshore SPV may be prohibited from distributing their profits and dividends to their\noffshore parent company or from carrying out other subsequent cross-border foreign exchange activities. The offshore SPV may also be restricted\nin its ability to contribute additional capital to its PRC subsidiaries. Where a domestic resident fails to complete relevant foreign\nexchange registration as required, fails to truthfully disclose information on the actual controller of the enterprise involved in the\nreturn investment or otherwise makes false statements, the foreign exchange control authority may order them to take remedial actions,\nissue a warning, and impose a fine of less than RMB 300,000 (approximately $43,000) on an institution or less than RMB 50,000 (approximately\n$7,000) on an individual.\n\n \n\nCircular 13 was issued by SAFE on February 13,\n2015, and became effective on June 1, 2015. Pursuant to Circular 13, a domestic resident who makes a capital contribution to an SPV using\nhis or her legitimate domestic or offshore assets or interests is no longer required to apply to SAFE for foreign exchange registration\nof his or her overseas investments. Instead, he or she shall register with a bank in the place where the assets or interests of the domestic\nenterprise in which he or she has interests are located if the domestic resident individually seeks to make a capital contribution to\nthe SPV using his or her legitimate domestic assets or interests; or he or she shall register with a local bank at his or her permanent\nresidence if the domestic resident individually seeks to make a capital contribution to the SPV using his or her legitimate offshore assets\nor interests.\n\n \n\n61\n\n \n\n \n\n*Circular 19 and Circular 16*\n\n \n\nCircular 19 was promulgated by SAFE on March\n30, 2015, and became effective on June 1, 2015. According to Circular 19, foreign exchange capital of foreign-invested enterprises\nshall be granted the benefits of Discretional Foreign Exchange Settlement (“Discretional Foreign Exchange Settlement”).\nWith Discretional Foreign Exchange Settlement, foreign exchange capital in the capital account of a foreign-invested enterprise for\nwhich the rights and interests of monetary contribution has been confirmed by the local foreign exchange bureau, or for which book\nentry registration of monetary contribution has been completed by the bank, can be settled at the bank based on the actual\noperational needs of the foreign-invested enterprise. The allowed Discretional Foreign Exchange Settlement percentage of the foreign\nexchange capital of a foreign-invested enterprise has been temporarily set to be 100%. The Renminbi converted from the foreign\nexchange capital will be kept in a designated account and if a foreign-invested enterprise needs to make any further payment from\nsuch account, it will still need to provide supporting documents and to complete the review process with its bank. Furthermore,\nCircular 19 stipulates that foreign-invested enterprises shall make bona fide use of their capital for their own needs within their\nbusiness scopes. The capital of a foreign-invested enterprise and the Renminbi if obtained from foreign exchange settlement shall\nnot be used for the following purposes:\n\n** **\n\n \n●\ndirectly or indirectly used for expenses beyond its business scope or prohibited by relevant laws or regulations;\n\n** **\n\n \n●\ndirectly or indirectly used for investment in securities unless otherwise provided by relevant laws or regulations;\n\n** **\n\n \n●\ndirectly or indirectly used for entrusted loan in Renminbi (unless within its permitted scope of business), repayment of inter-company loans (including advances by a third party) or repayment of bank loans in Renminbi that have been sub-lent to a third party; and\n\n** **\n\n \n●\ndirectly or indirectly used for expenses related to the purchase of real estate that is not for self-use (except for foreign-invested real estate enterprises).\n\n**  **\n\nCircular 16 was issued by SAFE on June 9, 2016.\nPursuant to Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign currency to Renminbi on a\nself-discretionary basis. Circular 16 provides an integrated standard for conversion of foreign exchange capital items (including but\nnot limited to foreign currency capital and foreign debts) on a self-discretionary basis applicable to all enterprises registered in the\nPRC. Circular 16 reiterates the principle that an enterprise’s Renminbi converted from foreign currency denominated capital may\nnot be directly or indirectly used for purposes beyond its business scope or purposes prohibited by PRC laws or regulations, and such\nconverted Renminbi shall not be provided as loans to nonaffiliated entities.\n\n \n\nCirculars 16 and 19 address foreign direct investments\ninto the PRC, and stipulate the procedures applicable to foreign exchange settlement. If and when proceeds in foreign currency raised\nin any offering are settled to RMB, our WFOE would be subject to Circular 19 or Circular 16.\n\n \n\n*Dividend distribution*\n\n \n\nThe Foreign Investment Law, promulgated on March\n15, 2019 and became effective on January 1, 2020, and the Implementation Regulations for the Foreign Investment Law, promulgated in December\n26, 2019 and became effective on January 1, 2020, are the key regulations governing distribution of dividends of foreign-invested enterprises.\n\n \n\nAccording to these regulations, a wholly foreign-owned\nenterprise in China, or a WFOE, may pay dividends only out of its accumulated profits, if any, determined in accordance with PRC accounting\nstandards and regulations. In addition, a WFOE is required to allocate at least 10% of its accumulated after-tax profits each year, if\nany, to statutory reserve funds unless its reserves have reached 50% of the registered capital of the enterprises. These reserves are\nnot distributable as cash dividends. The proportional ratio for withdrawal of rewards and welfare funds for employees shall be determined\nat the discretion of the WFOE. Profits of a WFOE shall not be distributed before the losses thereof before the previous accounting years\nhave been made up. Any undistributed profit for the previous accounting years may be distributed together with the distributable profit\nfor the current accounting year.\n\n \n\n62\n\n \n\n \n\nIn the event that a PRC shareholder holding interests\nin a special purpose vehicle fails to fulfill the required SAFE registration pursuant to Circular 37 and Circular 13, the PRC subsidiaries\nof that special purpose vehicle may be prohibited from making distributions of profit to the offshore parent and from carrying out subsequent\ncross-border foreign exchange activities and the special purpose vehicle may be restricted in their ability to contribute additional capital\ninto its PRC subsidiary. And, failure to comply with the various SAFE registration requirements described above could result in liability\nunder PRC law for foreign exchange evasion, including (i) up to 30% of the total amount of foreign exchange remitted overseas and\ndeemed to have been evasive and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to the total\namount of remitted foreign exchange deemed evasive. Furthermore, the persons-in-charge and other persons at our PRC subsidiaries who are\nheld directly liable for the violations may be subject to criminal sanctions. These regulations apply to our direct and indirect shareholders\nwho are PRC residents and may apply to any offshore acquisitions and share transfer that we make in the future if our shares are issued\nto PRC residents. See “*Risk Factors—Risks Related to Doing Business in China—PRC regulations relating to offshore\ninvestment activities by PRC residents may limit our PRC subsidiary’s ability to increase its registered capital or distribute profits\nto us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.*”\n\n \n\n**PRC Laws and Regulations relating to Taxation**\n\n** **\n\n*Enterprise Income Tax*\n\n \n\nThe *Enterprise Income Tax Law of the People’s\nRepublic of China *(the “EIT Law”) was promulgated by the Standing Committee of the National People’s Congress\non March 16, 2007 and became effective on January 1, 2008, and was most recently amended on December 29, 2018 (also the effective date).\nThe *Implementation Rules of the EIT Law *(the “Implementation Rules”) were promulgated by the State Council\non December 6, 2007 and became effective on January 1, 2008. According to the EIT Law and the Implementation Rules, enterprises are divided\ninto resident enterprises and non-resident enterprises. Resident enterprises shall pay enterprise income tax on their incomes obtained\nin and outside the PRC at the rate of 25%. Non-resident enterprises setting up institutions in the PRC shall pay enterprise income tax\non the incomes obtained by such institutions in and outside the PRC at the rate of 25%. Non-resident enterprises with no institutions\nin the PRC, and non-resident enterprises whose incomes having no substantial connection with their institutions in the PRC, shall pay\nenterprise income tax on their incomes obtained in the PRC at a reduced rate of 10%.\n\n  \n\nThe *Arrangement between China Mainland\nand Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to\nTaxes on Income *(the “Arrangement”) was promulgated by the State Administration of Taxation (“SAT”) on\nAugust 21, 2006 and came into effect on December 8, 2006. According to the Arrangement, a company incorporated in Hong Kong will be subject\nto withholding tax at the lower rate of 5% on dividends it receives from a company incorporated in the PRC if it holds a 25% interest\nor more in the PRC company. The *Notice on the Understanding and Identification of the Beneficial Owners in the Tax Treaty *(the\n“Notice”) was promulgated by SAT and became effective on October 27, 2009. According to the Notice, a beneficial ownership\nanalysis will be used based on a substance-over-form principle to determine whether or not to grant tax treaty benefits.\n\n \n\nThe WFOE and its subsidiaries are resident enterprises\nand pay EIT tax at the rate of 25% in PRC. It is more likely than not that the Company and its offshore subsidiary would be treated as\na non-resident enterprise for PRC tax purposes. Please see Section of “*Taxation - People’s Republic of China Enterprise\nTaxation*”.\n\n \n\n*Value-added Tax and Business Tax*\n\n \n\nThe *Provisional Regulations on Value-Added\nTax of the PRC *(the “VAT Regulations”) were promulgated by the State Council on December 13, 1993 and took effect\non January 1, 1994, which were last amended on November 19, 2017. The *Rules for the Implementation of the Provisional Regulations\non Value Added Tax of the PRC *(the “Rules”) were promulgated by the Ministry of Finance (“MOF”) on December\n25, 1993 and were last amended on October 28, 2011. Pursuant to the VAT Regulations and the Rules, entities or individuals in the PRC\nengaged in the sale of goods, the provision of processing, repairs and replacement services and the importation of goods are required\nto pay VAT, on the value added during the course of the sale of goods or provision of services. Unless otherwise specified, the applicable\nVAT rate for the sale or importation of goods and provision of processing, repair and replacing services is 17%. On April 4, 2018,\nthe Ministry of Finance and the State Administration of Taxation issued the Notice on Adjustment of VAT Rates, which came into effect\non May 1, 2018. According to the abovementioned notice, the taxable goods previously subject to VAT rates of 17% and 11%, respectively,\nbecome subject to lower VAT rates of 16% and 10%, respectively, starting from May 1, 2018. Furthermore, according to the Announcement\non Relevant Policies for Deepening Value-added Tax Reform jointly promulgated by the Ministry of Finance, the State Administration of\nTaxation and the General Administration of Customs, which became effective on April 1, 2019, the taxable goods previously subject\nto VAT rates of 16% and 10%, respectively, become subject to lower VAT rates of 13% and 9%, respectively, starting from April 1,\n2019.\n\n \n\n63\n\n \n\n \n\nThe SAT and the MOF jointly promulgated the *Circular\non Comprehensively Promoting the Pilot Program of the Collection of Valued-added Tax in lieu of Business Tax *on March 23, 2016,\nwhich became effective on 1 May 2016. Pursuant to the pilot plan and relevant notices, VAT is generally imposed in lieu of business tax\nin certain service industries, including technology services and advertising services, on a nationwide basis. VAT of a rate of 6% applies\nto revenue derived from the provision of certain services. Certain small taxpayers under PRC law are subject to reduced value-added tax\nat a rate of 3%. Unlike business tax, a taxpayer is allowed to offset the qualified input VAT paid on taxable purchases against the output\nVAT chargeable on the services provided.\n\n* *\n\nAccording to the above-regulations, our PRC subsidiaries are generally\nsubject to a 6% VAT rate.\n\n \n\n*Dividend Withholding Tax*\n\n \n\nThe Enterprise Income Tax Law provides that since\nJanuary 1, 2008, an income tax rate of 10% will normally be applicable to dividends declared to non-PRC resident investors which do not\nhave an establishment or place of business in the PRC, or which have such establishment or place of business but the relevant income is\nnot effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within the\nPRC.\n\n \n\nPursuant to an *Arrangement Between\nthe Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of\nFiscal Evasion with Respect to Taxes on Incomes *(“Double Tax Avoidance Arrangement”) and other applicable PRC\nlaws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions\nand requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends the\nHong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%. However, based on the *Circular\non Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties *(the “SAT Circular\n81”) issued on February 20, 2009 by SAT, if the relevant PRC tax authorities determine, in their discretion, that a company\nbenefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities\nmay adjust the preferential tax treatment.\n\n \n\nAccording to the *Circular on Several Questions\nregarding the “Beneficial Owner” in Tax Treaties*, which was issued on February 3, 2018 by the SAT and took effect on April\n1, 2018, when determining the applicant’s status of the “beneficial owner” regarding tax treatments in connection with\ndividends, interests or royalties in the tax treaties, several factors, including without limitation, whether the applicant is obligated\nto pay more than 50% of his or her income in twelve months to residents in third country or region, whether the business operated by the\napplicant constitutes the actual business activities, and whether the counterparty country or region to the tax treaties does not levy\nany tax or grant tax exemption on relevant incomes or levy tax at an extremely low rate, will be taken into account, and it will be analyzed\naccording to the actual circumstances of the specific cases. This circular further provides that applicants who intend to prove his or\nher status of the “beneficial owner” shall submit the relevant documents to the relevant tax bureau according to the *Announcement\non Issuing the Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of the Treatment under Tax Agreements.*\n\n** **\n\n**PRC Laws and Regulations relating to Employment\nand Social Welfare**\n\n** **\n\n*Labor Law of the PRC*\n\n* *\n\nPursuant to the Labor Law of the PRC, which was\npromulgated by the Standing Committee of the NPC on July 5, 1994 with an effective date of January 1, 1995 and was last amended on December\n29, 2018 and the Labor Contract Law of the PRC, which was promulgated on June 29, 2007, became effective on January 1, 2008 and was last\namended on December 28, 2012, with the amendments coming into effect on July 1, 2013, enterprises and institutions shall ensure the safety\nand hygiene of a workplace, strictly comply with applicable rules and standards on workplace safety and hygiene in China, and educate\nemployees on such rules and standards.\n\n \n\nFurthermore, employers and employees shall enter into written employment\ncontracts to establish their employment relationships. Employers are required to inform their employees about their job responsibilities,\nworking conditions, occupational hazards, remuneration and other matters with which the employees may be concerned. Employers shall pay\nremuneration to employees on time and in full accordance with the commitments set forth in their employment contracts and with the relevant\nPRC laws and regulations. Our subsidiaries in China have entered into written employment contracts with all of the employees and performed\nits obligations required under the relevant PRC laws and regulations.\n\n \n\n64\n\n \n\n* *\n\n*Social Insurance and Housing Fund*\n\n* *\n\nPursuant to the *Social Insurance Law\nof the PRC*, which was promulgated by the Standing Committee of the NPC on October 28, 2010 and became effective on July 1, 2011,\nand was last amended on December 29, 2018, with the amendments coming into effect on the same day, employers in the PRC shall\nprovide their employees with welfare schemes covering basic pension insurance, basic medical insurance, unemployment insurance,\nmaternity insurance, and occupational injury insurance. Without force majeure reasons, employers must not suspend or reduce their\npayment of social insurance for employees, otherwise, competent governmental authorities will have the power to enforce employers to\npay up social insurance within a prescribed time limit, and a fine of 0.05% of the unpaid social insurance will be charged on the\npart of the employers per day commencing from the first day of default. Provided that the employers still fail to make the payment\nwithin the prescribed time limit, a fine of over one time and up to three times of the unpaid sum of social insurance will be\ncharged.\n\n \n\nIn accordance with the *Regulations on Management of Housing\nProvident Fund*, which were promulgated by the State Council on April 3, 1999 and last amended on March 24, 2019, employers must register\nat the designated administrative centers and open bank accounts for depositing employees’ housing funds. Employers and employees\nare also required to pay and deposit housing funds, with an amount no less than 5% of the monthly average salary of the employee in the\npreceding year in full and on time. Employers must not suspend or reduce the payment of house provident funds for their employees. Under\nthe circumstances where financial difficulties do exist due to which an employer is unable to pay or pay up house provident funds, permission\nof labor union of the employer and approval of the local house provident funds commission must first be obtained before the employer can\nsuspend or reduce their payment of house provident funds. Where an employer does not open accounts of house provident funds for its employees,\nthe relevant authorities will have the power to demand such employer to do so within a prescribed period, failure of which can result\nin a fine of over RMB 10,000 (approximately $1,500) and up to RMB 50,000 (approximately $7,000) charged on the employer. Moreover, under\nthe cases where competent authorities have given notice to the employer for paying up house provident funds but the employer still fails\nto do so, an application for enforcement can be filed to the court in this regard.\n\n** **\n\n**PRC Laws and Regulations Related to internet\ninformation security and privacy protection**\n\n** **\n\n*The PRC Civil Code*\n\n \n\nOn May 28, 2020, the National People’s Congress\nof the PRC issued the PRC Civil Code, which became effective on January 1, 2021. The PRC Civil Code 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.\n\n \n\n*Cybersecurity Law of the PRC*\n\n \n\nOn November 7, 2016, the Standing Committee of\nthe National People’s Congress of the PRC (the “SCNPC”) 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 warning, confiscation of illegal earnings, suspension of related business\nfor rectification, shutting down its websites, and revocation of its business license or relevant permits, all of which may be imposed\nby the relevant authority, along with fines of up to RMB 1 million (approximately $146,000) depending on the severity of the circumstances.\n\n \n\nOn February 15, 2022, Cybersecurity Review Measures published by Cyberspace\nAdministration of China or the CAC, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry\nof Public Security, Ministry of State Security, Ministry of Finance, Ministry of Commerce, People’s Bank of China, State Administration\nfor Market 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 September 24, 2024, the State Council published the Administration Measures for Cyber Date Security,\nor the “Cyber Data Security Measure”, which requires cyber data processors to file a national security review if their cyber\ndata processing activities affect or may affect national security. On April 2, 2022, the CSRC released the Provisions on Strengthening\nConfidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies which became effective on\nMarch 31, 2023 and provides that a domestic company that seeks to offer and list its securities in a overseas market shall strictly abide\nby applicable PRC laws and regulations, enhance legal awareness of keeping state secrets and strengthening archives administration, institute\na sound confidentiality and archives administration system, and take necessary measures to fulfill confidentiality and archives administration\nobligations.\n\n \n\n65\n\n \n\n \n\n*Measures for the Security Assessment of Data\nCross-border Transfer*\n\n \n\nOn July 7, 2022, CAC promulgated the Measures for the Security Assessment\nof Data Cross-border Transfer, effective on September 1, 2022, which requires the data processors to apply for data cross-border security\nassessment coordinated by the CAC under the following circumstances: (i) any data processor transfers important data to overseas; (ii)\nany critical information infrastructure operator or data processor who processes personal information of over 1 million people provides\npersonal information to overseas; (iii) any data processor who provides personal information to overseas and has already provided personal\ninformation of more than 100,000 people or sensitive personal information of more than 10,000 people to overseas since January 1st of\nthe previous year; and (iv) other circumstances under which the data cross-border transfer security assessment is required as prescribed\nby the CAC.\n\n \n\n*Personal Information Protection Law of the\nPRC*\n\n \n\nOn August 20, 2021, the SCNPC promulgated the\nPersonal Information Protection Law of the People’s Republic of China (the “Personal Information Protection Law”), effective\nfrom November 1, 2021. The Personal Information Protection Law requires, among others, that (i) the processing of personal information\nshould have a clear and reasonable purpose which should be directly related to the processing purpose, in a method that has the least\nimpact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope necessary\nto achieve the processing purpose to avoid the excessive collection of personal information. Different types of personal information and\npersonal information processing will be subject to various rules on consent, transfer, and security. Entities handling personal information\nbear responsibilities for their personal information handling activities, and shall adopt necessary measures to safeguard the security\nof the personal information they handle. Otherwise, the entities handling personal information could be ordered to correct, or suspend\nor terminate the provision of services, and face confiscation of illegal income, fines or other penalties.\n\n \n\n**Hong Kong Regulations**\n\n \n\nAs we provide a trading service business in Hong\nKong, our business operations are subject to various regulations and rules promulgated by the Hong Kong government. The following is a\nbrief summary of the Hong Kong laws and regulations that currently and materially affect our business. This section does not purport to\nbe a comprehensive summary of all present and proposed regulations and legislation relating to the industries in which we operate.\n\n \n\n*Hong Kong Laws and Regulations relating\nto Protection of Personal Data Personal Data (Privacy) Ordinance* (Chapter 486 of the Laws of Hong Kong)\n(“PDPO”), which came into full effect in Hong Kong in 1996 aims to protect the privacy of individuals of their personal\ndata. The PDPO imposes a statutory duty on data users to comply with the requirements of the six data protection principles (the\n“Data Protection Principles”) contained in Schedule 1 to the PDPO. The PDPO provides that a data user shall not do an\nact, or engage in a practice, that contravenes a Data Protection Principle unless the act or practice, as the case may be, is\nrequired or permitted under the PDPO. The six Data Protection Principles are:\n\n \n\n \n●\nPrinciple 1 — purpose and manner of collection of personal data;\n\n** **\n\n \n●\nPrinciple 2 — accuracy and duration of retention of personal data;\n\n** **\n\n \n●\nPrinciple 3 — use of personal data;\n\n \n\n66\n\n \n\n \n\n \n●\nPrinciple 4 — security of personal data;\n\n** **\n\n \n●\nPrinciple 5 — information to be generally available; and\n\n** **\n\n \n●\nPrinciple 6 — access to personal data.\n\n** **\n\nNon-compliance with a Data Protection Principle\nmay lead to a complaint to the Privacy Commissioner for Personal Data (the “Privacy Commissioner”). The Privacy Commissioner\nmay serve an enforcement notice to direct the data user to remedy the contravention. A data user who contravenes an enforcement notice\ncommits an offence which may lead to a fine and imprisonment.\n\n \n\nThe PDPO also gives data subjects certain rights, inter\nalia:\n\n** **\n\n \n●\nthe right to be informed by a data user whether the data user holds personal data of which the individual is the data subject;\n\n** **\n\n \n●\nif the data user holds such data, to be supplied with a copy of such data; and\n\n** **\n\n \n●\nthe right to request correction of any data they consider to be inaccurate.\n\n** **\n\nThe PDPO criminalizes, including but not limited\nto, the misuse or inappropriate use of personal data in direct marketing activities, non-compliance with a data access request\nand the unauthorized disclosure of personal data obtained without the relevant data user’s consent.\n\n \n\n*Hong Kong Laws and Regulations relating to\nTrade Description*\n\n** **\n\n*Trade Descriptions\nOrdinance* (Chapter 362 of the Laws of Hong Kong) (“TDO”), which came into full effect in Hong Kong on April 1,\n1981 aims to prohibit false or misleading trade descriptions and statements to goods and services provided to the customers during\nor after a commercial transaction. Pursuant to the TDO, any person in the course of any trade or business applies a false trade\ndescription to any goods or supply or offers to supply them commits an offence and a person also commits the same offence if he/she\nis in possession for sale or for any purpose of trade or manufacture of any goods with a false description. The TDO also provides\nthat traders may commit an offence if they engage in a commercial practice that has a misleading omission of material information of\nthe goods, an aggressive commercial practice, involves bait advertising, bait and switch or wrong acceptance of payment.\n\n \n\n*Hong Kong Laws and Regulations relating to\nSales of Goods*\n\n \n\nPursuant to *Sale of Goods Ordinance *(Chapter\n26 of the Laws of Hong Kong) (“SOGO”), which came into full effect in Hong Kong on August 1, 1896, in every contract of sale,\nthere is an implied warranty that the goods are free, and will remain free until the time when the property is to pass,\nfrom any charge or encumbrance not disclosed or known to the buyer before the contract is made and that the buyer will enjoy quiet\npossession of the goods except so far as it may be disturbed by the owner or other person entitled to the benefit of any charge or\nencumbrance so disclosed or known. The SOGO provides that there is an implied condition that the goods shall correspond with the\ndescription where there is a contract for the sale of goods by description, and there is any implied condition or warranty as\nto the quality or fitness for any particular purpose of goods supplied under a contract of sale. Where the seller sells\ngoods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable\nquality.  \n\n \n\n*Hong Kong Laws and Regulations relating to\nSupply of Services*\n\n \n\nPursuant to *Supply of Services (Implied\nTerms) Ordinance *(Chapter 457 of the Laws of Hong Kong) (“SSITO”), which came into full effect in Hong Kong on October\n21, 1994, in a contact for the supply of a service where the supplier is acting in the course of a business, there is an implied\nterm that the supplier will carry out the service with reasonable care and skill. The SSITO provides that where, under a contract for\nthe supply of a service by a supplier acting in the course of a business, the time for the service to be carried out is not fixed\nby the contract, is not left to be fixed in a manner agreed by the contract or is not determined by the course of dealing between the\nparties, there is an implied term that the supplier will carry out the service within a reasonable time.\n\n \n\n67\n\n \n\n \n\n*Hong Kong Laws and Regulations relating to\nExemption Clauses in a Contract*\n\n \n\n*Control of Exemption Clauses Ordinance* (Chapter\n71 of the Laws of Hong Kong) (“CECO”), which came into full effect in Hong Kong on December 1, 1990 aims to limit the scope\nwhere the seller may limit its liability via the terms of the contracts. The CECO provides that unless the concerned terms satisfy the\ntest of reasonableness, a person dealing as consumer cannot by reference to any contract term be made to indemnify another person (whether\na party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract.\n\n \n\n*Hong Kong Laws and Regulations relating to\nObscene and Indecent Article*\n\n \n\nPursuant to *Control of Obscene and\nIndecent Articles Ordinance *(Chapter 390 of the Laws of Hong Kong) (“COIAO”), which came into full effect in\nHong Kong on September 1, 1987, any person who publishes, possesses for the purpose of publication or imports for the purpose of the\npublication, any obscene article, whether or not he knows that it is an obscene article, may commit an offence and may be liable for\na fine and imprisonment. The COIAO provides that it may be an offence to publish any indecent article without sealing such articles\nin wrappers and displaying a notice as prescribed by the COIAO. It may also be an offence to publish any indecent article to a\nperson under 18, whether or not it is known that it is an indecent article or that such person is under 18.\n\n \n\n*Hong Kong Laws and Regulations relating to\nCopyright*\n\n \n\n*Copyright Ordinance *(Chapter 528 of\nthe Laws of Hong Kong) (“Copyright Ordinance”), which came into full effect in Hong Kong on July 13, 2001 provides comprehensive\nprotection for recognized categories of work including artistic work. The Copyright Ordinance restricts certain acts such as copying and/or\nissuing or making available copies to the public of a copyright work without the authorization from the copyright owner as it may constitute\nprimary infringement. The Copyright Ordinance provides that a person may also incur liability for secondary infringement if that person\npossesses, sells, distributes or deals with a copy of a work which is, and which he knows or has reason to believe to be, an infringing\ncopy of work for the purposes of or in the course of any trade or business without the consent of the copyright owner.\n\n \n\n*Hong Kong Laws and Regulations relating to\nCompetition*\n\n \n\n*Competition Ordinance* (Chapter 619\nof the Laws of Hong Kong) (“Competition Ordinance”), which came into full effect in Hong Kong on December 14, 2015 prohibits\nand deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting\nor distorting competition in Hong Kong. The key prohibitions include (i) prohibition of agreements between businesses which have\nthe object or effect of preventing, restricting or distorting competition in Hong Kong; and (ii) prohibiting companies with a substantial\ndegree of market power from abusing their power by engaging in conduct that has the object or effect of preventing, restricting or distorting\ncompetition in Hong Kong. The penalties for breaches of the Competition Ordinance include, but are not limited to, financial penalties\nof up to 10% of the total gross revenues obtained in Hong Kong for each year of infringement, up to a maximum of three years in which\nthe contravention occurs.\n\n \n\n*Hong Kong Laws and Regulations relating to\nEmployment*\n\n \n\nPursuant to *Employment Ordinance *(Chapter\n57 of the Laws of Hong Kong) (“EO”), which came into full effect in Hong Kong on September 27, 1968, all employees covered\nby the EO are entitled to basic protection under the EO including but not limited to payment of wages, restrictions on wages deductions\nand the granting of statutory holidays.\n\n \n\nPursuant to *Mandatory Provident Fund Schemes\nOrdinance* (Chapter 485 of the Laws of Hong Kong) (“MPFSO”), which came into full effect in Hong Kong on December\n1, 2000, every employer must take all practicable steps to ensure that the employee becomes a member of a Mandatory Provident Fund (MPF)\nscheme. An employer who fails to comply with such a requirement may face a fine and imprisonment. The MPFSO provides that an employer who\nis employing a relevant employee must, for each contribution period, from the employer’s own funds, contribute to the relevant\nMPF scheme the amount determined in accordance with the MPFSO.\n\n \n\nPursuant to *Employees’ Compensation\nOrdinance* (Chapter 282 of the Laws of Hong Kong) (“ECO”), which came into full effect in Hong Kong on December 1,\n1953, all employers are required to take out insurance policies to cover their liabilities under the ECO and at common law for injuries\nat work in respect of all of their employees. An employer failing to do so may be liable to a fine and imprisonment.\n\n \n\n68\n\n \n\n \n\n**C. Organizational structure**\n\n** **\n\nBelow is the Company’s corporate structure\nchart as of the date of this report.\n\n \n\n \n\nVariable Interest Entity Arrangements\n\n \n\nWe previously conducted our operations in China\nthrough the variable interest entity, Jiangsu Yanggu. The material terms of the VIE Agreements with Jiangsu Yanggu and its shareholders\nare as follows:\n\n \n\n*Technical Consultation and Service Agreement*. Pursuant\nto the Technical Consultation and Service Agreement between the WFOE and Jiangsu Yanggu dated May 8, 2019, the WFOE has the exclusive\nright to provide consultation and services to Jiangsu Yanggu in the areas of management, human resources, technology and intellectual\nproperty rights. For such services, Jiangsu Yanggu agrees to pay service fees in the amount of 100% of its net income and the WFOE has\nthe obligation to absorb 100% of Jiangsu Yanggu’s losses. The WFOE exclusively owns any intellectual property rights arising from\nthe performance of this Technical Consultation and Service Agreement. The amount of service fees and the payment term can be amended\nby the WFOE with consultation with Jiangsu Yanggu for implementation. The term of the Technical Consultation and Service Agreement is\n20 years. The WFOE may terminate this agreement at any time by giving 30 days’ written notice to Jiangsu Yanggu.\n\n \n\n*Equity Pledge Agreement*. Pursuant\nto the Equity Pledge Agreement among the WFOE, Jiangsu Yanggu and Jiangsu Yanggu’s shareholders dated May 8, 2019, amended on January\n28, 2021 (collectively, the “Pledge”), each of Jiangsu Yanggu’s shareholders pledged all of their equity interests\nin Jiangsu Yanggu to the WFOE to guarantee Jiangsu Yanggu’s performance of relevant obligations and indebtedness under the Technical\nConsultation and Service Agreement and other control agreements (collectively, the “Control Agreement”). If Jiangsu Yanggu\nbreaches its obligations under the Control Agreement, the WFOE, as pledgee, will be entitled to certain rights, including the right to\ndispose of the pledged equity interests in order to recover the damages associated with such breaches. The Pledge shall be continuously\nvalid until all of Jiangsu Yanggu’s shareholders are no longer shareholders of Jiangsu Yanggu, or until the satisfaction of all\nJiangsu Yanggu’s obligations under the Control Agreement.\n\n \n\n69\n\n \n\n \n\n*Equity Option Agreement.* Pursuant\nto the Equity Option Agreement among the WFOE, Jiangsu Yanggu and Jiangsu Yanggu’s shareholders dated May 8, 2019, amended on January\n28, 2021, WFOE has the exclusive right to require that Jiangsu Yanggu’s shareholders fulfill and complete all approval and registration\nprocedures required under PRC laws for the WFOE to purchase, or designate one or more persons to purchase, such shareholders’ equity\ninterests in Jiangsu Yanggu, in one or multiple transactions, at any time or from time to time, at the WFOE’s sole and absolute\ndiscretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until\nall of the equity interests owned by Jiangsu Yanggu’s shareholders have been legally transferred to the WFOE or its designee(s).\n\n \n\n*Voting Rights Proxy and Financial Supporting\nAgreements*. Pursuant to the Voting Rights Proxy and Financial Supporting Agreement among the WFOE, Jiangsu Yanggu\nand Jiangsu Yanggu’s shareholders dated May 8, 2019, amended on January 28, 2021, Jiangsu Yanggu’s shareholders irrevocably\nappointed the WFOE or the WFOE’s designee to exercise all of his or her rights as a shareholder of Jiangsu Yanggu under the Articles\nof Association of Jiangsu Yanggu, including but not limited to the power to exercise all such shareholder’s voting rights with\nrespect to all matters to be discussed and voted in Jiangsu Yanggu shareholder meetings. The term of the Voting Rights Proxy and Financial\nSupporting Agreements is 20 years.\n\n \n\nThese contractual arrangements with the variable\ninterest entity and its shareholders enable us to exercise effective control over the variable interest entity and hence consolidate the\nfinancial results of the VIE and its wholly owned subsidiaries without being deemed as a foreign invested company.\n\n \n\nWe terminated the VIE Agreements and dismantle\nthe VIE structure on November 11, 2025. Jiangsu Yanggu is no longer our consolidated variable interest entity and is no longer consolidated\nin our financial statements since then. All equity interests of entities previously held by Jiangsu Yanggu were transferred to the WFOE\nat no consideration, and all equity pledges and contractual control arrangements were terminated on November 11, 2025.\n\n \n\nThe Company currently conducts its operations\nin the People’s Republic of China through its wholly-owned subsidiaries, without any VIE or contractual control arrangements.\n\n \n\nThe VIE Agreements were fully terminated and the VIE structure was\ncompletely dissolved on November 11, 2025, as a result of the VIE Termination Agreement.\n\n \n\n**D. Property, Plants and Equipment**\n\n** **\n\nOur principal executive offices are located in Hong Kong where we lease\napproximately 30 square meters of office space. Our leased premises are leased from unrelated third parties who either have valid title\nto the relevant properties or proper authorization from the title holder to sublease the property. On November 4, 2021, Kashi Dongfang\nand Kashi Longrui, jointly entered into an agreement acquired an office building from Nanjing Z-COM Wireless Communication Technology\nCo., Ltd. for a total amount of RMB 60 million (approximately $9.2 million). The office building is located at Building 30, #699-22, Xuanwu\nAvenue, Xuanwu District, Nanjing City, Jiangsu Province, which is approximately 6,840 square meters. The land use right for the land occupied\nby the building was acquired by means of purchase and remains valid until December 20, 2056. The Company completed the decoration of the\nbuilding in January 2024, which has been used as our office space in China since February 2024.\n\n \n\nWe believe that we will have adequate facilities to accommodate our\nfuture expansion plans. Currently, we also lease the following properties to conduct our business:\n\n** **\n\nProperty \nLessee \nAnnual Rent \nTermination\nDate \nPurposes/Use\n\nRoom 501, 14th Floor, Shannxi Building, Kashi Avenue, Kashi, Xinjiang, China \nKashi Longrui \nRMB 25,000 (approximately $3,548) \nJune 30, 2026 \nOffice\n\nRoom 1310, Tower B, Harbour View\nBuilding, Eastern District, Hong Kong \nOriental Culture Holding LTD \nHKD 120,000 (approximately\n$ 15,400) \nDecember 31, 2026 \nOffice\n\n \n\n70"}