{"url_path":"/sec/ucar/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1939780/0001213900-26-057792-index.html","accession_number":"0001213900-26-057792","cik":"0001939780","ticker":"UCAR","issuer_name":"U Power Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1939780/0001213900-26-057792-index.html","primary_entity_key":"0001939780","primary_entity_name":"U Power Ltd"},"word_count":37212,"has_tables":true,"body_markdown":"**Item\n3. KEY INFORMATION** \n\n \n\nWe\nare not a Chinese operating company, but rather a holding company incorporated in the Cayman Islands. As a holding company with no material\noperations of our own, we conduct our operations through our operating entities established in the PRC. As such, our corporate structure\ninvolves unique risks to investors. Investors of our Class A Ordinary Shares do not directly own any equity interests in our Chinese\noperating subsidiaries, but will instead own shares of a Cayman Islands holding company. The Chinese regulatory authorities could intervene\nor influence the operations of our Chinese operating subsidiaries, including disallowing our corporate structure, which would likely\nresult in a material change in our operations and/or a material change in the value of our Class A Ordinary Shares. See “Item 3.\nKey Information — D. Risk Factors **—**Risks Relating to Doing Business in China — Any actions by the Chinese\ngovernment, including any decision to intervene or influence the operations of the operating entities or to exert control over any offering\nof securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations\nof the PRC operating entities, may limit or completely hinder our ability to continue to offer securities to investors, and may cause\nthe value of such securities to significantly decline or be worthless.”\n\n \n\nWe\nare subject to legal and operational risks associated with being based in and having the majority of our operations in China. These risks\nmay result in a material change in our operations, or a complete hindrance of our ability to continue to offer our securities to investors,\nand could cause the value of such securities to significantly decline or become worthless. Since 2021, the PRC government initiated a\nseries of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down\non illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest\nentity structure, and adopting new measures to extend the scope of cybersecurity reviews. On July 6, 2021, the General Office of the\nCommunist Party of China Central Committee and the General Office of the State Council jointly issued an announcement to crack down on\nillegal activities in the securities market and promote the high-quality development of the capital market, which, among other things,\nrequires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance\nsupervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the\nPRC securities laws. On December 28, 2021, the Cyberspace Administration of China (the “CAC”), together with 12 other governmental\ndepartments of the PRC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity\nReview Measures require that an online platform operator which possesses the personal information of at least one million users must\napply for a cybersecurity review by the CAC if it intends to be listed in foreign countries. On September 30, 2024, the State Council\nof China published the Regulations on Network Data Security Administration, which provides that data processing operators engaging in\ndata processing activities that affect or may affect national security must be subject to network data security review by the relevant\ncyberspace administration of the PRC. The Regulations on Network Data Security Administration became effective on January 1, 2025. On\nOctober 28, 2025, the Standing Committee of the National People’s Congress adopted a decision to amend the Cybersecurity Law of\nthe People’s Republic of China. This revision significantly raises the maximum thresholds for financial penalties for violations,\nestablishes a legal framework for the security governance of new technologies such as artificial intelligence, and further strengthens\nthe security protection responsibilities and extraterritorial application of the law for network operators, particularly platforms. The\namended law became effective on January 1, 2026. As confirmed by our PRC counsel, Guantao Law Firm, since we are not an online platform\noperator that possesses over one million users’ personal information, we are not subject to the cybersecurity review with the CAC\nunder the Cybersecurity Review Measures and the Regulations on Network Data Security Administration. There remains uncertainty, however,\nas to how the Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the\nCAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures\nand the Regulations on Network Data Security Administration. In addition, since 2021, the Chinese government has strengthened its anti-monopoly\nsupervision, mainly in three aspects: (1) establishing the National Anti-Monopoly Bureau; (2) revising and promulgating anti-monopoly\nlaws and regulations, including the Anti-Monopoly Law (draft Amendment published on October 23, 2021 for public opinion, the newly revised-Monopoly\nLaw that was promulgated on June 24, 2022, and became effective on August 1,2022), the anti-monopoly guidelines for various industries,\nand the detailed Rules for the Implementation of the Fair Competition Review System; and (3) expanding the anti-monopoly law enforcement\ntargeting Internet companies and large enterprises. As of the date of this annual report, the Chinese government’s recent statements\nand regulatory actions related to anti-monopoly concerns have not impacted our ability to conduct business, accept foreign investments,\nor list on a U.S. or other foreign exchange, because neither the Company nor its PRC operating entities engage in monopolistic behaviors\nthat are subject to these statements or regulatory actions. On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”)\nreleased the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures,\nand five supporting guidelines, which came into effect on March 31, 2023. The Trial Measures regulate both direct and indirect overseas\noffering and listing by PRC domestic companies by adopting a filing-based regulatory regime. Pursuant to the Trial Measures, domestic\ncompanies that seek to offer or list securities overseas, whether directly or indirectly, should fulfill the filing procedures and report\nrelevant information to the CSRC within three working days after submitting listing applications and subsequent\namendments. According to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing\nby Domestic Companies from the CSRC, or the CSRC Notice, the domestic companies that have already been listed overseas before the effective\ndate of the Trial Measures (i.e. March 31, 2023) shall be deemed to be existing issuers (the “Existing Issuers”). Existing\nIssuers are not required to complete the filing procedures immediately; however Existing Issuers will be required to file with the CSRC\nfor any subsequent offerings. Our PRC counsel, Guantao Law Firm, advised us that, since we obtained approval from both the U.S. Securities\nand Exchange Commission (the “SEC”) and The Nasdaq Stock Market LLC (“Nasdaq”) to issue and list our shares on\nthe Nasdaq Capital Market prior to March 31, 2023, and closed our initial public offering on April 24, 2023, we were not required to\ncomplete the filing procedures with the CSRC for our initial public offering immediately pursuant to the Trial Measures. In\nthe event that filings with the CSRC are required with respect to subsequent offerings, we cannot assure you that we can complete the\nfiling procedures, obtain the approvals, or complete other compliance procedures in a timely manner, or at all, or that any completed\nfilings or approvals or other compliance procedures fulfilled would not be later rescinded. Any such failure could subject us to sanctions\nby the CSRC or other PRC regulatory authorities. For further details, see “Item 3. Key Information — D. Risk Factors\n— Risks Relating to Doing Business in China — The PRC government exerts substantial influence over the manner in which we\nand our PRC subsidiaries must conduct our business activities. We are currently not required to obtain approval from Chinese authorities\nto list on U.S. exchanges; however, if we or our PRC subsidiaries are required to obtain approval in the future and are denied permission\nfrom Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchanges, which would materially\naffect the interest of the investors.”\n\n1\n\n \n\nOur\nPRC counsel, Guantao Law Firm, has advised us that, as of the date of this annual report, we and our PRC subsidiaries have received from\nthe PRC authorities all requisite licenses, permissions, or approvals that are required and material for conducting our operations in\nChina, such as business licenses and auto dealer filings. However, it is uncertain whether we or our PRC subsidiaries will be required\nto obtain additional approvals, licenses, or permits in connection with our business operations pursuant to evolving PRC laws and regulations,\nand whether we would be able to obtain and renew such approvals on a timely basis or at all. Failing to do so could result in non-compliance\nand materially change in our operations, and the value of our Class A Ordinary Shares could depreciate significantly or become worthless.\n\n \n\n**Approvals\nfrom the PRC Authorities to Conduct Our Operations**\n\n \n\nOur\nPRC counsel, Guantao Law Firm, has advised us that, as of the date of this annual report, we and our PRC subsidiaries have received from\nthe PRC authorities all requisite licenses, permissions, or approvals that are required and material for conducting our operations in\nChina, such as business licenses and auto dealer filings. However, it is uncertain whether we or our PRC subsidiaries will be required\nto obtain additional approvals, licenses, or permits in connection with our business operations pursuant to evolving PRC laws and regulations,\nand whether we would be able to obtain and renew such approvals on a timely basis or at all. Failing to do so could result in non-compliance\nand materially change in our operations, and the value of our Class A Ordinary Shares could depreciate significantly or become worthless.\n \n\n* *\n\n**Dividends\nand Distributions**\n\n \n\nUnder\nCayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either a profit or share premium account,\nprovided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts due in\nthe ordinary course of business. As of the date of this annual report, (1) the Company transferred approximately $5.89 million and\n$4.88 million to a subsidiary, Energy U Limited, in fiscal years 2025 and 2024, respectively, and no other cash transfers or\ntransfers of other assets have occurred among the Company and its subsidiaries during such periods, and (2) the Company and its subsidiaries have not\nmade any dividends or distributions to investors. We intend to keep any future earnings to finance the expansion of our business,\nand we do not anticipate that any cash dividends will be paid in the foreseeable future. As of the date of this annual report, we\nhave not installed any cash management policies that dictate how funds are transferred among the Company, its subsidiaries, or\ninvestors.\n\n \n\nOur\nPRC operating entities receive substantially all of our revenue in RMB. Under our current corporate structure, to fund any cash and financing\nrequirements we may have, we may rely on dividend payments from the PRC operating subsidiaries. Under existing PRC foreign exchange regulations,\npayment of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made\nin foreign currencies without prior approval from State Administration of Foreign Exchange (“SAFE”) by complying with certain\nprocedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior approval\nfrom SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC\nforeign exchange regulations, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate\nshareholders who are PRC residents. Approval from or registration with appropriate government authorities is, however, required where\nthe RMB is to be converted into foreign currency and remitted out of China to pay capital expenses, such as the repayment of loans denominated\nin foreign currencies. The PRC government may also, at its discretion, restrict access in the future to foreign currencies for current\naccount transactions.\n\n \n\nCurrent\nPRC regulations permit our PRC subsidiaries to pay dividends to the Company only out of their accumulated profits, if any, determined\nin accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside\nat least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered\ncapital. Each such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare\nfund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory\nreserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings\nof the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.\n\n \n\n2\n\n \n\nCash\ndividends, if any, on our Class A Ordinary Shares, will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for\ntax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and, as a result, may be subject\nto PRC withholding tax at a rate of up to 10.0%. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative\nRegion for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax\nrate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC project. The 5% withholding tax rate, however,\ndoes not automatically apply and certain requirements must be satisfied, including, without limitation, that (a) the Hong Kong project\nmust be the beneficial owner of the relevant dividends; and (b) the Hong Kong project must directly hold no less than 25% share ownership\nin the PRC project during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong project\nmust obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong\nKong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain\nthe tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the\nDouble Taxation Arrangement with respect to any dividends paid by WFOE, Shandong Yousheng New Energy Technology Development Co., Ltd,\nto its two direct Hong Kong holding companies. As of the date of this annual report, we have not applied for the tax resident certificate\nfrom the relevant Hong Kong tax authority. Our Hong Kong subsidiaries intend to apply for the tax resident certificate if and when our\nPRC subsidiaries plan to declare and pay dividends to our Hong Kong subsidiaries.\n\n \n\nAs of the date of this annual report, there are\nno restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including\nfunds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities. See “Item\n3. Key Information — D. Risk Factors — Risks Relating to Doing Business in China — To the extent cash or assets of\nour business, or of our PRC or Hong Kong subsidiaries, is in mainland China or Hong Kong, such cash or assets may not be available to\nfund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations\nby the PRC government to the transfer of cash or assets.”\n\n** **\n\n**Public\nCompany Accounting Oversight Board of the United States’s Determinations on Public Accounting Firms Headquartered in Mainland China\nand in Hong Kong**\n\n \n\nOur\nClass A Ordinary Shares may be delisted under the Holding Foreign Companies Accountable Act (“HFCAA”) if the Public Company\nAccounting Oversight Board of the United States (the “PCAOB”) is unable to inspect our auditors for three consecutive years\nbeginning in 2021. On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was signed into law as part of the\nConsolidated Appropriations Act, which amended the HFCAA by reducing the number of consecutive non-inspection years required for triggering\nthe prohibitions under the HFCAA from three years to two.\n\n \n\nOn\nDecember 16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered\npublic accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions\ntaken by PRC authorities in those jurisdictions (the “Determination”). On August 26, 2022, the CSRC, the Ministry of Finance\nof the PRC (the “MOF”), and the PCAOB signed the Statement of Protocol (the “Protocol”), governing inspections\nand investigations of audit firms based in China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect\nand investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect\nto the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation\nand has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB determined that it was able to secure\ncomplete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated\nits previous determinations to the contrary. Our former auditor, Onestop Assurance PAC (“Onestop”), was replaced by HHL LLP\n(“HHL”) on July 31, 2025. HHL, a PCAOB-registered public accounting firm headquartered in New York, was subsequently dismissed\nand replaced by HCL, PLLC (“HCL”) as our independent registered public accounting firm, effective January 13, 2026. Our current\nauditor, HCL, and our former auditors, HHL and Onestop, are subject to oversight by the PCAOB, which entity conducts regular inspections\nto assess compliance with applicable professional standards. Onestop has been inspected by the PCAOB on a regular basis, as required\nby U.S. law. Our current auditor, HCL, is headquartered at 1415 W 37th Street, Suite 200, Chicago, IL 60609, and expects to be inspected\nby the PCAOB on a regular basis. As such, as of the date of this annual report, we have not been affected by the HFCAA and the related\nregulations. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB\nmay consider the need to issue a new determination. There is a risk that our auditor cannot be inspected by the PCAOB in the future,\nand if the PCAOB determines that it cannot inspect or fully investigate our auditor for two consecutive years, our securities will be\nprohibited from trading on a national exchange or over-the-counter under the HFCAA, and, as a result, Nasdaq may determine to delist\nour securities, which may cause the value of our securities to decline or become worthless. See “Item 3. Key Information —\nD. Risk Factors —Risk Factors — Risks Relating to Doing Business in China — The Holding Foreign\nCompanies Accountable Act and the Accelerating Holding Foreign Companies Accountable Act call for additional and more stringent criteria\nto be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors\nwho are not inspected by the PCAOB. These developments could add uncertainties to our continued listing on the Nasdaq Capital Market,\nand Nasdaq may determine to delist our securities if the PCAOB determines that it cannot inspect or fully investigate our auditor.”\n\n \n\n3\n\n \n\n**Our\nCorporate History**\n\n \n\nOur\nsubsidiary, AHYS, a limited liability company established pursuant to PRC laws on May 16, 2013, operates through the following subsidiaries:\n\n \n\n(1).Youpin,\nwhich was established on July 18, 2013 and AHYS holds 54.37% of its equity interest. Youpin\nhas the following subsidiaries:\n\n \n\na.Liaoning\nYouguan New Energy Technology Co., Ltd. (“LY New Energy”), which was established\non November 8, 2019, and is wholly owned by Youpin.\n\n \n\nb.Shanghai\nYouchuangneng Digital Technology Co., Ltd. (“SY Digital Tech”), which was established\non November 13, 2015, and is wholly owned by Youpin.\n\n \n\nc.Youguan\nFinancial Leasing (China) Co., Ltd., which was established on February 27, 2017 and is wholly\nowned by Youpin;\n\n \n\n(2).CD\nYouyineng, which was established on October 29, 2020 and is wholly owned by AHYS;\n\n \n\n(3).SH\nYouteng, which was established on November 3, 2020 and AHYS holds 70% of its equity interest;\n\n \n\n(4).SH\nYouxu, which was established on March 22, 2021 and AHYS holds 70% of its equity interest.\nSH Youxu has the following subsidiaries:\n\n \n\na.Quanzhou\nYouyi Power Exchange Network Technology Co., Ltd., which was established on June 29, 2021\nand is wholly owned by SH Youxu;\n\n \n\nb.Youxu\n(Xiamen) Power Exchange Network Technology Co., Ltd., which was established on August 10,\n2021 and is wholly owned by SH Youxu;\n\n \n\nc.Wuhu\nYouxu New Energy Technology Co., Ltd., which was established on November 12, 2021 and is\nwholly owned by SH Youxu;\n\n \n\nd.Henan\nYouxu New Energy Technology Co., Ltd., which was established on December 1, 2022 and SH Youxu\nowns 80% of its equity interest;\n\n \n\ne.Youxu\nNew Energy Technology (Nanyang) Co., Ltd., which was established on March 14, 2023 and SH\nYouxu owns 70% of its equity interest;\n\n \n\nf.Shanghai\nYounengke New Energy Technology Co., Ltd., which was established on July 11, 2025 and is\nwholly owned by SH Youxu; and\n\n \n\ng.Youxu\nNew Energy Technology (Jilin) Co., Ltd., which was established on January 22, 2026 and is\nwholly owned by SH Youxu.\n\n \n\n(5).Youpin\nSD, which was established on June 30, 2020 and AHYS holds 86.96% of its equity interest.\nYoupin SD has the following subsidiaries:\n\n \n\na.Youxu\nNew Energy Technology (Zibo) Co., Ltd., which was established on July 29, 2021 and Youpin\nSD owns 98.0392% of its equity interest.\n\n \n\nb.Zibo\nHengxin Investment Partnership Enterprise (Limited Partnership), which was established on\nNovember 2, 2020 and Youpin SD owns 99.0099% of its equity interest.\n\n \n\n(6).U\nSWAP Co., Ltd., which was established on June 13, 2024 and AHYS owns 85% of its equity interest.\nU SWAP Co., Ltd has the following subsidiary:\n\n \n\na.Greendrive\nTech Co., Ltd., which was established on March 5, 2025, and is owned 70% by USWAP Co., Ltd.\nand 30% by Ezzy Transporter (Thailand) Company Limited.\n\n \n\nSince\n2013, AHYS and its subsidiaries have principally engaged in the provision of vehicle sourcing services. Beginning in 2020, AHYS and its\nsubsidiaries gradually shifted focus from the vehicle sourcing business to the development of their proprietary battery-swapping technology,\nor UOTTA technology.\n\n \n\n4\n\n \n\n**Reorganization\nin Connection with Our IPO**\n\n \n\nIn\nconnection with our initial public offering (the “IPO”), which was closed in April 2023, we undertook a reorganization (the\n“Reorganization”) in the following steps:\n\n \n\nOn\nJune 17, 2021, Upincar was incorporated under the laws of the Cayman Islands. Upincar owns 100% of Youcang Limited, a British Virgin\nIslands company incorporated on June 30, 2021. Youcang Limited owns 100% of Energy U Limited, a Hong Kong company incorporated\non July 19, 2021.\n\n \n\nOn\nJanuary 27, 2022, WFOE was incorporated pursuant to the PRC laws as a wholly foreign owned enterprise. Energy U Limited holds 100%\nof the equity interest in WFOE.  On July 8, 2022, WFOE acquired 99% equity interest in AHYS for RMB217,774,286.31. On December\n12, 2022, WFOE acquired the remaining 1% equity interest in AHYS from U Robur Limited (HK), a Hong Kong company.\n\n \n\n**Our\nCorporate Structure**\n\n \n\nWe\nare a Cayman Islands exempted company incorporated on June 17, 2021. Exempted companies are Cayman Island companies conducting business\nmainly outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Act (As Revised)\nof the Cayman Islands.\n\n \n\nThe\nfollowing diagram illustrates our corporate structure as of the date of this annual report.\n\n \n\n \n\n(1)\nOn December 25, 2024, U\nSWAP Co., Ltd., signed a cooperation agreement with Ezzy Transporter (Thailand) Company Limited to establish Greendrive Tech Co.\nLtd in Thailand. On March 5, 2025, Greendrive Tech Co., Ltd. was incorporated in Thailand. As of the date of this annual report,\nSwap Co Ltd. holds a 70% equity interest in Greendrive Tech Co. Ltd. and Ezzy Transporter (Thailand) Company Limited holds the remaining\n30% equity interest. See “Item 4. Information on the Company — A. History and Development of the Company — Joint\nVenture in Thailand.”\n\n \n\nA. [Reserved]\n\n \n\nB. Capitalization\nand Indebtedness\n\n \n\nNot applicable.\n\n \n\n5\n\n \n\nC. Reasons\nfor the Offer and Use of Proceeds\n\n \n\nNot applicable.\n\n \n\nD. Risk\nFactors\n\n** **\n\n**Summary\nof Risk Factors**\n\n \n\nInvesting\nin our Class A Ordinary Shares involves significant risks. You should carefully consider all of the information in this annual report\nbefore making an investment in our Class A Ordinary Shares. Below please find a summary of the principal risks we face, organized under\nrelevant headings. These risks are discussed more fully in the section titled “Item 3. Key Information — D. Risk Factors”\nin this annual report.\n\n** **\n\n**Risks\nRelating to Doing Business in China**\n\n \n\nRisks\nand uncertainties related to doing business in China include, but are not limited to, the following:\n\n \n\n●Changes\nin China’s economic, political or social conditions, laws, regulations or governmental\npolicies could have a material adverse effect on our business, financial conditions and results\nof operations. PRC laws and regulations governing our current business operations are sometimes\nvague and uncertain and any changes in such laws and regulations may impair our ability to\noperate profitably (see page 11 of this annual report);\n\n \n\n●Substantial\nuncertainties in the promulgation, interpretation and enforcement of PRC laws and regulations\ncould limit the legal protections available to you and us (see page 12 of this annual report);\n\n \n\n●Any\nactions by the Chinese government, including any decision to intervene or influence the operations\nof the operating entities or to exert control over any offering of securities conducted overseas\nand/or foreign investment in China-based issuers, may cause us to make material changes to\nthe operations of the PRC operating entities, may limit or completely hinder our ability\nto continue to offer securities to investors, and may cause the value of such securities\nto significantly decline or be worthless (see page 12 of this annual report);\n\n \n\n●We\nmay become subject to a variety of laws and regulations in the PRC regarding privacy, data\nsecurity, cybersecurity, and data protection (see page 13 of this annual report);\n\n \n\n●The\nM&A Rules and certain other PRC regulations may make it more difficult for us to pursue\ngrowth through acquisitions (see page 18 of this annual report);\n\n \n\n●To\nthe extent cash or assets of our business, or of our PRC or Hong Kong subsidiaries, is in\nmainland China or Hong Kong, such cash or assets may not be available to fund operations\nor for other use outside of the PRC or Hong Kong, due to interventions in or the imposition\nof restrictions and limitations by the PRC government to the transfer of cash or assets (see\npage 21 of this annual report);\n\n \n\n●Fluctuations\nin exchange rates could have a material and adverse effect on our results of operations and\nthe value of your investment (see page 23 of this annual report);\n\n \n\n●Governmental\ncontrol of currency conversion may limit our ability to utilize our income effectively and\naffect the value of your investment (see page 23 of this annual report);\n\n \n\n6\n\n \n\n●The\nPRC government exerts substantial influence over the manner in which we and our PRC subsidiaries\nmust conduct our business activities. We are currently not required to obtain approval from\nChinese authorities to list on U.S. exchanges; however, if we or our PRC subsidiaries are\nrequired to obtain approval in the future and are denied permission from Chinese authorities\nto list on U.S. exchanges, we will not be able to continue listing on U.S. exchanges, which\nwould materially affect the interest of the investors (see page 24 of this annual report);\n\n \n\n●The\nHFCAA and the Accelerating Holding Foreign Companies Accountable Act call for additional\nand more stringent criteria to be applied to emerging market companies upon assessing the\nqualification of their auditors, especially the non-U.S. auditors who are not inspected by\nthe PCAOB. These developments could add uncertainties to our continued listing on the Nasdaq\nCapital Market, and Nasdaq may determine to delist our securities if the PCAOB determines\nthat it cannot inspect or fully investigate our auditor (see page 25 of this annual report);\nand\n\n \n\n●Changes\nin international trade policies, or the escalation of tensions in international relations,\nparticularly with regard to China, may adversely impact our business and operating results\n(see page 26 of this annual report); and\n\n \n\n●Trade\ndisputes or the imposition of tariffs on imports and exports could affect international trade,\nand therefore could adversely affect our business.\n\n \n\n**Risks\nRelating to Our Business and Industry**\n\n \n\nRisks\nand uncertainties related to our business and industry include, but are not limited to, the following:\n\n \n\n●We\nhave incurred substantial losses in the past and may incur losses in the future. There is\nsubstantial doubt about our ability to continue as a going concern (see page 28 of this annual\nreport);\n\n \n\n●We\nhave limited operating history in an emerging and fast-growing market, and our historical\nfinancial and operating performance may not be indicative of our future prospects and results\nof operations (see page 28 of this annual report);\n\n \n\n●We\nface intense competition and may not be able to compete effectively (see page 29 of this\nannual report);\n\n \n\n●We\nmay not be able to effectively manage our growth, control expenses or implement business\nstrategies, any of which events may cause our PRC subsidiaries to be unable to provide services\nor deliver products with premium quality or compete effectively (see page 30 of this annual\nreport);\n\n \n\n●Any\nharm to our brands or reputation or any damage to the reputation of the third parties with\nwhom we collaborate or failure to enhance brand recognition could have a material adverse\neffect on our results of operations and growth prospects (see page 30 of this annual report);\n\n \n\n●We\nmay not be able to prevent others from unauthorized use of our intellectual property, which\ncould harm our business and competitive position (see page 31 of this annual report);\n\n \n\n7\n\n \n\n●Some of our patent applications\non UOTTA technology are currently pending, we cannot assure you that such patents will be approved, and we may not be able to prevent\nothers from developing or exploiting competing technologies, which could have a material and adverse effect on our business, results\nof operations, financial condition and prospects (see page 32 of this annual report);\n\n \n\n●Any significant disruption in our IT systems, including events beyond our control,\nor disruptions in our business partners’ IT systems, could have a material and adverse effect on our\nbusiness and financial condition (see page 33 of this annual\nreport);\n\n \n\n●If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately\nreport our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market price of our shares may be materially and adversely affected (see page 34 of this annual report);\n\n \n\n●Our business will be harmed if overall consumer demand suffers from a severe or sustained economic downturn or\nif there is an oversupply in the automobile industry, the EV industry or the battery-swapping station sector (see page 35 of this annual\nreport); and\n\n \n\n●The seasonality of the\nautomobile industry impacts our operating results (see page 36 of this annual report).\n\n** **\n\n**Risks\nRelated to Our Vehicle Sourcing Business**\n\n \n\nRisks\nand uncertainties related to our vehicle sourcing business, but are not limited to, the following:\n\n \n\n●Our\nvehicle sourcing network is crucial to the success of our vehicle sourcing business; if we\nfail to further develop or maintain our business relationships with sourcing partners at\na sustainable cost, or at all, our vehicle sourcing business, financial condition and prospects\nwould be adversely affected (see page 38 of this annual report);\n\n \n\n●The\ncommissions from our sourcing services may decline in the future, and any material decrease\nin such commissions could harm our business, financial condition and results of operations\n(see page 39 of this annual report);\n\n \n\n●We\nface intense competition in the sourcing market and may not be able to compete effectively\n(see page 39 of this annual report);\n\n \n\n \n●\nUncertainties relating\nto the growth of the Chinese automotive markets in general could adversely affect our sourcing business and results of operations\n(see page 39 of this annual report);\n\n \n\n \n●\nOur business is sensitive\nto changes in the prices of new and used vehicles (see page 40 of this annual report); and\n\n \n\n●We\nrely on third-party carriers to transport vehicles to our customers, and they are subject\nto associated business risks and costs and with those of the transportation industry, generally,\nmany of which risks and costs would be out of our control (see page 40 of this annual report).\n\n** **\n\n**Risks\nRelated to UOTTA-powered EV and Battery-Swapping Station Business**\n\n \n\nRisks\nand uncertainties related to our UOTTA-powered EV and Battery-Swapping Station business include, but are not limited to, the following:\n\n \n\n●We\nmay encounter difficulties in entering into the EV market, which may materially and adversely\naffect our growth and business prospects (see page 40 of this annual report);\n\n \n\n●Our\nfuture growth is dependent upon the demand for, and upon consumers’ willingness to\nadapt to, EVs and battery-swapping stations as a power solution (see page 41 of this annual\nreport);\n\n \n\n8\n\n \n\n●Our success depends on our\nability to successfully develop, market and sell UOTTA-powered EVs and battery-swapping stations (see page 42 of this annual report);\n\n \n\n●If UOTTA-powered EVs\nand battery-swapping stations do not meet the expectations of customers and users, our business, financial condition and competitive position\nwill be materially and adversely affected (see page 42 of this annual report);\n\n \n\n●We may encounter difficulty promoting and marketing UOTTA-powered EVs and battery-swapping stations because of\nthe lack of unified industry standards on EV batteries (see page 42 of this annual report);\n\n \n\n●Our reliance on third parties for manufacturing UOTTA-powered commercial-use EVs and battery-swapping stations\nincreases the risk that the supply of our products may become limited or interrupted or may not be of satisfactory quality and quantity\n(see page 43 of this annual report);\n\n \n\n●If we fail to comply with regulatory requirements, our business could be adversely affected (see page 44 of this\nannual report);\n\n \n\n●We may fail to maintain our strategic partnerships with auto manufacturers to jointly develop UOTTA-powered EVs\n(see page 44 of this annual report);\n\n \n\n●We depend on third parties for the supply of components and parts to\nmanufacture battery-swapping stations (see page 44 of this annual report);\n\n \n\n●We could experience cost increases or disruptions in supply of raw\nmaterials or other components used in the manufacturing of battery-swapping stations (see page 45 of this annual report);\n\n \n\n●Adverse conditions affecting one or more of our cooperating automobile manufacturers, battery-swapping station\nmanufacturers and suppliers may negatively impact our business, financial condition and prospects (see page 45 of this annual report);\n\n \n\n●The UOTTA-powered EVs we jointly develop with cooperating automobile\nmanufacturers are subject to motor vehicle safety standards and the failure to satisfy such mandated safety standards would have a material\nadverse effect on our business and operating results (see page 46 of this annual report);\n\n  \n\n●The construction and operation of our battery-swapping station manufacturing\nfacilities are subject to regulatory approvals or filings and may be subject to changes, delays, cost overruns or may not produce expected\nbenefits (see page 46 of this annual report);\n\n \n\n●The unavailability, reduction or elimination of government and economic\nincentives or government policies which are favorable for EVs, domestically produced vehicles or battery-swapping stations could have\na material adverse effect on our business, financial condition and prospects (see page 46 of this annual report).\n\n** **\n\n9\n\n** **\n\n**Risks\nRelated to Our Class A Ordinary Shares and the Trading Market**\n\n** **\n\nRisks\nand uncertainties related to our Class A Ordinary Shares and the trading market include, but are not limited to, the following:\n\n \n\n●An\nactive trading market for our Class A Ordinary Shares may not develop or sustain, and the\ntrading price for our Class A Ordinary Shares may fluctuate significantly (see page 47 of\nthis annual report);\n\n \n\n●The\ntrading price of our Class A Ordinary Shares has been, and is likely to continue to be, volatile,\nwhich could result in substantial losses to investors (see page 47 of this annual report);\n\n \n\n●We\nmay experience extreme stock price volatility unrelated to our actual or expected operating\nperformance, financial condition or prospects, making it difficult for prospective investors\nto assess the rapidly changing value of our Class A Ordinary Shares (see page 48 of this\nannual report);\n\n \n\n●The\nsale or availability for sale of substantial amounts of our Class A Ordinary Shares could\nadversely affect their market price (see page 49 of this annual report);\n\n \n\n●Because\nwe do not expect to pay dividends in the foreseeable future, you must rely on price appreciation\nof our Class A Ordinary Shares for return on your investment (see page 49 of this annual\nreport);\n\n \n\n●We\nincur substantially increased costs as a public company (see page 50 of this annual report);\n\n \n\n \n●\nIf we fail to maintain our Nasdaq listing, we may face increased regulatory burdens and reduced investor protections on over-the-counter markets (see page 51 of this annual report);\n\n \n \n \n\n \n●\nNasdaq has proposed a new $5 million minimum market value continued listing requirement that, if approved, could result in immediate suspension and delisting of our Class A Ordinary Shares without any cure period or opportunity to regain compliance (see page 51 of this annual report); and\n\n \n \n \n\n \n●\nGeopolitical conflicts involving Iran, military actions in the Middle East, and the war in Ukraine may adversely affect global economic conditions and cause significant volatility in the trading price of our Class A Ordinary Shares (see page 52 of this annual report).\n\n \n\n**Risks\nRelated to Our Capital Structure**\n\n** **\n\nRisks\nand uncertainties related to our Capital Structure, but are not limited to, the following:\n\n \n\n●Our\ndual class share structure with different voting rights may adversely affect the value and\nliquidity of the Class A Ordinary Shares (see page 52 of this annual report); and\n\n \n\n●Our\ndual class share structure with different voting rights will limit your ability to influence\ncorporate matters and could discourage others from pursuing any change of control transactions\nthat holders of our Class A Ordinary Shares may view as beneficial (see page 52 of this annual\nreport).\n\n \n\n10\n\n \n\n**Risks\nRelating to Doing Business in China**\n\n** **\n\n**Changes\nin China’s economic, political or social conditions, laws, regulations or governmental policies could have a material adverse effect\non our business, financial conditions and results of operations.**\n\n \n\nAll\nof our revenues are generated by our PRC subsidiaries. Accordingly, our results of operations, financial condition and prospects are\ninfluenced by economic, political and legal developments in China. Economic reforms begun in the late 1970s have resulted in significant\neconomic growth. China’s economy differs from the economies of most developed countries in many respects, including with respect\nto the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources.\nAlthough the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction\nof state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial\nportion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant\nrole in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over\nChina’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting\nmonetary policy, and providing preferential treatment to particular industries or companies.\n\n \n\nAlthough\nthe PRC economy has grown significantly in the past, that growth may not continue, as evidenced by the slowing of the growth of the PRC\neconomy since 2012. Any adverse changes in economic conditions in China, in the policies of the PRC government or in the laws and regulations\nin China could have a material adverse effect on a specific industry including our PRC subsidiaries in China. Such developments could\nadversely affect our PRC subsidiaries’ business and operating results, lead to reduction in demand for our services and adversely\naffect our competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation\nof resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial\ncondition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations.\nIn addition, in the past the Chinese government has implemented certain measures, including interest rate adjustments, to control the\npace of economic growth. These measures may cause decreased economic activities in China, which may adversely affect our business and\noperating results.\n\n \n\nThe\nPRC operating entities’ ability to operate profitably in the PRC may be adversely affected by changes in policies by the PRC government,\nincluding changes in laws, regulations, or their interpretation, particularly those regarding the Internet, including censorship and\nother restrictions on material which can be transmitted over the Internet, security, intellectual property, money laundering, taxation,\nand other laws that affect our ability to operate our business.\n\n** **\n\n**PRC\nlaws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations\nmay impair our ability to operate profitably.**\n\n \n\nThere\nare substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to,\nthe laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances.\nThe laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement\nmay involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments\nto existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently\nadopted or interpreted in a manner different from their understanding of these laws and regulations. New laws and regulations that affect\nexisting and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing\nor new PRC laws or regulations may have on our business.\n\n \n\n11\n\n \n\n**Substantial\nuncertainties in the promulgation, interpretation and enforcement of PRC laws and regulations could limit the legal protections available\nto you and us.**\n\n \n\nThe\nPRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil\nlaw system may be cited for reference but have limited precedential value. Since these laws and regulations are relatively new and the\nPRC legal system continues to rapidly evolve, the promulgation of new rules and explanations and interpretations of many laws, regulations\nand rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties. In 1979, the PRC government\nbegan to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation\nover the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However,\nChina has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects\nof economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties.\nSpecifically, rules and regulations in China can change quickly with little advance notice.\n\n \n\nFrom\ntime to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative\nand court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult\nto evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal\nsystems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published\nin a timely manner or at all) that may have retroactive effect. As a result, we or our PRC subsidiaries may not be aware of our violation\nof these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of\nour contractual, property (including intellectual property) and procedural rights, could materially and adversely affect our PRC subsidiaries’\nbusiness and impede their ability to continue our operations.\n\n** **\n\n**Any\nactions by the Chinese government, including any decision to intervene or influence the operations of the operating entities or to exert\ncontrol over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material\nchanges to the operations of the PRC operating entities, may limit or completely hinder our ability to continue to offer securities to\ninvestors, and may cause the value of such securities to significantly decline or be worthless.**\n\n \n\nWe\nare a Cayman Islands holding company and are not a Chinese company. As a holding company with no material operations of our own, we conduct\nall of our operations through our PRC operating entities in China. As such, our corporate structure involves unique risks to investors.\nThere are legal and operational risks associated with having operations in mainland China, and the Chinese regulatory authorities could\ndisallow this ownership structure, which would likely result in a material change in our operations and/or a material change in the value\nof the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or\nbecome worthless.\n\n \n\nIn\nthe meeting of the Political Bureau of the CPC Central Committee held on July 30, 2021, the improvement of the regulatory system\nfor overseas listing of enterprises was first proposed. On February 17, 2023, the CSRC released the Trial Administrative Measures of\nOverseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines,\nwhich came into effect on March 31, 2023. Pursuant to the Overseas Listing Trial Measures, domestic companies that seek to offer or list\nsecurities overseas, whether directly or indirectly, should fulfil the filing procedures and submit relevant information to the CSRC. \n\n \n\nAlthough\nthe detailed implementations are still unclear, the supervision of overseas listing of Chinese stocks may continue to tighten. The Chinese\ngovernment has exercised, and continues to exercise, substantial control over virtually every sector of the Chinese economy through regulation\nand state ownership. The ability of our operating entities to operate in China may be impaired by changes in its laws and regulations,\nincluding those relating to taxation, environmental regulations, land use rights, foreign investment limitations, and other matters.\nThe central or local governments of China may impose new, stricter regulations or interpretations of existing regulations that would\nrequire additional expenditures and efforts on our part to our compliance with such regulations or interpretations. As such, we may be\nsubject to various government and regulatory interference in the provinces in which we operate. We could be subject to regulation by\nvarious political and regulatory entities, including various local and municipal agencies and government sub-divisions. We may incur\nincreased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.\n\n \n\n12\n\n \n\nFurthermore,\nit is uncertain when and whether we will be required to obtain permission from the PRC government to list on U.S. exchanges in the\nfuture, and even when such permission is obtained, whether it will be denied or rescinded. Although we believe that we are currently\nnot required to obtain permission from any Chinese authorities and have not received any notice of denial of permission to list on the\nU.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating\nto the PRC operating entities’ business or industry, particularly in the event permission to list on U.S. exchanges may be\nlater required, or withheld or rescinded once given.\n\n \n\nAccordingly,\ngovernment actions in the future, including any decision to intervene or influence our operations at any time or to exert control over\nan offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes\nto our operations, may limit or completely hinder our ability to continue to offer securities to investors, and/or may cause the value\nof such securities to significantly decline or be worthless.\n\n** **\n\n**We\nmay become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection.**\n\n \n\nWe\nmay become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection.\nThese laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable\nto us are often uncertain and may be conflicting. In particular, there are a number of laws and regulations regarding privacy and the\ncollection, sharing, use, processing, disclosure, and protection of personal information and other user data. Such laws and regulations\noften vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions.\n\n \n\nThe\nPRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1,\n2015), prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen’s personal\ninformation obtained during the course of performing duties or providing services or obtaining such information through theft or other\nillegal ways. On November 7, 2016, the Standing Committee of the PRC National People’s Congress issued the Cyber Security\nLaw of the PRC, or Cyber Security Law, which became effective on June 1, 2017. The Cyber Security Law is the first PRC law that\nsystematically lays out the regulatory requirements on cybersecurity and data protection, subjecting many previously under-regulated\nor unregulated activities in cyberspace to government scrutiny. Pursuant to the Cyber Security Law, network operators must not, without\nusers’ consent, collect their personal information, and may only collect users’ personal information necessary to provide\ntheir services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions\nregarding the protection of personal information as stipulated under the relevant laws and regulations. The legal consequences of violation\nof the Cyber Security Law include penalties such as warnings, confiscation of illegal income, suspension of related business, winding\nup for rectification, shutting down the websites, and revocation of business license or relevant permits. As of the date of this annual\nreport, we have not been involved in any investigations or cybersecurity reviews by the CAC, and we have not received any inquiry, notice,\nwarning, or sanction in such respect.\n\n \n\nThe\nCivil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020, and effective from January 1, 2021)\nprovides the main legal basis for privacy and personal information infringement claims under the Chinese civil laws. PRC regulators,\nincluding the CAC, Ministry of Industry and Information Technology, and the Ministry of Public Security, have been increasingly focused\non regulation in the areas of data security and data protection. The PRC regulatory requirements regarding cybersecurity are constantly\nevolving. For instance, various regulatory bodies in China, including the CAC, the Ministry of Public Security and the State Administration\nfor Market Regulation, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations.\n\n \n\n13\n\n \n\nOn\nJuly 30, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, or the\nCII Regulations, which became effective on September 1, 2021. Pursuant to the CII Regulations, critical information infrastructure\nrefers to any important network facilities or information systems of an important industry or field such as public communication and\ninformation service, energy, transport, water conservation, finance, public services, e-government affairs, science and technology industry\nfor national defense and other industries and sectors that may seriously endanger national security, people’s livelihood and public\ninterest in case of damage, function loss or data leakage. In addition, relevant administration departments of each critical industry\nand sector are responsible for formulating eligibility criteria and determining the critical information infrastructure in the respective\nindustry or sector. The operators will be informed about the final determination as to whether they are categorized as critical information\ninfrastructure operators, or CIIOs.\n\n \n\nAs\nof the date of this annual report, no detailed rules or interpretations have been issued and we have not been informed by any governmental\nauthorities that we are a CIIO. However, the exact scope of CIIOs under the current regulatory regime remains unclear, and the PRC\ngovernmental authorities have discretion in the interpretation and enforcement of these laws and regulations. Therefore, it is uncertain\nwhether we would be deemed as a CIIO under PRC law. According to our PRC counsel, Guantao Law Firm, if we are identified as CIIO, we\nwill be subject to stricter requirements on business operations and cybersecurity compliance, and we may need to follow cybersecurity\nreview procedure and apply with Cybersecurity Review Office before making certain purchases of network products and services, and if\na cybersecurity review is applicable, we may be required to suspend providing any existing or new services to our users, and we may experience\nother disruptions of our operations.\n\n \n\nOn\nDecember 28, 2021, the CAC and other twelve PRC regulatory authorities jointly revised and promulgated the Measures for Cybersecurity\nReview, or the Cybersecurity Review Measures, which is consistent with the Cybersecurity Review Measures (Revision Draft for Comment)\nannounced by the CAC on July 10, 2021.Pursuant to the Cybersecurity Review Measures: (i) “operator of critical information\ninfrastructure” should take the initiative to report to the Cybersecurity Review Office for cybersecurity review when purchasing\nnetwork products and services which affects or may affect national security; (ii) network platform operators possessing the personal\ninformation of more than one million users must apply to the Cybersecurity Review Office for cybersecurity review when list abroad; and\n(iii) data processor carrying out data processing activities that affect or may affect national security should be subject to cybersecurity\nreview. The Cybersecurity Review Measures further elaborated on the factors to be considered when assessing the national security risks\nof the relevant activities, including, among others, (a) the risk of core data, important data or a large amount of personal information\nbeing stolen, leaked, destroyed, and illegally used or exited the country; and (b) the risk of critical information infrastructure,\ncore data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments\nafter listing abroad.\n\n \n\nOn\nSeptember 30, 2024, the State Council of China published the Regulations on Network Data Security Administration, which provides that\ndata processing operators engaging in data processing activities that affect or may affect national security must be subject to network\ndata security review by the relevant cyberspace administration of the PRC. The Regulations on Network Data Security Administration became\neffective on January 1, 2025.\n\n \n\nWe\nbelieve, in consultation with our PRC counsel, Guantao Law Firm, that we have none of the aforesaid factors in our business, and given\nthat: (i) we have not been informed that we are an operator of critical information infrastructure by any governmental authorities;\n(ii) we do not possess the personal information of more than one million users; and (iii) the type and nature of the personal\ninformation we gather is of relatively low national security significance. However, there remains uncertainty as to how the Cybersecurity\nReview Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations,\nrules, or detailed implementation and interpretation related to the Cybersecurity Review Measures. If a cybersecurity review is required,\nwe will actively cooperate with the CAC to conduct such cybersecurity review. According to our PRC counsel, any failure to comply with\napplicable laws or regulations or any other obligations relating to privacy, data protection or information security, or any compromise\nof security that results in unauthorized access, collection, transfer, use or release of personally identifiable information or other\ndata, or the perception or allegation that any of the foregoing types of failure or compromise has occurred, could damage our reputation\nor result in investigations, fines, or other penalties by government authorities and private claims or litigation, any of which could\nmaterially adversely affect our business, financial condition and results of operations. If any such new laws, regulations, rules, or\nimplementation and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse\neffect of such laws on us.\n\n \n\n14\n\n \n\nOn June 10,\n2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect on September 1, 2021. The Data\nSecurity Law also sets forth the data security protection obligations for entities and individuals handling personal data, including\nthat no entity or individual may acquire such data by stealing or other illegal means, and the collection and use of such data should\nnot exceed the necessary limits the costs of compliance with, and other burdens imposed by, CSL and any other cybersecurity and related\nlaws may limit the use and adoption of our products and services and could have an adverse impact on our business. Any organizational\nor individual data processing activities that violate the Data Security Law shall bear the corresponding civil, administrative or criminal\nliabilities depending on specific circumstances. During the years ended December 31, 2020, 2021, and 2022, and up to the date\nof this annual report, we had not experienced any material data or personal information leakage or loss, infringement of data or personal\ninformation, or information security incident, nor had we been subject to or involved in any official inquiry, examination, warning,\ninterview on cybersecurity, data security and personal information protection by relevant competent regulatory authorities.\n\n \n\nOn\nAugust 20, 2021, the Standing Committee of the NPC approved the Personal Information Protection Law (“PIPL”), which\nbecame effective on November 1, 2021. The PIPL regulates collection of personal identifiable information and seeks to address the\nissue of algorithmic discrimination. Companies in violation of the PIPL may be subject to warnings and admonishments, forced corrections,\nconfiscation of corresponding income, suspension of related services, and fines. As of the date of this annual report, we have not received\nany personal data protection related administrative warnings or penalties from any competent PRC regulatory authorities.\n\n \n\nWe\ncannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that\nwe and/or our PRC subsidiaries can fully or timely comply with such laws as our business develops. In the event that we or our PRC subsidiaries\nare subject to any mandatory cybersecurity review and other specific actions required by the CAC, we face uncertainty as to whether any\nclearance or other required actions can be timely completed, or at all. Given such uncertainty, we and/or our PRC subsidiaries may be\nfurther required to suspend the relevant business, or face other penalties, which could materially and adversely affect our business,\nfinancial condition, and results of operations. From time to time, we communicate with the competent authorities, including the local\nbranch of the CAC, and expect to closely monitor and assess further regulatory developments regarding cybersecurity and data privacy\nlaws, including the development on cybersecurity review, and comply with the latest regulatory requirements.\n\n** **\n\n**You\nmay experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us\nor our management named in the annual report based on foreign laws.**\n\n \n\nWe\nare a company incorporated under the laws of the Cayman Islands. However, we conduct substantially all of our operations through our\nPRC subsidiaries in China and substantially all of our assets are located in China. In addition, most of our senior executive officers\nreside within China for a significant portion of the time and many of them are PRC nationals. As a result, it may be difficult for you\nto effect service of process upon us, or our management named in this annual report inside mainland China. It may also be difficult for\nyou to enforce in U.S. courts of the judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal\nsecurities laws against us and our officers and directors as none of them currently resides in the United States or has substantial\nassets located in the United States. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC\nwould recognize or enforce judgments of U.S. courts against us, or such persons predicated upon the civil liability provisions of\nthe securities laws of the United States or any state.\n\n \n\nThe\nrecognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and\nenforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law and other applicable laws, regulations\nand interpretations based either on treaties between China and the country where the judgment is made or on principles of\nreciprocity between jurisdictions. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign\njudgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or\nnational sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce\na judgment rendered by a court in the United States. Furthermore, class action lawsuits, which are available in the\nUnited States for investors to seek remedies, are generally uncommon in China.\n\n \n\n15\n\n \n\n**It\nmay be difficult for overseas regulators to conduct investigations or collect evidence within China.**\n\n \n\nShareholder\nclaims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or\npracticality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory\ninvestigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism\nwith the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such\ncooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical\ncooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020,\nno overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory\nof the PRC. In addition, entities or individuals are prohibited from providing documents and information in connection with any\nsecurities business activities to any organizations and/or persons aboard without the prior consent of the securities regulatory authority\nof the State Council and the competent departments of the State Council. While detailed interpretation of or implementation rules under\nArticle 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or\nevidence collection activities within China may further increase difficulties faced by you in protecting your interests. See also “—* Risks\nRelating to Our Class A Ordinary Shares and the Trading Market — You may face difficulties in protecting your interests,\nand your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law*”\nfor risks associated with investing in us as a Cayman Islands company.\n\n** **\n\n**If\nwe are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences\nto us and our non-PRC shareholders or ordinary shareholders.**\n\n \n\nUnder\nthe PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with “de facto management\nbody” within China is considered a “resident enterprise” and will be subject to the enterprise income tax on its global\nincome at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises\nfull and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise.\nThe Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the\nBasis of De Facto Management Bodies, which was issued by the State Administration of Taxation on April 22, 2009 and further amended\non December 29, 2018, or Circular 82, which provides certain specific criteria for determining whether the “de facto management\nbody” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although Circular 82 only applies to offshore\nenterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria\nset forth in the circular may reflect the State Administration of Taxation’s general position on how the “de facto management\nbody” text should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore\nincorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of\nhaving its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only\nif all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC;\n(ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations\nor personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and\nshareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives\nhabitually reside in the PRC.\n\n \n\nWe\nbelieve none of our PRC subsidiaries outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status\nof an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of\nthe term “de facto management body.” If the PRC tax authorities determine that we are a PRC resident enterprise for enterprise\nincome tax purposes, we could be subject to PRC tax at a rate of 25% on our worldwide income, which could materially reduce our net income,\nand we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises,\nsubject to any reduction set forth in applicable tax treaties. In addition, non-resident enterprise shareholders may be subject to PRC\ntax at a rate of 10% on gains realized on the sale or other disposition of Class A Ordinary Shares, if such income is treated as sourced\nfrom within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to our non-PRC individual shareholders\nand any gain realized on the transfer of Class A Ordinary Shares or Class A Ordinary Shares by such shareholders may be subject to PRC\ntax at a rate of 10% in the case of non-PRC enterprises or a rate of 20% in the case of non-PRC individuals unless a reduced rate is\navailable under an applicable tax treaty. It is unclear whether non-PRC shareholders of our company would be able to claim the benefits\nof any tax treaties between their country or area of tax residence and the PRC in the event that we are treated as a PRC resident enterprise.\nAny such tax may reduce the returns on your investment in the Class A Ordinary Shares.\n\n \n\n16\n\n \n\n**We\nface uncertainties with respect to indirect transfer of equity interests in PRC resident enterprises by our non-PRC holding companies.**\n\n \n\nIn\nFebruary 2015, the State Administration of Taxation issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers\nof Assets by Non-PRC Resident Enterprises or Bulletin 7. Pursuant to Bulletin 7, an “indirect transfer” of PRC assets, including\na transfer of equity interests in an unlisted non-PRC holding company of a PRC resident enterprise, by non-PRC resident enterprises may\nbe re-characterized and treated as a direct transfer of the underlying PRC assets, if such arrangement does not have a reasonable commercial\npurpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect\ntransfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is\nobligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.\n\n \n\nOn\nOctober 17, 2017, the State Administration of Taxation issued the Announcement of the State Administration of Taxation on Issues\nConcerning the Withholding of Non-resident Enterprise Income Tax at Source, or Bulletin 37, which came into effect on December 1,\n2017. Bulletin 37 further clarifies the practice and procedure of the withholding of non-resident enterprise income tax.\n\n \n\nWe\nface uncertainties on the reporting and consequences of past or future private equity financing transactions, share exchanges or other\ntransactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities\nmay pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligations, and request\nour PRC subsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of\nbeing subject to filing obligations or being taxed under Bulletin 7 and Bulletin 37, and may be required to expend valuable resources\nto comply with them or to establish that we and our non-resident enterprises should not be taxed under these regulations, which may have\na material adverse effect on our financial condition and results of operations.\n\n \n\nThe\nPRC tax authorities have the discretion under Bulletin 7 to make adjustments to the taxable capital gains based on the difference between\nthe fair value of the taxable assets transferred and the cost of investment. If the PRC tax authorities make adjustments to the taxable\nincome of the transactions under Bulletin 7, our income tax costs associated with such transactions will be increased, which may have\nan adverse effect on our financial condition and results of operations. We cannot assure you that the PRC tax authorities will not, at\ntheir discretion, adjust any capital gains and impose tax return filing obligations on us or require us to provide assistance to them\nfor the investigation of any transactions we were involved in. Heightened scrutiny over acquisition transactions by the PRC tax authorities\nmay have a negative impact on potential acquisitions we may pursue in the future.\n\n \n\n**Failure\nto make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required\nby PRC regulations or comply with laws and regulations on other employment practices may subject us to penalties.**\n\n \n\nCompanies\noperating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance,\nhousing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of\nsalaries, including bonuses and allowances, of our PRC subsidiaries’ employees up to a maximum amount specified by the local government\nfrom time to time at locations where our PRC subsidiaries operate their businesses. The requirement of employee benefit plans has not\nbeen implemented consistently by the local governments in China given the different levels of economic development in different locations.\nCompanies operating in China are also required to withhold individual income tax on employees’ salaries based on the actual salary\nof each employee upon payment. Our PRC subsidiaries have been making social payments for employee benefits of at least at the minimum\nwage level for all eligible employees, while the applicable PRC laws and regulations on employee benefits stipulate that employers shall\nbe responsible for making payments based on the actual wage paid to employees. With respect to the underpaid employee benefits, our PRC\nsubsidiaries may be required to complete registrations, make up the contributions for these plans as well as to pay late fees and fines.\nWith respect to the under-withheld individual income tax, our PRC subsidiaries may be required to make up sufficient withholding and\npay late fees and fines. If they are subject to late fees or fines in relation to the underpaid employee benefits and under-withheld\nindividual income tax, our financial condition and results of operations may be adversely affected. Our PRC subsidiaries may also be\nsubject to regulatory investigations and other penalties if their other employment practices are deemed to be in violation of relevant\nPRC laws and regulations.\n\n \n\n17\n\n \n\n**The\nenforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may subject our PRC subsidiaries to penalties\nor liabilities.**\n\n \n\nThe\nPRC Labor Contract Law, which was enacted in 2008 and amended in 2012, introduced specific provisions related to fixed-term employment\ncontracts, part-time employment, probationary periods, consultation with labor unions and employee assemblies, employment without a written\ncontract, dismissal of employees, severance, and collective bargaining to enhance previous PRC labor laws. Under the Labor Contract Law,\nan employer is obligated to sign a non-fixed term labor contract with any employee who has worked for the employer for ten consecutive years.\nFurther, if an employee requests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively,\nthe resulting contract, with certain exceptions, must have non-fixed term, subject to certain exceptions. With certain exceptions, an\nemployer must pay severance to an employee where a labor contract is terminated or expires. In addition, the PRC governmental authorities\nhave continued to introduce various new labor-related regulations since the effectiveness of the Labor Contract Law.\n\n \n\nThese\nlaws and regulations designed to enhance labor protection tend to increase our labor costs. In addition, as the interpretation and implementation\nof these regulations are still evolving, our PRC subsidiaries’ employment practices may not at all times be deemed in compliance\nwith the regulations. As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes\nor investigations.\n\n** **\n\n**The\nM&A Rules and certain other PRC regulations may make it more difficult for us to pursue growth through acquisitions.**\n\n \n\nThe\nRegulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory\nagencies in 2006 and amended in 2009, and some other regulations and rules concerning mergers and acquisitions established complex procedures\nand requirements for acquisition of Chinese companies by foreign investors, including requirements in some instances that the Ministry\nof Commerce of the PRC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC\ndomestic enterprise. Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the National People’s Congress, which\nbecame effective in 2008, requires that where the concentration of business operators reaches the filing thresholds stipulated by the\nState Council, business operators shall file a declaration with the State Administration for Market Regulation, or SAMR, and no concentration\nshall be implemented until the SAMR clears the anti-monopoly filing. In addition, the security review rules issued by the Ministry of\nCommerce and became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national\ndefense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic\nenterprises that raise “national security” concerns are subject to strict review by the Ministry of Commerce, and the rules\nprohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual\ncontrol arrangement.\n\n \n\nIn\nthe future, we may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the\nrequirements of the above-mentioned regulations and other rules to complete such transactions could be time-consuming, and any required\napproval processes, including obtaining approval or clearance from the Ministry of Commerce, may delay or inhibit our ability to complete\nsuch transactions, which could affect our ability to expand our business or maintain our market share. Furthermore, according to the\nM&A Rules, if a PRC entity or individual plans to merger or acquire its related PRC entity through an overseas company legitimately\nincorporated or controlled by such entity or individual, such a merger and acquisition will be subject to examination and approval by\nthe Ministry of Commerce. The application and interpretations of M&A Rules are still uncertain, and there is possibility that the\nPRC regulators may promulgate new rules or explanations requiring that us obtain approval of the Ministry of Commerce for our completed\nor ongoing mergers and acquisitions. There is no assurance that we can obtain such approval from the Ministry of Commerce for our mergers\nand acquisitions, and if we fail to obtain those approvals, we may be required to suspend our acquisition and be subject to penalties.\nAny uncertainties regarding such approval requirements could have a material adverse effect on our business, results of operations and\ncorporate structure.\n\n \n\n18\n\n \n\n**PRC\nregulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to change their\nregistered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties\nunder PRC laws. In addition, any failure to comply with PRC regulations with respect to registration requirements for offshore financing\nmay subject us to legal or administrative sanctions.**\n\n \n\nIn\nJuly 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore\nInvestment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37. SAFE Circular 37 requires PRC\nresidents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign\nexchange administration purpose) to register with SAFE or its local branches in connection with their direct or indirect offshore investment\nactivities. SAFE Circular 37 further requires amendment to the SAFE registrations in the event of any changes with respect to the basic\ninformation of the offshore special purpose vehicle, such as change of a PRC individual shareholder, name and operation term, or any\nsignificant changes with respect to the offshore special purpose vehicle, such as increase or decrease of capital contribution, share\ntransfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable\nto any offshore acquisitions that we make in the future.\n\n \n\nUnder\nthese foreign exchange regulations, PRC residents who make, or have previously made, prior to the implementation of these foreign exchange\nregulations, direct or indirect investments in offshore companies are required to register those investments. In addition, any PRC resident\nwho is a direct or indirect shareholder of an offshore company is required to update its previously filed SAFE registration, to reflect\nany material change involving its round-trip investment. If any PRC shareholder fails to make the required registration or update the\npreviously filed registration, the PRC subsidiary of that offshore parent company may be restricted from distributing their profits and\nthe proceeds from any reduction in capital, share transfer or liquidation to their offshore parent company, and the offshore parent company\nmay also be restricted from injecting additional capital into its PRC subsidiary. Moreover, failure to comply with the various foreign\nexchange registration requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange\nrestrictions, including (i) the requirement by SAFE to return the foreign exchange remitted overseas or into the PRC within a period\nof time specified by SAFE, with a fine of up to 30% of the total amount of foreign exchange remitted overseas or into PRC and deemed\nto have been evasive or illegal and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to\nthe total amount of remitted foreign exchange deemed evasive or illegal.\n\n \n\nWe\nare committed to complying with and to ensuring that our shareholders who are subject to these regulations will comply with the SAFE\nrules and regulations. However, due to the inherent uncertainty in the implementation of the regulatory requirements by the PRC authorities,\nsuch registration might not be always practically available in all circumstances as prescribed in those regulations. In addition, we\nmay not always be able to compel them to comply with SAFE Circular 37 or other related regulations. We cannot assure you that SAFE or\nits local branches will not release explicit requirements or interpret the PRC laws and regulations otherwise. We may not be fully informed\nof the identities of all our shareholders or beneficial owners who are PRC residents, and we cannot provide any assurance that all of\nour shareholders and beneficial owners who are PRC residents will comply with our request to make, obtain or update any applicable registrations\nor comply with other requirements under SAFE Circular 37 or other related rules in a timely manner.\n\n \n\nBecause\nthere is uncertainty concerning the reconciliation of these foreign exchange regulations with other approval requirements, it is unclear\nhow these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented\nby the governmental authorities. We cannot predict how these regulations will affect our business operations or future strategy. For\nexample, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance\nof dividends and foreign-currency-denominated borrowings, which may adversely affect our results of operations and financial condition.\nThis may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.\n\n \n\nIn\naddition, our offshore financing activities, such as the issuance of foreign debt, are also subject to PRC laws and regulations. In accordance\nwith such laws and regulations, we may be required to complete filing and registration with the National Development and Reform Commission\nprior to such activities. Failure to comply with the requirements may result in administrative meeting, warning, notification and other\nregulatory penalties and sanctions.\n\n \n\n19\n\n \n\n**We\nmay be materially adversely affected if our shareholders and beneficial owners who are PRC entities fail to comply with the PRC overseas\ninvestment regulations.**\n\n \n\nOn\nDecember 26, 2017, the National Development and Reform Commission, or NDRC, promulgated the Administrative Measures on Overseas\nInvestments, which took effect as of March 1, 2018. According to this regulation, non-sensitive overseas investment projects are\nsubject to record-filing requirements with the local branch of the NDRC. On September 6, 2014, the Ministry of Commerce promulgated\nthe Administrative Measures on Overseas Investments, which took effect as of October 6, 2014. According to this regulation, overseas\ninvestments of PRC enterprises that involve non-sensitive countries and regions and non-sensitive industries are subject to record-filing\nrequirements with a local branch of Ministry of Commerce. According to the Circular of the State Administration of Foreign Exchange on\nIssuing the Regulations on Foreign Exchange Administration of the Overseas Direct Investment of Domestic Institutions, which was promulgated\nby the State Administration of Foreign Exchange, or SAFE, on July 13, 2009 and took effect on August 1, 2009, PRC enterprises\nmust register for overseas direct investment with a local SAFE branch.\n\n \n\nWe\nmay not be fully informed of the identities of all of our shareholders or beneficial owners who are PRC entities, and we cannot provide\nany assurance that all of our shareholders and beneficial owners who are PRC entities will comply with our request to complete the overseas\ndirect investment procedures under the aforementioned regulations or other related rules in a timely manner, or at all. If they fail\nto complete the filings or registrations required by the overseas direct investment regulations, the authorities may order them to suspend\nor cease the implementation of such investment and make corrections within a specified time, which may adversely affect our business,\nfinancial condition and results of operations.\n\n \n\n**We\nmay rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may\nhave, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our\nability to conduct our business.**\n\n \n\nWe\nare a Cayman Islands holding company and we rely principally on dividends and other distributions on equity from our PRC subsidiaries\nfor our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders for services\nof any debt we may incur. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt\nmay restrict its ability to pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC subsidiaries, which\nare foreign-owned enterprises, may pay dividends only out of their respective accumulated profits, as determined in accordance with PRC\naccounting standards and regulations. In addition, a foreign-owned enterprise is required to set aside at least 10% of its accumulated\nafter-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of\nits registered capital. Such reserve funds cannot be distributed to us as dividends. Some of our subsidiaries are required to allocate\ngeneral risk reserves prior to the distribution of dividends.\n\n \n\nOur\nPRC subsidiaries generate essentially all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result,\nany restriction on currency exchange may limit the ability of our PRC subsidiaries to use their Renminbi revenues to pay dividends to\nus.\n\n \n\nThe\nPRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward\nby SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of\nour PRC subsidiaries to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow,\nmake investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.\n\n \n\nIn\naddition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable\nto dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties\nor arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises\nare incorporated.\n\n \n\n20\n\n \n\n**To\nthe extent cash or assets of our business, or of our PRC or Hong Kong subsidiaries, is in mainland China or Hong Kong, such\ncash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in\nor the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets.**\n\n \n\nThe\ntransfer of funds and assets among the Company, its Hong Kong and PRC subsidiaries is subject to governmental control and restriction.\nThe competent PRC government imposes controls on the conversion of the RMB into foreign currencies and the remittance of currencies out\nof mainland China. In addition, the PRC Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate\nof 10% will be applicable to dividends payable by Chinese companies to enterprises that are not mainland China resident enterprises,\nunless reduced under treaties or arrangements between the PRC central government and the governments of other countries or regions where\nthe enterprises that are not mainland China resident enterprises are tax resident.\n\n \n\nAs\nof the date of this annual report, there are no restrictions or limitations imposed by the Hong Kong government on the transfer\nof capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds\ninvolving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate\nnew laws or regulations that may impose such restrictions in the future.\n\n \n\nAs\na result of the above, to the extent cash or assets of our business, or of our PRC or Hong Kong subsidiaries, is in mainland China\nor Hong Kong, such funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong,\ndue to interventions in or the imposition of restrictions and limitations by the competent government to the transfer of cash or assets.\n\n** **\n\n**You\nmay be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our Class A Ordinary Shares.**\n\n \n\nUnder\nthe Enterprise Income Tax Law and its implementation rules, PRC withholding tax at a rate of 10% is generally applicable to dividends\nfrom PRC sources paid to investors that are resident enterprises outside of China and that do not have an establishment or place of business\nin China, or that have an establishment or place of business in China if the income is not effectively connected with the establishment\nor place of business. Any gain realized on the transfer of shares by such investors is subject to 10% PRC income tax if this gain is\nregarded as income derived from sources within China. Under the PRC Individual Income Tax Law and its implementation rules, dividends\nfrom sources within China paid to foreign individual investors who are not PRC residents are generally subject to a PRC withholding tax\nat a rate of 20% and gains from PRC sources realized by these investors on the transfer of shares are generally subject to 20% PRC income\ntax. Any such PRC tax liability may be reduced by the provisions of an applicable tax treaty.\n\n \n\nAlthough\nall of our business operations are conducted by our PRC subsidiaries in China, it is unclear whether the dividends we pay with respect\nto our Class A Ordinary Shares, or the gains realized from the transfer of our shares, would be treated as income derived from sources\nwithin China and as a result be subject to PRC income tax if we are considered a PRC resident enterprise. If PRC income tax is imposed\non gains realized through the transfer of our Class A Ordinary Shares or on dividends paid to our non-resident investors, the value of\nyour investment in our Class A Ordinary Shares may be materially and adversely affected. Furthermore, our shareholders whose jurisdictions\nof residence have tax treaties or arrangements with China may not qualify for benefits under these tax treaties or arrangements.\n\n \n\nIn\naddition, pursuant to the Double Tax Avoidance Arrangement between Hong Kong and China, if a Hong Kong resident enterprise\nowns more than 25% of the equity interest of a PRC company at all times during the twelve-month period immediately prior to obtaining\na dividend from such company, the 10% withholding tax on the dividend is reduced to 5%, provided that certain other conditions and requirements\nare satisfied at the discretion of the PRC tax authority. However, based on the Notice on Certain Issues with Respect to the Enforcement\nof Dividend Provisions in Tax Treaties, issued in 2009 by the State Administration of Taxation, if the PRC tax authorities determine,\nin their discretion, that a company benefits from the reduced income tax rate due to a structure or arrangement that is primarily tax-driven,\nthe PRC tax authorities may adjust the preferential tax treatment. If our Hong Kong subsidiaries are determined by PRC government\nauthorities as receiving benefits from reduced income tax rates due to a structure or arrangement that is primarily tax-driven, the dividends\npaid by our PRC subsidiaries to our Hong Kong subsidiaries will be taxed at a higher rate, which will have a material adverse effect\non our financial performance.\n\n \n\n21\n\n \n\n**PRC\nregulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion\nmay delay or prevent us from using the proceeds of the initial public offering to make loans or additional capital contributions to our\nPRC subsidiaries and our consolidated affiliated entities in China, which could materially and adversely affect our liquidity and our\nability to fund and expand our business.**\n\n \n\nWe\nare an offshore holding company conducting our operations in China through our PRC subsidiaries. We may make loans to our PRC subsidiaries,\nor we may make additional capital contributions to our PRC subsidiaries, or we may establish new PRC subsidiaries and make capital contributions\nto these new PRC subsidiaries, or we may acquire offshore entities with business operations in China in an offshore transaction.\n\n \n\nMost\nof these ways are subject to PRC regulations and approvals or registration. For example, loans by us to our wholly owned PRC subsidiaries\nto finance their activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE. If we decide\nto finance our wholly owned PRC subsidiary by means of capital contributions, these capital contributions are subject to registration\nwith the State Administration for Market Regulation or its local branch, reporting of foreign investment information with the PRC Ministry\nof Commerce, or registration with other governmental authorities in China. Due to the restrictions imposed on loans in foreign currencies\nextended to PRC domestic companies, we are not likely to make such loans to our consolidated affiliated entities, which is a PRC domestic\ncompany. Further, we are not likely to finance the activities of our consolidated affiliated entities by means of capital contributions\ndue to regulatory restrictions relating to foreign investment in PRC domestic enterprises engaged in certain businesses.\n\n \n\nSAFE\npromulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement\nof Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015, in replacement of the Circular on the Relevant\nOperating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested\nEnterprises, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration\nof Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration\nof Certain Capital Account Foreign Exchange Businesses. According to SAFE Circular 19, the flow and use of the RMB capital converted\nfrom foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used\nfor the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred\nto a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested\nenterprise to be used for equity investments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated\ncapital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear\nwhether SAFE will permit such capital to be used for equity investments in China in actual practice. SAFE promulgated the Notice of the\nState Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital\nAccount, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes\nthe prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company\nto issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of\nSAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly\nlimit our ability to transfer any foreign currency we hold, including the net proceeds from a follow-on offering, to our PRC subsidiaries,\nwhich may adversely affect our liquidity and our ability to fund and expand our business in China. On October 25, 2019, the SAFE\npromulgated the Notice for Further Advancing the Facilitation of Cross-border Trade and Investment, or the SAFE Circular 28, which, among\nother things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments\nin China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign\ninvestment. However, since the SAFE Circular 28 is newly promulgated, it is unclear how SAFE and competent banks will carry this out\nin practice.\n\n \n\nIn\nlight of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies,\nwe cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals\non a timely basis, or at all, with respect to future loans to our PRC subsidiaries or consolidated affiliated entities or future capital\ncontributions by us to our PRC subsidiaries. As a result, uncertainties exist as to our ability to provide prompt financial support to\nour PRC subsidiaries or consolidated affiliated entities when needed, and our ability to use the proceeds we receive from the initial\npublic offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely\naffect our liquidity and our ability to fund and expand our business.\n\n \n\n22\n\n \n\n**Fluctuations\nin exchange rates could have a material and adverse effect on our results of operations and the value of your investment.**\n\n \n\nThe\nconversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China.\nThe Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against the\nU.S. dollar and other currencies is affected by changes in China’s political and economic conditions and by China’s\nforeign exchange policies, among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in\nvalue against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy\nmay impact the exchange rate between Renminbi and the U.S. dollar in the future.\n\n \n\nSubstantially\nall of our income and expenses are denominated in Renminbi and our reporting currency is Renminbi. Significant revaluation of the Renminbi\nmay have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive\nfrom our initial public offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would reduce\nthe Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for\nthe purpose of paying dividends or for other business purposes, appreciation of the U.S. dollar against the Renminbi would reduce\nthe U.S. dollar amount available to us.\n\n \n\nVery\nlimited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into\nany hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging\ntransactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to hedge our exposure\nadequately or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our\nability to convert Renminbi into foreign currency.\n\n** **\n\n**Governmental\ncontrol of currency conversion may limit our ability to utilize our income effectively and affect the value of your investment.**\n\n \n\nThe\nPRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of\ncurrency out of China. We receive substantially all of our income in Renminbi. Under our current corporate structure, our Cayman Islands\nholding company may rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements payable outside of\nChina. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments\nand trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying\nwith certain procedural requirements. Specifically, under the existing exchange restrictions, cash generated from the operations of our\nPRC subsidiaries in China may be used to pay dividends to our company without prior approval of SAFE. However, approval from or\nregistration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted\nout of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain\nSAFE approval to use cash generated from the operations of our PRC subsidiaries and any consolidated affiliated entity to pay any debts\nthey may incur in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside\nChina in a currency other than Renminbi.\n\n \n\nIn\naddition, if any of our shareholders who are subject to SAFE regulations fail to satisfy the applicable overseas direct investment filing\nor approval requirement, the PRC government may restrict our access to foreign currencies for current account transactions. If we are\nprevented from obtaining sufficient foreign currency to satisfy our foreign currency demands, we may not be able to pay dividends in\nforeign currencies to our shareholders.\n\n** **\n\n**If\nthe chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes,\nthe corporate governance of these entities could be severely and adversely compromised.**\n\n \n\nIn\nChina, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature.\nEach legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security\nBureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The\nchops of our PRC subsidiaries are generally held securely by personnel designated or approved by our PRC subsidiaries in accordance with\ntheir respective internal control procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons\nor for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate\nentities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite\npower and authority to do so. In addition, if the chops are misused by unauthorized persons, the impacted PRC subsidiary could experience\ndisruption to its normal business operations. Our PRC subsidiaries may have to take corporate or legal action, which could involve significant\ntime and resources to resolve while distracting management from their operations.\n\n \n\n23\n\n \n\n**The\nPRC government exerts substantial influence over the manner in which we and our PRC subsidiaries must conduct our business activities.\nWe are currently not required to obtain approval from Chinese authorities to list on U.S. exchanges, however, if we or our PRC subsidiaries\nare required to obtain approval in the future and are denied permission from Chinese authorities to list on U.S. exchanges, we will\nnot be able to continue listing on U.S. exchanges, which would materially affect the interest of the investors.**\n\n \n\nThe\nPRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through\nregulation and state ownership. Our PRC subsidiaries’ ability to operate in China may be harmed by changes in its laws and regulations,\nincluding those relating to taxation, environmental regulations, land use rights, property and other matters. The central data security,\nanti-monopoly policies or local PRC governments may impose new, stricter regulations or interpretations of existing regulations that\nwould require additional expenditures and efforts of our PRC subsidiaries to ensure their compliance with such regulations or interpretations.\nAccordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return\nto a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant\neffect on economic conditions in the PRC or particular regions thereof, and could require us to divest ourselves of any interest we then\nhold in Chinese properties.\n\n \n\nOn\nJuly 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council\njointly issued the Opinions on Strictly Cracking Down on Illegal Securities Activities, or the Opinions, which emphasized the need to\nstrengthen administration over illegal securities activities and supervision of overseas listings by China-based companies. The Opinions\nproposed promoting regulatory systems to deal with risks facing China-based overseas-listed companies, and provided that the State Council\nwill revise provisions regarding the overseas issuance and listing of shares by companies limited by shares and will clarify the duties\nof domestic regulatory authorities. However, the Opinions did not provide detailed rules and regulations. As a result, uncertainties\nremain regarding the interpretation and implementation of the Opinions.\n\n \n\nSince\n2021, the Chinese government has strengthened its anti-monopoly supervision, mainly in three aspects: (1) establishing the National\nAnti-Monopoly Bureau; (2) revising and promulgating anti-monopoly laws and regulations, including: the Anti-Monopoly Law (draft\nAmendment published on October 23, 2021 for public opinions; the newly revised Anti-Monopoly Law was promulgated on June 24,\n2022, and became effective on August 1, 2022.), the anti-monopoly guidelines for various industries, and the detailed Rules for\nthe Implementation of the Fair Competition Review System; and (3) expanding the anti-monopoly law enforcement targeting Internet\ncompanies and large enterprises. As of the date of this annual report, the Chinese government’s recent statements and regulatory\nactions related to anti-monopoly concerns have not impacted our ability to conduct business, accept foreign investments, or list on a\nU.S. or other foreign exchange because neither the Company nor its PRC operating entities engage in monopolistic behaviors that\nare subject to these statements or regulatory actions. On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas\nSecurities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines, which\ncame into effect on March 31, 2023. The Overseas Listing Trial Measures regulate both direct and indirect overseas offering and listing\nby PRC domestic companies by adopting a filing-based regulatory regime. Pursuant to the Overseas Listing Trial Measures, domestic companies\nthat seek to offer or list securities overseas, whether directly or indirectly, should fulfill the filing procedures and report relevant\ninformation to the CSRC within three working days after submitting listing applications and subsequent amendments. According to the Notice\non the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC,\nor the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Overseas Listing Trial\nMeasures (i.e. March 31, 2023) shall be deemed to be existing issuers (the “Existing Issuers”). Existing Issuers are not\nrequired to complete the filing procedures immediately; however, Existing Issuers will be required to file with the CSRC for any subsequent\nofferings. Our PRC counsel, Guantao Law Firm, advised us that, since we obtained approval from both the SEC and Nasdaq to issue and list\nour shares on the Nasdaq Capital Market prior to March 31, 2023, and closed our initial public offering on April 24, 2023, we were not\nrequired to complete the filing procedures with the CSRC for our initial public offering immediately pursuant to the Overseas Listing\nTrial Measures. In the event that filings with the CSRC are required with respect to subsequent offerings, we cannot assure you that\nwe can complete the filing procedures, obtain the approvals, or complete other compliance procedures in a timely manner, or at all, or\nthat any completed filings or approvals or other compliance procedures fulfilled would not be later rescinded. Any such failure could\nsubject us to sanctions by the CSRC or other PRC regulatory authorities.\n\n \n\nOn\nFebruary 24, 2023, the CSRC and other relevant government authorities promulgated the Provisions on Strengthening the Confidentiality\nand Archives Administration of Overseas Securities Issuance and Listing by Domestic Enterprises, which requires a domestic enterprise\nthat intends to provide or publicly disclose through its overseas listing entities, any document or material involving any state secret\nor any work secret of any government organ, shall report the same to the competent department with examination and approval authority\nfor approval in accordance with the law, and file the same with the administrative department of secrecy at the same level for the record.\n\n \n\nAs\nsuch, we may be subject to various government and regulatory interference in the provinces in which we operate. We could be subject to\nregulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions.\nWe may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to\ncomply. It is uncertain when and whether we will be required to obtain permission from the PRC government to list on U.S. exchanges\nin the future, and even when such permission is obtained, whether it will be denied or rescinded. Although we are currently not required\nto obtain permission from any of the PRC federal or local government to obtain such permission and has not received any denial to list\non the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations\nrelating to its business or industry.\n\n \n\n24\n\n \n\n**The\nHolding Foreign Companies Accountable Act and the Accelerating Holding Foreign Companies Accountable Act call for additional and more\nstringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors\nwho are not inspected by the PCAOB. These developments could add uncertainties to our continued listing on the Nasdaq Capital Market,\nand Nasdaq may determine to delist our securities if the PCAOB determines that it cannot inspect or fully investigate our auditor.**\n\n \n\nOn\nApril 21, 2020, the former SEC Chairman, Jay Clayton, and PCAOB Chairman William D. Duhnke III, along with other senior\nSEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations\nin emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect\nauditors and audit work papers in China and higher risks of fraud in emerging markets.\n\n \n\nOn\nMay 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily\noperating in “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board\nof director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company\nbased on the qualifications of the company’s auditors.\n\n \n\nOn\nDecember 18, 2020, the HFCAA was signed by President Donald Trump and became law. This legislation requires certain issuers of securities\nto establish that they are not owned or controlled by a foreign government. Specifically, an issuer must make this certification if the\nPCAOB is unable to audit specified reports because the issuer has retained a foreign public accounting firm not subject to inspection\nby the PCAOB. Furthermore, if the PCAOB is unable to inspect the issuer’s public accounting firm for three consecutive years\nbeginning in 2021, the issuer’s securities are banned from trade on a national exchange or through other methods.\n\n \n\nOn\nNovember 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the HFCAA. Rule 6100 provides\na framework for the PCAOB to use to determine whether it is unable to inspect or investigate registered public accounting firms located\nin a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.\n\n \n\nOn\nDecember 2, 2021, The SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA.\nThe rules apply to registrants the SEC identifies as having filed an annual report with an audit report issued by a registered public\naccounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate.\n\n \n\nOn\nDecember 16, 2021, the PCAOB issued a report on its determinations that the Board is unable to inspect or investigate completely\nPCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the\nPeople’s Republic of China (PRC), because of positions taken by PRC authorities in those jurisdictions (the “Determination”).\nThe Board made these determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities\nunder the HFCAA.\n\n \n\nOn\nAugust 26, 2022, the CSRC, MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in China\nand Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms\nheadquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB\nshall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer\ninformation to the SEC.\n\n \n\n25\n\n \n\nOn\nDecember 15, 2022, the PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting\nfirms headquartered in mainland China and Hong Kong and vacated its previous determinations to the contrary. However, should PRC authorities\nobstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB may consider the need to issue a new determination.\n\n \n\nOn\nDecember 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was signed into law as part of the Consolidated Appropriations\nAct, which amended the HFCAA by reducing the number of consecutive non-inspection years required for triggering the prohibitions under\nthe HFCAA from three years to two.\n\n \n\nAny\nlack of access to the PCAOB inspection in China may prevent the PCAOB from fully evaluating audits and quality control procedures of\nthe auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections. The inability of the\nPCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firms’\naudit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which\ncould cause existing and potential investors to lose confidence in audit procedures and reported financial information and the quality\nof financial statements of China-based companies.\n\n \n\nOur\nformer auditor, Onestop, was replaced by HHL on July 31, 2025. HHL, a PCAOB-registered public accounting firm headquartered in New York,\nwas subsequently dismissed and replaced by HCL as our independent registered public accounting firm, effective January 13, 2026. Our\ncurrent auditor, HCL, and our former auditors, HHL and Onestop, are subject to oversight by the PCAOB, which conducts regular inspections\nto assess compliance with applicable professional standards. Our current auditor, HCL, is headquartered at 1415 W 37th Street, Suite\n200, Chicago, IL 60609, and expects to be inspected by the PCAOB on a regular basis, as required by U.S. law. As of the date of this\nannual report, we have not been affected by the HFCAA and related regulations.. However, we cannot assure you whether Nasdaq or regulatory\nauthorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit\nprocedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience\nas related to the audit of our financial statements. Furthermore, there is a risk that our auditor cannot be inspected by the PCAOB in\nthe future. The lack of inspection could cause trading in our securities to be prohibited on a national exchange or in the over-the-counter\ntrading market under the HFCAA, and, as a result, Nasdaq may determine to delist our securities, which may cause the value of our securities\nto decline or become worthless.\n\n** **\n\n**Changes\nin international trade policies, or the escalation of tensions in international relations, particularly with regard to China, may adversely\nimpact our business and operating results.**\n\n** **\n\nThere\nhave been heightened tensions in international relations, particularly between the United States and China, in recent years. The U.S.\ngovernment has made statements and taken certain actions that may lead to potential changes to U.S. and international trade policies\ntowards China. It remains unclear if unfavorable government policies on international trade, such as capital controls or tariffs, or\nthe U.S. dollar payment and settlement system may affect the demand for the operating entity’s products, impact the competitive\nposition of the products, prevent the operating entity from selling products in certain countries, or even our participation in the U.S.\ndollar payment and settlement system, which would materially and adversely affect the international operations, results of operations\nand financial condition. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated\nor, in particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tensions, such changes could\nhave an adverse effect on our business, financial condition and results of operations.\n\n \n\n26\n\n \n\nIn\naddition to trade related tensions between China and the United States, the U.S. government escalated tensions between the U.S. and China\nin recent years by revoking Hong Kong’s special trading status. Also, the Congress of the United States enacted the Uyghur Forced\nLabor Prevention Act (UFLPA) in December 2021. Effective from June 21, 2022, the UFLPA creates a rebuttable presumption that goods mined,\nproduced, or manufactured (wholly or in part) in China’s Xinjiang Uyghur Autonomous Region are made with forced labor, where goods\ndesignated as such will be subject to an import ban into the United States. The President of the United States may also impose sanctions\non companies that knowingly engage in, are responsible for, or facilitate forced labor in Xinjiang. As of the date of this annual report,\nwe do not have any operations in Xinjiang Uyghur Autonomous Region, and our business is not impacted by the UFLPA.\n\n \n\nMoreover,\nrecently, the war in Ukraine and sanctions on Russia have increased the uncertainties in the relations between China and the United States,\nand tensions between these two countries could be heightened as a result. These tensions have affected both diplomatic and economic ties\nbetween the two countries. Heightened tensions could reduce levels of trade, investments, technological exchanges, and other economic\nactivities between the two major economies. The impacts of the war in Ukraine and sanctions on Russia to our business are very limited\nbecause the operating subsidiaries do not source their raw materials from the European Union, Russia, or Ukraine and can seek alternative\nsuppliers to their current suppliers in China without undue cost or effort. The prices of main raw materials used in the products were\nstable in fiscal years 2024 and 2025. However, the existing tensions and any further deterioration in international relations may have\na negative impact on the general, economic, political, and social conditions in China and, given our reliance on the Chinese market,\nadversely impact our business, financial condition, and results of operations.\n\n \n\n**Trade\ndisputes or the imposition of tariffs on imports and exports could affect international trade, and therefore could adversely affect our\nbusiness.**\n\n \n\nSince\n2018, China and the United States each began implementing increasingly protective trade measures, including significant tariff increases,\nin a trade war between these countries. Beginning in February 2025, President Trump has announced new tariffs on imports, including 10%\ntariffs on virtually all imports to the United States, and higher tariffs on imports of certain products or from certain countries (including\nCanada, Mexico and China). In response, foreign governments, including China, have enacted retaliatory tariffs. It is unknown whether\nand to what extent new tariffs will be adopted, or the effect that any such actions would have on us, our business partners or our industry.\n\n \n\nTrade\nbarriers to protect domestic industries against foreign imports depress trading demand. Protectionist developments, such as the imposition\nof trade tariffs or the perception they may occur, may have a material adverse effect on global economic conditions, and may significantly\nreduce global trade. Moreover, increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally,\n(b) the length of time required to transport goods, and (c) the risks associated with exporting goods. Such increases may significantly\naffect the quantity of goods to be traded, shipping time schedules, voyage costs and other associated costs, which could have an adverse\nimpact on the Chinese economy and our business, operating results and financial condition. Further, protectionist policies in any country\ncould impact global markets, including foreign exchange and securities markets. Any resulting changes in currency exchange rates, tariffs,\ntreaties and other regulatory matters could in turn adversely impact our business, results of operations, financial condition and cash\nflows.\n\n \n\n27\n\n \n\n**Risks\nRelating to Our Business and Industry**\n\n \n\n**We\nhave incurred substantial losses in the past and may incur losses in the future. There is substantial doubt about our ability to continue\nas a going concern.**\n\n \n\nAs discussed in “Note 3” to the consolidated\nfinancial statements to this annual report, we have suffered significant losses from operations, resulting in a material decrease in working\ncapital that raises substantial doubt about our ability to continue as a going concern. For the year ended December 31, 2025, we reported\na net loss of RMB80.5 million, negative operating cash flows of RMB69.9 million and an accumulated deficit of RMB289.8 million.\n\n \n\nOur\nauditor, HCL, has indicated in its report on our financial statements for the fiscal year ended December 31, 2025 that there is substantial\ndoubt as to our ability to continue as a going concern for the next 12 months from the date of issuance of the consolidated financial\nstatements. Such a substantial doubt could impair our ability to finance our operations through the sale of equity, incurring debt, or\nother financing alternatives. In assessing its liquidity, management monitors and analyzes the Company’s cash on-hand, its ability\nto generate sufficient revenue sources and ability to obtain additional financial support in the future, and its operating and capital\nexpenditure commitments.\n\n \n\nManagement’s\nplan to alleviate the substantial doubt about our ability to continue as a going concern includes the following measures:\n\n \n\n \n(i)\nObtaining financial support and credit guarantees from\nmajor shareholders;\n\n \n \n \n\n \n(ii)\nTaking various cost control measures to tighten the\ncosts of operations;\n\n \n \n \n\n \n(iii)\nSpeeding up the production cycle and shortening the\ndelivery term to improve receivable turnover;\n\n \n \n \n\n \n(iv)\nImplementing various strategies to enhance sales and\nprofitability; and\n\n \n \n \n\n \n(v)\nEquity financing.\n\n \n\nHowever,\nthere can be no assurance that additional financing, if required, would be available on favorable terms or at all or that the foregoing\nplans and measures will be sufficient to fund our ongoing capital expenditures, working capital, and other requirements.\n\n \n\n**We\nhave limited operating history in an emerging and fast-growing market, and our historical financial and operating performance may not\nbe indicative of our future prospects and results of operations.**\n\n \n\nThe\nautomotive market in the PRC, especially the EV market, is relatively new and evolving rapidly. While the EV market has undergone significant\ngrowth in the past few years, notwithstanding the slight reduction in growth attributable to the impact from the COVID-19 pandemic\nand the reduction of government subsidies, there is no assurance that it can continue to grow as rapidly. We established AHYS in 2013,\nwhich entity, together with the other operating subsidiaries, has had limited operating history. We may not have sufficient experience\nto address the risks to which companies operating in new or rapidly evolving markets may be exposed. We have limited experience in the\nEV industry. The laws and regulations governing the EV industry in the PRC are still at a nascent stage and subject to further changes\nand interpretations. As the market, the regulatory environment or other conditions evolve, our existing products and service offerings\nmay not continue to deliver the expected business results. As our business develops, we may continue to introduce new products and services,\nmake adjustments to existing products and services, to our business model or to our operations in general. Our abilities to retain and\nattract new sourcing partners, cooperating automobile manufacturers, and other third parties are also critical to our business. Any significant\nchange to our business model or failure to achieve the intended business results may have a material and adverse impact on our financial\ncondition and results of operations. Therefore, it may be difficult to effectively assess our future prospects.\n\n \n\n28\n\n \n\nYou\nshould consider our business and prospects in light of the risks and challenges that we encounter or may encounter, given the rapidly-evolving\nmarket in which they operate and their limited operating history. These risks and challenges include our ability to, among other things:\n\n \n\n●maintain\nand enhance relationships with sourcing partners, cooperating automobile manufacturers, and\nother third parties;\n\n \n\n●comply\nwith complex and evolving laws and regulations;\n\n \n\n●improve\noperational efficiency;\n\n \n\n●attract,\nretain and motivate talented employees, particularly in the areas of research and development,\nsales and marketing, as well as risk management;\n\n \n\n●enhance\ntechnology infrastructure to support the growth of business and maintain the security of\nour data system and the confidentiality of the information provided and collected across\nsuch system;\n\n \n\n●navigate\neconomic conditions and fluctuations;\n\n \n\n●implement\nbusiness strategies entering into the EV market; and\n\n \n\n●defend\nagainst legal and regulatory actions, such as actions involving intellectual property or\ndata privacy claims.\n\n** **\n\n**We\nface intense competition and may not be able to compete effectively.**\n\n \n\nThe\nautomotive market in China is large yet competitive. We compete against other sourcing service providers, such as 4S dealerships, brand-owned\nstores/direct authorized dealerships, and automobile e-commerce platforms. Competitors may offer better prices and/or deliver better\nuser experiences to prospective customers/users. We may also face future competition from new entrants that could intensify the market\ncompetition. We anticipate that more established companies, including technology companies that possess large, existing user bases, substantial\nfinancial resources and sophisticated technological capabilities may also enter the markets in which we compete. Competitors may have\ndifferent business models, have different cost structures or participate selectively in different industry segments. They may ultimately\nprove to be more successful or more adaptable to customer demand and new regulatory, technological and other developments. Some of our\ncurrent and potential competitors may have significantly more financial, technical, marketing and other resources than we do and may\nbe able to devote greater resources to the development, promotion, sales and support of their products and service offerings. Our competitors\nmay also have longer operating histories, greater brand recognition and brand loyalty and broader or closer relationships with dealers,\nautomobile manufacturers or other third-party relationships than those of our PRC subsidiaries. Additionally, a current or potential\ncompetitor may acquire, or form a strategic alliance with, one or more of our PRC subsidiaries’ other competitors. Our competitors\nmay be better at developing new products and solutions and services, responding more quickly to new technologies and undertaking more\nextensive and effective marketing campaigns. In response to competition, we may have to lower and/or adjust the various fees charged\nand paid to the other parties, such as commissions charged to purchasers for sourcing services, which could materially and adversely\naffect business, profit margins and results of operations. If we are unable to compete with such companies and meet the need for innovation\nin our industry, the demand for our services could stagnate or substantially decline, which could harm our business and results of operations.\n\n \n\nFurthermore,\nwe intend to enter into a market where we have limited or no prior experience. Such efforts may prove unsuccessful, and we may expend\nresources that yield no material gains, which could adversely impact our business and results of operations.\n\n \n\n29\n\n \n\n**We\nmay not be able to effectively manage our growth, control expenses or implement business strategies, any of which events may cause our\nPRC subsidiaries to be unable to provide services or deliver products with premium quality or compete effectively.**\n\n \n\nWe\nbelieve that our growth and expansion will depend on our ability to maintain and further develop our sourcing networks, maintain and\ngrow our relationships with cooperating automobile manufacturers, and capture growth opportunities and implement marketing strategies\nand compete against existing and future competitors. There can be no assurance that we will achieve any of the above goals.\n\n \n\nTo\nmanage our growth and expansion, and to maintain profitability, we anticipate that we will need to implement a variety of new and upgraded\noperational and financial systems, procedures and controls. We will also need to further expand, train, manage and motivate our workforce\nand manage their relationships with third parties. All of these endeavors involve risks and will require substantial management efforts\nand skills and significant additional expenditures. Our future growth may divert management, operational or technological resources from\nexisting business operations. We cannot assure you that we will be able to grow and expand successfully or implement future business\nstrategies effectively, and failure to do so may materially and adversely affect our business, financial condition, results of operations\nand future prospects.\n\n** **\n\n**Any\nharm to our brands or reputation or any damage to the reputation of the third parties with whom we collaborate or failure to enhance\nbrand recognition could have a material adverse effect on our results of operations and growth prospects.**\n\n \n\nEnhancing\nthe recognition and reputation of our sourcing services and Upincar brands are critical to our business and competitiveness. Factors\nthat are vital to this objective include, but are not limited to, our ability to:\n\n \n\n●maintain\nthe quality and reliability of products and services;\n\n \n\n●maintain\nand develop relationships with sourcing partners;\n\n \n\n●maintain\nand develop relationships with automobile manufacturers;\n\n \n\n●provide\nprospective car buyers and existing car buyers with superior experience;\n\n \n\n●effectively\nmanage and resolve any complaints of sourcing partners, cooperating automobile manufacturers,\nand other third-parties; and\n\n \n\n●effectively\nprotect personal information and privacy of car buyers and any sensitive data received from\nthird parties.\n\n \n\nAny\nmalicious or inadvertent negative allegations made by the media or other parties about the foregoing or other aspects of our company,\nincluding but not limited to our PRC subsidiaries’ management, business, compliance with law, financial condition or prospects,\nwhether with merit or not, could severely hurt our reputation and harm our business and results of operations.\n\n \n\nIn\naddition, as the EV market in China is under rapid development and the regulatory framework for this market is also evolving, negative\npublicity about this industry may arise from time to time. Negative publicity about China’s EV industry, in general, may also have\na negative impact on our PRC subsidiaries’ reputation, regardless of whether they have engaged in any inappropriate activities.\nFurthermore, any negative development in the EV industry, such as alleged design deficiencies, safety concerns or negative perception\nof the industry as a whole, even if factually incorrect or based on isolated incidents, could compromise our PRC subsidiaries’\nimage, undermine the trust and credibility they have established and have a negative impact on their ability to attract potential car\nbuyers. Negative developments in the EV industry may also lead to tightened regulatory scrutiny of the sector and limit the scope of\npermissible business activities that may be conducted by companies such as our PRC subsidiaries. If any of the foregoing takes place,\nour business and results of operations could be materially and adversely affected.\n\n \n\nOur\nPRC subsidiaries collaborate with various industry participants in providing products and services. Such participants include dealers,\nautomobile manufacturers and other business partners. Negative publicity about such counterparties, such as their failure to comply with\napplicable laws and regulations or to otherwise meet required quality and service standards, could cause reputational harm to our business.\n\n \n\n30\n\n \n\n**For\nthe fiscal years ended December 31, 2025, 2024 and 2023, we were not profitable, and we did not generate positive cash flows from operations.**\n\n \n\nWe\nrecorded net losses of RMB80.5 million, RMB56.4 million and RMB25.5 million for the fiscal years ended December 31, 2025, 2024 and\n2023, respectively. In addition, we had negative cash flows from operating activities of RMB69.9 million, RMB73.2 million and RMB65.4\nmillion for the fiscal years ended December 31, 2025, 2024 and 2023, respectively. We have made significant up-front investments in research\nand development, dealer networking and sales and marketing to rapidly develop and expand our business. We anticipate that we will continue\nto invest significantly in research and development, and sales and marketing, and potentially in production capacity expansion, to further\ndevelop and expand our business. The aforementioned investments may not result in an increase in revenue or positive cash flow on a timely\nbasis, or at all.\n\n  \n\nWe\nmay not generate sufficient revenues or may incur substantial losses for a number of reasons, including a lack of demand for our PRC\nsubsidiaries’ products and services, increasing competition, challenging macro-economic environment, residual negative impacts\non our operations due to COVID-19, as well as other risks discussed herein, and we may incur unforeseen expenses, or encounter difficulties,\ncomplications and delays in generating revenue or achieving profitability. If we are unable to achieve profitability, we may have to\nreduce the scale of our operations, which may impact our business growth and adversely affect our financial condition and results of\noperations. In addition, our continuous operation depends on our capability to improve operating cash flows, as well as our capacity\nto obtain sufficient external equity or debt financing. If we do not succeed in doing so, we may have to limit the scale of operations,\nwhich may limit our business growth and adversely affect our financial condition and results of operations.\n\n** **\n\n**We\nmay not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.**\n\n \n\nWe\nregard our trademarks, service marks, patents, domain names, trade secrets, proprietary technologies and similar intellectual property\nas critical to our success. We rely on trademark and patent law, trade secret protection and confidentiality and license agreements with\nemployees and others to protect such proprietary rights. We have invested significant resources to develop such own intellectual property.\nFailure to maintain or protect these rights could harm our business. In addition, any unauthorized use of such intellectual property\nby third parties may adversely affect current and future revenues and our reputation.\n\n \n\nImplementation\nand enforcement of PRC intellectual property-related laws have historically been deficient and ineffective. Accordingly, protection of\nintellectual property rights in China may not be as effective as in the United States or other countries with more developed intellectual\nproperty laws. Furthermore, policing unauthorized use of proprietary technology is difficult and expensive. Our PRC subsidiaries rely\non a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect their intellectual property\nrights. Despite efforts to protect such proprietary rights, third parties may attempt to copy or otherwise obtain and use our PRC subsidiaries’\nintellectual property or seek court declarations that they do not infringe upon our PRC subsidiaries’ intellectual property rights.\nMonitoring unauthorized use of such intellectual property is difficult and costly, and we cannot assure you that the steps we have taken\nor will take will prevent misappropriation of such intellectual property. From time to time, our PRC subsidiaries may have to resort\nto litigation to enforce their intellectual property rights, which could result in substantial costs and diversion of resources.\n\n** **\n\n31\n\n** **\n\n**Some\nof our patent applications on UOTTA technology are currently pending, we cannot assure you that such patents will be approved, and we\nmay not be able to prevent others from developing or exploiting competing technologies, which could have a material and adverse effect\non our business, results of operations, financial condition and prospects.**\n\n \n\nAs\nof the date of this annual report, we have 51 issued patents and 18 pending patent applications in China. For our pending applications,\nwe cannot assure you that we will be granted patents pursuant to such pending applications. Even if our patent applications succeed and\nwe are issued patents in accordance, it is still uncertain whether these patents will be contested, circumvented or invalidated in the\nfuture. In addition, the rights granted under any issued patents may not provide us with meaningful protection or competitive advantages.\nThe claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing technologies\nthat are similar or that achieve results similar to theirs. The intellectual property rights of others could also bar us from licensing\nand exploiting any patents that issue from our pending applications. Numerous patents and pending patent applications owned by others\nexist in the fields in which we have developed and are developing. These patents and patent applications might have priority over our\npatent applications and could subject our patent applications to invalidation. Finally, in addition to those who may claim priority,\nany of our existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.\nAny of the foregoing could materially and adversely affect our business, results of operations, financial condition and prospects.\n\n \n\n**We\nmay need to defend against patent or trademark infringement claims, which may be time-consuming and would cause us to incur substantial\ncosts.**\n\n \n\nCompanies,\norganizations or individuals, including our PRC subsidiaries’ competitors, may hold or obtain patents, trademarks or other proprietary\nrights that would prevent, limit or interfere with our ability to make, use, develop, sell or market our products, which could make it\nmore difficult for us to operate our business. From time to time, we may receive communications from holders of patents or trademarks\nregarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement\nof such rights or otherwise assert their rights and urge us to take licenses. Our applications and uses of trademarks relating to their\ndesign, software or artificial intelligence technologies could be found to infringe upon existing trademark ownership and rights. In\naddition, if we were to be found by a court to have infringed upon a third party’s intellectual property rights, we may be required\nto do one or more of the following:\n\n \n\n●cease\nselling, incorporating certain components into, or using or offering goods or services that\nincorporate or use the challenged intellectual property;\n\n \n\n●pay\nsubstantial damages;\n\n \n\n●seek\na license from the holder of the infringed intellectual property right, which license may\nnot be available on reasonable terms or at all;\n\n \n\n●redesign\nour goods or services; or\n\n \n\n●establish\nand maintain alternative branding for our products and services.\n\n \n\nIn\nthe event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology\nor other intellectual property right, our business, prospects, operating results and financial condition could be materially and adversely\naffected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion\nof resources and management attention.\n\n** **\n\n32\n\n \n\n**Any\nsignificant disruption in our IT systems, including events beyond our control, or disruptions in our business partners’ IT systems,\ncould have a material and adverse effect on our business and financial condition.**\n\n \n\nIn\nthe event of a system outage, malfunction or data loss, our ability to provide services would be materially and adversely affected. The\nsatisfactory performance, reliability and availability of their technology and their underlying network infrastructure are critical to\ntheir operations, user service, reputation and their ability to attract new and retain existing car buyers. Our IT systems infrastructure\nis currently deployed and their data is currently maintained through a customized cloud computing system. Our servers are housed at third-party\ndata centers, and their operations depend on the service providers’ ability to protect their systems in their facilities as well\nas their own systems against damage or interruption from natural disasters, power or telecommunications failures, air quality issues,\nenvironmental conditions, computer viruses or attempts to harm their systems, criminal acts and similar events, many of which may be\nbeyond their control. Moreover, if our arrangements with these service providers are terminated or if there is a lapse of service or\ndamage to their facilities or if the services are no longer cost-effective to us, we could experience material interruptions to our operations.\n\n \n\nAny\ninterruptions or delays in our business operations, whether as a result of third-party error, our error, natural disasters or security\nbreaches, whether accidental or willful, could harm our relationships with dealers, automobile manufacturers, and other third parties\nand their reputation. We may not have sufficient capacity to recover all data lost in the event of an outage, which in turn may adversely\naffect our results of operations and prospects.\n\n** **\n\n**Misconduct\nand errors by our employees and the employees of third parties we collaborate with could harm our business and reputation.**\n\n \n\nWe\nare exposed to many types of operational risks, including the risk of misconduct and errors by our employees and the employees of third-party\nbusiness partners that we collaborate with. Our business depends on our employees and third parties, such as dealers, other sourcing\npartners, and cooperating automobile manufacturers, to promote, manufacture, sell or deliver products. We could be materially and adversely\naffected if transactions are improperly executed, if confidential information was disclosed to unintended recipients or if an operational\nbreakdown or failure in the processing of transactions occurred, whether as a result of human error, purposeful sabotage or fraudulent\nmanipulation of operations or systems. It is not always possible to identify and deter misconduct or errors by employees or third-party\nbusiness partners, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged\nrisks or losses. If any of their employees or employees of third-party business partners take, convert or misuse funds, documents or\ndata or fail to follow rules and procedures when interacting with current or prospective customers, we could be liable for damages and\nsubject to regulatory actions and penalties. We could also be perceived to have facilitated or participated in the illegal misappropriation\nof funds, documents or data, or the failure to follow rules and procedures, and therefore be subject to civil or criminal liability.\nAny of these occurrences could result in the diminished ability to operate our business, potential liability to end users, inability\nto attract car buyers, reputational damage, regulatory intervention and financial harm, which could negatively impact our business, financial\ncondition and results of operations.\n\n \n\n33\n\n \n\n**We\nmay need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances,\nand financing may not be available on acceptable terms or at all.**\n\n \n\nAs\nwe intend to continue to make investments to support the growth of our business, we may require additional capital to pursue our business\nobjectives and respond to business opportunities, challenges or unforeseen circumstances, including developing new products and service\nofferings, increasing sales and marketing expenditures to improve brand awareness and engage car buyers through expanded channels, enhancing\nour PRC subsidiaries’ operating infrastructure and acquiring complementary businesses and technologies. Accordingly, we may need\nto engage in additional equity or debt financing to secure additional funds. However, additional funds may not be available when needed,\non terms that are acceptable, or at all. Repayment of any such debt may divert a substantial portion of cash flow to repay principal\nand interest on such debt, which would reduce the funds available for expenses, capital expenditures, acquisitions and other general\ncorporate purposes; and we may suffer as a result of any default and foreclosure on assets pledged to secure any such financing, if our\noperating cash flow is insufficient to service debt obligations, which could in turn result in acceleration of obligations to repay the\nindebtedness and limit sources of financing.\n\n \n\nVolatility\nin the credit markets may also have an adverse effect on our ability to obtain debt financing. If we raise additional funds through further\nissuance of equity or convertible debt securities, our existing shareholders could suffer significant dilution, and any new equity securities\nwe issue could have rights, preferences and privileges superior to those of holders of our Class A Ordinary Shares. If we are unable\nto obtain adequate financing or financing on terms satisfactory to us when required, our ability to continue to pursue our business objectives\nand to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, financial\ncondition, results of operations and prospects could be adversely affected.\n\n** **\n\n**If\nwe fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations,\nmeet our reporting obligations or prevent fraud, and investor confidence and the market price of our shares may be materially and adversely\naffected.** \n\n \n\nWe are subject to the reporting requirements of\nthe Exchange Act, the Sarbanes-Oxley Act  and the rules and regulations of the Nasdaq Stock Market. Pursuant to Section\n404 of the Sarbanes-Oxley Act, we are required to file a report by our management on our internal control over financial reporting, and\nwhile we remain an “emerging growth company”, as such term is defined under the JOBS Act, we will not be required to include\nan attestation report on internal control over financial reporting issued by our independent registered public accounting firm. In the\ncourse of preparing our financial statements for the year ended December 31, 2025, we identified one material weakness in our\ninternal control over financial reporting. As defined in standards established by the PCAOB, a “material weakness” is a deficiency,\nor a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material\nmisstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness\nidentified relates to our lack of sufficient skilled staff with U.S. GAAP knowledge and the SEC reporting knowledge for the purpose\nof financial reporting as well as the lack in formal accounting policies and procedures manual to ensure proper financial reporting in\naccordance with U.S. GAAP and SEC reporting requirements.\n\n \n\nWe\nhave already taken the following steps to implement measures to remediate the material weakness we have identified: (1) streamlining\nour accounting department structure and enhancing our staff’s U.S. GAAP expertise on a continuous basis; and (2) making\nan overall assessment on the current finance and accounting resources and planning to hire new finance team members with pertinent qualifications,\nin order to strengthen our U.S. GAAP reporting framework. We plan to take additional measures to improve the effectiveness of our\ninternal control and financial reporting, including: (1) hiring a new reporting manager who has expertise in U.S. GAAP to improve\nthe quality of U.S. GAAP reports; (2) participating in training and seminars provided by professional service firms on a regular\nbasis to gain knowledge on regular accounting/SEC reporting updates; and (3) providing internal training to our current accounting\nteam on U.S. GAAP practices. We are also in the process of completing a systematic accounting manual for U.S. GAAP and financial\nclosing process. However, we cannot assure you that we will not identify additional material weaknesses or significant deficiencies in\nthe future. In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley Act, our Class A Ordinary\nShares may not be able to remain listed on the Nasdaq Capital Market.\n\n \n\n34\n\n \n\nIf\nwe cease to be an “emerging growth company”, as such term is defined under the JOBS Act, our independent registered public\naccounting firm must attest to and report on the effectiveness of our internal control over financial reporting. In addition, as we are\na public company, our reporting obligations may place a significant strain on our management, operational and financial resources and\nsystems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.\n\n \n\nDuring\nthe course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the\nSarbanes- Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting.\nIn addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented\nor amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial\nreporting. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our\nfinancial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported\nfinancial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in\nthe trading price of our shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk\nof fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations\nand civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.\n\n** **\n\n**Our\nbusiness will be harmed if overall consumer demand suffers from a severe or sustained economic downturn or if there is an oversupply\nin the automobile industry, the EV industry or the battery-swapping station sector.**\n\n \n\nOur\nbusiness is heavily dependent on consumer demand and preferences in China. Our revenues generated through our PRC subsidiaries will be\nmaterially and adversely affected if there is a severe or sustained downturn in overall levels of consumer spending in China. Retail\nvehicle sales are cyclical and historically have experienced periodic downturns characterized by oversupply and weak demand. These cycles\nare often dependent on general economic conditions, consumer confidence and governmental incentive programs, as well as the level of\ndiscretionary personal income and credit availability. In addition, consumers’ demand for automobiles is also subject to other\nfactors that are outside of our control. For example, severe or sustained increases in gasoline prices may lead to a reduction in automobile\npurchases or a shift in buying patterns from luxury/sports utility vehicle models, which typically provide high profit margins to retailers,\nto smaller, more economical vehicles, which typically have lower profit margins.\n\n \n\nIf\nthe overall capacity of the automobile industry outgrows the demand of consumers, the oversupply of automobiles may occur, and we may\nface increased competition and experience increased pricing pressure. As a result, our business and profitability could be materially\nand adversely affected.\n\n** **\n\n**We\nmay be subject to product liability claims if people or properties are harmed by defects in UOTTA-powered vehicles and battery-swapping\nstations, which may result in delays in new model launches, recall campaigns or increased warranty costs and may adversely affect our\nbrands and result in a decrease in the residual value of such vehicles.**\n\n \n\nWe\nmay be subject to product liability claims if people or properties are harmed by defects in UOTTA-powered EVs and battery-swapping stations.\nAlthough we may have legal recourse against the cooperating automobile manufacturers, station manufacturers and suppliers under PRC law\nin such circumstances, attempting to enforce our rights against these parties may be expensive, time-consuming and ultimately futile.\nIn addition, our PRC subsidiaries do not currently maintain any third-party liability insurance or product liability insurance. As a\nresult, any material product liability claim or litigation could have a material and adverse effect on our business, financial condition\nand results of operations. Even unsuccessful claims could result in the expenditure of funds and managerial efforts in defending them\nand could have a negative impact on our reputation. As of the date of this annual report, we have not received any product liability\nclaims relating to personal injury or property damage.\n\n \n\nUOTTA-powered\nEVs and battery-swapping stations may contain design and manufacturing defects. The design of such vehicles and battery-swapping stations\nare complex and could contain latent defects and errors, which may cause vehicles not to perform or operate as expected or even result\nin property damage, personal injuries or death. While we and our cooperating manufacturers plan to perform extensive internal testing\non UOTTA-powered EVs and battery-swapping stations, and the related software and hardware systems, we have a limited frame of reference\nby which to assess the long-term performance of UOTTA-powered EVs and battery-swapping stations. Any of the above may result in delays\nin new model launches, recall campaigns or increased warranty costs and may adversely affect our brand and growth prospects.\n\n** **\n\n35\n\n** **\n\n**We\nmay be subject to increased environmental and safety or other regulation resulting in higher costs, cash expenditures, and/or sales restrictions.**\n\n \n\nAs\na manufacturing company manufactures battery-swapping stations, we are subject to complex environmental, manufacturing, health and safety\nlaws and regulations at numerous jurisdictional levels in China, including laws and regulations relating to the use, handling, storage,\nrecycling, disposal and human exposure to hazardous materials and relating to the construction, expansion and maintenance of their facilities.\nThe costs of compliance, including remediating contamination if any is found on our facilities, and any changes to their operations mandated\nby new or amended laws, may be significant. We may be required to incur additional costs to comply with any changes to such regulations,\nand any failures to comply could result in significant expenses, delays, fines or shutdowns. We will be subject to laws, regulations\nand standards applicable to the supply, manufacture, import, sale and service of automobiles in different jurisdictions and relating\nto vehicle safety, fuel economy and emissions, among other things, in different jurisdictions which often may be materially different\nfrom each other. As a result, our PRC subsidiaries and/or their manufacturing partners may need to make additional investments to ensure\nregulatory compliance.\n\n \n\n**The\nseasonality of the automobile industry impacts our operating results.**\n\n \n\nThe\nautomobile industry in China is subject to seasonal variations in revenues. Demand for automobiles is generally higher before or during\ncertain major Chinese holidays, such as the Lunar New Year in February, the Labor Day holidays in May and the National Day holidays in\nOctober. Accordingly, we expect our revenues and operating results generally to be higher in these periods than in other months\nof the year. Therefore, if circumstances arise during these months that impede automobile sales, such as high fuel costs, automobile\nsupply shortage, unfavorable governmental policy changes, depressed economic conditions or similar adverse conditions, our revenues for\nthe year would be disproportionately adversely affected. In addition, comparisons of sales and operating results between different periods\nwithin a single fiscal year, or between the same periods in different fiscal years, may not be meaningful and should not be relied\nupon as indicators of our performance.\n\n** **\n\n**Our\nbusiness depends on the continued efforts of senior management and key R&D personnel. If one or more members of our senior management\nor R&D teams were unable or unwilling to continue in their present positions, our business may be severely disrupted.**\n\n \n\nOur\nbusiness operations depend on the continued services of senior management, particularly the executive officers named in this annual report\nand our key R&D personnel. In particular, Mr. Jia Li, our PRC subsidiaries’ founder and chairman, and Mr. Zhanduo\nHao, the head of our battery-swapping technology team, are critical to the management of our business and operations and the development\nof our strategic direction. While we have provided various incentives to sustain their continued management, and although Mr. Jia\nLi is also our Chief Executive Officer, there can be no assurance that we can continue to retain their services. If one or more members\nof senior management were unable or unwilling to continue in their present positions, we may not be able to replace them easily or at\nall, and we may incur additional expenses to recruit, train and retain qualified personnel. Any new executive we recruit may fail to\ndevelop or implement effective business strategies, in which case, our future growth may be constrained, our business may be severely\ndisrupted and our financial condition and results of operations may, in turn, be materially and adversely affected.\n\n \n\nMoreover,\ncompetition for well-qualified and skilled employees is intense. Our future success also depends on the continuing ability to attract,\ndevelop, motivate and retain highly qualified and skilled R&D personnel. In addition, although we have entered into confidentiality\nand non-competition agreements with our management and key R&D personnel, there is no assurance that any member of our management\nteams will not join competitors or form a competing business. If any dispute arises with our current or former officers, management or\npersonnel, we may have to incur substantial costs and expenses in order to enforce such agreements in China or may be unable to enforce\nthem at all.\n\n** **\n\n**Intense\ncompetition for employees and increases in labor costs in the PRC may adversely affect our business and results of operations.**\n\n \n\nWe\nbelieve our success depends on the efforts and talent of our employees, including sales and marketing, operations, risk management, research\nand development and finance personnel. Our future success depends on our continued ability to attract, develop, motivate and retain qualified\nand skilled employees. Competition for highly skilled sales and marketing, operations, risk management, research and development and\nfinance personnel are extremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with\ntheir existing compensation and salary structure. Some of the companies with which we compete for experienced employees have greater\nresources and may be able to offer more attractive terms of employment.\n\n \n\n36\n\n \n\nIn\naddition, we invest significant time and expenses in our employees, which increases their value to competitors who may seek to recruit\nthem. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality\nof their services and ability to serve dealers and other sourcing partners, car buyers and other industry participants could diminish,\nresulting in a material adverse effect to our business.\n\n \n\nThe\neconomy in China has experienced increases in inflation and labor costs in recent years. As a result, average wages in the PRC are\nexpected to continue to increase. In addition, our PRC subsidiaries are required by PRC laws and regulations to pay various statutory\nemployee benefits, including pension insurance, housing funds, medical insurance, work-related injury insurance, unemployment insurance\nand maternity insurance to designated government agencies for the benefit of their employees.\n\n \n\nAs\nof the date of this annual report, we have not experienced significant inflationary pressures on labor costs negatively affecting our\nongoing business. However, we expect that our labor costs, including wages and employee benefits, to continue to increase. To mitigate\ninflationary pressures, we plan to:\n\n \n\n●monitor\nour labor costs carefully in our day-to-day operations;\n\n \n\n●outsource\nor contract certain nonessential employees, to reduce labor-related administrative costs;\nand\n\n \n\n●install\na performance-based pay schedule for our sales personnel.\n\n \n\nNevertheless,\nthere is no assurance that significant inflationary pressures on labor costs would not negatively affect our ongoing business. As a result,\nour business, financial condition and results of operations may be adversely affected by inflationary pressures on labor costs.\n\n** **\n\n**We\nmay not have sufficient insurance coverage.**\n\n \n\nInsurance\ncompanies in China currently do not offer as extensive an array of insurance products as insurance companies in more developed economies.\nCurrently, we do not have enough business liability or disruption insurance to cover their operations. We have determined that the costs\nof insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical\nfor them to have such insurance. Any uninsured business disruptions may result in the incurrence of substantial costs and the diversion\nof resources, which could have an adverse effect on our financial condition and results of operations.\n\n** **\n\n**We\nmay be subject to potential liability in connection with pending or threatened legal proceedings and other matters, which could adversely\naffect our business or financial results.**\n\n \n\nFrom\ntime to time, we have been, and may in the future become, a party to various legal or administrative proceedings arising in the ordinary\ncourse of business, including breach of contract claims, anti-competition claims and other matters. Such proceedings are inherently uncertain,\nand their results cannot be predicted with certainty. Regardless of the outcome and merit of such proceedings, any such legal action\ncould have an adverse impact on our business because of defense costs, negative publicity, diversion of management’s attention\nand other factors. In addition, it is possible that an unfavorable resolution, including any judgment or settlement subjecting us to\nliability, of one or more legal or administrative proceedings, whether in the PRC or in another jurisdiction, which could materially\nand adversely affect our business, financial position, results of operations or cash flows in a particular period or reputational damage.\n\n** **\n\n**We\nare subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance\nwith such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and\nlegal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.**\n\n \n\nWe\nare subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations\nin various jurisdictions in which we conduct activities, including the U.S. Foreign Corrupt Practices Act, or the FCPA, the Chinese\nCriminal Law and Anti-Unfair Competition Law, and other anti-corruption laws and regulations. The FCPA and the Chinese Criminal Law and\nAnti-Unfair Competition Law prohibit us and our officers, directors, employees and business partners acting on our behalf, including\nagents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes\nof influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires\ncompanies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain\na system of adequate internal accounting controls. The Chinese Criminal Law and Anti-Unfair Competition Law also prohibit non-governmental\n“commercial” bribery and soliciting or accepting bribes. A violation of these laws or regulations could adversely affect\nour business, results of operations, financial condition and reputation.\n\n \n\n37\n\n \n\nWe\nhave direct or indirect interactions with officials and employees of government agencies and state-owned affiliated entities in the ordinary\ncourse of business. We have also entered into joint ventures and/or other business partnerships with government agencies and state-owned\nor affiliated entities. These interactions subject us to an increased level of compliance-related concerns. We are in the process of\nimplementing policies and procedures designed to ensure compliance by us, our PRC subsidiaries, and our directors, officers, employees,\nrepresentatives, consultants, agents and business partners with applicable anti-corruption, anti-bribery, anti-money laundering, financial\nand economic sanctions and similar laws and regulations. However, our policies and procedures may not be sufficient and our PRC subsidiaries,\nour directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for\nwhich we may be held responsible.\n\n \n\nNon-compliance\nwith anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower\ncomplaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences,\nremedial measures and legal expenses, any of which could materially and adversely affect our business, results of operations, financial\ncondition and reputation. In addition, changes in economic sanctions laws in the future could adversely impact our business and investments\nin our shares.\n\n** **\n\n**We\nface risks related to natural disasters, health epidemics and outbreaks, which could significantly disrupt our operations.**\n\n \n\nWe\ncould be adversely affected by the effects of epidemics. In recent years, there have been outbreaks of epidemics in China and globally.\nOur business operations could be disrupted if any of their employees are exposed to epidemics, since it could require such employees\nto be quarantined and/or their offices to be disinfected. In addition, our results of operations could be adversely affected to the extent\nthat the outbreak harms the Chinese economy in general.\n\n \n\nWe\nare also vulnerable to natural disasters and other calamities. Although we have servers that are hosted in an offsite location, their\nbackup system may be unable to recover certain data in the event of a server failure. We cannot assure you that any backup systems will\nbe adequate to protect us from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins,\nwar, riots, terrorist attacks or similar events. Any of the foregoing events may give rise to interruptions, breakdowns, system failures,\ntechnology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware.\n\n** **\n\n**Our\nbusiness, financial condition and results of operations may be adversely affected by COVID-19.**\n\n \n\nFor\nthe fiscal year ended December 31, 2022, due to the impact of the COVID-19 pandemic, we had postponed some of our projects, experienced\ninstability in the supply chain, as well as cancellations of sales orders, all of which had negatively impacted our results of operations\nin fiscal year 2022. On December 7, 2022, the joint prevention and control mechanism of the State Council of China issued the Notice\non Further Optimizing the Implementation of Covid Prevention and Control Measures, stipulating that the control measures for epidemic\nprevention were gradually reduced. For the fiscal years ended December 31, 2023, 2024 and 2025, as the Chinese economy experienced slow\nand gradual recovery from the COVID-19 pandemic, our business was not materially impacted by COVID-19.\n\n \n\nHowever,\nthe occurrence of such outbreaks in the future may disrupt our operations, and the operations of our customers and suppliers if the development\nof such an outbreak becomes more severe resulting in a tightening of restrictions and regulations on businesses. If we or our customers\nand suppliers are forced to close their businesses with prolonged disruptions to their operations, we may experience a delay or shortage\nof supplies and/or services by our suppliers, or termination of our orders and contracts by our customers, thereby causing our business\nand financial performance to be adversely affected.\n\n** **\n\n**Risks\nRelating to Our Vehicle Sourcing Business**\n\n** **\n\n**Our\nvehicle sourcing network is crucial to the success of our vehicle sourcing business; if we fail to further develop or maintain our business\nrelationships with sourcing partners at a sustainable cost, or at all, our vehicle sourcing business, financial condition and prospects\nwould be adversely affected.**\n\n \n\nWe\nhave established a vehicle sourcing network and we believe such network allows us to access the commercial-use EV market primarily in\nthe lower-tier cities in China.\n\n \n\nWe\nclosely collaborate with vehicle sourcing partners in the sourcing business. As China is a large and diverse market, business practices\nmay vary significantly by region. Experience in the markets in which our PRC subsidiaries currently operate may not be applicable in\nother parts of China. If we determine to expand into new geographical markets in China, such efforts may impose considerable burdens\non sales, marketing and general managerial resources. If we are unable to manage such expansion efforts effectively, if expansion efforts\ntake longer than planned, or if the costs for these efforts exceed expectations, our results of operations may be adversely affected.\n\n \n\nOur\nrelationships with our sourcing partners are not exclusive, and there can be no assurance that we will be able to maintain our relationships\nwith our sourcing partners. A decrease in partner participation, or deterioration in relationships with any such partners, could adversely\naffect our vehicle sourcing business, financial condition and results of operations.\n\n** **\n\n38\n\n** **\n\n**The\ncommissions from our sourcing services may decline in the future, and any material decrease in such commissions could harm our business,\nfinancial condition and results of operations.**\n\n \n\nThe\ncommissions we charge SME dealers and individual vehicle buyers could be affected by a variety of factors, including the competitive\nlandscape of the automotive sourcing industry, regulatory requirements, and our strategic plan to expand into the EV battery-swapping\nmarket. In fiscal year 2023, 2024 and 2025, the revenue from the sourcing business constituted 7.7%, 0.1% and 2.7%, respectively, of\nour total revenue.\n\n \n\nOur competitors may offer more attractive prices\nand services, which may require us to reduce commissions in order to compete effectively. In addition, commissions may be sensitive to\nmany macroeconomic factors beyond our control, such as inflation, recession, the state of the automotive market, changes in market interest\nrates, global economic disruptions, unemployment and fiscal and monetary policies. Further, as we expand into the EV battery-swapping\nmarket, we may have limited resources available for us to use in our vehicle sourcing business. In the event that the income from the\nsourcing service commissions decrease significantly in the future and our PRC subsidiaries are not able to adopt any initiatives to reverse\nsuch trend, our business, financial condition and results of operations could be harmed.\n\n** **\n\n**We\nface intense competition in the sourcing market and may not be able to compete effectively.**\n\n \n\nThe\nautomotive sourcing industry in China is competitive. Our competitors may offer better pricing and user experiences to prospective car\nbuyers. We may also in the future face competition from new entrants that will increase the level of competition. More established companies,\nincluding technology companies that possess large, existing user bases, substantial financial resources and sophisticated technological\ncapabilities may also enter the market in the future. Competitors may operate different business models, have different cost structures\nor participate selectively in different industry segments. They may ultimately prove to be more successful or more adaptable to customer\ndemands and new regulatory, technological and other developments. Some of our current and potential competitors may have significantly\nmore financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion,\nsales and support of their platforms, products and service offerings. Competitors may also have longer operating histories, greater brand\nrecognition and brand loyalty and broader or closer relationships with dealers, manufacturers and their authorized wholesalers, or other\nautomotive transaction industry participants. Additionally, a current or potential competitor may acquire, or form a strategic alliance\nwith, one or more of our other competitors. Competitors may be better at developing new products and solutions and services, offering\nmore attractive fees, responding more quickly to new technologies and undertaking more extensive and effective marketing campaigns. In\nresponse to competition and in order to grow or maintain the cash-flow generated by the sourcing service, we may have to lower and/or\nadjust our fees, which could materially and adversely affect our business, profit margins and results of operations. If we are unable\nto compete effectively, the demand for our services could stagnate or substantially decline, which could, in turn, harm our business\nand results of operations.\n\n** **\n\n**Uncertainties\nrelating to the growth of the Chinese automotive markets in general could adversely affect our sourcing business and results of operations.**\n\n \n\nDemand\nfor our sourcing services depends upon numerous factors affecting the development of the automotive industry in China, which may be beyond\nour control. These factors include, but are not limited to, the following:\n\n \n\n●the\ngrowth in car ownership and the rate of any such growth;\n\n \n\n●changes\nin car buyer demographics, tastes and preferences;\n\n \n\n●changing\nfinancing behavior of car buyers;\n\n \n\n●the\nselection, price and popularity of cars offered by manufacturers and wholesalers within our\nsourcing network; and\n\n \n\n●government\npolicies on car purchases and ownership, such as the government policy relating to subsidiaries\nfor new energy vehicles.\n\n \n\n39\n\n \n\n**Our\nbusiness is sensitive to changes in the prices of new and used vehicles.**\n\n \n\nSignificant\nchanges in retail prices for new or used vehicles could have a material adverse effect on our sourcing business, financial condition\nand results of operations. For example, if retail prices for used vehicles drop significantly relative to retail prices for new vehicles,\nit could make buying a used vehicle more attractive to our customers than buying a new vehicle, reducing demand for our services, which\ncould have a material adverse effect on our business, financial condition and results of operations. Additionally, manufacturer incentives\ncould contribute to increasing the price gap between new and used vehicles. Lower used vehicle prices could reduce the orders of vehicles\nwith our PRC subsidiaries for sale, reducing their, and consequently our, revenues.\n\n** **\n\n**We\nrely on third-party carriers to transport vehicles to our customers, and they are subject to associated business risks and costs and\nwith those of the transportation industry, generally, many of which risks and costs would be out of our control.**\n\n \n\nWe\nrely on third-party carriers to transport vehicles to their facilities, as well as from their temporary inventory to purchasers that\nelect to have the vehicle delivered to them. As a result, we are exposed to risks associated with the transportation industry, such as\nweather, traffic patterns, local and federal regulations, vehicular crashes, gasoline prices and lack of reliability of many independent\ncarriers. Third-party carriers who deliver vehicles to our customers could adversely affect the customer experience if they do not perform\nto our standards of professionalism and courtesy, which could adversely impact our business (including their reputation), financial condition\nand results of operations.\n\n** **\n\n**Risks\nRelating to UOTTA-powered EV and Battery-Swapping Station Business**\n\n** **\n\n**We\nmay encounter difficulties in entering into the EV market, which may materially and adversely affect our growth and business prospects.**\n\n \n\nWe\nare dedicated to (i) the development of UOTTA-powered EVs, and (ii) the development of battery-swapping stations, including\nthe Titan station model, which is intended for electric trucks, and the Chipbox station model, which is intended for small logistic vehicles\nand ride-hailing vehicles. The execution of our business plan to enter the EV market is subject to significant risks and uncertainties,\nincluding, but not limited to, the following:\n\n \n\n●our\nPRC subsidiaries may not be able to develop UOTTA power solutions in the desired vehicles;\n\n \n\n●our\nUOTTA technology may not be effective in providing an alternative power solution to the currently\nmore prevalent charging technology;\n\n \n\n●our\ncompetitors may have better technology, resources, and experiences than us;\n\n \n\n●prospective\npurchasers of EVs may choose not to purchase EVs with battery-swapping capabilities over\nconventional EVs;\n\n \n\n●the\nretail market price of new EV vehicles may drop significantly and the potential sales of\nUOTTA-powered EVs may be subject to increased pricing pressure and sustain loss on future\nsales;\n\n \n\n●our\nPRC subsidiaries’ existing operations are in the auto sourcing business and do not\nhave a track record in operating the new EV businesses;\n\n \n\n●our\nPRC subsidiaries may not be able to accurately assess and timely respond to consumer tastes,\npreferences and demands; and\n\n \n\n●our\nPRC subsidiaries may not be able to generate enough revenues to offset costs required in\nthe investment of the new EV business.\n\n \n\nThese\nand other risks may make our business expansion plan of entering the EV market unsuccessful. In addition, implementing this plan may\nrequire significant financial, managerial and other resources be devoted to the expansion of product lines, which may divert such resources\nfrom existing business segments and product lines. If we are not successful in executing our expansion plan, our growth may be materially\nand adversely affected.\n\n** **\n\n40\n\n** **\n\n**Our\nfuture growth is dependent upon the demand for, and upon consumers’ willingness to adapt to, EVs and battery-swapping stations\nas a power solution.**\n\n \n\nDemand\nfor EVs depends to a large extent on general, economic, political and social conditions in a given market and the introduction of new\nvehicles and technologies.\n\n \n\nDemand\nfor EVs may also be affected by factors directly impacting automobile prices or the costs of purchasing and operating automobiles, such\nas sales and financing incentives, prices of raw materials and parts and components, cost of fuel and governmental regulations, including\ntariffs, import regulation and other taxes.\n\n \n\nIn\naddition, demand for EVs and battery-swapping stations will depend upon the adoption by consumers of new energy vehicles. The market\nfor new energy vehicles is still rapidly evolving, characterized by rapidly changing technologies, competitive pricing and competitive\nfactors, evolving government regulation and industry standards and changing consumer demands and behaviors. Other factors that may influence\nthe adoption of EVs, include, but are not limited to, the following:\n\n \n\n●perceptions\nabout EV quality, safety, design, performance and cost, especially if adverse events or accidents\noccur that are linked to the quality or safety of EVs, whether or not such vehicles are produced\nby our PRC subsidiaries or other manufacturers;\n\n  \n\n●perceptions\nabout vehicle safety, in particular safety issues that may be attributed to the use of advanced\ntechnology, including EV and regenerative braking systems;\n\n \n\n●the\nlimited range over which EVs may be driven on a single battery charge/swap and the speed\nat which batteries can be swapped;\n\n \n\n●concerns\nabout electric grid capacity and reliability;\n\n \n\n●the\navailability of new energy vehicles, including plug-in hybrid EVs;\n\n \n\n●improvements\nin the fuel economy of the internal combustion engine;\n\n \n\n●the\navailability of services for EVs;\n\n \n\n●the\nenvironmental consciousness of consumers;\n\n \n\n●access\nto battery-swapping stations, standardization of commercial-use EV battery-swapping systems\nand consumers’ perceptions about convenience and cost to swap batteries;\n\n \n\n●the\navailability governmental incentives to purchase and operate EVs or future regulation requiring\nincreased use of nonpolluting vehicles;\n\n \n\n●perceptions\nabout, and the actual cost of, alternative fuel; and\n\n \n\n●macroeconomic\nfactors.\n\n \n\nAny\nof the factors described above may make it difficult for our PRC subsidiaries to promote, market or sell UOTTA-powered EVs and battery-swapping\nstations. If the markets for commercial-use EVs and battery-swapping stations do not grow as expected or develop more slowly than anticipated,\nour business, prospects, financial condition and operating results will be affected.\n\n** **\n\n41\n\n \n\n**Our\nsuccess depends on our ability to successfully develop, market and sell UOTTA-powered EVs and battery-swapping stations.**\n\n \n\nThe\nsuccess of our UOTTA-powered EV and battery-swapping business depends in part on our ability to attract prospective EV buyers and battery-swapping\nstation buyers and operating partners. To that end, we must continue to invest significant resources in the development of UOTTA-powered\nEVs, battery-swapping solutions and services and build relationships with automobile manufacturers, dealers and other third parties.\nOur ability to successfully develop, launch, sell and deliver UOTTA-powered EVs, battery-swapping solutions and related services depends\non many factors, including our ability to anticipate and effectively respond to changing interests and preferences of car buyers, anticipate\nand respond to changes in the competitive landscape, and develop and offer products that address the needs of prospective buyers. If\nour efforts in these regards are unsuccessful, our business, prospects, financial condition and results of operations may be materially\nand adversely affected.\n\n \n\n**If\nUOTTA-powered EVs and battery-swapping stations do not meet the expectations of customers and users, our business, financial condition\nand competitive position will be materially and adversely affected.**\n\n \n\nThe\nUOTTA-powered EVs and battery-swapping stations may not perform in line with customers’ expectations. For example, UOTTA technology\nis a new technology and may not provide effective or reliable power solutions in practice. Furthermore, UOTTA-powered EVs and battery-swapping\nstations may contain defects in design and manufacturing that may cause them not to perform as expected or that may require repairs.\nWhile our PRC subsidiaries perform extensive internal testing on the vehicles and battery-swapping stations during the design and development\nprocesses, there is a limited frame of reference by which to evaluate the long-term performance of such products. There can be no assurance\nthat we will be able to detect and fix any defects in the vehicles or battery-swapping stations prior to selling them to consumers. If\nany of the UOTTA-powered EVs or battery-swapping stations fail to perform as expected, deliveries may be delayed, product recalls may\nbe initiated, and servicing or updates for products under warranty at our expense may occur, which could adversely affect our UOTTA brand\nin target markets and could adversely affect our business, prospects and results of operations.\n\n** **\n\n**We\nmay encounter difficulty promoting and marketing UOTTA-powered EVs and battery-swapping stations because of the lack of unified industry\nstandards on EV batteries.**\n\n \n\nEV\ntechnology and battery standards vary widely among vehicle OEMs, but automakers and battery developers are reluctant to share technical\nstandards. Currently, EVs for commercial use vary with different size and performance capabilities, and are compatible only with specific\nbattery models. While the Ministry of Industry and Information Technology (the “MIIT”) and other departments have issued\npolicies related to battery-swapping technology for EVs, there is no clear timeline to promote the standardization of batteries.\n\n \n\nWhen\nin operation, our battery-swapping stations will only be able to service compatible UOTTA-powered EVs, which will limit the marketability\nof our battery-swapping stations and UOTTA-powered EVs. The availability of compatible battery-swapping stations in the areas of their\noperations will affect our ability to market and sell compatible UOTTA-powered EVs, and vice versa.\n\n \n\n42\n\n \n\nFurthermore,\nif in the future, the MIIT publishes unified standards for EV batteries, we may incur substantial costs to conform existing and future\nproducts to such standards. If we were to fail to comply with the potential EV battery standards imposed by the MIIT, it could result\nin sanctions being imposed on our PRC subsidiaries, including manufacturing holds, fines, injunctions, civil penalties, delays, suspension\nor withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any\nof which could significantly and adversely affect our UOTTA-powered EV and battery-swapping station business.\n\n \n\nAny\nof the aforementioned developments may adversely affect our ability to commercialize UOTTA-powered EVs and battery-swapping stations,\nas well as our business, prospects and results of operations.\n\n** **\n\n**Our\nreliance on third parties for manufacturing UOTTA-powered commercial-use EVs and battery-swapping stations increases the risk that the\nsupply of our products may become limited or interrupted or may not be of satisfactory quality and quantity.**\n\n \n\nWe\nlack resources for manufacturing EVs and will depend on the cooperating automobile manufacturers to manufacture UOTTA-powered EVs. Although\nwe have our own factory for battery-swapping station manufacturing, we currently rely on third-party manufacturers for parts and components\nand have limited personnel with experience in battery-swapping station manufacturing. Our reliance on third-party manufacturers exposes\nus to the following risks:\n\n \n\n●We\nmay be unable to identify alternative cooperating manufacturers on acceptable terms or at\nall, because the number of potential cooperating manufacturers is limited. This may require\nnew testing and regulatory interactions. In addition, any new cooperating manufacturer would\nhave to be educated in, or develop substantially equivalent processes for, the production\nof our products.\n\n \n\n●Current\nor any future third-party cooperating manufacturers might be unable to timely manufacture\nour products or produce the quantity and quality required to meet our commercial needs, if\nany.\n\n \n\n●Current\nand any other third-party cooperating manufacturers may not be able to execute our manufacturing\nprocedures appropriately.\n\n \n\n●Current\nand any future third-party cooperating manufacturers may not perform as agreed upon or may\nnot remain in the contract manufacturing business for the time required to supply trials\nor to successfully produce, store and distribute our products.\n\n \n\n●Manufacturers\nare subject to inspections and regulations by the relevant PRC agencies, such as the MIIT,\nthe National Development and Reform Commission, the State Administration for Market Regulation,\nNational Energy Administration, and the Ministry of Transport, to ensure strict compliance\nwith regulatory requirements and standards. Our PRC subsidiaries do not have control over\nthird-party manufacturers’ compliance with such regulations and standards.\n\n \n\n43\n\n \n\n●We\nmay not own, or may have to share, the intellectual property rights to any additional improvements\nmade by the third-party manufacturers in the manufacturing process for products.\n\n \n\n●We\nhave not entered into any exclusive cooperation agreements with third-party manufacturers,\ntherefore the manufacturers may choose to develop and manufacture similar models with our\ncompetitors.\n\n \n\n●Our\ndependence upon others for the manufacture of products may also adversely affect profit margins\nand our ability to commercialize any products on a timely and competitive basis.\n\n \n\nAll\nof the above could adversely affect our business results of operations and financial condition.\n\n** **\n\n**If\nwe fail to comply with regulatory requirements, our business could be adversely affected.**\n\n \n\nDevelopment,\nmanufacture, and sale of EVs and battery-swapping stations must comply with relevant laws and regulations. Any failure by us or our cooperating\nmanufacturers to adhere to, or comply with, regulatory requirements could lead to a delay or interruption in the availability of our\nproducts or enforcement action from the regulatory authorities. If we or our cooperating manufacturers were to fail to comply with regulatory\nrequirements, it could result in sanctions being imposed on us, including manufacturing holds, fines, injunctions, civil penalties, delays,\nsuspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions;\nany of which could significantly and adversely affect our business and financial condition.\n\n** **\n\n**We\nmay fail to maintain our strategic partnerships with auto manufacturers to jointly develop UOTTA-powered EVs.**\n\n \n\nWe\nhave formed strategic partnerships and entered into cooperating agreements to jointly develop UOTTA-powered EVs with certain automobile\nmanufactures in China. There can be no assurance that our PRC subsidiaries will be able to maintain their strategic partnerships with\ncooperating auto manufacturers. The cooperating agreements do not indicate exclusive collaborative relationships, and do not specify\na definitive commitment as to the scale or results of their cooperation. The cooperating auto manufacturers may terminate or reduce the\nscale of strategic partnerships with us, or otherwise limit our ability to develop UOTTA-powered EVs or enter into the EV market. Furthermore,\nif we fail to perform certain contractual obligations required by these cooperation agreements, such as the obligation of providing financing\nsolutions and support to the joint development and promotion of the UOTTA-powered EVs and power-swapping stations, there is a risk that\nthe cooperating auto manufacturers may end their strategic partnerships or reduce the scale of their collaborations with our us. If we\nfail to maintain strategic partnerships with the cooperating auto manufacturers, it will adversely affect our business results of operations\nand our financial condition would be materially and adversely affected.\n\n** **\n\n**We\ndepend on third parties for the supply of components and parts to manufacture battery-swapping stations.**\n\n \n\nWe\ndepend upon third parties for the supply of certain parts and components for the manufacturing of battery-swapping stations. If such\nsuppliers fail to provide us with products that satisfy their requirements, we may not be able to secure replacement products on favorable\nterms, in a timely manner, or at all. In addition, defective parts and components from these suppliers may cause personal and/or property\ndamage to our customers, resulting in claims against us, for which indemnity from such suppliers may not be sufficient or available.\nWe may also incur significant financial costs in connection with such claims and they may divert management’s attention away from\nother important matters. As a result, our business, financial condition and results of operations may be negatively affected.\n\n \n\n44\n\n \n\n**We\ncould experience cost increases or disruptions in supply of raw materials or other components used in the manufacturing of battery-swapping\nstations.**\n\n \n\nWe\nuse various parts and components in the manufacturing of battery-swapping stations, including containers and charging cabinets sourced\nfrom over 15 suppliers. Our suppliers also rely on key raw materials, such as steel and aluminum to produce parts and components. The\nsupply chain exposes them to multiple potential sources of delivery failure or component shortages. Events in upstream supplies and component\nshortages may negatively impact our ability to plan and deliver ordered battery-swapping stations in a timely fashion.\n\n \n\nWe\ndo not control our suppliers, nor their business practices. Accordingly, we cannot guarantee that the quality of the components will\nbe consistent and maintained to a high standard. Any defects of or quality deficiency issues associated with these components, or any\nnoncompliance incidents associated with these third-party suppliers could result in quality deficiencies, which could compromise our\nbrand image and results of operations. Additionally, we cannot guarantee the suppliers’ compliance with ethical business practices,\nsuch as environmental responsibilities, fair wage practices, and compliance with child labor laws, among others. A lack of demonstrated\ncompliance with any such requirements could lead us to seek alternative suppliers, which could increase costs and result in delayed delivery\nof products, product shortages, or other disruptions of operations.\n\n \n\nFurthermore,\nqualifying alternate suppliers for certain customized components of battery-swapping stations may be time-consuming and costly. Any disruption\nin the supply of components could temporarily disrupt production of vehicles until an alternative supplier is fully qualified by them\nor is otherwise able to supply them with the required material. We cannot assure you that in such circumstances we would be able to successfully\nretain alternative suppliers or supplies on a timely basis, on acceptable terms, or at all. Changes in business conditions, force majeure,\ngovernment changes, or other factors beyond our control or anticipation, could also affect our PRC subsidiaries’ suppliers’\nability to deliver components to them on a timely basis. Moreover, if we experience a significant increase in demand or need to replace\nexisting suppliers, there can be no assurance that additional supplies will be available when required on terms that are favorable to\nthem, or at all, or that any supplier would allocate sufficient supplies to them in order to meet their requirements or fill our orders\nin a timely manner. Any of the foregoing could materially and adversely affect our business, financial condition, results of operations,\nand prospects.\n\n** **\n\n**Adverse\nconditions affecting one or more of our cooperating automobile manufacturers, battery-swapping station manufacturers and suppliers may\nnegatively impact our business, financial condition and prospects.**\n\n \n\nSuccess\nof our business depends to a great extent on the reputation, as well as marketing and production capabilities of cooperating automobile\nmanufacturers and battery-swapping station manufacturers, and suppliers with whom we collaborate. Adverse conditions affecting these\nand other important aspects of these manufacturers’ operations may adversely affect our PRC subsidiaries’ ability to develop\nand market the UOTTA-powered EVs and battery-swapping stations, and result in material adverse impact upon our business, financial condition,\nresults of operations and prospects.\n\n** **\n\n**We\nhave experienced, and may continue to experience, delays in the development and launch of UOTTA-powered EV models in collaboration with\nour cooperating manufacturers.**\n\n \n\nAs\nof the date of this annual report, we have entered into cooperating agreements to jointly develop UOTTA-powered EVs with two major automobile\nmanufacturers by adapting selected EV models with our UOTTA technology. We have experienced, and may continue to experience, delays in\nthe development and commercial release of UOTTA-powered EV models, due to various reasons, such as delays in resolving design issues\nand obtaining the required governmental approvals. Furthermore, we rely on third-party suppliers for the provision and development of\ncertain key components to be used in the UOTTA-powered EVs. To the extent we need to further delay the launch of the UOTTA-powered EVs,\nour growth prospects could be materially and adversely affected, as we may lose the targeted markets to competitors and miss the opportunity\nto enter into the EV market as we had planned.\n\n \n\n45\n\n \n\n**The\nUOTTA-powered EVs we jointly develop with cooperating automobile manufacturers are subject to motor vehicle safety standards and the\nfailure to satisfy such mandated safety standards would have a material adverse effect on our business and operating results.**\n\n \n\nAll\nvehicles must comply with various safety standards of the market where the vehicles are sold. In China, vehicles must meet or exceed\nall mandated safety standards. Rigorous testing prior to the launch of vehicles and auto parts and the use of approved materials and\nequipment are among the requirements for achieving such standards. Vehicles must pass various tests and undergo a certification process\nand be affixed with the China Compulsory Certification (“CCC”), before receiving delivery from the factory, being sold, or\nbeing used in any commercial activity, and such certification is also subject to periodic renewal. The process of obtaining the CCC typically\nrequires four to five months. Furthermore, the government carries out the supervision and scheduled and unscheduled inspection of\ncertified vehicles on a regular basis. In the event that a certified vehicle has a defect resulting in quality or safety accidents, or\nconsistently fails to comply with certification requirements during follow-up inspections, the CCC may be suspended or even revoked.\nAny vehicle that fails to satisfy the requirements for the CCC may not continue to be delivered, sold, imported or used in any commercial\nactivities. If we fail to ensure that each of the UOTTA-powered car models satisfy the safety standards, our business, prospects and\nfinancial conditions will be adversely affected.\n\n** **\n\n**The\nconstruction and operation of our battery-swapping station manufacturing facilities are subject to regulatory approvals or filings and\nmay be subject to changes, delays, cost overruns or may not produce expected benefits.**\n\n \n\nUnder\nPRC law, construction projects are subject to broad and strict government supervision and approval procedures, including but not limited\nto project approvals and filings, construction land and project planning approvals, environment protection approvals, pollution discharge\npermits, work safety approvals, fire protection approvals, and the completion of inspection and acceptance by relevant authorities. Some\nof the construction projects being carried out by us are undergoing necessary approval procedures as required by law. As a result, the\nrelevant entities operating such construction projects may be subject to administrative uncertainty, and construction projects in question\nmay be subject to fines or the suspension of use of such projects. Failure to complete the construction projects on schedule and within\nbudget, and failure to obtain necessary approvals or any incompliance with relevant government supervision could have a material adverse\nimpact on our PRC subsidiaries’ operations, and we may not be able to find commercially reasonable alternatives.\n\n** **\n\n**The\nunavailability, reduction or elimination of government and economic incentives or government policies which are favorable for EVs, domestically\nproduced vehicles or battery-swapping stations could have a material adverse effect on our business, financial condition and prospects.**\n\n \n\nOur\ngrowth depends significantly on the availability and amounts of government subsidies, economic incentives and government policies that\nsupport the expansion of the new energy vehicle industries. Favorable government incentives and subsidies vary by geographic region in\nChina, and may include one-time government subsidies, exemption from vehicle purchase tax, exemption from license plate restrictions\nin certain cities, preferential utility rates for charging facilities and more. Changes in government subsidies, economic incentives\nand government policies to support EVs could adversely affect our results of operations.\n\n \n\nChina’s\ncentral government provides subsidies for purchasers of certain EVs and reviews and further adjusts the subsidy standards on an annual\nbasis. According to *Notice on the Fiscal Subsidy Policy for the Promotion and Application of New Energy Vehicles in 2022(Cai Jian\n[2021] No.466),*in 2022, the subsidy standard by the Chinese central government for new energy vehicles was lowered by 30% from the\nlevel of 2021; with the exception that the subsidy standard for vehicles used for urban public transportation, road passenger transport,\ntaxis (including taxis subject to online booking), environmental sanitation, urban logistics and distribution, postal and express delivery,\ncivil aviation airports and official duties of the Chinese Communist Party and government organs was lowered by 20% from the level of\n2021. The new energy vehicle purchase subsidies were terminated on December 31, 2022, and no subsidies will be granted to vehicles\nlicensed after December 31, 2022. On January 30, 2023, the Ministry of Industry and Information Technology, the Ministry of Transport,\ntogether with the Development and Reform Commission, the Ministry of Finance, the Ministry of Ecology and Environment, the Ministry of\nHousing and Urban-Rural Development, the Energy Bureau, and the Post Office launched the pilot work of the public domain vehicle comprehensive\nelectrification pilot area nationwide, with a pilot period of 2023-2025 (the “2023 New Energy Vehicle Subsidy Policy”). The\nmain goal is to significantly increase the level of vehicle electrification. The proportion of new energy vehicles in new and updated\nvehicles in pilot areas has increased significantly, among which, urban public transportation, leasing, sanitation, postal express delivery,\nand urban logistics distribution areas strive to reach 80%. Further, in order to promote the development of local new energy vehicles,\n23 cities have recently announced the 2023 New Energy Vehicle Subsidy Policy. See “Item 4. Information on the Company — B. Business\nOverview — Regulation — Favorable Government Policies Relating to New Energy Vehicles (“NEV”)\nin the PRC.” As a result, the future sales of the UOTTA-powered vehicles might be negatively affected.\n\n \n\n46\n\n \n\nOur\nbusiness may also be impacted by government policies such as tariffs on imported cars and foreign investment restrictions in the industry.\nThe tariff in China on imported passenger vehicles (other than those originating in the United States of America) was reduced to\n15% starting from July 1, 2018. As a result, pricing advantage of domestically manufactured vehicles could be diminished. There\nused to be certain limit on foreign ownership of automakers in China, but for automakers of EVs, such limit was lifted in 2018. Further,\npursuant to the currently effectively Special Administrative Measures for Market Access of Foreign Investment (2021 Version), or the\n2021 Negative List, which came into effect on January 1, 2021, the limit on foreign ownership of automakers for ICE passenger vehicles\nwas lifted. As a result, foreign EV competitors can build wholly owned facilities in China without the need for a domestic joint venture\npartner. The above changes may affect the competitive landscape of the EV industry and reduce any pricing advantage we had enjoyed, which\nmay adversely affect our business, results of operations and financial condition.\n\n \n\nChina’s\ncentral government encourages local governments to provide funds and subsidies to support the roll-out of EV charging infrastructures.\nOn October 20, 2020, the General Office of the State Council issued the Notice on Development Plan of New Energy Vehicles Industry\n(2021-2035). Pursuant to such notice, the new energy vehicles industry in China has entered a new stage for accelerated development,\nin which the state plans to promote the construction of charging and swapping networks, encourage the application of the power exchange\nmode, strengthen the research and development of new charging technologies, and improve charging convenience and product reliability.\n\n \n\nThese\npolicies are subject to change and beyond our control. Furthermore, any reduction, elimination, delayed payment or discriminatory application\nof government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives due to\nthe perceived success of EVs, fiscal tightening or other factors may result in the diminished competitiveness of the new energy vehicle\nindustry generally, or UOTTA-powered EVs, in particular. Any of the foregoing could materially and adversely affect our business, results\nof operations, financial condition and prospects.\n\n** **\n\n**Risks\nRelating to Our Class A Ordinary Shares and the Trading Market**\n\n** **\n\n**An\nactive trading market for our Class A Ordinary Shares may not develop or sustain, and the trading price for our Class A Ordinary Shares\nmay fluctuate significantly.**\n\n \n\nNo\nassurance can be given that an active market in our Class A Ordinary Shares will develop or be sustained. If an active market does not\ndevelop, the market price and liquidity of our Class A Ordinary Shares may be materially and adversely affected, and holders of our Class\nA Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all. There can be no\nguarantee that we will continue to satisfy the continued listing standards of Nasdaq. If we fail to satisfy the continued listing standards,\nwe could be de-listed, which would have a negative effect on the price of our Class A Ordinary Shares and impair your ability to sell\nyour shares. As a result, investors in our securities may experience a significant decrease in the value of their Class A Ordinary Shares.\n\n** **\n\n**The\ntrading price of our Class A Ordinary Shares has been, and is likely to continue to be, volatile, which could result in substantial losses\nto investors.**\n\n \n\nThe\ntrading price of our Class A Ordinary Shares has been, and is likely to continue to be, volatile and could fluctuate widely due to various\nfactors, some of which are beyond our control. This may happen because of broad market and industry factors, like the performance and\nfluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities\nin the United States. A number of Chinese companies have listed or are in the process of listing their securities on U.S. stock\nmarkets. The securities of some of these companies have experienced significant volatility, including price declines in connection with\ntheir initial public offerings. The trading performances of these Chinese companies’ securities after their offerings may affect\nthe attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading\nperformance of our Class A Ordinary Shares, regardless of our actual operating performance.\n\n \n\n47\n\n \n\nIn\naddition to market and industry factors, the price and trading volume for our Class A Ordinary Shares may be highly volatile for factors\nspecific to our own operations, including the following:\n\n \n\n●variations\nin our income, earnings and cash flow;\n\n \n\n●announcements\nof new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;\n\n \n\n●announcements\nof new services and expansions by us or our competitors;\n\n \n\n●changes\nin financial estimates by securities analysts;\n\n \n\n●detrimental\nadverse publicity about us, our services or our industry;\n\n \n\n●additions\nor departures of key personnel;\n\n \n\n●release\nof lock-up or other transfer restrictions on our outstanding equity securities or sales of\nadditional equity securities; and\n\n \n\n●potential\nlitigation or regulatory investigations.\n\n \n\nAny\nof these factors may result in large and sudden changes in the volume and price at which our Class A Ordinary Shares will trade.\n\n \n\nIn\nthe past, shareholders of public companies have often brought securities class action suits against those companies following periods\nof instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount\nof our management’s attention and other resources from our business and operations and require us to incur significant expenses\nto defend the suit, which could harm our results of operations.\n\n \n\nAny\nsuch class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future.\nIn addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse\neffect on our financial condition and results of operations.\n\n** **\n\n**We\nmay experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition or prospects,\nmaking it difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares.**\n\n \n\nAs\na relatively small-capitalization company with relatively small public float, we may experience greater share price volatility, extreme\nprice run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our Class A Ordinary Shares\nmay be subject to rapid and substantial price volatility, low volumes of trade and large spreads in bid and ask prices. Such volatility,\nincluding any share run-up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making\nit difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares. In addition, investors of\nour Class A Ordinary Shares may experience losses, which may be material, if the price of our Class A Ordinary Shares declines or if\nsuch investors purchase Class A Ordinary Shares prior to any price decline.\n\n** **\n\n48\n\n \n\n**If\nsecurities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations\nregarding our Class A Ordinary Shares, the market price for our Class A Ordinary Shares and trading volume could decline.**\n\n \n\nThe\ntrading market for our Class A Ordinary Shares will be influenced by research or reports that industry or securities analysts publish\nabout our business. If one or more analysts who cover us downgrade our Class A Ordinary Shares, the market price for our Class A Ordinary\nShares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could\nlose visibility in the financial markets, which in turn could cause the market price or trading volume for our Class A Ordinary Shares\nto decline.\n\n** **\n\n**The\nsale or availability for sale of substantial amounts of our Class A Ordinary Shares could adversely affect their market price.**\n\n \n\nSales\nof substantial amounts of our Class A Ordinary Shares in the public market, or the perception that these sales could occur, could adversely\naffect the market price of our Class A Ordinary Shares and could materially impair our ability to raise capital through equity offerings\nin the future. The Class A Ordinary Shares sold in the initial public offering and follow-on offerings are freely tradable without restriction\nor further registration under the Securities Act, and shares held by our existing shareholders may also be sold in the public market\nin the future, subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the any applicable lock-up\nagreements. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder\nor the availability of these securities for future sale will have on the market price of our Class A Ordinary Shares.\n\n** **\n\n**Because\nwe do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our Class A Ordinary Shares for return\non your investment.**\n\n \n\nWe\ncurrently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our\nbusiness. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment\nin our Class A Ordinary Shares as a source for any future dividend income.\n\n \n\nOur\nboard of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and\npay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations\nand cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial\ncondition, contractual restrictions and other factors deemed relevant by our board of directors. In addition, our shareholders may declare\ndividends by ordinary resolution, but no dividend shall exceed the amount recommended by our board of directors. Accordingly, the return\non your investment in our Class A Ordinary Shares will likely depend entirely upon any future price appreciation of our Class A Ordinary\nShares. There is no guarantee that our Class A Ordinary Shares will appreciate in value or even maintain the price at which you purchased\nthe Class A Ordinary Shares. You may not realize a return on your investment in our Class A Ordinary Shares and you may even lose your\nentire investment in our Class A Ordinary Shares.\n\n** **\n\n**Our\nmemorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders\nof our Class A Ordinary Shares.**\n\n \n\nOur\nmemorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us\nto engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to\nsell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company\nin a tender offer or similar transaction. Our board of directors has the authority, without further action by our shareholders, to issue\npreferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional\nor special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms\nof redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A Ordinary Shares.\nPreferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal\nof management more difficult. If our board of directors decides to issue preferred shares, the price of our Class A Ordinary Shares may\nfall and the voting and other rights of the holders of our Class A Ordinary Shares may be materially and adversely affected.\n\n** **\n\n49\n\n \n\n**You\nmay face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited,\nbecause we are incorporated under Cayman Islands law.**\n\n \n\nWe\nare an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles\nof association, the Companies Act (as Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders\nto take action against the directors, actions by minority shareholders, and the fiduciary responsibilities of our directors to us under\nCayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived\nin part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions\nof whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and\nthe fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes\nor judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of\nsecurities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted\nbodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder\nderivative action in a federal court of the United States.\n\n \n\nShareholders\nof Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain\ncopies of lists of shareholders of such companies (save for our memorandum and articles of association, our register of mortgages and\ncharges and special resolutions of our shareholders). Our directors have discretion under our articles of association to determine whether,\nand under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to\nour shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder\nmotion or to solicit proxies from other shareholders in connection with a proxy contest.\n\n \n\nCertain\ncorporate governance practices in the Cayman Islands differ significantly from requirements for companies incorporated in other jurisdictions\nsuch as the U.S. To the extent we choose to follow home country practice, shareholders may be afforded less protection than they otherwise\nwould have under rules and regulations applicable to U.S. domestic issuers.\n\n \n\nAs\na result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken\nby management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated\nin the United States.\n\n** **\n\n**As\na company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance\nmatters that differ significantly from Nasdaq corporate governance listing standards; these practices may afford less protection to shareholders\nthan they would enjoy if we complied fully with Nasdaq corporate governance listing standards**.\n\n \n\nAs\na Cayman Islands company listed on the Nasdaq, we are subject to Nasdaq corporate governance listing standards. However, the Nasdaq rules\npermit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance\npractices in the Cayman Islands, which is our home country, may differ significantly from Nasdaq corporate governance listing standards.\nA Cayman Islands company is not required to have annual general meetings. Shareholders of Cayman Islands exempted companies like us have\nno general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies.\nOur directors have discretion under our articles of association to determine whether, and under what conditions, our corporate records\nmay be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult\nfor you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders\nin connection with a proxy contest. To the extent we choose to follow home country practice with respect to corporate governance matters,\nour shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.\nFor details as to the corporate governance matters for which we have elected to follow our home country practices, rather than Nasdaq\nlisting standards, please see “Item 16.G—Corporate Governance.”\n\n** **\n\n**We\nincur substantially increased costs as a public company.**\n\n \n\nAs\na public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley\nAct of 2002, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate\ngovernance practices of public companies. Compliance with these rules and regulations increases\nour legal and financial compliance costs and makes some corporate activities more time-consuming and costlier. We have incurred additional\ncosts in obtaining director and officer liability insurance. In addition, we incur additional costs associated with our public company\nreporting requirements. Such It may also be more difficult for us to find qualified persons to serve on our board of directors\nor as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we\ncannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.\n\n** **\n\n50\n\n \n\n**We\nare a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions\napplicable to United States domestic public companies.**\n\n \n\nBecause\nwe are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations\nin the United States that are applicable to U.S. domestic issuers, including:\n\n \n\n●the\nrules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q\nor current reports on Form 8-K with the SEC;\n\n \n\n●the\nsections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations\nin respect of a security registered under the Exchange Act;\n\n \n\n●the\nsections of the Exchange Act requiring insiders to file public reports of their stock\nownership and trading activities and liability for insiders who profit from trades made in\na short period of time; and\n\n \n\n●the\nselective disclosure rules by issuers of material nonpublic information under Regulation FD.\n\n \n\nWe\nwill be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend\nto publish our results through press releases, distributed pursuant to the rules and regulations of the Nasdaq. Press releases relating\nto financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required\nto file with or furnish to the SEC is less extensive and less timely than that required to be filed with the SEC by U.S. domestic\nissuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing\nin a U.S. domestic issuer.\n\n \n\n**If\nwe fail to maintain our Nasdaq listing, we may face increased regulatory burdens and reduced investor protections on over-the-counter\nmarkets.**\n\n \n\nIf\nour Class A Ordinary Shares are delisted from Nasdaq, they would likely trade, if at all, on over-the-counter markets such as the OTCQX,\nOTCQB or OTC Pink marketplaces. These alternative markets are generally considered to be less efficient and less liquid than Nasdaq.\nTrading on the over-the-counter markets could subject our Class A Ordinary Shares and our shareholders to additional risks, including\nlimited availability of market quotations, reduced liquidity, decreased market-making activity, reduced analyst coverage, and our decreased\nability to issue additional Class A Ordinary Shares or obtain additional financing. Additionally, the price of our Class A Ordinary Shares\non these markets may be more volatile than on Nasdaq, and shareholders may find it more difficult to dispose of or obtain accurate price\ninformation about our Class A Ordinary Shares.\n\n \n\n**Nasdaq\nhas proposed a new $5 million minimum market value continued listing requirement that, if approved, could result in immediate suspension\nand delisting of our Class A Ordinary Shares without any cure period or opportunity to regain compliance.**\n\n \n\nOn\nJanuary 13, 2026, Nasdaq proposed new listing rules requiring companies on the Nasdaq Global and Capital Markets to maintain a minimum\nmarket value of listed securities of at least $5 million. Under this proposal, if our market value falls below $5 million for 30 consecutive\nbusiness days, our Class A Ordinary Shares would be immediately suspended from trading and delisted from Nasdaq, with no cure period,\nno compliance period, and no stay of suspension during any appeal.\n\n \n\nThis proposed rule represents\na fundamental departure from Nasdaq’s traditional approach to listing deficiencies. Unlike other continued listing requirements that provide\ncompanies with 180 days or more to regain compliance, the proposed market value requirement would result in immediate and irreversible\nconsequences. While we could request a hearing before a Nasdaq Listing Qualifications Hearings Panel (the “Hearings Panel”)\nto appeal a delisting determination, such a request would not prevent the immediate suspension of our Class A Ordinary Shares from trading.\nFurthermore, the Hearings Panel would have extremely limited discretion and could only reverse the delisting decision if it determines\nthat the initial determination was in error, and the Hearings Panel could not consider evidence that we had subsequently regained compliance\nor grant us additional time to do so.\n\n \n\nNasdaq’s proposal reflects\nits belief that once a company’s market value falls below $5 million, the challenges facing that company are generally not temporary and\nare so severe that the company is unlikely to regain and sustain compliance for the long term. Nasdaq further believes it is difficult\nto maintain fair and orderly markets for such low-value companies. The SEC must decide on the proposal within 45 days of publication in\nthe Federal Register, unless it extends the review period, creating uncertainty regarding whether and when this rule may become effective.\n\n \n\nGiven\nthat our Class A Ordinary Shares have experienced price volatility, there is a risk with our market value falling below $5 million if\nthe proposed rule is adopted. Our market value is calculated as our consolidated closing bid price multiplied by our total Listed Securities.\nFactors that could cause our market value to fall below the proposed threshold include continued stock price decline, lack of investor\ninterest, adverse market conditions, negative developments in our business operations, dilutive financing transactions, or broader market\nvolatility affecting microcap companies. If we are simultaneously addressing our existing minimum bid price deficiency when the proposed\nrule becomes effective, we could face multiple overlapping listing threats that compound the risk of delisting.\n\n \n\n51\n\n \n\nThis\nproposal is part of a broader trend of Nasdaq tightening listing standards for small issuers, including recent rules granting Nasdaq\ndiscretion to deny initial listings based on susceptibility to manipulative trading and other market value-based requirements. This increasingly\nstringent regulatory environment creates greater challenges for microcap companies like us to maintain public listings.\n\n \n\nIf the proposed $5 million\nmarket value continued listing requirement is approved and we subsequently fail to maintain the required market value for 30 consecutive\nbusiness days, our Class A Ordinary Shares would be immediately suspended and delisted from Nasdaq with no opportunity to cure the deficiency,\nwhich would have severe adverse consequences for our business, our ability to raise capital, and the liquidity and value of our shareholders’\ninvestments.\n\n \n\n**Geopolitical\nconflicts involving Iran, military actions in the Middle East, and the war in Ukraine may adversely affect global economic conditions\nand cause significant volatility in the trading price of our Class A Ordinary Shares.**\n\n** **\n\nThe\nheightened military conflict involving the United States, Israel, and Iran, which escalated significantly in February 2026, has led to\nprofound instability in global financial and energy markets. These events, including the closure of strategic airspaces and critical\nmaritime routes such as the Strait of Hormuz and the Red Sea, have contributed to a dramatic increase in the price of oil and gas and\ncreated widespread market uncertainty. The ongoing disruptions caused by these military actions, and the potential for further escalation,\ncould result in protracted and severe damage to the global economy and investment climate.\n\n \n\nFurthermore,\nthe continuing war in Ukraine and the resulting sanctions levied by the United States, the European Union, and other nations against\nRussia continue to impact global financial markets. The extent and duration of these military actions in the Middle East and Eastern\nEurope, as well as the resulting sanctions and market disruptions, are impossible to predict but are expected to remain substantial.\n\n \n\nSuch\ngeopolitical instability often leads to broad sell-offs in the equity markets and heightened investor sensitivity to risk. Consequently,\nthese developments may materially and adversely affect the market price of our Class A Ordinary Shares, regardless of our actual operating\nperformance. We cannot predict the ultimate progress or outcome of these situations, and any prolonged unrest or intensified military\nactivities could have a material adverse effect on the global economy, which in turn could negatively impact our financial condition\nand the value of our securities.\n\n \n\n**Risks\nRelating to Our Capital Structure**\n\n* *\n\n**Our dual\nclass share structure with different voting rights may adversely affect the value and liquidity of the Class A Ordinary Shares.**\n\n \n\nWe\ncannot predict whether our dual class share structure with different voting rights will result in a lower or more volatile market price\nof the Class A Ordinary Shares, in adverse publicity, or other adverse consequences. Certain index providers have announced restrictions\non including companies with multiple class share structures in certain of their indices. Because of our dual class structure, we will\nlikely be excluded from these indices and other stock indices that take similar actions. Given the sustained flow of investment funds\ninto passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by\nmany of these funds and could make the Class A Ordinary Shares less attractive to investors. In addition, several shareholder advisory\nfirms have announced their opposition to the use of multiple class structure and our dual class structure may cause shareholder advisory\nfirms to publish negative commentary about our corporate governance, in which case the market price and liquidity of the Class A\nOrdinary Shares could be adversely affected.\n\n** **\n\n**Our dual\nclass share structure with different voting rights will limit your ability to influence corporate matters and could discourage others\nfrom pursuing any change of control transactions that holders of our Class A Ordinary Shares may view as beneficial.**\n\n \n\nWe\nhave adopted a dual class share structure such that our Ordinary Shares consist of Class A Ordinary Shares and Class B Ordinary\nShares. In respect of matters requiring the votes of shareholders, each Class A Ordinary Share is entitled to one (1) vote\nand each Class B Ordinary Share is entitled to one hundred (100) votes. Each Class B Ordinary Share is convertible into\none Class A Ordinary share at any time by the holder thereof. Our Class A Ordinary Shares are not convertible into our Class B\nOrdinary Shares under any circumstances.\n\n \n\nOnly\nour Class A Ordinary Shares are tradable on the market. This voting structure may discourage investors from pursuing any change\nof control transactions that holders of our Class A Ordinary Shares may view as beneficial.\n\n \n\n52"}