{"url_path":"/sec/ucar/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","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":22526,"has_tables":true,"body_markdown":"**Item\n4. INFORMATION ON THE COMPANY**\n\n \n\nA. History\nand Development of the Company\n\n \n\nFor\nthe history and development of the Company, please refer to “Item 3. Key Information — Our Corporate History.”\n\n \n\nOn\nApril 20, 2023, our ordinary shares commenced trading on the Nasdaq Capital Market under the symbol “UCAR.”\n\n \n\nOn\nApril 21, 2023, we closed our initial public offering. We raised $15.0 million in gross proceeds from our initial public offering, before\ndeducting underwriting discounts and other related expenses.\n\n \n\nOn\nDecember 6, 2023, we closed a registered follow-on offering and raised gross proceeds of $12.0 million, before deducting offering expenses. \n\n** **\n\nOn\nJune 13, 2024, U SWAP CO., LTD. was incorporated in Thailand under the Civil and Commercial Code, which is 15% owned by Mr. Ke Zhang\nand 85% owned by Energy U limited, as of the date of this annual report.\n\n \n\n**Entry\ninto two Material Definitive Agreements with Fortune Light Assets Ltd. (May 2024)**\n\n* *\n\n*Unless\notherwise indicated, all share amounts and per share amounts in this subsection are not presented to give effect to the 1-for-10 share\nconsolidation, which was effected on April 1, 2026.*\n\n* *\n\nOn\nMay 13, 2024, we entered into a subscription agreement with Fortune Light Assets Ltd. (“FLA”). Pursuant to the subscription\nagreement, FLA agreed to subscribe for and purchase, and the Company agreed to issue and sell to FLA, pursuant to Rule 902 of Regulation\nS (“Regulation S”) promulgated under the Securities Act, an aggregate of 209,644 ordinary shares of the Company, par value\nUS$0.00001 per share, at a purchase price of $4.77 per share, for an aggregate purchase price of $1,000,001.88. The closing of the transaction\ntook place on June 15, 2024. Pursuant to the subscription agreement, FLA is entitled to the following: (i) one demand registration with\nrespect to the 209,644 ordinary shares (which demand registration right terminated on the six-month anniversary of the execution date\nof the subscription agreement); and (ii) the right to purchase of up to 492,611 additional ordinary shares of the Company at a per share\nprice of $6.09 for a total purchase price of up to $3,000,000.99, pursuant to an agreement to be in customary form reasonably acceptable\nto the parties, and such right to purchase additional shares will terminate on the two-year anniversary of the execution date of the\nsubscription agreement.\n\n \n\nOn\nJune 24, 2024, we entered into a subscription agreement with FLA. Pursuant to the subscription agreement, FLA agreed to subscribe for\nand purchase, and the Company agreed to issue and sell to FLA, pursuant to Regulation S , an aggregate of 209,644 ordinary shares of\nthe Company, par value US$0.00001 per share, at a purchase price of $4.77 per share, for an aggregate purchase price of $1,000,001.88.\nThe closing of the transaction took place on July 3, 2024. Pursuant to the subscription agreement, FLA is entitled to the following:\n(i) one demand registration with respect to the 209,644 ordinary shares (which demand registration right expired on the six-month anniversary\nof the execution date of the subscription agreement); and (ii) the right to purchase of up to 164,204 additional ordinary shares of the\nCompany at a per share price of $6.09 for a total purchase price of up to $1,000,002.36, pursuant to an agreement to be in customary\nform reasonably acceptable to the parties, and such right to purchase additional shares will terminate on the two-year anniversary of\nthe execution date of the subscription agreement. \n\n \n\n**Entry\ninto a Material Definitive Agreements with Big Benefit Ltd. (May 2024)**\n\n \n\n*Unless\notherwise indicated, all share amounts and per share amounts in this subsection are not presented to give effect to the 1-for-10 share\nconsolidation, which was effected on April 1, 2026.*\n\n* *\n\nOn\nMay 23, 2024, we entered into a subscription agreement with Big Benefit Ltd. (“BBL”). Pursuant to the subscription agreement,\nBBL agreed to subscribe for and purchase, and the Company agreed to issue and sell to BBL, pursuant to Regulation S, an aggregate of\n419,289 ordinary shares of the Company, par value US$0.00001 per share, at a purchase price of $4.77 per ordinary share, for an aggregate\npurchase price of $2,000,008.53. \n\n \n\nThe\nclosing of the transaction took place on June 10, 2024. BBL was entitled to one demand registration with respect to the 419,289 ordinary\nshares (which demand registration right expired on the six-month anniversary of the execution date of the subscription agreement).\n\n \n\n53\n\n** **\n\n**Joint\nVenture in Thailand (December 2024)**\n\n \n\nOn\nDecember 25, 2024, U SWAP Co., Ltd., signed a cooperation agreement with Ezzy Transporter (Thailand) Company Limited (“Ezzy Transporter”)\nto establish Greendrive Tech Co. Ltd. (“Greendrive”), a company formed for the purpose of expanding the market for and facilitating\nthe sale of electric vehicles (“EVs”) in Thailand (the “Joint Venture”). Pursuant to the agreement, the parties\nto the Joint Venture will seek to integrate the Company’s proprietary UOTTA battery-swapping technology into a diversified fleet\nof vehicles in Thailand, including taxis, ride-sharing vehicles, and multipurpose pickup trucks.\n\n \n\nThe\nJoint Venture will undertake the three following principal areas of strategic development:\n\n \n\n1.Customization\nof battery-swapping EVs to meet targeted customer requirements;\n\n \n\n2.Development\nof a comprehensive battery-swapping ecosystem within the taxi and ride-sharing markets, including\nvehicle sales, battery-swapping station operations, and end-of-life vehicle recycling initiatives;\nand\n\n \n\n3.Marketing\nand distribution of battery-swapping pick-up trucks, with an emphasis on building and expanding\na robust dealer network throughout Thailand.\n\n \n\nThrough\nthese complementary activities, the Joint Venture is expected to deliver integrated EV solutions across the entire electric vehicle value\nchain in the region.\n\n \n\nGreendrive’s\ninitial production run is scheduled for completion in 2026 and will consist of approximately 2,000 custom-built sedans and multipurpose\npickup trucks equipped with UOTTA technology. The Company also intends to explore future cooperation opportunities with other strategic\npartners to invest in and expand the UOTTA battery-swapping station infrastructure in Thailand, with the objective of supporting the\nfull-scale commercialization of the UOTTA battery-swapping model amid Thailand’s ongoing transition toward electric mobility.\n\n \n\n**Variation\nof Share Capital**\n\n \n\n*Unless\notherwise indicated, all share amounts and per share amounts in this subsection are not presented to give effect to the 1-for-10 share\nconsolidation, which was effected on April 1, 2026.*\n\n* *\n\nThe\n2024 annual general meeting of shareholders (the “AGM”) of the Company was held on August 13, 2024. At the AGM, the shareholders\nof the Company adopted the following resolutions with respect to the variation of share capital:\n\n \n\n(a)re-designated\nall of the issued shares of a par value of US$0.00001 each (the “Shares”) in\nthe capital of the Company (other than the 71,250 ordinary shares held by U Create Limited,\nthe 157,859 ordinary shares held by U Trend Limited, the 149,435 ordinary shares held by\nUpincar Limited and the 209,644 ordinary shares held by FLA) into Class A ordinary shares\nof US$0.00001 each, with each Class A ordinary share of US$0.00001 each entitled to one vote;\n\n \n\n(b)re-designated\nthe 71,250 ordinary shares held by U Create Limited, the 157,859 ordinary shares held by\nU Trend Limited, the 149,435 ordinary shares held by Upincar Limited and the 209,644 ordinary\nshares held by FLA into Class B ordinary shares of US$0.00001 each, with each Class B ordinary\nshare of US$0.00001 each entitled to 20 votes;\n\n \n\n(c)re-designated\n3,996,621,812 authorized but unissued Shares as Class A ordinary shares of US$0.00001 each;\nand\n\n \n\n(d)re-designated\n1,000,000,000 authorized but unissued Shares as Class B ordinary shares of US$0.00001 each,\n\n \n\nImmediately\nfollowing the AGM, and as a result thereof, the authorized share capital of the Company was varied from US$50,000 divided into 5,000,000,000\nordinary shares of par value of US$0.00001 each to US$50,000 divided into 3,999,411,812 Class A ordinary shares of a par value of US$0.00001\neach, and 1,000,588,188 Class B ordinary shares of a par value of US$0.00001 each.\n\n \n\n54\n\n \n\n**Entry\ninto a Material Definitive Agreement with certain institutional investors (January 2025)**\n\n** **\n\n*Unless\notherwise indicated, all share amounts and per share amounts in this subsection are not presented to give effect to the 1-for-10 share\nconsolidation, which was effected on April 1, 2026.*\n\n* *\n\nOn\nJanuary 24, 2025, we entered into a securities purchase agreement with certain institutional investors, pursuant to which we issued and\nsold i) in a registered direct offering 648,000 Class A ordinary shares of US$0.00001 each and pre-funded warrants to purchase up to\n393,668 Class A ordinary shares of US$0.00001 each (the “January 24, 2025 Pre-funded Warrants”), and ii) in a concurrent\nprivate placement, common warrants to purchase up to 1,562,502 Class A ordinary shares of US$0.00001 each (the “January 24, 2025\nCommon Warrants”), which have an exercise price of $4.80 per Class A ordinary share of US$0.00001 each, are exercisable immediately\nas of such date and will expire on January 28, 2030 (the “January 2025 Offering”). The combined offering price for each Class\nA ordinary share of US$0.00001 each and accompanying January 24, 2025 Common Warrant was $4.80. The closing of the transaction took place\non January 27, 2025. The gross proceeds to the Company were approximately $5.0 million before deducting the placement agent’s fees\nand other offering expenses.\n\n \n\nThe\nClass A ordinary shares of US$0.00001 each, the January 24, 2025 Pre-Funded Warrants and the Class A ordinary shares of US$0.00001 each\nunderlying the January 24, 2025 Pre-funded Warrants were offered by the Company pursuant to a registration statement on Form F-3 (File\nNo.333-282901), previously filed and declared effective by the SEC on November 8, 2024, the base prospectus filed as part of the registration\nstatement on Form F-3, and the prospectus supplement dated January 24, 2025. The issuance of the January 24, 2025 Common Warrants described\nabove was exempt from the registration requirements of the Securities Act, pursuant to an exemption provided by Section 4(a)(2) thereof\nand/or Rule 506 of Regulation D promulgated thereunder as a transaction by an issuer not involving a public offering.\n\n** **\n\n**Entry\nInto a Material Definitive Agreement with Certain Institutional Investors (July 2025)**\n\n** **\n\n*Unless\notherwise indicated, all share amounts and per share amounts in this subsection are not presented to give effect to the 1-for-10 share\nconsolidation, which was effected on April 1, 2026.*\n\n* *\n\nOn\nJuly 24, 2025, we entered into a securities purchase agreement (the “July 2025 SPA”) with certain institutional investors,\npursuant to which we issued and sold (i) in a registered direct offering 445,000 Class A ordinary shares of the Company, par value $0.00001\nper share, and certain pre-funded warrants to purchase up to 106,628 Class A ordinary shares of the Company, par value $0.00001 per share,\nand (ii) in a concurrent private placement, certain common warrants to purchase up to 551,628 Class A ordinary shares of the Company,\npar value $0.00001 per share, which common warrants have an exercise price of $2.50 per Class A ordinary share of the Company, par value\n$0.00001 per share, are exercisable immediately and will expire on July 24, 2030. The combined offering price for each Class A ordinary\nshare of the Company, par value $0.00001 per share, and accompanying common warrant was $2.50. The closing of the transaction took place\non July 25, 2025. The gross proceeds to the Company were approximately $1.38 million before deducting the placement agent’s fees\nand other offering expenses.\n\n \n\nThe\nClass A ordinary shares, the pre-funded warrants and the Class A ordinary shares underlying the pre-funded warrants were offered by the\nCompany pursuant to a registration statement on Form F-3 (File No.333-282901), previously filed and declared effective by the SEC on\nNovember 8, 2024, the base prospectus filed as part of the registration statement on Form F-3, and the prospectus supplement dated July\n24, 2025. The issuance of the common warrants described above was exempt from the registration requirements of the Securities Act, pursuant\nto an exemption provided by Section 4(a)(2) thereof and/or Rule 506 of Regulation D promulgated thereunder as a transaction by an issuer\nnot involving a public offering.\n\n \n\n**Entry\ninto Material Agreements with Maxim Group LLC and an institutional investor (December 2025)**\n\n \n\nOn\nDecember 1, 2025, we entered into a placement agency agreement (the “Placement Agency Agreement”) with Maxim Group LLC, as\nthe sole placement agent, and a securities purchase agreement (the “December 2025 SPA”) with an institutional investor, pursuant\nto which the Company received US$2,013,600 in consideration for the issuance of a series of senior secured promissory notes (collectively,\nthe “2025 Senior Secured Promissory Notes”) in the original aggregate principal amount of US$2,517,000 to the institutional\ninvestor.\n\n \n\nThe\n2025 Senior Secured Promissory Notes were issued with twenty percent (20%) original issue discount, and bear no interest unless an event\nof default occurs, and are due and payable by the Company on the maturity date of March 1, 2026. Any principal or other amounts due under\nthe December 2025 SPA and the 2025 Senior Secured Promissory Notes that are not paid when due (excluding amounts already accruing interest\nat the default rate established therefor under the 2025 Senior Secured Promissory Notes) will incur a late charge equal to 18% per annum\nfrom the due date until fully paid.\n\n \n\nAdditionally,\non December 1, 2025, the institutional investor and certain subsidiaries of the Company (collectively, the “Pledgors”), entered\ninto a pledge agreement (the “Pledge Agreement”), pursuant to which the Pledgors pledged their respective interests in Ordinary\nShares of the Company and other related collateral (collectively, the “Pledged Collateral”) to the investor, to secure the\nprompt payment and performance of all obligations under the 2025 Senior Secured Promissory Notes, the December 2025 SPA, and related\ntransaction documents. Concurrently therewith, the Company, the Pledgors, and the institutional investor entered into an equity interest\ncontrol agreement to perfect the security interest pledged in the Pledged Collateral pursuant to the Pledge Agreement.\n\n  \n\n55\n\n \n\nIn\naccordance with the terms of the Senior Secured Promissory Notes, in the event of any delay in the repayment of principal, the Company\nshall pay to Maxim Group LLC a late charge at a rate equal to 18% per annum, calculated from the applicable due date until such amount\nis fully paid.\n\n \n\nThe\nsecurities described above were sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities\nAct and/or Rule 506 of Regulation D promulgated thereunder. The investor is an accredited investor that purchased the securities as an\ninvestment in a private placement that did not involve a general solicitation.\n\n \n\n**Change\nof Voting Power (December 2025)**\n\n** **\n\n*Unless\notherwise indicated, all share amounts and per share amounts in this subsection are not presented to give effect to the 1-for-10 share\nconsolidation, which was effected on April 1, 2026.*\n\n \n\nAt\nthe 2025 annual general meeting of the Company held on December 5, 2025, the shareholders of the Company approved three resolutions (i)\nauthorizing the increase of the voting power of the Class B ordinary shares from twenty (20) to one hundred (100) votes per share; (ii)\nadopting a third amended and restated memorandum and articles of association; and (iii) authorizing the following conditional share consolidations:\n\n \n\n(A)\non a date when the closing market price per Class A ordinary shares of par value of US$0.00001 each is less than US$1.00, or on such\ndate as any director, chief executive officer or chief operating officer of the Company deems advisable, each 10 ordinary shares of a\npar value of US$0.00001 each be consolidated into 1 (one) ordinary share of a par value of US$0.0001 each, such that following such share\nconsolidation, the authorized share capital of the Company will be US$50,000 divided into 399,941,181.2 Class A ordinary shares of a\npar value of US$0.0001 each, and 100,058,818.8 Class B ordinary shares of a par value of US$0.0001 each (the “First Share Consolidation”);\n\n \n\n(B)\nsubsequently following the First Share Consolidation, on a date when the closing market price per the Class A ordinary share of a par\nvalue of US$0.0001 each is less than US$1.00, or on such date as any director, chief executive officer or chief operating officer of\nthe Company deems advisable, each 20 ordinary shares of a par value of US$0.0001 each be consolidated into 1 (one) ordinary share of\na par value of US$0.002 each, such that following such share consolidation, the authorized share capital of the Company will be US$50,000\ndivided into 19,997,059.06 Class A ordinary shares of a par value of US$0.002 each, and 5,002,940.94 Class B ordinary shares of a par\nvalue of US$0.002 each (the “Second Share Consolidation”);\n\n \n\n(C)\nsubsequently following the Second Share Consolidation, on a date when the closing market price per the Class A ordinary share of a par\nvalue of US$0.002 each is less than US$1.00, or on such date as any director, chief executive officer or chief operating officer of the\nCompany deems advisable and may determine in his or her absolute discretion, each 20 ordinary shares of a par value of US$0.002 each\nbe consolidated into 1 (one) ordinary share of a par value of US$0.04 each, such that following such share consolidation, the authorized\nshare capital of the Company will be US$50,000 divided into 999,852.953 Class A ordinary shares of a par value of US$0.04 each, and 250,147.047\nClass B ordinary shares of a par value of US$0.04 each (the “Third Share Consolidation”, and together with the First Share\nConsolidation and the Second Share Consolidation, the “Share Consolidations”); and\n\n \n\n(D)\nall fractional shares (after aggregating all fractional shares that would otherwise be received by a shareholder) resulting from each\nof the Share Consolidations will be rounded up to the whole number of shares. \n\n \n\n**Warrant\nExchange and Cancellation Agreement with SABBY VOLATILITY WARRANT MASTER FUND LTD. (March 2026)**\n\n** **\n\n*Unless\notherwise indicated, all share amounts and per share amounts in this subsection are not presented to give effect to the 1-for-10 share\nconsolidation, which was effected on April 1, 2026.*\n\n \n\nOn\nMarch 18, 2026, we entered into a Warrant Exchange and Cancellation Agreement (the “Exchange Agreement”) with SABBY VOLATILITY\nWARRANT MASTER FUND LTD. (the “Holder”), pursuant to which the Holder agreed to the full surrender and cancellation of 551,628\nordinary share purchase warrants previously issued to the Holder on July 25, 2025 (the “Cancelled Warrants”). Upon such cancellation,\nall rights under the Cancelled Warrants, including the price reset mechanisms set forth in Section 3(b) thereof, were terminated and\nare of no further force or effect.\n\n \n\nIn\nexchange for the cancellation of the Cancelled Warrants, the Company agreed to issue 3,000,000 Class A ordinary shares of the Company,\npar value $0.00001 per share, to the Holder (the “Exchange Shares”).\n\n \n\nThe\nexchange of the Cancelled Warrants for the Exchange Shares was made in reliance upon the exemption from registration provided by Section\n3(a)(9) of the Securities Act. No commission or other remuneration was paid or given, directly or indirectly, for soliciting such exchange.\n\n \n\nAs\nof the date of this annual report, all the Exchange Shares were issued to the Holder.\n\n \n\n56\n\n \n\n**Follow-on\nOffering (March 2026)**\n\n \n\n*Unless\notherwise indicated, all share amounts and per share amounts in this subsection are not presented to give effect to the 1-for-10 share\nconsolidation, which was effected on April 1, 2026.*\n\n \n\nOn\nMarch 20, 2026, the Company closed its underwritten follow-on offering (the “March 2026 Offering”) of 13,360,000 units (each,\na “Unit,” and, collectively, the “Units”), with each Unit consisting of (i) one Class A ordinary share,\npar value $0.00001 per share , and (ii) one Class A warrant to purchase one Class A ordinary share, par value $0.00001\nper share, (each, a “Class A Warrant,” and, collectively, the “Class A Warrants”), at a public offering\nprice of $0.449 per Unit, for aggregate gross proceeds to the Company of approximately $6 million, before deducting underwriting discounts\nand offering expenses payable by the Company. The Units, the Class A ordinary shares, par value $0.00001 per share, the Class A Warrants,\nand the shares underlying the Class A Warrants are collectively referred to herein as the “March 2026 Securities.” The Company\nalso granted the underwriter an over-allotment option exercisable for up to forty-five (45) days after the date of the March 2026 Offering,\nwhich permits the underwriter to purchase a maximum of 2,004,000 additional Class A ordinary shares, par value $0.00001 per share, and/or\n2,004,000 additional Class A Warrants to purchase Class A ordinary shares, par value $0.00001 per share. On March 19, 2026, the underwriter\npartially exercised its over-allotment option to purchase 1,890,000 Class A Warrants.\n\n \n\nThe\nClass A Warrants have a one-year term, are immediately exercisable after issuance, and had an initial exercise price of $0449 per\nClass A ordinary share, par value $0.00001 per share. On the 2nd and 5th trading day following the closing of the March\n2026 Offering, the exercise price of the Class A Warrants was reduced to 70% and 50% of the initial exercise price, or $0.3143 and\n$0.2245 per Class A ordinary share, par value $0.00001 per share, respectively. Upon each adjustment to the exercise price for the\nClass A Warrants, the number of issuable shares underlying the Class A Warrants were proportionally increased so that so that\nafter such adjustment the aggregate exercise price of the Class A Warrants remained the same. The Class A Warrants also provide\nfor a zero exercise price option, in which the holder will receive two (2) Class A Ordinary Shares that would be issuable upon a\ncash exercise of the Class A Warrant, without payment of additional consideration.\n\n \n\nThe March 2026 Securities were offered pursuant\nto the Company’s registration statement on Form F-1, as amended (File No. 333-294161), which was initially filed with\nthe SEC on March 10, 2026 and\ndeclared effective by the SEC on March\n18, 2026.\n\n \n\nThe\nMarch 2026 Offering was conducted pursuant to an underwriting agreement, dated March 19, 2026, by and between the Company and Maxim Group\nLLC, as the sole book-running manager in connection with the March 2026 Offering. Underwriting discounts equaled 7% of the gross proceeds\nof the March 2026 Offering, and the Company also agreed to reimburse Maxim Group LLC for certain of its offering-related expenses in\nan amount not to exceed $100,000.\n\n \n\n**First\nShare Consolidation (April 2026)**\n\n** **\n\nOn\nMarch 25, 2026, the Company announced on a report on Form 6-K plans to effectuate a consolidation of all of the Company’s authorized\nissued and unissued ordinary shares on a 10:1 basis to take effect at the commencement of trading on April 1, 2026. As a result,\neach 10 ordinary shares of a par value of US$0.00001 each were to be consolidated into 1 (one) ordinary share of a par value of US$0.0001\neach, and following such share consolidation, the authorized share capital of the Company was changed to US$50,000 divided into 399,941,181.2\nClass A ordinary shares of a par value of US$0.0001 each, and 100,058,818.8 Class B ordinary shares of a par value of US$0.0001 each.\n\n \n\n**Entry\ninto Material Agreements with certain investors (April 2026)**\n\n** **\n\nOn\nApril 7, 2026, the Company entered into subscription agreements (collectively, the “April 7, 2026 Subscription Agreements”)\nwith seven purchasers. Pursuant to the April 7, 2026 Subscription Agreements, and in reliance on Regulation S, certain investors agreed\nto subscribe for and purchase from the Company, and the Company agreed to issue and sell to such investors, an aggregate of 2,900,000\nClass A Ordinary Shares at a purchase price of $1.10 per share, for an aggregate purchase price of $3,190,000. The investors represented\nthat they were not residents of the United States and were not “U.S. persons,” as defined in Rule 902(k) of Regulation S,\nand were not acquiring the Class A Ordinary Shares for the account or benefit of any U.S. person.\n\n \n\nThe\nentry into the April 7, 2026 Subscription Agreements and the transactions contemplated thereby were approved by the Company’s board\nof directors on April 6, 2026.\n\n \n\n**Entry\ninto Material Agreements with certain investors (April 2026)**\n\n** **\n\nOn\nApril 27, 2026, the Company entered into certain subscription agreements (collectively, the “April 27, 2026 Subscription Agreements”)\nwith ten purchasers. Pursuant to the April 27, 2026 Subscription Agreements, and in reliance on Regulation S, the purchasers agreed to\nsubscribe for and purchase from the Company, and the Company agreed to issue and sell to the purchasers, an aggregate of 15,670,737 Class\nA Ordinary Shares at a purchase price of $1.64 per share, for an aggregate purchase price of $25.7 million. Each of the purchasers represented\nthat they were not residents of the United States and were not “U.S. persons,” as defined in Rule 902(k) of Regulation S,\nand were not acquiring the Class A Ordinary Shares for the account or benefit of any U.S. person.\n\n \n\nThe\nentry into the April 27, 2026 Subscription Agreements and the transactions contemplated thereby were approved by the Company’s\nboard of directors on April 24, 2026.\n\n \n\n57\n\n \n\n**Corporate\nInformation**\n\n \n\nOur\nprincipal executive offices are located at 18/F, Building 3, Science and Technology Industrial Park, Yijiang District, Wuhu City, Anhui\nProvince (安徽省芜湖市弋江区科技产业园3号楼18层),\nPeople’s Republic of China. Our telephone number at this address is 00852-6859-3598. Our registered office in the Cayman Islands\nis located at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY-1104, Cayman Islands.\n\n \n\nInvestors should submit any inquiries to the\naddress and telephone number of our principal executive offices. Our corporate website is http://www.upincar.com/. The information contained\non our websites is not a part of this annual report. Our agent for service of process in the United States is located at 122 East 42nd\nSt 18th Floor, New York, NY 10168.\n\n \n\nThe\nSEC maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding issuers\nthat file electronically with the SEC using its EDGAR system.\n\n \n\nFor\ninformation regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects — B.\nLiquidity and Capital Resources — Capital Expenditures.”\n\n** **\n\nB.\nBusiness Overview\n\n** **\n\n**Overview**\n\n \n\nWe\nare a vehicle sourcing service provider in China, with a vision to becoming an EV market player primarily focused on our proprietary\nbattery-swapping technology, or UOTTA technology, which is an intelligent modular battery-swapping technology designed to provide a comprehensive\nbattery power solution for EVs. \n\n \n\nFrom\nour commencement of operations in 2013 through fiscal year 2022, we were principally engaged in the provision of vehicle sourcing services.\nWe broker sales of vehicles between automobile wholesalers and buyers, including SME dealers and individual customers primarily located\nin the lower-tier cities in China, which are smaller and less developed than the tier-1 or tier-2 cities. To that end, we have focused\non building business relationships with our sourcing partners and have developed a vehicle sourcing network. As of the date of this annual\nreport, our vehicle sourcing network consisted of approximately 100 wholesalers and 30 SME dealers located in lower-tier cities in China.\nFor fiscal years ended December 31, 2023, 2024 and 2025, our revenues from the sourcing business were RMB1.5 million, RMB0.1 million\nand RMB1.1 million, which constituted 7.7%, 0.1% and 2.7%, respectively, of our total revenue.\n\n \n\nBeginning\nin 2020, we gradually shifted our focus from the vehicle sourcing business to the development of our proprietary battery-swapping technology,\nor UOTTA technology. According to Frost & Sullivan, the PRC government will focus on promoting the electrification of commercial\nvehicles in the next few years, and it is expected that the sales volume of electric commercial vehicles will grow from 218.9 thousand\nunits in 2022 to 431.0 thousand units in 2026 at a compound annual growth rate (“CAGR”) of 18.5% in China, and with the increasing\npenetration rates of electric commercial vehicles and the expanding battery-swapping infrastructure network, the market size by revenue\nof battery swapping solutions for electric commercial vehicles is expected to increase from approximately RMB22,097.6 million in 2022\nto RMB176,615.1 million in 2026, representing a CAGR of 68.1%. In order to capture the opportunities arising from such growth, our plan\nis to develop a comprehensive EV battery power solution based on UOTTA technology, which mainly consists of: (i) vehicle-mounted supervisory\ncontrol units that monitor the real-time status of an EV’s battery packs; (ii) customized vehicle control units (“VCUs”),\nwhich upload real-time data of the electric vehicle, such as its battery status, real-time location and safety status, to our data platform,\nusing Bluetooth and/or Wi-Fi technologies; (iii) our data management platform, which collects and synchronizes real-time information\nof the EVs uploaded by their respective VCUs, as well as information on the availability and locations of compatible UOTTA battery-swapping\nstations that assist drivers in locating the nearest compatible UOTTA battery-swapping station(s) available when the EV’s battery\nis determined to be lower than a certain level; and (iv) UOTTA battery-swapping stations designed for precise positioning, rapid disassembly,\ncompact integration and flexible deployment of battery swapping for compatible EVs. \n\n \n\nWe\nhave established in-house capabilities in the innovation of EV battery-swapping technology. Through our research and development efforts,\nwe are developing an intellectual property portfolio. As of the date of this annual report, we had 51 issued patents and 18 pending patent\napplications in China. Our research and development team is committed to technology innovation. As of the date of this annual report,\nour research and development team consisted of 25 personnel and is led by Mr. Rui Wang and Mr. Zhanduo Hao, each of whom has\nexperience of over 20 years in the electric power sector.\n\n \n\n58\n\n \n\nIn\n2021, leveraging years of automobile industry experience, we started cooperating with major automobile manufactures to jointly develop\nUOTTA-powered EVs, by adapting selected EV models with our UOTTA technology. According to Frost & Sullivan, compared with passenger\nEV drivers, drivers of commercial-use EVs experience more range anxiety and are more motivated to shorten, or even eliminate, time spent\non recharging EVs, therefore, we intend to primarily focus on developing commercial-use UOTTA-powered EVs, such as ride-hailing passenger\nEVs, small logistics EVs, light electric trucks, and heavy electric trucks, and their compatible UOTTA battery-swapping stations. As\nof the date of this annual report, we have entered into cooperating agreements with two major Chinese automobile manufacturers, FAW Jiefang\nQingdao Automotive Co., Ltd, and HUBEI TRI-RING Motor Co., Ltd, to jointly develop UOTTA-powered electric trucks. We also have engaged\nwith one battery-swapping station manufacture to jointly develop and manufacture UOTTA battery-swapping stations that are compatible\nwith UOTTA-powered EVs. Our UOTTA battery-swapping stations are designed for precise positioning, rapid disassembly, compact integration\nand flexible deployment, allowing battery replacement within several minutes. As of the date of this annual report, we realized sales\nof eleven battery-swapping stations. In August 2021, we completed the construction of our own battery-swapping station factory in\nZibo City, Shandong Province (the “Zibo Factory”), which commenced manufacturing UOTTA battery-swapping stations in January 2022.\nIn January 2022, we started operating a battery-swapping station, and in March 2023, we started operating a second battery-swapping station,\nboth in Quanzhou City, Fujian Province, pursuant to our station cooperation agreement with Quanzhou Xinao. In order to provide a comprehensive\nbattery power solution based on UOTTA technology, we are in the process of developing a data management platform that connects UOTTA-powered\nEVs and stations, and assists the UOTTA-powered EV drivers in locating the closest compatible UOTTA swapping-stations on their routes.\nWe believe we have made significant progress in entering into the EV market as of the date of this annual report, however, there is no\nassurance that we will be able to execute our business plan to expand into the EV market as we have planned. For fiscal years ended December\n31, 2023, 2024 and 2025, our revenues from the EV business were RMB17.1 million, RMB41.8 million, and RMB36.6\nmillion, which constituted 86.3%, 94.5% and 89.1%, respectively, of our total revenue. \n\n \n\n**Our\nCompetitive Strengths**\n\n** **\n\n**A\nvehicle sourcing network in lower-tier cities in China**\n\n \n\nWe\nhave established a vehicle sourcing network primarily in the lower-tier cities in China, which allows us to distribute vehicles to our\ncustomers. We have a deep understanding of the vehicle dealership market and are able to provide services tailored to the changing needs\nof our consumers. We have built long-term relationships with our suppliers and SME dealer customers, who have a strong presence in the\nlower-tier cities. Through working directly with our suppliers and customers, we are able to better understand and timely address their\nneeds, as well as provide targeted services to them. As of the date of this annual report, we worked with approximately 100 suppliers\nand 30 SME dealers in the lower-tier cities in China. We have also established strong working relationships with a number of vehicle\nwholesalers.\n\n** **\n\n**UOTTA\nBattery-swapping technology**\n\n \n\nOur\nUOTTA technology is an intelligent modular battery swapping technology designed to provide a comprehensive battery power solution for\nEVs. Through our cooperation with major automobile manufactures, we are in the process of adapting UOTTA technology to electric trucks.\nWe believe our UOTTA technology has the potential of greatly alleviating range-anxiety, which, according to Frost & Sullivan,\nhas been one of the most critical challenges to EV adoption, particularly in the commercial-use EV market. Our UOTTA technology is designed\nto provide a comprehensive battery power solution that includes UOTTA-powered EVs and battery-swapping stations, as well as a data management\nplatform that synchronizes real-time data.\n\n** **\n\n**Strong\ncooperation with key partners, including major automakers and battery developers in China**\n\n \n\nWe\nhave partnered with major automotive manufacturers to jointly develop the UOTTA-powered EV models. As of the date of this annual report,\nkey partners of our UOTTA battery power solution include major automobile manufacturers (FAW Jiefang Qingdao Automotive Co., Ltd and\nHUBEI TRI-RING Motor Co., Ltd), and battery developers and manufacturer (Ruipu Energy Co., Ltd). We expect that their expertise and industry\nknow-how will guide us in our efforts to enter the EV market. We believe we are one of the few companies that are able to develop such\nrelationships with these major manufacturers, due to our industry experience, research and development capabilities, and industry reputation.\n\n** **\n\n**Visionary\nand experienced management team with strong commitment**\n\n \n\nWe\nare led by a visionary management team with a unique “bottom up” strategy. Our founders and senior management team have in-depth\nexpertise in the automotive and technology industries. The key members of our management team have an average of approximately 20 years\nof industry experience. Our founder and chairman, Mr. Jia Li, is a well-recognized leader in the Chinese automotive industry. He\nserved as vice president of the finance group in SAIC Motor, one of the largest automobile manufacturers in China, before he founded\nour Company. Mr. Jia Li’s proven track record and extensive experience in the automobile industry provide strong leadership\nto our mission. Mr. Rui Wang, our senior vice president, has approximately 20-years of industry experience in automobile engineering\nand design, working at several leading automobile manufacturers, such as FAW Group, Isuzu Auto, Toyota and IAT Auto. Mr. Zhanduo\nHao, our senior engineer, is committed to the research of key electric vehicle charging and battery-swapping technologies and has substantial\nindustry experience, having previously participated in the formulation of national and industry standards related to power swapping projects.\n\n** **\n\n59\n\n \n\n**Our\nStrategies**\n\n** **\n\n**Jointly\nDevelop UOTTA-powered EVs with major auto manufacturers in China**\n\n \n\nAs\nof the date of this annual report, our UOTTA technology is in the process of being adapted to electric vehicles by cooperating with major\nauto manufacturers in China. We intend to further explore collaboration opportunities with additional auto manufacturers who have leading\ntechnologies and sufficient capacities.\n\n** **\n\n**Develop\nand manufacture battery-swapping stations for UOTTA-powered EVs**\n\n \n\nAs\nof the date of this annual report, we have launched two models of UOTTA battery-swapping stations, “Titan” and “Chipbox”,\nby cooperating with battery-swapping station manufacturers in China. In August 2021, we completed the construction of our Zibo Factory,\nwhich commenced manufacturing UOTTA battery-swapping stations in January 2022. The Zibo Factory is located in Zibo City, Shandong\nProvince, with approximately 15,430 square meters of production area. In May 2023, we cancelled our plan to build another factory in\nWuhu City because our current production demand can be adequately served by our Zibo Factory. In February 2024, we entered into a share\nexchange agreement to acquire 26.25% equity shares of MATSON (HONG KONG) INDUSTRY CO., LIMITED, which is a Hong Kong limited liability\ncompany engaged in the development of EV battery-swapping technology. Our plan is to promote and expand our products into the Hong Kong\nmarket, and such acquisition was in furtherance of this goal.\n\n** **\n\n**Enhance\nour research and development capabilities**\n\n \n\nTechnology\ndrives our business. We plan to focus on technology innovations to continue developing and upgrading our proprietary UOTTA technology.\nWe expect to further strengthen the collaboration between our research and development team and marketing team to accumulate and transform\ninsights gained from practical experience into research and development capabilities. In addition, we are determined to strengthen our\nresearch and development capabilities by proactively recruiting and retaining engineering talents, in order to expand our talent pool\nand help us drive technological innovation.\n\n** **\n\n**Expand\nsales channels**\n\n \n\nIn\norder to promote and market our UOTTA-powered EVs and battery-swapping stations, we plan to (i) leverage our existing sourcing networks\nto market our new products; and (ii) explore new sales channels by cooperating with new strategic partners who possess their own\nsales networks, as well as enhancing the capabilities of our in-house sales team by recruiting qualified sales professionals.\n\n** **\n\n**Our\nBusiness Model**\n\n \n\n●**Sourcing\nBusiness**\n\n** **\n\nFor\nthe fiscal years ended December 31, 2025, 2024, and 2023, we generated revenues of RMB1.1 million, RMB0.1 million and RMB1.5 million,\nconstituting 2.7%, 0.1% and 7.7% of our total revenue, respectively, from the sourcing business.\n\n \n\nFrom\nour commencement of operations in 2013 through fiscal year 2022, we were primarily engaged in the provision of vehicle sourcing\nservices and developed a sourcing network in the lower-tier cities in China by building relationships with our sourcing partners,\nincluding automobile wholesalers on the supply side and SME dealers and individual customers on the demand side. We charge a\ncommission that is calculated based on the purchase price of each purchase order and the commission is recognized upon\ndelivery of vehicles to customers. For fiscal years ended December 31, 2025, 2024 and 2023, revenues\ngenerated from provision of vehicle sourcing services were RMB1.1 million, RMB0.1 million, RMB1.5 million, constituting 2.7%, 0.1%,\nand 7.7% of our total revenue, respectively. We aim to continue expanding our sourcing network, in an effort to provide our\ncustomers with a means by which they may acquire vehicles at a reasonable price point. As of the date of this annual report, our\nsourcing network was comprised of approximately 30 SME dealers and 100 wholesalers.\n\n \n\nWhile\nwe customarily source whole vehicles that are completed with vehicle bodies and batteries, some of our vehicle sourcing customers\ndemanded to purchase certain EV model vehicle bodies without batteries. The automobile wholesaler who sells this certain EV model,\nhowever, only sells the whole EV, including both body and battery. In order to address the needs of these customers, we purchased\nthese EVs from the wholesaler, delivered the EV bodies to the vehicle sourcing customers, and entered into a battery sales agreement\nwith another buyer to sell these batteries separately. As of the date of this annual report, we have only made one transaction of\nbattery sales and plan to provide the service on a case by case basis.\n\n \n\n60\n\n \n\n●**EV\nBusiness**\n\n \n\nFor\nthe fiscal years ended December 31, 2025, 2024 and 2023, we generated revenues of RMB36.6 million, RMB41.8 million and RMB17.1 million,\nconstituting 89.1%, 94.5% and 86.3% of our total revenue, respectively, from our EV business, as the following:\n\n \n\nUOTTA-powered\nEVs: The UOTTA-powered EVs are being jointly developed in cooperation with major automobile manufacturers in China, utilizing our\nproprietary UOTTA technology that enables efficient battery-swapping for EVs. We intend to primarily focus on commercial-use EVs in the\nnear future. As of the date of the annual report, we have entered into cooperating agreements with two major auto manufactures to jointly\ndevelop UOTTA-powered EVs by adapting commercial-use electric vehicles with UOTTA technology. For the fiscal years ended December 31,\n2025, 2024 and 2023, we did not generate any revenue from sales of UOTTA-powered EVs.\n\n \n\nUOTTA\nBattery-swapping Stations: Our UOTTA battery-swapping station currently has two models: (i) the Titan model, which is intended\nfor electric heavy trucks; and (ii) the Chipbox model, which is intended for ride-hailing passenger EVs, light electric trucks,\nand small logistics vehicles. Both models are developed based on our UOTTA technology. In fiscal year 2025, we realized sales of nine\nstations in Jilin province, China, one station in Hong Kong, and two stations in Thailand. In fiscal year 2024, we realized sales of\ntwelve stations in Jilin City, Jilin Province,and one station in Songyuan City, Jinlin Province. In fiscal year 2023, we realized sales\nof five stations in Quanzhou City, Fujian Province, and one station in Huzhou City, Zhejiang Province.\n\n \n\nBattery-swapping\nStation Operations: In January 2022, we started operating a battery-swapping station in Quanzhou City, Fujian Province, pursuant\nto our station cooperation agreement with Quanzhou Xinao, a local gas station operator. In March 2023, we started operating a second\nbattery-swapping station pursuant to the same agreement. For the fiscal years ended December 31, 2025, 2024 and 2023, we generated\nrevenue from battery-swapping services in the amount of RMB3.4 million, RMB2.4 million and RMB1.2 million, which revenue included a\nbattery swapping services fee and the station control system upgrading service, constituting 8.3%, 5.4% and 6% of our total revenue,\nrespectively.\n\n \n\n**Our\nVehicle Sourcing Business**\n\n \n\nWe\ntypically source vehicles from wholesalers to fulfill demands for vehicles of our customers, including SME dealers and individual customers\nprimarily located in lower-tier cities in China. We charge a commission that is calculated based on the purchase price of each purchase\norder and such agent commission is recognized upon delivery of vehicles to customers. Customers are required to make full payment for\nthe total selling price before we deliver the purchased vehicles to them.\n\n \n\nWe\nintend to further expand our sourcing network through marketing efforts by our sales team, such as targeted promotions via social media\nplatforms and in-person meetings. We plan to leverage our existing sourcing network to market and promote our UOTTA-powered EVs and battery-swapping\nstations.\n\n \n\nThe\nfollowing table sets forth the gross merchandise volume (“GMV”) and car units sourced and delivered to our customers by customer\ntype for the fiscal years ended December 31, 2025, 2024 and 2023. For the fiscal year ended December 31, 2025, we sold cars to our SME\ncustomers with lower unit price, which led to lower GMV with the increase numbers of units.\n\n \n\n  \nFor the year ended December 31 \n\n  \n2025  \n2024  \n2023 \n\n  \nGMV  \nUnits  \nGMV  \nUnits  \nGMV  \nUnits \n\n　 \n(RMB)  \n　  \n(RMB)  \n　  \n(RMB)  \n　 \n\nSME dealer customers \n 836,244  \n 81  \n 302,712  \n 215  \n 1,452,684  \n 22 \n\nIndividual customers \n    \n    \n -  \n -  \n -  \n - \n\nTotal \n 836,244  \n 81  \n 302,712  \n 215  \n 1,452,684  \n 22 \n\n \n\nWhile\nwe customarily source whole vehicles completed with vehicle bodies and batteries, some of our vehicle sourcing customers demanded to\nonly purchase certain EV’s vehicle bodies without their batteries. The automobile wholesaler, Wuhan Dongjun Automobile Sales Service\nCo., Ltd., which sells this EV, however, only sells the whole EV, including both the body and battery. In order to address the needs\nof our vehicle sourcing customers, on May 17, 2022, we entered into a purchase agreement with Wuhan Dongjun Automobile Sales Service\nCo., Ltd., to purchase a certain number of the whole EVs, but delivered and charged for only the vehicle bodies (without the batteries)\nto our vehicle sourcing customers. Subsequently, on June 27, 2022, we entered into a sales agreement with Quanzhou Shengyue New Energy\nTechnology Co., Ltd., to sell the batteries separately.\n\n \n\n61\n\n** **\n\n**Vehicle\nSourcing Customers**\n\n \n\nWe provide sourcing services to SME dealers and\nindividual customers primarily located in lower-tier cities in the PRC. Our relationships with our customers are mainly established\nthrough prior business dealings and referrals of our existing customers. For fiscal year 2025, we had [two] customers, both of which,\n[two] were SME dealers and there were no individual customers. For fiscal year 2024, we had 4 customers, all 4 of which were SME\ndealers and there were no individual customers. For fiscal year 2023, we had 2 customers, among which, two were SME dealers and no individual\ncustomers.\n\n \n\nTwo\ncustomers accounted for more than 10% of our total sourcing revenues in the fiscal year 2025. Four customers accounted for more than\n10% of our total sourcing revenues in the fiscal year 2024. Four customers accounted for more than 10% of our total sourcing revenues\nin the fiscal year 2023.\n\n** **\n\n**Vehicle\nSourcing Suppliers**\n\n \n\nWe\ntypically source cars from vehicle wholesalers. Occasionally we also source cars directly from auto manufacturers. For the fiscal years\nended December 31, 2025, 2024 and 2023, we sourced cars from 3, nil and 2 suppliers, respectively. One supplier accounted for more than\n10% of our total sourcing amount for the fiscal year ended December 31, 2025.\n\n \n\nWe\ndo not enter into long-term supplier agreements with our sourcing suppliers. The relationships with our suppliers are established through\nour history of long-term cooperation. The members of our core management team have years of experience in the automotive industry\nand have established extensive and in-depth contacts with our suppliers.\n\n** **\n\n**Our\nEV Business**\n\n** **\n\n**UOTTA-powered\nEVs**\n\n \n\nWe\nare dedicated to the research and development, and promotion and sales of our UOTTA-powered EVs. As of the date of this annual report,\nwe have entered into cooperating agreements to jointly develop UOTTA-powered EVs with two major automobile manufactures by adapting selected\nEV models with our UOTTA technology. Depending on the manufacturer, the terms of these agreements are either two or five years.\nEach UOTTA-powered EV model is designed to meet all safety and technical requirements specified by the safety and operational standards\nmandated by the Ministry of Industry and Information Technology of the PRC (“MIIT”). Prior to sale to the public, each UOTTA-powered\nEV model must have been certified by authorities designated by the Accreditation Administration Committee as qualified products and granted\ncertification marks, as well as pass inspections conducted by a state-recognized testing institution, and obtain approvals from the MITT. As\nof the date of this annual report, HUBEI TRI-RING Motor Co., Ltd. has received approvals from the MITT on two UOTTA-powered electric\ntruck models adapted with our UOTTA technology.\n\n \n\nSalient\nterms of the agreements with our cooperating automobile manufacturers in relation to the development, manufacturing and sales of the\nUOTTA-powered EVs are as follows:\n\n \n\n●The\nautomobile manufacturer will select, from its existing product pipeline, car model(s) that\nare suitable to be transformed into UOTTA-powered EV(s). The automobile manufacturer shall\nalso manufacture, promote and distribute the UOTTA-powered EVs.\n\n \n\n●We\nwill provide battery-swapping technology solutions that transform the selected EV model into\na UOTTA-powered EV that allows battery-swapping at our UOTTA battery-swapping stations. We\nshall also promote and distribute the UOTTA-powered EVs.\n\n \n\n●We\nwill develop, manufacture, and construct compatible battery-swapping stations for the jointly-developed\nUOTTA-powered EVs, and provide customer services for users of the UOTTA battery-swapping\nservices at the stations.\n\n \n\n●In\nsome cases, we will provide financing plans and solutions to support the joint development,\npromotion, and sales of the UOTTA-powered EVs and battery-swapping stations.\n\n \n\n●We\nwill assist the manufacturer in obtaining MIIT approvals for UOTTA-powered EV models.\n\n** **\n\nIn October 2023, we started to sell two-wheeled\nUOTTA-powered EVs. We source the vehicles from Wuxi Aide Electric Technology Co., Ltd. and Jielin New Energy Vehicle Industry Wuxi Co.,\nLtd. We have engaged two dealers, Yuncheng Xinfengfei Trading Co., Ltd (“Xinfengfei”) and Wuhu Huanyu Automobile Co., Ltd,\nas regional dealers for our EV products. For the fiscal year ended December 31, 2025, we have sold 61 EVs to Treep Mobility Group S.A.C.\nand generated revenue of RMB 4446,905 from such sales and sold 21 EVs to Sumitomo Mitsui and generated revenue of RMB326,906\nfrom such sales.\n\n \n\n62\n\n \n\n**UOTTA\nBattery-Swapping Stations**\n\n \n\nDrivers\nof UOTTA-powered EVs can replace depleted batteries for ones that are fully charged at compatible UOTTA battery-swapping stations. Currently,\ndue to the yet to be resolved issue of battery standardization, UOTTA battery-swapping stations can only service certain compatible EV\nmodels. The Titan model of UOTTA battery-swapping station is designed to service electric heavy trucks, while the Chipbox model is designed\nto service electric light trucks, logistics vehicles, ride-hailing passenger cars and taxis. For further details, see “Item 3.\nKey Information — D. Risk Factors —Risk Factors — Risks Relating to the Development and Sales of UOTTA-powered\nEVs and Battery-Swapping Stations — We may encounter difficulty promoting and marketing UOTTA-powered EVs and battery-swapping\nstations because of the lack of unified industry standards on EV batteries.”\n\n \n\nThe\ntypical size of a Titan station is approximately 6 to 8 parking spaces, or 60 square meters. The typical size of a Chipbox station is\napproximately 8-10 parking spaces, or 90 square meters. UOTTA battery-swapping stations are capable of automated operations. Once\na vehicle is parked in the station and the driver activates the swap function, battery-swapping will take place automatically. Our UOTTA\nbattery-swapping stations are jointly-developed with our cooperating battery-swapping station manufacturers using advanced modular replacement\ntechnology, capable of battery-swapping services of compatible EVs within a few minutes.\n\n \n\nThe\nbase prices of the Titan model range from RMB2,500,000 to 3,500,000 per unit, and the base price of the Chipbox model ranges from RMB2,200,000\nto 3,000,000 per unit. The prices include assembling and installing of the stations, but exclude the construction or infrastructure costs\nof the physical battery-swapping station. The expected useful-life of the stations is approximately 10 to 15 years. To purchase\na UOTTA battery-swapping station, a customer is required to make a non-refundable deposit in the amount of approximately 40% of the full\nprice. The prospective buyers/operators of our battery-swapping stations are the existing oil/gas station owners/operators and transportation\nbusiness owners such as ride-hailing service providers and logistics companies. In an effort to promote the adoption of our battery-swapping\nstations, we have generally adopted the following forms of agreement:\n\n \n\n●**Battery-swapping\nstation operation agreement (“Station Operation Agreement”). **Pursuant\nto the Station Operation Agreement, the prospective station owners shall purchase one or\nmore battery-swapping stations and install the stations at premises owned or leased by them.\nFor those prospective station owners who operate stations by themselves, we will provide\ntraining and supervision on the operation of the stations for a period of not more than two months;\nfor those who choose to entrust us to operate their stations, we will operate the stations\nfor a pre-determined monthly fee for a term of 5 years.\n\n \n\n●**Battery-swapping\nstation operation agreement (“Station Cooperation Agreement”).** Pursuant\nto the Station Cooperation Agreements, we shall invest in, build and operate a pre-determined\nnumber of battery-swapping stations at locations as selected and prepared by our customers\nfor a pre-determined length of time, generally for 8 years. The customer may elect to purchase\nthe battery-swapping stations at pre-determined prices during this period. In the event that\nthe customer does not exercise its right to purchase the battery-swapping stations, we will\ncontinue to own and operate the battery swapping stations, and shall lease the premises of\nthe battery-swapping stations from the customer at pre-determined rates after 180 days of\noperation.\n\n \n\n●**Battery-swapping\nstation sales agreement (“Station Sales Agreement”).** Pursuant to the\nStation Sales Agreement, we are responsible for supply and delivery of battery-swapping stations\nto the prospective buyers, who will be responsible for the construction and operation of\nthe battery-swapping stations.\n\n \n\nIn\nfiscal year 2025, we sold and delivered 12 stations to five customers pursuant to the Station Sales Agreements. In fiscal year 2024,\nwe sold and delivered 12 stations to two customers, pursuant to the Station Sales Agreements. In fiscal year 2023, we sold and delivered\nsix stations to four customers, pursuant to the Station Sales Agreements.\n\n \n\nAs\nof the date of this annual report, we entered into one Station Cooperation Agreement with one customer, Quanzhou Xinao, to invest in,\nbuild and operate four battery-swapping stations in Quanzhou City, Fujian Province. Pursuant to which agreement, we are currently operating\ntwo stations as follows:\n\n \n\n(1)In\nJanuary 2022, we completed the construction of one station and started operating the station.\nAfter 180 days of operation, Quanzhou Xinao chose not to purchase the station from us, and\nsubsequently we entered into a lease agreement with Quanzhou Xinao to lease the premises\nof the battery-swapping station for a period of eight years, from July 16, 2022 to July 15,\n2030, during which time we will continue to own and operate this station, unless Quanzhou\nXinao exercises its right to purchase the station, from us.\n\n \n\n(2)In\nMarch 2023, we completed the construction and commenced operation of a second station We\nentered into a lease agreement with Quanzhou Xinao to lease the premises of the battery-swapping\nstation for a period of eight years, beginning from January 16, 2023, during which time we\nwill continue to own and operate this station, unless Quanzhou Xinao exercises its right\nto purchase the station, from us.\n\n \n\n63\n\n** **\n\n**UOTTA\nData Management Platform**\n\n \n\nAs\npart of a comprehensive battery power solution, our self-developed UOTTA data management platform collects and synchronizes real-time\ninformation, including battery power voltage and remaining cruising range of the UOTTA-powered EVs, uploaded by their respective VCUs,\nas well as information on the availability and locations of compatible UOTTA battery-swapping stations. The UOTTA data management platform\nthen provides information to assist a driver in locating the nearest compatible UOTTA battery-swapping station(s) available when\nthe EV’s battery is determined to be lower than a certain level. As of the date of this annual report, we have substantially completed\nthe development of the main functionalities of the data management platform, and are in the process of developing ancillary programs\nand applications that assist with the day-to-day operations of the UOTTA battery-swapping stations and user management.\n\n* *\n\n**Research\nand Development (R&D)**\n\n \n\nAs of the date of this annual report, our engineering\nresearch and development headquarters is in Shanghai, where we have a team of 25 research and development personnel. For the fiscal years\nended December 31, 2025, 2024 and 2023, our R&D expenses were RMB4.6 million, RMB3.0 million and RMB2.2 million, which accounted for\n11.2%, 6.7% and 11.1% of our revenues, respectively.\n\n** **\n\n**Vehicle\nEngineering.**We have in-house vehicle engineering capabilities which cover all areas of vehicle engineering, starting from concept\nto completion. Our vehicle engineering group consists of 6 personnel. Our vehicle engineering team is located at our Shanghai headquarters,\nwhich location was selected due to its status as a global automotive hub, providing us with valuable exposure to a significant talent\npool.\n\n** **\n\n**Battery-swapping\nStations.**We have in-house battery-swapping station design and engineering capabilities, which cover all areas of battery-swapping\nstation design and engineering starting from layout design to operational platform design. Our battery-swapping station engineering group\nconsists of 5 personnel.\n\n** **\n\n**Data\nmanagement platform.**We have in-house data management platform design and development capabilities, which cover all areas of\nonline vehicle and user management system and power exchange service order management system. Our data management platform development\ngroup consists of 14 personnel.\n\n** **\n\n**Servicing\nand Warranty Terms**\n\n** **\n\n**Servicing. **We\nprovide servicing in relation to the UOTTA-powered battery-swapping stations primarily through our in-house after-sales team, which provides\ntraining, repair and maintenance services. We plan to form a service management team, which will be responsible for supervising and management\nof our after-sales team. Our team will select the location of our service centers primary based on the following criteria: (i) UOTTA-powered\nEVs and battery-swapping stations density (ii) the number of authorized dealers or service providers of our cooperating auto manufacturers;\n(iii) labor and operational costs. We established UOTTA authorized service centers in 12 cities in eight provinces as of this annual\nreport. Servicing in relation to the UOTTA-powered EVs will be primarily provided by our cooperating auto manufacturers through certain\nauthorized dealers or service providers, which provide repair and maintenance services.\n\n** **\n\n**Limited\nWarranty Policy. **For UOTTA battery-swapping stations, we provide a limited one-year warranty, subject to certain conditions.\nWarranties for parts and components are provided by our suppliers. In addition, after our one-year warranty expires, we will provide\nlife-time maintenance service for UOTTA battery-swapping stations and only charge the owners costs for replacement parts and components.\nFor UOTTA-powered EVs, our cooperation automobile manufactures will provide a limited warranty, subject to certain conditions and requirements\nof the relevant PRC laws and regulations.\n\n** **\n\n**Manufacturing,\nSupply Chain and Quality Control**\n\n \n\nWe\nview the manufacturers and suppliers we work with as key partners through our vehicle and battery-swapping station development process.\nWe aim to leverage our partners’ industry expertise to ensure that our products meet strict quality standards.\n\n \n\n64\n\n** **\n\n**Manufacturing\nof Battery-swapping Stations**\n\n \n\nAs\nof the date of this annual report, we have entered into cooperation agreements with two battery-swapping station manufacturers for the\njoint development and manufacturing of UOTTA battery-swapping stations. The manufacturing process in our own factory is mainly assembly\nof parts and components procured from our cooperating battery-swapping station manufacturers.\n\n \n\n**Zibo\nBattery-swapping Station Factory (“Zibo Factory”). **We completed the construction of our Zibo Factory in August 2021\nand commenced production of UOTTA battery-swapping stations in January 2022. The Zibo Factory is located in Zibo City, Shandong\nProvince, with approximately 15,430 square meters of production. The lease for the Zibo Factory is 5 years from April 2022.\nWe also lease the equipment at the Zibo Factory. The full production capacity of the Zibo Factory is anticipated to range from 180 to\n250 units per year. In May 2023, we cancelled our plan to construct another factory in the Wuhu City, because our current production\ndemand can be well served by our Zibo Factory.\n\n** **\n\n**Our\nBattery-swapping Station Suppliers**\n\n \n\nOur\nsupply base is located in China, which we believe is beneficial, as it enables us to acquire supplies more quickly and reduces the risk\nof delays related to shipping and importing of parts and components required for the manufacturing of UOTTA battery-swapping stations.\nWe expect that as our scale increases, such access to our supply base will enable us to take advantage of economies of scale with respect\nto pricing. We obtain components, parts, manufacturing equipment and other supplies and services from suppliers which we believe to be\nreputable and reliable. We follow our internal process to source suppliers, taking into account quality, cost and timing.\n\n \n\nOur\nmethod for sourcing suppliers depends on the nature of the supplies needed. For general parts which are widely available, we seek proposals\nfrom multiple suppliers and choose those mainly based on quality and price competitiveness. For parts requiring special designs, we solicit\ndesign proposals and choose suppliers largely based on design-related factors. However, in certain cases we have limited choices, given\nour scale. In such circumstances, we typically partner with suppliers that we believe to be well-positioned to meet our needs.\n\n \n\nWe\ndo not directly procure raw materials used in the manufacturing of our UOTTA battery-swapping stations; we only procure parts and components\nfrom our suppliers. We enter into purchase agreements with key suppliers. The agreements with our suppliers allow us to purchase parts\nand components on a per purchase order basis. The main parts and components include containers, charging cabinets, station control software\nand hardware. Furthermore, prices for the parts and components fluctuate, depending on various market conditions and price of the raw\nmaterials, such as steel, aluminum, copper, rubber, that are used by our suppliers to manufacture such parts and components. The prices\nfor raw materials are subject to market forces largely beyond our control, including energy costs, market demand, economy trend, and\nfreight costs. See “Item 3. Key Information — D. Risk Factors — Risk Factors — Risks Relating to the\nDevelopment and Sales of UOTTA-powered EVs and Battery-Swapping Stations — We could experience cost increases or disruptions\nin supply of raw materials or other components used in the manufacturing of battery-swapping stations.”\n\n** **\n\n**Quality\nAssurance.**\n\n \n\nWe\naim to deliver high-quality products and services to our customers in line with our core values and commitments. We believe that our\nquality assurance systems are the key to ensuring the delivery of high-quality products and services. We also seek to minimize waste\nand to maximize efficiency of our manufacturing process. We emphasize quality management across all business functions, including product\ndevelopment, manufacturing, supplier selection, procurement, servicing and logistics. Our quality management team consists of five members\nwho are responsible for our overall quality strategy, quality systems and processes, and general quality management implementation.\n\n** **\n\n**Competition**\n\n \n\nWe\ncompete in both the vehicle sourcing and EV battery swapping markets in the PRC, and competitions in both markets are intense and fast\nevolving. According to Frost & Sullivan, China’s current vehicle sales market is highly concentrated and consists of traditional\ncar companies, internet technology companies, and new energy car companies. Battery-swapping operators can be categorized into EV manufacturers\nand independent battery-swapping operators. The EV manufacturers mainly serve their own battery-swapping electric vehicle models, while\nthe independent battery-swapping operators offer services to various cooperated EV manufacturers. With the development of battery-swapping\ntechnology and the growing battery-swapping infrastructure and supportive government policies, it is expected that more market players\nwill enter the battery-swapping market in the near future.\n\n** **\n\n65\n\n \n\n**Intellectual\nProperty**\n\n \n\nWe\nhave invested heavily in the areas of battery-swapping solution R&D and developed our proprietary UOTTA technology. As a result,\nour success depends, in part, on our ability to protect our technology and intellectual property. To accomplish this, we rely on a combination\nof patents, patent applications, trade secrets, including employee and third-party nondisclosure agreements, copyright laws, trademarks,\nand other contractual rights to establish and protect our proprietary rights in our intellectual property. As of the date of this annual\nreport, we had 51 issued patents and 18 pending patent applications, 14 registered trademarks and six pending trademark applications\nin China, and we also held or otherwise had the legal right to use four registered software copyrights and four registered artwork copyrights.\nSet forth below is a detailed description of our registered patents:\n\n \n\nCountry\n \nPatent\nNo.\n \nPatent\nName\n \nPatent\n\nPublication\nDate\n \nPatent\nType\n \nPatent\n\nValidity\nPeriod\n \nPatent\n\nStatus\n\nPRC\n \nCN202122540404.8\n \nFloating\nLock Nut Device for Electric Vehicle Swappable Battery Pack\n \n2022-04-12\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202121845193.2\n \nBattery\nPack Self-Locking Device for Electric Vehicles\n \n2022-04-12\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202121781707.2\n \nRooting\nDevice for Electric Vehicle Battery Pack\n \n2022-01-28\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202121731681.0\n \nElectric\nVehicle Battery Pack Capable of Voltage Switching\n \n2022-01-28\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202121147208.8\n \nA New\nEnergy Heavy Truck Battery-Swapping Unit\n \n2022-01-18\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN201921036843.1\n \nA Temporary\nStorefront with Diverse Application Scenarios\n \n2020-06-09\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202121688515.7\n \nLocking\nand Unlocking Device of Swappable Battery Pack for Electric Vehicles\n \n2022-01-11\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202121686004.1\n \nSwappable\nBattery Pack Locking Device\n \n2022-01-28\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202121686020.0\n \nBattery\nPack Locking Device for Electric Vehicles\n \n2022-01-11\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202121096648.5\n \nAn Unmanned\nVehicle Battery-Swapping Unit\n \n2022-08-30\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202220774766.5\n \nBattery\nPack Swapping Connector\n \n2022-07-26\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202220697269.X\n \nDouble\nSpring-Limited Battery Pack Locking Mechanism for Electric Vehicles\n \n2022-07-26\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202220591673.9\n \nBattery\nPack Rooting Mechanism with Fault Tolerance\n \n2022-07-26\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202121147209.2\n \nA Spreader\nfor Battery-Swapping of New Energy Vehicles\n \n2022-01-18\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202320055606.X\n \nBattery\nBox Compartment Rack Assembly for Charging Stations\n \n2023-04-25\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202320136496.X\n \nBattery\nBox Locking Device for Electric Vehicles\n \n2023-06-13\n \nUtility\nModel Patent\n \n10 years\n \nRegistered\n\nPRC\n \nCN202110907285.7\n \nFlexible\nBattery Enclosure for Electric Vehicles\n \n2022-09-30\n \nInvention\nPatent\n \n20 years\n \nRegistered\n\n**PRC  **\n \nCN202111349980.2\n \nSystem\nfor Information Exchange and Battery Swapping between Vehicles and Swap Stations\n \n2023-06-20\n \nInvention\nPatent\n \n20 years\n \nRegistered\n\n**PRC**\n \n**CN202222076850.2**\n \n**An\nUnmanned Electric Vehicle Swapping Drone**\n \n**2022-11-15**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202222101377.9**\n \n**An\nAccurately Positioned Heavy-Duty Electric Vehicle Swapping Station Lifting Device**\n \n**2023-04-07**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202222130650.0**\n \n**A\nVehicle-Mounted Battery Pack Base Suitable for Heavy-Duty Trucks**\n \n**2022-12-13**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202222227148.1**\n \n**A\nNew Energy Vehicle Battery Swapping System Powered by Clean Energy Sources**\n \n**2023-03-24**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n \n\n66\n\n \n\n**PRC**\n \n**CN202222519831.2**\n \n**A\nRotatable Heavy-Duty Vehicle Battery Swapping Station Hoist**\n \n**2023-01-17**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202222650534.1**\n \n**An\nElectric Vehicle Battery Swapping Lock**\n \n**2023-01-31**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202223083482.0**\n \n**Suspension-Type\nBattery Box Mounting Mechanism**\n \n**2023-04-18**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202223131182.5**\n \n**Quick-Release\nDC Output Charging Device**\n \n**2023-03-28**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202223315209.6**\n \n**An\nExchangeable Battery Pack Exchange Structure**\n \n**2023-05-09**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202230617507.7**\n \n**Quick-Change\nBattery Pack**\n \n**2023-01-10**\n \n**Design\nPatent**\n \n**15\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202320057020.7**\n \n**Battery\nBox Transport Device for Swapping Stations**\n \n**2023-05-26**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202320125070.4**\n \n**Battery\nPack Maintenance and Storage Cabinet**\n \n**2023-06-23**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202222163173.8**\n \n**A\nMobile Device for Heavy-Duty Battery Swapping Stations**\n \n**2022-11-22**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202111348022.3**\n \n**System\nand method for monitoring high-capacity lithium-ion batteries**\n \n**2024-03-19**\n \n**Invention\nPatent**\n \n**20\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202330032697.0**\n \n**Quick-change\nbattery box**\n \n**2023-11-10**\n \n**Design\nPatent**\n \n**15\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202230514295.X**\n \n**Display\nscreen panel with station control system graphical user interface**\n \n**2023-01-17**\n \n**Design\nPatent**\n \n**15\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202230514494.0**\n \n**Battery\nexchange mini-program graphical user interface for display screen panel (Uda battery exchange mini-program)**\n \n**2023-01-17**\n \n**Design\nPatent**\n \n**15\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202230514294.5**\n \n**Display\nscreen panel with graphical user interface for software (Uda battery exchange operation management platform SaaS system)**\n \n**2023-01-13**\n \n**Design\nPatent**\n \n**15\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202230346944.X**\n \n**Station-cloud\ncommunication device**\n \n**2023-01-10**\n \n**Design\nPatent**\n \n**15\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202230514504.0**\n \n**Display\nscreen panel with graphical user interface (Uda battery exchange operation management platform)**\n \n**2023-01-10**\n \n**Design\nPatent**\n \n**15\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202221780227.9**\n \n**On-board\nbattery exchange device**\n \n**2022-11-15**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**ZL202420037870.5**\n \n**A\nbattery locking and unlocking RGV (Rail-Guided Vehicle)**\n \n**2024-02-06**\n \n**Invention\nPatent**\n \n**20\nyears**\n \n**Registered**\n\n**PRC**\n \n**ZL202323085598.2**\n \n**An\nintelligent battery swapping station**\n \n**2024-01-09**\n \n**Invention\nPatent**\n \n**20\nyear**\n \n**Registered**\n\n**PRC**\n \n**ZL202420037902.1**\n \n**A\nbattery handling stacker**\n \n**2024-02-06**\n \n**Invention\nPatent**\n \n**20\nyear**\n \n**Registered**\n\n**PRC**\n \n**ZL202110835764.2**\n \n**A\nfixing and quick-installation mechanism for battery swap boxes**\n \n**2024-05-24**\n \n**Invention\nPatent**\n \n**20\nyear**\n \n**Registered**\n\n**PRC**\n \n**ZL202110835790.5**\n \n**A\nfixing mechanism for electric vehicle battery boxes**\n \n**2024-05-24**\n \n**Invention\nPatent**\n \n**20\nyear**\n \n**Registered**\n\n**PRC**\n \n**ZL202110858600.1**\n \n**A\nbattery box system and output voltage switching method that can switch between multiple voltage levels**\n \n**2024-05-24**\n \n**Invention\nPatent**\n \n**20\nyear**\n \n**Registered**\n\n**PRC**\n \n**ZL202110881386.1**\n \n**A\nfastening device for quickly securing battery boxes**\n \n**2024-05-24**\n \n**Invention\nPatent**\n \n**20\nyear**\n \n**Registered**\n\n**PRC**\n \n**CN202110907741.8**\n \n**Locking\ndevice for battery box for battery swapping**\n \n**2024-05-24**\n \n**Invention\nPaten**\n \n**20\nyear**\n \n**Registered**\n\n**PRC**\n \n**CN202420720847**\n \n**Electric\nvehicle chassis battery swapping system based on vehicle-mounted rails**\n \n**2025-03-14**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202422924992.9**\n \n**An\nautomatic ramp structure for a charging station**\n \n**2025-10-03**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202423016802.X**\n \n**An\napparatus for the maintenance and installation of large-weight battery boxes**\n \n**2025-09-30**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n**PRC**\n \n**CN202520033896.7**\n \n**A\nhoisting mechanism for charging stations**\n \n**2025-12-23**\n \n**Utility\nModel Patent**\n \n**10\nyears**\n \n**Registered**\n\n** **\n\n \n\n67\n\n** **\n\n**Employees**\n\n \n\nWe\nhad 86, 80 and 77 full-time employees for the fiscal years ended December 31, 2025, 2024 and 2023, respectively. The following table\nsets forth the numbers of our employees categorized by function as of April 1, 2026:\n\n \n\nFunction \nAs\nof\nApril 1,\n2026 \n\nExecutives \n 6 \n\nResearch and Development \n 25 \n\nSales and marketing \n 6 \n\nOperation and Administrative \n 31 \n\nManufacturing \n 18 \n\nTotal\nnumber of employees \n 86 \n\n \n\nWe\nenter into employment contracts with our full-time employees. As required by regulations in China, our Chinese subsidiaries participate\nin various employee social security plans that are organized by municipal and provincial governments for our PRC-based full-time employees,\nincluding pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance.\nOur PRC subsidiaries are required under PRC law to make contributions from time to time to employee benefit plans for full-time employees\nat specified percentages of the salaries, bonuses and certain allowances of such employees, up to a maximum amount specified by the local\ngovernments in China. For more details, please see “Item 4. Information On The Company — Regulations — Regulation\nRelated to Employment, Social Insurance and Housing Fund.”\n\n \n\nOur\nemployees are not covered by any collective bargaining agreements. We believe that we maintain a good working relationship with our employees,\nand we have not experienced any significant labor disputes.\n\n** **\n\n**Facilities**\n\n \n\nAs\nof the date of this annual report, we lease all of our facilities. The following table sets forth the location, approximate size, primary\nuse and lease term of our major leased facilities:\n\n \n\nLocation \nApproximate\n\nGross Floor Area\nin Square Meters \nPrimary\nUse \nLease\nor Own \nLease\n\nExpiration Date\n\nAnhui, China \n357 \nGlobal headquarters \nLease \n1/31/2027\n\nShanghai, China \n752 \nOffice \nLease \n11/15/2026\n\nHenan, China \n385 \nOffice \nLease \n7/31/2026\n\nZibo, China \n15,430 \nFactory \nLease \n3/31/2027\n\n \n\nIn\nDecember 2021, Youpin SD., Youxu New Energy Technology (Zibo) Co., Ltd. (a wholly owned subsidiary of Youpin SD.), Mr. Jia\nLi, and Shandong Qiying Industrial Investment Development Co., Ltd. (“Shandong Qiying”) entered into a Capital Increase Agreement\n(the “Capital Increase Agreement”). Pursuant to the Capital Increase Agreement, in exchange for the total rental fees in\nthe amount of RMB15,670,840 from April 1, 2022 to March 31, 2027, for both the factory and equipment of the Zibo Factory, Shandong Qiying\nshall receive 15% of the equity shares of Youxu New Energy Technology (Zibo) Co., Ltd. Furthermore, Youxu New Energy Technology (Zibo)\nCo., Ltd. and Shandong Qiying entered into a lease agreement on December 28, 2021 (the “Zibo Factory Lease Agreement”), pursuant\nto the Capital Increase Agreement. In November 2023, the parties entered into an amendment to the Capital Increase Agreement (the “Amendment”)\nand agreed that Shandong Qiying shall receive 16.11% of the equity shares of Youxu New Energy Technology (Zibo) Co., Ltd in exchange\nfor the rental fees. A copy of the English translation of each of the Capital Increase Agreement, the Zibo Factory Lease Agreement Lease\nAgreement, and the Amendment is filed as Exhibits 4.6, 4.8, and 4.15, respectively, to this annual report.\n\n** **\n\n**Insurance**\n\n \n\nWe\nmaintain certain types of insurance to safeguard against risks and unexpected events. For example, we provide social security insurance,\nincluding pension insurance, unemployment insurance, work-related injury insurance and medical insurance for employees. We also maintain\nemployer liability insurance. We are not required to maintain business interruption insurance or product liability insurance in China\nunder PRC laws and do not maintain key person insurance, insurance policies covering damages to network infrastructures or information\ntechnology systems, nor any insurance policies for properties. For the fiscal years ended December 31, 2024, 2023, and 2022, we did not\nfile any material insurance claims in relation to our businesses.\n\n** **\n\n68\n\n** **\n\n**Seasonality**\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 January/February, the Labor Day holidays in May and the National Day holidays\nin October. Accordingly, we expect our revenues and operating results generally to be higher in these periods than in other months\nof the year.\n\n** **\n\n**Legal\nProceedings**\n\n \n\nFrom\ntime to time, we may be involved in legal proceedings in the ordinary course of our business. Litigation or any other legal or administrative\nproceeding, regardless of the outcome, is likely to result in substantial costs and diversion of our resources, including our management’s\ntime and attention.\n\n \n\nYoupin\nSD sued one of its vehicle sourcing service providers Inner Mongolia Zhonglutong Trading Co., Ltd. for failing to deliver vehicles as\nscheduled to Youpin SD’s customer. Youpin SD won the case on September 8, 2022. On March 23, 2023, both parties entered into a\nsettlement agreement, and the supplier agreed to return the deposit and liquidated damages with a total of RMB2,746,000 (US$376,000).\nAs of the date of this annual report, Youpin SD has applied for compulsory enforcement and the remaining unpaid amount was RMB2,608,890 (US$371,171).\n\n \n\nYoupin\nsued Hainan Gaozhan New Energy Vehicle Company Limited for its failure to refund a deposit of RMB170,000 (US$23,000) and payment of overdue\ninterest to Youpin in November 2023. On April 10, 2024, Youpin won the trial. As of the date of this annual report, Youpin has applied\nfor compulsory enforcement and the remaining unpaid amount was RMB201,428 (US$28,804).\n\n \n\nYouguan\nFinancial Leasing (China) Co., Ltd. sued Sichuan Maichebang Automobile Sales Co., Ltd., Yuan Mingqin, and Yuan Jinsong for rent and liquidated\ndamages of a total of RMB1,949,000 (US278,703). On July 21, 2025, the court rendered a judgment, ordering Sichuan Maichebang Automobile\nSales Co., Ltd. to pay unpaid rent and liquidated damages with a total of RMB1,378,082.10 (US$196,062), together with appraisal fees of RMB26,000\n(US$3,699). Youguan Financial Leasing (China) Co., Ltd. has applied for compulsory enforcement.\n\n \n\nQuanzhou\nYouyi Power Exchange Network Technology Co., Ltd., Youpin SD and SH Youxu were sued by Quanzhou Meibiaoyouxin Automobile Sales Service\nCo., Ltd. for payment of RMB700,000 (US$95,890) and liquidated damages on January 16, 2024. The initial hearing was held on March 22,\n2024. Youpin SD lost the case and appealed to the court on July 25, 2024. On November 8, 2024, the Quanzhou Intermediate People’s\nCourt revoked the original judgment and remanded the case for retrial. A retrial hearing of second instance was held on January 9,\n2026, and the judgment is currently pending.\n\n \n\nAHYS,\nShanghai Youcang Business Consulting Partnership (Limited Partnership), and Li Jia were sued by Zhuji Huarui Wenhua Equity Investment\nPartnership (Limited Partnership), Zhuji Huarui Torch Venture Capital Investment Partnership (Limited Partnership), and Zhuji Fuhui Industrial\nTransformation and Upgrading Investment Fund Partnership (Limited Partnership). The plaintiffs requested the court to order the defendants\nto jointly pay the investment exit amount of RMB10,000,000 (US$1,429,981), along with overdue payment penalties (calculated based on\nRMB10,000 (US$1,430) at the prevailing one-year loan prime rate of banks, from January 1, 2024, to the actual payment date, and the litigation\ncosts. On October 24, 2025, the court of first instance ruled in favor of the plaintiffs. On January 6, 2026, the court of second instance\nupheld the judgment rendered by the court of first instance.\n\n \n\nThe Wuhu High-Tech Industrial Development Zone\nAdministrative Committee issued an administrative decision to Youpin on August 29, 2024, which requires Youpin to return a rental subsidy\nwith respect to a factory lease of RMB3,000,000 (US$428,994). Thereafter, Youpin applied for administrative reconsideration and filed\na lawsuit. Both the administrative reconsideration and litigation proceedings upheld the administrative decision. As of the date of this\nannual report, Youpin has not returned the RMB3,000,000 rental subsidy. \n\n \n\nZibo Hengsong You Car Equity Investment Fund\nPartnership (Limited Partnership) (“Zibo Hengsong”) has sued Youpin SD, AHYS, WFOE, and Mr. Jia Li. The plaintiff requested\nthe defendants to repurchase the 13.0435% equity interest in Youpin SD and jointly pay the equity repurchase price of RMB240,000,000\n(US$34,319,544) plus interest (temporarily calculated at RMB78,220,273 (US$11,185,350)). The defendants filed a counterclaim demanding\nthat the plaintiff transfer the 13.0435% equity interest in Youpin SD to the defendants at a consideration of RMB1. On December 22, 2025,\nthe Zibo Intermediate People’s Court rendered a judgment, ordering AHYS and Mr. Jia Li to jointly pay Zibo Hengsong equity repurchase\nproceeds of RMB312,374,229.66 (US$44,677,747) plus interest accruing from January 11, 2025 to the date of actual payment (calculated\non a principal amount of RMB240,000,000 at an annual interest rate of 8%); ordering Youpin SD to bear joint and several liability  with AHYS and Mr. Jia Li\nfor such payment obligations; ordering WFOE to bear joint and several liability for AHYS’s payment obligations; and dismissing\nthe defendants’ counterclaim in its entirety. In connection with the foregoing proceedings, the Zibo Intermediate People’s\nCourt has frozen certain equity interests held by AHYS, Mr. Jia Li, and certain related entities, including, among others, AHYS’s\nequity interests in Youpin Automobile Service Group Co., Ltd. and Shanghai Youxu New Energy Technology Co., Ltd., Mr. Jia Li’s\nequity interests in Shanghai Youyi Jia New Energy Technology Partnership (Limited Partnership) and Shanghai Youcang Business Consulting\nPartnership (Limited Partnership), and equity interests held by AHYS and certain related entities in certain of our PRC subsidiaries,\nincluding Youpin, Youpin SD, SH Youteng, SH Youxu, and CD Youyineng, with the frozen equity interests ranging in value from approximately\nRMB103,548 to RMB100,000,000 per interest, and the freezing orders are to remain in effect through February or March 2028. On January\n8, 2026, Youpin SD, AHYS, Mr. Jia Li, and WFOE filed an appeal with the Shandong High People’s Court, requesting that the first\ninstance judgment be reversed and that all of Zibo Hengsong’s claims be dismissed. As of the date of this annual report, the case\nis under trial before the court of second instance.\n\n \n\n69\n\n \n\nSH Youxu, AHYS, and WFOE were sued by Nanyang\nChengtou Holding Co., Ltd. for payment of the repurchase of the equity interests in SH Youxu held by Nanyang Chengtou Holding Co.,\nLtd. of RMB5,000,000 (US$714,991) plus interest (temporarily calculated at RMB754,700 at an annual interest rate of 8%).   SH\nYouxu filed a counterclaim demanding that the plaintiff transfer an outstanding capital contribution of RMB5,000,000 (US$714,991). The\ncourt rendered a judgment on September 5, 2025, dismissing the plaintiff’s claims. As of the date of this annual report, no appeal\nhas been filed by the plaintiff.  \n\n \n\nSH Youxu and Youxu New Energy Technology (Nanyang)\nCo., Ltd. were sued by Shanghai Jiehuan Intelligent Technology Co., Ltd. for payment of RMB5,800,000 (US$828,389) for a battery swap station.\nThe Company was added as a third party by the Shanghai Songjiang District People’s Court on August 12, 2025. On April 13, 2026,\nthe court rendered the first-instance judgment, ordering the defendants to jointly and severally pay the plaintiff RMB5,800,000 (US$828,389).\nAs of the date of this annual report, the case is under trial before the court.\n\n \n\nYouxu (Xiamen) Power Exchange Network Technology Co., Ltd. and Youpin\nSD were sued by Yidong New Energy Technology Co., Ltd. for battery depreciation deduction of RMB1,499,024.70 (US$213,239), liquidated\ndamages of RMB414,412.38 (US$58,959), leasing service fees and overdue payment liquidated damages, with Youxu (Xiamen) Power Exchange\nNetwork Technology Co., Ltd. and Youpin SD bearing joint and several guarantee liability. The case was filed on March 5, 2026, and a court\nhearing is scheduled to be held on May 20, 2026. The case follows a prior dispute that was settled via mediation but subsequently led\nto enforcement proceedings due to non-compliance. As of the date of this annual report, the defendants are currently in negotiations with\nthe plaintiff regarding a mediation proposal.\n\n \n\n**Regulations**\n\n \n\nThis section\nsets forth a summary of the principal laws and regulations relevant to our business and operations in the PRC.\n\n** **\n\n**Regulations\nRelated to Foreign Investment**\n\n \n\nThe establishment, operation and management of\ncompanies in the PRC are mainly governed by the Company Law, which was issued by the Standing Committee of the National People’s\nCongress and was last amended in December 2023. The Company Law applies to both PRC domestic companies and foreign-invested companies.\nThe investment activities in China of foreign investors are also governed by the Foreign Investment Law, which was approved by the National\nPeople’s Congress of China in March 2019 and took effect on January 1, 2020. Along with the Foreign Investment Law, the\nImplementing Rules of Foreign Investment Law promulgated by the State Council and the Interpretation of the Supreme People’s Court\non Several Issues Concerning the Application of the Foreign Investment Law promulgated by the Supreme People’s Court became effective\non January 1, 2020. Pursuant to the Foreign Investment Law, the term “foreign investments” refers to any direct or indirect\ninvestment activities conducted by any foreign investor in the PRC, including foreign individuals, enterprises or organizations; such\ninvestment includes any of the following circumstances: (i)foreign investors establishing foreign-invested enterprises in the PRC solely\nor jointly with other investors, (ii)foreign investors acquiring shares, equity interests, property portions or other similar rights and\ninterests thereof within the PRC, (iii)foreign investors investing in new projects in the PRC solely or jointly with other investors,\nand (iv)other forms of investments as defined by laws, regulations, or as otherwise stipulated by the State Council.\n\n \n\nPursuant\nto the Foreign Investment Law, the State Council shall promulgate or approve a list of special administrative measures for access of\nforeign investments. We refer to this as the negative list. The Foreign Investment Law grants treatment to foreign investors and their\ninvestments at the market access stage which is no less favorable than that given to domestic investors and their investments, except\nfor the investments of foreign investors in industries deemed to be either “restricted” or “prohibited” on the\nnegative list. The Foreign Investment Law provides that foreign investors shall not invest in the “prohibited” industries\non the negative list, and shall meet such requirements as stipulated under the Negative List for making investment in “restricted”\nindustries on the negative list. Accordingly, the National Development and Reform Commission, or the NDRC, and the Ministry of Commerce\npromulgated the Special Entry Management Measures (Negative List) for the Access of Foreign Investment (2024 version), or the 2024 Negative\nList, which took effect on November 1, 2024, and the NDRC and the Ministry of Commerce promulgated the Encouraged Industry Catalogue\nfor Foreign Investment (2025 version), or the 2025 Encouraged Industry Catalogue, which took effect on February 1, 2026. Industries not\nlisted in the 2024 Negative List and 2025 Encouraged Industry Catalogue are generally open for foreign investments unless specifically\nrestricted by other PRC laws.\n\n \n\nThe\nForeign Investment Law and its implementing rules also provide several protective rules and principles for foreign investors and their\ninvestments in the PRC, including, among others, local governments shall abide by their commitments to the foreign investors; foreign-invested\nenterprises are allowed to issue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall\nbe followed and fair and reasonable compensation shall be made in a timely manner; expropriation or requisition of the investment of\nforeign investors is prohibited; mandatory technology transfer is prohibited; and the capital contributions, profits, capital gains,\nproceeds out of asset disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or proceeds\nreceived upon settlement by foreign investors within China, may be freely remitted inward and outward in RMB or a foreign currency. Also,\nforeign investors or the foreign investment enterprise will have legal liabilities imposed for failing to report investment information\nin accordance with the requirements.\n\n** **\n\n**Regulation Related\nto Automobile Sales**\n\n \n\nPursuant\nto the Administrative Measures on Automobile Sales promulgated by the Ministry of Commerce, which became effective on July 1, 2017,\nautomobile suppliers and dealers are required to file with the relevant authorities through the national automobile circulation information\nsystem operated by the competent commerce department within 90 days after the receipt of a business license. Where there is any\nchange to the information filed, automobile suppliers and dealers must update such information within 30 days after such change.\n\n \n\n70\n\n \n\n**Favorable\nGovernment Policies Relating to New Energy Vehicles (“NEV”) in China**\n\n** **\n\n**Government\nSubsidies for NEV Purchasers**\n\n \n\nOn\nApril 22, 2015, the Ministry of Finance, or the MOF, the Ministry of Science and Technology, or the MOST, the MIIT and the NDRC\njointly issued the Circular on the Financial Support Policies on the Promotion and Application of New Energy Vehicles in 2016 – 2020,\nor the Financial Support Circular, which took effect on the same day. The Financial Support Circular provides that those who purchase\nNEVs specified in the Catalogue of Recommended New Energy Vehicle Models for Promotion and Application by the MIIT may obtain subsidies\nfrom the PRC national government. Pursuant to the Financial Support Circular, a purchaser may purchase a new energy vehicle from a seller\nby paying the original price minus the subsidy amount, and the seller may obtain the subsidy amount from the government after such new\nenergy vehicle is sold to the purchaser.\n\n \n\nOn\nDecember 29, 2016, the MOF, the MOST, the MIIT and the NDRC jointly issued the Circular on Adjusting the Subsidy Policy for the\nPromotion and Application of New Energy Vehicles, or the Circular on Adjusting the Subsidy Policy, which took effect on January 1,\n2017, to adjust the existing subsidy standards for purchasers of NEVs. The Circular on Adjusting the Subsidy Policy capped the local\nsubsidies at 50% of the national subsidy amount, and further specified that national subsidies for purchasers purchasing certain NEVs\n(except for fuel cell vehicles) from 2019 to 2020 was reduced by 20% as compared to 2017 subsidy standards.\n\n \n\nThe\nCircular on Adjusting and Improving the Subsidy Policies for the Promotion the Application of New Energy Vehicles, which was jointly\npromulgated by the MOF, the MOST, the MIIT and the NDRC on February 12, 2018 and became effective on the same day further adjusted\nand improved the existing national subsidy standards for purchasers of NEVs.\n\n \n\nOn\nApril 23, 2020, the Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Science and Technology,\nand the Development and Reform Commission jointly issued the “Notice on Improving the Financial Subsidy Policy for the Promotion\nand Application of New Energy Vehicles,” extending the implementation period of the financial subsidy policy for the promotion\nand application of new energy vehicles to the end of 2022. In principle, the subsidy standard for 2020 – 2022 was\nreduced by 10%, 20%, and 30% on the basis of the previous year and the threshold for pure electric vehicles has been raised to 300 kilometers.\nFor example, in 2020, pure electric new energy vehicles with a cruising range between 300 and 400 kilometers can enjoy a subsidy of RMB\n16,200; pure electric new energy vehicles with a cruising range of more than 400 kilometers can enjoy a subsidy of RMB 22,500. At the\nsame time, the subsidy amount for plug-in hybrid models with a mileage of more than 50 kilometers in pure electric state can enjoy a\nsubsidy of RMB 8,500. In addition, the annual subsidy limit is about 2 million vehicles.\n\n  \n\nOn\nJanuary 30, 2023, the Ministry of Industry and Information Technology, the Ministry of Transport, together with the Development and Reform\nCommission, the Ministry of Finance, the Ministry of Ecology and Environment, the Ministry of Housing and Urban-Rural Development, the\nEnergy Bureau, and the Post Office launched the pilot work of the public domain vehicle comprehensive electrification pilot area nationwide,\nwith a pilot period of 2023-2025 (the “2023 New Energy Vehicle Subsidy Policy”). The main policy goal is to significantly\nincrease the level of vehicle electrification. The proportion of new energy vehicles in new and updated vehicles in pilot areas has increased\nsignificantly, among which, urban public transportation, leasing, sanitation, postal express delivery, and urban logistics distribution\nareas strive to reach 80%.\n\n \n\nIn\norder to promote the development of local new energy vehicles, 23 cities have recently announced the 2023 New Energy Vehicle Subsidy\nPolicy. Although the national subsidies ended, many areas still enjoy car purchase subsidies. For example, Shanghai continues to implement\nnew energy vehicle replacement subsidies, individual consumers who transfer to Shanghai before June 30, 2023, and meet certain the relevant\nstandards and purchase pure electric vehicles, is eligible to receive a financial subsidy of 10,000 yuan per vehicle.\n\n \n\n**Exemption\nof Vehicle Purchase Tax**\n\n \n\nOn\nDecember 26, 2017, the Ministry of Finance, the SAT, the MIIT, and the Ministry of Science and Technology jointly issued the Announcement\non Exemption of Vehicle Purchase Tax for New Energy Vehicle, pursuant to which, from January 1, 2018 to December 31, 2020,\nthe vehicle purchase tax applicable to ICE vehicles is not imposed on purchases of qualified NEVs listed in the Catalogue of New Energy\nVehicle Models Exempt from Vehicle Purchase Tax issued by the MIIT, including NEVs listed before December 31, 2017.\n\n \n\nOn\nApril 16, 2020, the Ministry of Finance, the SAT, and the MIIT jointly issued the Announcement on Exemption Policy of Vehicle Purchase\nTax for New Energy Vehicle, which was effective on January 1, 2021, pursuant to which the exemption of vehicle purchase tax for\nthe NEVs was extended to 2022.\n\n \n\n71\n\n \n\nOn\nSeptember 18, 2022, the Ministry of Finance, the SAT, and the MIIT jointly issued the Announcement on the Continuation of the Vehicle\nPurchase Tax Exemption Policy for New Energy Vehicles, which became effective on September 18, 2022, pursuant to which the exemption\nof vehicle purchase tax for the NEVs was extended to December 31, 2023.\n\n** **\n\n**Non-Imposition\nof Vehicle and Vessel Tax**\n\n \n\nPursuant\nto the Preferential Vehicle and Vessel Tax Policies for Energy-Saving and New Energy Vehicles and Vessels jointly promulgated by the\nMinistry of Finance, the Ministry of Transport, the SAT, and the MIIT, on July 10, 2018, NEVs, including battery electric commercial\nvehicles, plug-in (including extended-range) hybrid electric vehicles, fuel cell commercial vehicles are exempt from vehicle and vessel\ntax, whereas BEVs and fuel cell passenger vehicles are not subject to vehicle and vessel tax. The qualified vehicles are listed in the\nCatalogue of New Energy Vehicle Models Exempt from Vehicle and Vessel Tax issued by the MIIT and SAT from time to time.\n\n** **\n\n**NEV\nLicense Plates**\n\n \n\nIn\nrecent years, in order to control the number of motor vehicles on the road, certain local governments in China, such as Shanghai,\nTianjin, Shenzhen, Guangzhou, and Hangzhou, have issued restrictions on the issuance of vehicle license plates. These restrictions generally\ndo not apply to the issuance of license plates for NEVs (including EREVs, or extended-range electric passenger vehicles), which makes\nit easier for NEV purchasers to obtain license plates. For example, in Shanghai, local authorities will issue new license plates to qualified\nNEV purchasers pursuant to the Implementation Measures on Encouraging Purchase and Use of New Energy Vehicles in Shanghai, without requiring\nsuch qualified purchasers to go through certain license-plate bidding processes and to pay license-plate purchase fees as compared with\nICE vehicle purchasers. However, in Beijing, EREVs are treated as ICE vehicles for the purposes of obtaining license plates under the\nAdministration Rules on Encouraging Implementation of New Energy Vehicles in Beijing. Potential EREV purchasers in Beijing must participate\nin a lottery for a purchase permit, instead of applying for the NEV license plates based on the quota determined by the local authorities\nin Beijing.\n\n** **\n\n**Policies\nRelating to Incentives for Electric Vehicle Charging Infrastructure**\n\n \n\nPursuant\nto the Guiding Opinions of the General Office of the State Council on Accelerating the Promotion and Application of the New Energy Vehicles\nwhich took effect on July 14, 2014, the Guiding Opinions of the General Office of the State Council on Accelerating the Construction\nof Charging Infrastructure of the Electric Vehicle which took effect on September 29, 2015 and the Guidance on the Development of\nElectric Vehicle Charging Infrastructure (2015 – 2020) which took effect on October 9, 2015, the PRC government\nencourages the construction and development of charging infrastructure for electric vehicles, such as charging stations and battery swap\nstations, and requires relevant local authorities to adopt simplified construction approval procedures and expedite the approval process.\nIn particular, only newly-built centralized charging and battery replacement power stations with independent land occupation are required\nto obtain the construction approvals and permits from the relevant authorities. Government guidance price should be implemented in managing\nthe rate of the charging service fees before the year 2020.\n\n \n\nOn\nJanuary 11, 2016, the Ministry of Finance, the Ministry of Science and Technology, the MIIT, the NDRC, and the National Energy Administration\njointly promulgated the Circular on Incentive Policies on the Charging Infrastructures of New Energy Vehicles and Strengthening the Promotion\nand Application of New Energy Vehicles During the 13th Five-year Plan Period, which became effective on January 11, 2016.\n\n \n\nOn\nJanuary 1, 2022, the Implementation Opinions on Further Improving the Service Support Capability of Electric Vehicle Charging Infrastructure\n(“Implementation Opinions”) was issued jointly by the NDRC, the National Energy Administration, the Ministry of Industry\nand Information Technology, the Ministry of Finance, the Ministry of Natural Resources, the Ministry of Housing and Urban-Rural Development,\nthe Ministry of Transport, the Ministry of Agriculture and Rural Affairs, the Ministry of Emergency Management, and the State Administration\nfor Market Regulation. The Implementation Opinions require that, by the end of 2025, China’s capacity of charging and supporting\nfacilities for electric vehicles to be further improved to support more than 20 million electric vehicles, and encourage local governments\nto: (i) establish subsidy standards based on service quality to further incentivize the development of high-quality facilities;\n(ii) expand subsidies for developmental and demonstrative facilities such as high-power charging and vehicle-network interaction\nfacilities, to promote industry transformation and upgrading. On October 20, 2020, the General Office of the State Council issued\nthe Notice on Development Plan of New Energy Vehicles Industry (2021 – 2035). Pursuant to the notice, new energy vehicles\nindustry in China has entered a new stage for accelerated development, in which the state plans to promote the construction of charging\nand swapping networks, encourage the application of power exchange mode, strengthen the research and development of new charging technologies,\nand improve charging convenience and product reliability.\n\n \n\n72\n\n \n\nOn\nJune 8, 2023, The General Office of the State Council issued the Guiding Opinions on Further Building a High-quality Charging Infrastructure\nSystem, according to which, by 2030, a high-quality charging infrastructure system with extensive coverage, moderate scale, reasonable\nstructure and perfect functions shall be built to effectively support the development of the new energy vehicle industry and meet the\npeople’s travel charging needs.\n\n** **\n\n**Regulation Related\nto Compulsory Product Certification**\n\n \n\nAccording\nto the Administrative Regulations on Compulsory Product Certification as promulgated by the General Administration of Quality Supervision,\nInspection and Quarantine, or the QSIQ, which was merged into the SAMR afterwards, on July 3, 2009 and became effective on September 1,\n2009 and the List of the First Batch of Products Subject to Compulsory Product Certification as promulgated by the QSIQ in association\nwith the State Certification and Accreditation Administration Committee, or the CAA on December 3, 2001, and became effective on\nthe same day, QSIQ are responsible for the quality certification of automobiles. Automobiles and the relevant accessories must not\nbe sold, exported or used in operating activities until they are certified by certification authorities designated by CAA as qualified\nproducts and granted certification marks.\n\n** **\n\n**Regulation Related\nto Manufacturing New Energy Passenger Vehicles**\n\n \n\nThe\nMIIT is responsible for the national-wide administration of new energy vehicles and their manufacturers. On July 24, 2020, the MIIT\nrevised and promulgated the Administrative Measures for the Entry of Manufacturers of New Energy Passenger Vehicles and the Products,\nwhich took effect on September 1, 2020, or Circular 39. Pursuant to Circular 39, the manufacturers shall apply to the MIIT for the\nentry approval to become a qualified manufacturer in China and shall further apply to the MIIT for the entry approval for new energy\npassenger vehicles before commencing the manufacturing and sale of such new energy passenger vehicles in China. In order to obtain the\nentry approvals from the MIIT, the manufacturers shall meet certain requirements, including, among others, (1) having obtained the\napprovals or completed the filings with the NDRC in relation to manufacturing of electric vehicles, (2) having capabilities in the\ndesign, development and manufacture of automotive products, ensuring product consistency, providing after-sales service and product safety\nassurance, and (3) the new energy vehicles shall meet the technical criteria specified in Circular 39 and other safety and technical\nrequirements specified by the MIIT and pass the inspections conducted by the relevant state-recognized testing institutions.\n\n \n\nMIIT\npublishes the approved new energy passenger vehicles and their respective manufacturers in the Announcement of the Vehicle Manufacturers\nand Products, or the Manufacturers and Products Announcement, from time to time. Any manufacturer who manufactures or sells new energy\nvehicles without obtaining the entry approvals or prior to MITT publishing the new energy vehicles in the Manufacturers and Products\nAnnouncement may be subject to penalties, including fines, forfeiture of illegally manufactured and sold vehicles and spare parts and\nrevocation of its business licenses.\n\n \n\n**Regulations\nRelated to Internet Information Security and Privacy Protection**\n\n** **\n\n**Regulations\non Internet Information Security**\n\n \n\nIn\nNovember 2016, the Standing Committee of the National People’s Congress promulgated the PRC Cyber Security Law, which became\neffective on June 1, 2017. The Cyber Security Law requires that network operators, including internet information services providers,\ntake technical measures and other necessary measures in accordance with applicable laws and regulations and the compulsory requirements\nof the national and industrial standards to safeguard the safe and stable operation of its networks. We are subject to such requirements\nas we are operating a website and mobile application and providing certain internet services mainly through our mobile application. The\nCyber Security Law further requires internet information services providers to formulate contingency plans for network security incidents,\nreport to the competent departments immediately upon the occurrence of any incident endangering cyber security, and take corresponding\nremedial measures.\n\n \n\n73\n\n \n\nInternet\ninformation services providers are also required to maintain the integrity, confidentiality, and availability of network data. The Cyber\nSecurity Law reaffirms the basic principles and requirements specified in other existing laws and regulations on personal data protection,\nsuch as the requirements on the collection, use, processing, storage, and disclosure of personal data, and internet information services\nproviders being required to take technical and other necessary measures to ensure the security of the personal information they have\ncollected and prevent the personal information from being divulged, damaged, or lost. Any violation of the Cyber Security Law may subject\nan internet information services provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of\nfilings, shutdown of websites, or criminal liabilities.\n\n \n\nOn\nJune 10, 2021, the Data Security Law was promulgated by the SCNPC, which became effective on September1, 2021. The Data Security\nLaw mainly sets forth specific provisions regarding establishing basic systems for data security management, including hierarchical data\nclassification management system, risk assessment system, monitoring and early warning system, and emergency disposal system. In addition,\nit clarifies the data security protection obligations of organizations and individuals carrying out data activities and implementing\nData security protection responsibility.\n\n \n\nOn\nAugust 16, 2021, the NDRC, the MIIT, the Ministry of Public Security and the Ministry of Transport jointly promulgated the Several\nProvisions on Automotive Data Security Management (for Trial Implementation), or the Automobile Data Security Provisions, to regulate\nthe processing of automobile data, which became effective on October 1, 2021. Pursuant to the Automobile Data Security Provisions,\nfor the important data that processed during the use, operation or maintenance of automobile, such as personal information of more than\n100,000 people, or the Important Data, the automotive data processor of such Important Data needs to submit a risk assessment report\nto the competent cyberspace administration regarding the important data processing activities to be carried out by it, and to annually\nreport and submit the safety management status of the important data. The Automobile Data Security Provisions also dictated that when\nImportant Data need to be provided to overseas parties due to business needs, a security assessment organized by the CAC in concert with\nthe relevant departments of the State Council is required, and an automotive data processor shall not provide overseas parties with any\nImportant Data for any reason beyond the purpose, scope and method, as well as the type and scale of the data, etc. specified for risk\nassessment of cross-border transfer of data. If we are deemed as automotive data processor, we may need to comply with the regulatory\nrequirements for automobile data processors and in terms of important data.\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 came into effect on February 15, 2022, and the Measures for Cybersecurity Review,\nwhich took effect on June 1, 2020, was abolished at the same time. The Cybersecurity Review Measures provides that, among others,\n(i) the purchase of cyber products and services by critical information infrastructure operators (the “CIIOs”) and the\nnetwork platform operators (the “Network Platform Operators”) which engage in data processing activities that affects or\nmay affect national security shall be subject to the cybersecurity review by the Cybersecurity Review Office, the department which is\nresponsible for the implementation of cybersecurity review under the CAC; and (ii) the Network Platform Operators with personal\ninformation data of more than one million users that seek for listing in a foreign country are obliged to apply for a cybersecurity review\nby the Cybersecurity Review Office.\n\n** **\n\nOn\nJuly 7, 2022, the CAC published the Measures for the Security Assessment of Outbound Data Transfer, which became effective on September\n1, 2022. The measures apply to the security assessment of important data and personal information collected and generated during operation\nwithin the territory of the People’s Republic of China and transferred abroad by a data handler. According to the Measures, a data\nhandler shall file with the State Cyberspace Administration for security assessment via the Province Cyberspace Administration if it\ntransfers data abroad under any of the following circumstances: (i) a data handler who transfers important data abroad; (ii) a critical\ninformation infrastructure operator, or a data handler processing the personal information of more than one million individuals transfers\npersonal information abroad; (iii) since January 1 of the previous year, a data handler cumulatively transferred abroad the personal\ninformation of more than 100,000 individuals, or the sensitive personal information of more than 10,000 individuals; or (iv) any other\ncircumstances where the security assessment for the outbound data transfer is required by the State Cyberspace Administration. As advised\nby our PRC counsel, Guantao Law Firm, since none of our PRC operating entities is a data handler that transfers data abroad under any\nof the aforementioned circumstances, the operations of the PRC operating entities and our continued listing are not affected by the Measures\nfor the Security Assessment of Outbound Data Transfer.\n\n \n\n74\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. As confirmed by our PRC counsel, Guantao Law Firm, since we are not an online platform operator that possesses\nover one million users’ personal information, we are not subject to the cybersecurity review with the CAC under the Cybersecurity\nReview Measures and the Regulations on Network Data Security Administration. There remains uncertainty, however, 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 and the Regulations on Network Data\nSecurity Administration.** **\n\n \n\n**Regulations\non Privacy Protection**\n\n \n\nOn\nMay 28, 2020, the National People’s Congress of the PRC approved the Civil Code of the PRC (the “Civil Code”),\nwhich has come into effect on January 1, 2021. Pursuant to the Civil Code, the personal information of a natural person shall be\nprotected by the law. Any organization or individual that need to obtain personal information of others shall obtain such information\nlegally and ensure the security of such information, and shall not illegally collect, use, process or transmit personal information of\nothers, or illegally purchase, sell, provide or make public personal information of others.\n\n \n\nIn\naddition to the Civil Code, the PRC government authorities have enacted other laws and regulations with respect to Internet information\nsecurity and protection of personal information from any abuse or unauthorized disclosure, which includes the Decision of the SCNPC on\nMaintaining Internet Security promulgated by the SCNPC on December 28, 2000 and amended on August 27, 2009, the Provisions\non the Technical Measures for Internet Security Protection promulgated by the Ministry of Public Security on December 13, 2005 and\nbecoming effective on March 1, 2006, and the Decision of the SCNPC on Strengthening Network Information Protection promulgated by\nthe SCNPC on December 28, 2012.\n\n \n\nOn\nFebruary 4, 2015, the CAC promulgated the Provisions on the Administrative of Account Names of Internet Users, which became effective\nas of March 1, 2015, setting forth the authentication requirement for the real identity of internet users by requiring users to\nprovide their real names during the registration process. In addition, these provisions specify that internet information service providers\nare required by these provisions to accept public supervision, and promptly remove illegal and malicious information in account names,\nphotos, self-introductions and other registration-related information reported by the public in a timely manner.\n\n \n\nOn\nAugust 20, 2021, the SCNPC promulgated the Law of Personal Information Protection of PRC, or the Personal Information Protection\nLaw, which became effective on November 1, 2021. Pursuant to the Personal Information Protection Law, the processing of personal\ninformation includes the collection, storage, use, processing, transmission, provision, disclosure, deletion, etc. of personal information,\nand before processing personal information, personal information processors should truthfully, accurately and completely inform individuals\nof the following matters in a conspicuous manner and in clear and easy-to-understand language: (i) the name and contact information\nof the personal information processor; (ii) purpose of processing personal information, processing method, type of personal information\nprocessed, and retention period; (iii) methods and procedures for individuals to exercise their rights under this law; and (iv) other\nmatters that should be notified as required by laws and administrative regulations. Personal information processors should also take\nthe following measures to ensure that personal information processing activities comply with laws and administrative regulations based\non the processing purpose, processing methods, types of personal information, impact on personal rights and interests, and possible security\nrisks, etc., and to prevent unauthorized access and personal information leakage, tampering, and loss: (i) formulate internal management\nsystems and operating procedures; (ii) implement classified management of personal information; (iii) adopt corresponding security\ntechnical measures such as encryption and de-identification; (iv) reasonably determine the operating authority for personal information\nprocessing, and regularly conduct safety education and training for practitioners; (v) formulate and organize the implementation\nof emergency plans for personal information security incidents; and (vi) other measures stipulated by laws and administrative regulations.\n\n \n\n75\n\n \n\nWhere\npersonal information is processed in violation of the provisions of the Personal Information Protection Law, or the processing of personal\ninformation fails to fulfil the personal information protection obligations hereunder, the department performing personal information\nprotection duties shall order corrections, give warnings, confiscate illegal gains, and apply programs for illegal processing of personal\ninformation, order to suspend or terminate the provision of services; if the personal information processor refuses to make corrections,\na fine of not more than RMB1 million shall be imposed; the directly responsible person in charge and other directly responsible\npersonnel shall be fined not less than RMB10,000 but not more than RMB100,000. If the aforesaid illegal act and the circumstances are\nserious, the department performing personal information protection duties at or above the provincial level shall order the personal information\nprocessor to make corrections, confiscate the illegal gains, and impose a fine of less than 50 million RMB or less than 5% of the\nprevious year’s turnover. It can also order the suspension of relevant business or suspend business for rectification, notify the\nrelevant competent authority to revoke the relevant permits or the business license; impose a fine of RMB100,000 up to RMB1 million\non the directly responsible person in charge and other directly responsible personnel, and may decide to prohibit he serves as a director,\nsupervisor, senior manager and person in charge of personal information protection of related companies within a certain period of time.\n\n** **\n\n**Regulations Related\nto Intellectual Property**\n\n** **\n\n**Patent**\n\n \n\nPatents\nin the PRC are principally protected under the PRC Patent Law, which was initially promulgated by the SCNPC in 1984 and was most recently\namended in 2020. A patent is valid for twenty years in the case of an invention and ten years in the case of utility models\nand designs.\n\n** **\n\n**Copyrights**\n\n \n\nCopyrights\nin the PRC, including software copyrights, is principally protected under the PRC Copyright Law, which took effect in 1991 and was most\nrecently amended in 2020 and other related rules and regulations. Under the PRC Copyright Law, the term of protection for software copyrights\nis 50 years. The Regulation on the Protection of the Right to Communicate Works to the Public over Information Networks, as most\nrecently amended on January 30, 2013, provides specific rules on fair use, statutory license, and a safe harbor for use of copyrights\nand copyright management technology and specifies the liabilities of various entities for violations, including copyright holders, libraries\nand Internet service providers.\n\n** **\n\n**Trademarks**\n\n \n\nRegistered\ntrademarks are protected under the PRC Trademark Law, which was adopted by the SCNPC in 1982 and most recently amended in 2019, as well\nas the Implementation Regulations of the PRC Trademark Law adopted by the State Council in 2002 and most recently amended in 2014 and\nother related rules and regulations. The State Intellectual Property Office, formerly known as the Trademark Office of the State Administration\nfor Industry and Commerce, handles trademark registrations and grants a protection term of ten years to registered trademarks and\nthe term may be renewed for another ten-year period upon request by the trademark owner.\n\n** **\n\n**Domain\nNames**\n\n \n\nDomain\nnames are protected under the Administrative Measures on Internet Domain Names promulgated by the MIIT on August 24, 2017, and effective\nsince November 1, 2017. Domain name registrations are handled through domain name service agencies established under the relevant\nregulations, and applicants become domain name holders upon successful registration.\n\n** **\n\n76\n\n** **\n\n**Regulations\nRelating to Environmental Protection**\n\n** **\n\n**Environmental\nProtection Law**\n\n \n\nThe\nEnvironmental Protection Law of the PRC, or the Environmental Protection Law, was promulgated and effective on December 26, 1989,\nand most recently amended on April 24, 2014. This Environmental Protection Law has been formulated for the purpose of protecting\nand improving both the living environment and the ecological environment, preventing and controlling pollution, other public hazards\nand safeguarding people’s health.\n\n \n\nAccording\nto the provisions of the Environmental Protection Law, in addition to other relevant laws and regulations of the PRC, the Ministry of\nEnvironmental Protection and its local counterparts take charge of administering and supervising said environmental protection matters.\nPursuant to the Environmental Protection Law, the environmental impact statement on any construction project must assess the pollution\nthat the project is likely to produce and its impact on the environment, and stipulate preventive and curative measures; the statement\nshall be submitted to the competent administrative department of environmental protection for approval. Installations for the prevention\nand control of pollution in construction projects must be designed, built and commissioned together with the principal part of the project.\n\n \n\nPermission\nto commence production at or utilize any construction project shall not be granted until its installations for the prevention and control\nof pollution have been examined and confirmed to meet applicable standards by the appropriate administrative department of environmental\nprotection that examined and approved the environmental impact statement. Installations for the prevention and control of pollution shall\nnot be dismantled or left idle without authorization. Where it is absolutely necessary to dismantle any such installation or leave it\nidle, prior approval shall be obtained from the competent local administrative department of environmental protection.\n\n \n\nThe\nEnvironmental Protection Law makes it clear that the legal liabilities of any violation of said law include warning, fine, rectification\nwithin a time limit, compulsory cease operation, compulsory reinstallation of dismantled installations of the prevention and control\nof pollution or compulsory reinstallation of those left idle, compulsory shutout or closedown, or even criminal punishment.\n\n \n\nAs of the\ndate of this annual report, we are not aware of any warning, investigations, prosecutions, disputes, claims or other proceedings in respect\nof environmental protection, nor have we been punished or can foresee any punishment to be made by any government authorities of the\nPRC.\n\n** **\n\n**Regulations\non Disposal of Hazardous Waste**\n\n \n\nPursuant\nto the Law on the Prevention and Control of Environmental Pollution Caused by Solid Waste, which was promulgated by the SCNPC in 1995\nand was latest amended on April 29, 2020, entities generating hazardous waste shall store, utilize and dispose hazardous waste according\nto the relevant requirements of the state and environmental protection standards, and shall not dump or pile up hazardous waste without\nauthorization. Furthermore, it is forbidden to entrust hazardous waste to entities without a permit for disposal, or else the competent\necological and environmental authorities shall order it to make rectification, impose fines, confiscate illegal gains, and in serious\ncircumstance, order it to suspend business or close down upon the approval of the government authorities.\n\n** **\n\n**Regulations\non Urban Drainage and Sewage Treatment**\n\n \n\nAccording\nto the Regulation on Urban Drainage and Sewage Treatment, which was promulgated by the State Council in 2013, and the Measures for the\nAdministration of Permits for Discharging Urban Sewage into the Drainage Pipeline, which was promulgated by the Ministry of Housing and\nUrban-Rural Development in 2015, enterprises, institutions and individually-owned businesses engaging in industry, construction, food\nand beverage, medical service and other activities which discharge sewage into urban drainage facilities shall apply to the competent\nurban drainage authorities for a permit for sewage discharge into the drainage pipe network, or the Drainage Permit. Discharging sewage\ninto urban drainage facilities without obtaining a Drainage Permit shall be ordered by the relevant urban drainage authority to suspend\nillegal activities, take remedial measures within a time limit, re-apply the Drainage Permit, and may impose a fine of less than RMB500,000.\n\n \n\n77\n\n \n\n**Regulations\non Consumer Rights Protection**\n\n \n\nThe\nConsumer Rights and Interests Protection Law, as promulgated on October 31, 1993, and most recently amended in 2013 by the Standing\nCommittee of the National People’s Congress of China, or the SCNPC, imposes stringent requirements and obligations on business\noperators. Failure to comply with the consumer protection requirements could subject the business operators to administrative penalties\nincluding warning, confiscation of illegal income, imposition of fines, an order to cease business operations, revocation of business\nlicenses, as well as potential civil or criminal liabilities.\n\n** **\n\n**Regulation Related\nto Foreign Exchange and Dividend Distribution**\n\n** **\n\n**Regulation\non Foreign Currency Exchange**\n\n \n\nThe\nprincipal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, as most recently\namended in 2008. Under PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments\nand trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the State\nAdministration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. By contrast, approval from or registration\nwith appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay\ncapital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments and investments\nin securities outside of China.\n\n \n\nIn\n2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment,\nor Circular 59, which substantially amends and simplifies the previous foreign exchange procedure. Pursuant to Circular 59, the opening\nand deposit of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital\naccounts and guarantee accounts, the reinvestment of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign\nexchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification\nof SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In\n2013, SAFE promulgated the Notice on Promulgation of the Provisions on Foreign Exchange Control on Direct Investments in China by Foreign\nInvestors and Supporting Documents, which specified that the administration by SAFE or its local branches over direct investment by foreign\ninvestors in the PRC must be conducted by way of registration and banks must process foreign exchange business relating to the direct\ninvestment in the PRC based on the registration information provided by SAFE and its branches. In February 2015, SAFE promulgated\nthe Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice\n13. Instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment\nfrom SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks. The qualified banks, under\nthe supervision of SAFE, may directly review the applications, conduct the registration and perform statistical monitoring and reporting\nresponsibilities.\n\n \n\nIn\nMarch 2015, SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital\nof Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange\ncapitals of foreign-invested enterprises nationwide. Circular 19 allows all foreign-invested enterprises established in the PRC to settle\ntheir foreign exchange capital on a discretionary basis according to the actual needs of their business operation, provides the procedures\nfor foreign invested companies to use RMB converted from foreign currency-denominated capital for equity investments and removes certain\nother restrictions under previous rules and regulations. However, Circular 19 continues to prohibit foreign-invested enterprises from,\namong other things, using RMB funds converted from their foreign exchange capital for expenditure beyond their business scope and providing\nentrusted loans or repaying loans between non-financial enterprises. SAFE promulgated the Notice of the State Administration of Foreign\nExchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective\nin June 2016, which reiterates some of the rules set forth in Circular 19. Circular 16 provides that discretionary foreign exchange\nsettlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding\nRMB capital converted from foreign exchange may be used to extend loans to related parties or repay inter-company loans (including advances\nby third parties). However, there are substantial uncertainties with respect to Circular 16’s interpretation and implementation\nin practice.\n\n \n\n78\n\n \n\nIn\nJanuary 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness\nand Compliance Verification, or Circular 3, which stipulates several capital control measures with respect to the outbound remittance\nof profits from domestic entities to offshore entities, including (i) banks must check whether the transaction is genuine by reviewing\nboard resolutions regarding profit distribution, original copies of tax filing records and audited financial statements and stamp with\nthe outward remittance sum and date on the original copies of tax filing records, and (ii) domestic entities must retain income\nto account for previous years’ losses before remitting any profits. Moreover, pursuant to Circular 3, domestic entities must\nexplain in detail the sources of capital and how the capital will be used, and provide board resolutions, contracts and other proof as\na part of the registration procedure for outbound investment.\n\n \n\nOn\nOctober 23, 2019, SAFE issued Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of\nCross-border Trade and Investment, or the Circular 28, which took effect on the same day. Circular 28 allows non-investment foreign-invested\nenterprises to use their capital funds to make equity investments in China, with genuine investment projects and in compliance with effective\nforeign investment restrictions and other applicable laws.\n\n** **\n\n**Regulation\non Dividend Distribution**\n\n \n\nThe\nprincipal regulations governing dividends distributions by companies include the PRC Company Law, the Foreign Invested Enterprise Law\nand its implementing rules. Under these laws and regulations, both domestic companies and foreign-invested companies in the PRC are required\nto set aside as general reserves at least 10% of their after-tax profit, until the cumulative amount of their reserves reaches 50% of\ntheir registered capital unless the laws and regulations regarding foreign investment provide otherwise. PRC companies are not permitted\nto distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years\nmay be distributed together with distributable profits from the current fiscal year.\n\n** **\n\n**Regulations Related\nto Tax**\n\n** **\n\n**Enterprise\nIncome Tax**\n\n \n\nOn\nMarch 16, 2007, the SCNPC promulgated the Enterprise Income Tax Law of the PRC which was amended on December 29, 2018, February 24,\n2017; and on December 6, 2007, the State Council enacted the Regulations for the Implementation of the Enterprise Income Tax Law,\nor collectively, the EIT Law. Under the EIT Law, both resident enterprises and non-resident enterprises are subject to tax in the PRC. Resident\nenterprises are defined as enterprises that are established in China in accordance with PRC laws, or that are established in accordance\nwith the laws of foreign countries but are actually or in effect controlled from within the PRC. Non-resident enterprises are defined\nas enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside the PRC, but have\nestablished institutions or premises in the PRC, or have no such established institutions or premises but have income generated from\ninside the PRC. Under the EIT Law and relevant implementing regulations, a uniform corporate income tax rate of 25% is applied.\nHowever, if non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent\nestablishment or premises in the PRC but there is no actual relationship between the relevant income derived in the PRC and the established\ninstitutions or premises set up by them, enterprise income tax is set at the rate of 10% with respect to their income sourced from inside\nthe PRC.\n\n** **\n\n**Value-added\nTax**\n\n \n\nThe\nProvisional Regulations of the PRC on Value-added Tax were promulgated by the State Council on December 13, 1993, and came into\neffect on January 1, 1994, which were subsequently amended from time to time. The Detailed Rules for the Implementation of the Provisional\nRegulations of the PRC on Value-added Tax (Revised in 2011) was promulgated by the MOF on December 25, 1993, and subsequently amended\non December 15, 2008 and October 28, 2011, or collectively, VAT Law. On November 19, 2017, the State Council promulgated\nthe Decisions on Abolishing the Provisional Regulations of the PRC on Business Tax and Amending the Provisional Regulations of the PRC\non Value-added Tax, or the Order 691. According to the VAT Law and the Order 691, all enterprises and individuals engaged in the sale\nof goods, the provision of processing, repair and replacement services, sales of services, intangible assets, real property and the importation\nof goods within the territory of the PRC are the taxpayers of VAT. The VAT tax rates generally applicable are simplified as 13%,\n9%,6% and 0%, and the VAT tax rate applicable to the small-scale taxpayers is 3%.\n\n \n\n79\n\n \n\n**Dividends\nWithholding Tax**\n\n \n\nAccording\nto the EIT Law and the EITIR, dividends paid by foreign-invested companies to their foreign investors that are non-resident enterprises\nas defined under the law are subject to withholding tax at a rate of 10%, unless otherwise provided in the relevant tax agreements entered\ninto with the central government of the PRC. Pursuant to the Arrangement Between the Mainland of China and the Hong Kong Special\nAdministrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income promulgated\non 21 August 2006, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have\nsatisfied the relevant conditions and requirements under such tax arrangement, the withholding tax rate on the dividends the Hong Kong\nresident enterprise receives from a PRC resident enterprise may be reduced to 5% from 10% applicable under the EIT Law and the EITIR. However,\nbased on the Notice of the State Administration of Taxation on Certain Issues with Respect to the Enforcement of Dividend Provisions\nin Tax Treaties promulgated by the SAT and effective on 20 February 2009, if the relevant PRC tax authorities determine, in their\ndiscretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven,\nsuch PRC tax authorities may adjust the preferential tax treatment. Furthermore, in October 2019, the SAT promulgated the Administrative\nMeasures for Non-Resident Taxpayers to Enjoy Treaty Treatments (the “Circular 35”), which became effective on 1 January 2020\nand superseded the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties promulgated in 2015. The\nCircular 35 abolished the record-filing procedure for justifying the tax treaty eligibility of taxpayers, and stipulates that non-resident\ntaxpayers can enjoy tax treaty benefits via the “self-assessment of eligibility, claiming treaty benefits, retaining documents\nfor inspection” mechanism.\n\n \n\nNon-resident\ntaxpayers can claim tax treaty benefits after self-assessment provided that relevant supporting documents shall be collected and retained\nfor post-filing inspection by the tax authorities. Based on the Notice of the State Administration of Taxation on the Recognition of\nBeneficial Owners in Tax Treaties, which was promulgated by SAT on 3 February 2018 and came into effect on 1 April 2018, a\ncomprehensive analysis will be used to determine beneficial ownership based on the actual situation of a specific case combined with\ncertain principles, and if an applicant was obliged to pay more than 50% of its income to a third country (region) resident within 12 months\nof the receipt of the income, or the business activities undertaken by an applicant did not constitute substantive business activities\nincluding substantive manufacturing, distribution, management and other activities, the applicant was unlikely to be recognized as an\nbeneficial owner to enjoy tax treaty benefits.\n\n** **\n\n**Enterprise\nIncome Tax on Indirect Transfer of Non-Resident Enterprises**\n\n \n\nOn\n10 December 2009, the SAT issued the Notice on Strengthening the Administration of Enterprise Income Tax on Equity Transfers of\nNon-resident Enterprises (the “Circular 698”). By promulgating and implementing the Circular 698, the PRC tax authorities\nhave enhanced their scrutiny over the indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise.\nThe SAT further issued the Public Announcement on Several Issues Concerning Enterprise Income Tax for Indirect Transfer of Assets by\nNon-Resident Enterprises (the “Circular 7”) on 3 February 2015, which replaces certain provisions in the Circular\n698. The Circular 7 introduces a new tax regime that is significantly different from that under the Circular 698. The Circular 7 extends\nits tax jurisdiction to capture not only indirect transfer as set forth under the Circular 698 but also transactions involving transfer\nof immovable property in China and assets held under the establishment and place, in China of a foreign company through the offshore\ntransfer of a foreign intermediate holding company. The Circular 7 also provides clearer criteria than the Circular 698 on how to assess\nreasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. Where a non-resident\nenterprise indirectly transfers equity interests or other assets of a PRC resident enterprise by implementing arrangements that are not\nfor reasonable commercial purposes to avoid its obligation to pay enterprise income tax, such an indirect transfer shall, in accordance\nwith the EIT Law, be recognized by the competent PRC tax authorities as a direct transfer of equity interests or other assets of the\nPRC resident enterprise.\n\n \n\nOn\n17 October 2017, the SAT promulgated the Announcement on Matters Concerning Withholding and Payment of Income Tax of Non-resident\nEnterprises from Source (the “SAT Circular 37”), which came into force and replace the Circular 698 and certain provisions\nin the Circular 7 on 1 December 2017 and was partly amended on 15 June 2018. The SAT Circular 37, among other things, simplifies\nthe procedures of withholding and payment of income tax levied on non-resident enterprises. Pursuant to SAT Circular 37, where the party\nresponsible for withholding such income tax did not, or was unable to, withhold the taxes that should have been withheld to the relevant\ntax authority, the party may be subject to penalties. Where the non-resident enterprise receiving such income failed to declare and pay\ntaxes that should have been withheld to the relevant tax authority, the party may be ordered to rectify within a specific time limit.\n\n \n\n80\n\n \n\n**Regulations Related\nto Employment, Social Insurance and Housing Fund**\n\n \n\nPursuant\nto the PRC Labor Law, which was promulgated in 1994 and most recently amended in 2018, and the PRC Labor Contract Law, which was promulgated\non June 29, 2007 and amended on December 28, 2012, employers must execute written labor contracts with full-time employees.\nAll employers must comply with local minimum wage standards. Violations of the PRC Labor Contract Law and the PRC Labor Law may result\nin the imposition of fines and other administrative and criminal liability in the case of serious violations. In addition, according\nto the PRC Social Insurance Law implemented on July 1, 2011 and most recently amended on December 29, 2018 and the Regulations\non the Administration of Housing Funds, which was promulgated by the State Council in 1999 and most recently amended in 2019, employers\nin China must provide employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, work-related\ninjury insurance, and medical insurance and housing funds.\n\n** **\n\n**Regulations Related\nto M&A Rules and Overseas Listing**\n\n \n\nOn\nAugust 8, 2006, six PRC regulatory agencies, including the MOFCOM, the State-owned Assets Supervision and Administration Commission\nof the State Council, the SAT, the SAIC, China Securities Regulatory Commission (the “CSRC”) and the SAFE, issued the Regulations\non Merger with and Acquisition of Domestic Enterprises by Foreign Investors (the “M&A Rules”), which took into effect\non September 8, 2006 and was amended by the MOFCOM on June 22, 2009. The M&A Rules, among other things, require that if\nan overseas company established or controlled by PRC companies or individuals intends to acquire equity interests or assets of any other\nPRC domestic company affiliated with such PRC companies or individuals, such acquisition must be submitted to MOFCOM for approval. The\nM&A Rules also require offshore special purpose vehicles formed for overseas listing purposes through acquisitions of PRC domestic\ncompanies and controlled by PRC companies or individuals, to obtain the approval of CSRC prior to publicly listing their securities on\nan overseas stock exchange.\n\n \n\nSince\nthe FIL and its implementation regulations became effective on January 1, 2020, the provisions of the M&A Rules remain effective\nto the extent they are not inconsistent with the FIL and its implementation regulations. According to the Anti-Monopoly Law which took\neffect as at August 1, 2008, where the concentration of business operators reaches the filing thresholds stipulated by the State\nCouncil, business operators shall file a declaration with the SAMR, and no concentration shall be implemented until the SAMR clears the\nanti-monopoly filing. Pursuant to the Notice of the General Office of the State Council on the Establishment of the Security Review System\nfor Mergers and Acquisitions of Domestic Enterprises by Foreign Investors and the Security Review Rules issued by the General Office\nof the State Council on February 3, 2011 and became effective on March 3, 2011, mergers and acquisitions by foreign investors\nthat raise “national defense and security” concerns, and mergers and acquisitions through which foreign investors may acquire\nde facto control over domestic enterprises that raise “national security” concerns, are subject to strict review by the PRC\ngovernment authorities. On August 25, 2011, the MOFCOM issued the Provisions of the Ministry of Commerce for the Implementation\nof the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which provides that if a foreign\ninvestor’s merger or acquisition of a domestic enterprise falls within the scope of security review specified in the Notice of\nthe General Office of the State Council on the Establishment of the Security Review System for Mergers and Acquisitions of Domestic Enterprises\nby Foreign Investors, the foreign investor shall file an application with MOFCOM for security review. Whether a foreign investor’s\nmerger or acquisition of a domestic enterprise falls within the scope of security review or not shall be determined based on the substance\nand actual influence of the merger or acquisition transaction. No foreign investor is allowed to substantially avoid the security review\nin any way, including but not limited to, holding shares on behalf of others, trust arrangements, multi-level reinvestment, leasing,\nloans, contractual control, or overseas transactions.\n\n \n\nOn\nFebruary 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies,\nor the Overseas Listing Trial Measures, which came into effect on March 31, 2023. Pursuant to the Overseas Listing Trial Measures, domestic\ncompanies that seek to offer or list securities overseas, either in directly or indirectly means, should fulfill the filing requirement\nand submit relevant information to the CSRC within three working days after making initial applications with overseas stock markets for\ninitial public offerings or listings, or after the completion of issuance of overseas listed securities by the overseas listed issuer.\nFor the initial public offerings or listings applicants, the required filing materials with the CSRC include (without limitation): (i) record-filing\nreports and related undertakings, (ii) compliance certificates, filing, or approval documents from the primary regulators of the\napplicants’ businesses (if applicable), (iii) security assessment opinions issued by related departments (if applicable),\n(iv) PRC legal opinions, and (v) the prospectus; while for overseas listed issuers who issue overseas listed securities, the\nrequired filing materials with the CSRC include (without limitation): (i) record-filing reports and related undertakings and (ii) PRC\nlegal opinions.\n\n \n\n81\n\n \n\nIn\naddition, overseas offerings and listings may be prohibited for such China-based companies under any of the following circumstances (i) where\nsuch securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules;\n(ii) where the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities\nunder the State Council in accordance with law; (iii) where the domestic company intending to make the securities offering and listing,\nor its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation\nof property or undermining the order of the socialist market economy during the latest three years; (iv) where the securities offering\nand listing is suspected of committing crimes or major violations of laws and regulations, and is under investigation according to law,\nand no conclusion has yet been made thereof; or (v) where there are material ownership disputes over equity held by the domestic\ncompany’s controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller.\nThe Overseas Listing Trial Measures further stipulate that a fine between RMB1 million and RMB10 million may be imposed if\nan applicant fails to fulfill the filing requirements with the CSRC or conducts an overseas offering or listing in violation of the Overseas\nListing Trial Measures.\n\n \n\nAccording\nto the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies\nfrom the CSRC, or the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Overseas\nListing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers (the “Existing Issuers”). Existing Issuers\nare not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for subsequent offerings.\nFurther, according to the CSRC Notice, domestic companies that have obtained approval from overseas regulatory authorities or securities\nexchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their\noverseas offerings and listings prior to March 31, 2023, but have not yet completed their overseas issuance and listing, are granted\na six-month transition period from March 31, 2023 to September 30, 2023. Those who complete their overseas offering and listing within\nsuch six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their overseas offering and listing.\nWithin such six-month transition period, however, if such domestic companies fail to complete their overseas offering and listing, they\nshall complete the filing procedures with the CSRC.\n\n \n\nC.\nOrganizational Structure\n\n \n\nSee\n“— A. History and Development of the Company.”\n\n \n\nD. Property,\nPlants and Equipment\n\n \n\nSee\n“— B. Business Overview — Properties.”"}