# EDGAR Filing Document

**Accession Number:** 0001984124
**File Stem:** 0001213900-26-057512
**Filing Date:** 2026-5
**Character Count:** 774832
**Document Hash:** 725b30c60093ad431d6744142a61ff53
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-057512.hdr.sgml**: 20260515

**ACCESSION NUMBER**: 0001213900-26-057512

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 151

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260515

**DATE AS OF CHANGE**: 20260515

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Luda Technology Group Ltd
- **CENTRAL INDEX KEY:** 0001984124
- **STANDARD INDUSTRIAL CLASSIFICATION:** STEEL PIPE & TUBES [3317]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 000000000

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-42289
- **FILM NUMBER:** 26985578

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** ROOMS 1604-1605, 16/F, YF LIFE CENTRE
- **STREET 2:** 38 GLOUCESTER ROAD
- **CITY:** WANCHAI
- **NON US STATE TERRITORY:** HONG KONG
- **PROVINCE COUNTRY:** K3
- **BUSINESS PHONE:** 852 2994 8774

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** ROOMS 1604-1605, 16/F, YF LIFE CENTRE
- **STREET 2:** 38 GLOUCESTER ROAD
- **CITY:** WANCHAI
- **NON US STATE TERRITORY:** HONG KONG
- **PROVINCE COUNTRY:** K3

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 20-F**

☐ **REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended December 31, 2025**

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from _________ to _________.**

**OR**

☐ **SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

Date of event requiring this shell company report:

Commission file number: 001-42289

**LUDA TECHNOLOGY GROUP LIMITED**

(Exact name of Registrant as Specified in its Charter)

**Cayman Islands**

(Jurisdiction of Incorporation or Organization)

**Rooms 1604-1605, 16/F, YF Life Centre 38 Gloucester Road, Wanchai Hong Kong**

(Address of Principal Executive Offices)

**Ma Biu, Chief Executive Officer Rooms 1604-1605, 16/F, YF Life Centre 38 Gloucester Road, Wanchai**

**Hong Kong + 852 2994 8774**

**Email: ir@ludahk.com**

(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Ordinary Shares, par value HK$0.25<br> (equivalent to US$0.03) | LUD | NYSE American LLC |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act:

<u>None</u>

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

<u>None</u>

(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2025, there were 22,690,000 ordinary shares issued and outstanding, par value HK$0.25 (equivalent to US$0.03) per share. As of the date of this annual report, there were 22,690,000 ordinary shares issued and outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard"
refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☒ U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| [INTRODUCTION](#a_001) | [INTRODUCTION](#a_001) | ii |
| [FORWARD-LOOKING STATEMENTS](#a_002) | [FORWARD-LOOKING STATEMENTS](#a_002) | iii |
|  | [PART I](#a_003) | 1 |
| ITEM 1. | [IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#a_004) | 1 |
| ITEM 2. | [OFFER STATISTICS AND EXPECTED TIMETABLE](#a_005) | 1 |
| ITEM 3. | [KEY INFORMATION](#a_006) | 1 |
| ITEM 4. | [INFORMATION ON THE COMPANY](#a_007) | 32 |
| ITEM 4A. | [UNRESOLVED STAFF COMMENTS](#a_008) | 60 |
| ITEM 5. | [OPERATING AND FINANCIAL REVIEW AND PROSPECTS](#a_009) | 60 |
| ITEM 6. | [DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](#a_010) | 73 |
| ITEM 7. | [MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](#a_011) | 79 |
| ITEM 8. | [FINANCIAL INFORMATION](#a_012) | 80 |
| ITEM 9. | [THE OFFER AND LISTING](#a_013) | 81 |
| ITEM 10. | [ADDITIONAL INFORMATION](#a_014) | 81 |
| ITEM 11. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#a_015) | 89 |
| ITEM 12. | [DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](#a_016) | 89 |
|  | [PART II](#a_017) | 90 |
| ITEM 13. | [DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES](#a_018) | 90 |
| ITEM 14. | [MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](#a_019) | 90 |
| ITEM 15. | [CONTROLS AND PROCEDURES](#a_020) | 90 |
| ITEM 16. | [\[RESERVED\]](#a_021) | 91 |
| ITEM 16A. | [AUDIT COMMITTEE FINANCIAL EXPERT](#a_022) | 91 |
| ITEM 16B. | [CODE OF ETHICS](#a_023) | 91 |
| ITEM 16C. | [PRINCIPAL ACCOUNTANT FEES AND SERVICES](#a_024) | 91 |
| ITEM 16D. | [EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES](#a_025) | 91 |
| ITEM 16E. | [PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS](#a_026) | 92 |
| ITEM 16F. | [CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT](#a_027) | 92 |
| ITEM 16G. | [CORPORATE GOVERNANCE](#a_028) | 92 |
| ITEM 16H. | [MINE SAFETY DISCLOSURE](#a_029) | 92 |
| ITEM 16I. | [DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.](#a_030) | 93 |
| ITEM 16J. | [INSIDER TRADING POLICY](#a_031) | 93 |
| ITEM 16K. | [CYBERSECURITY](#a_032) | 93 |
|  | [PART III](#a_033) | 94 |
| ITEM 17. | [FINANCIAL STATEMENTS](#a_034) | 94 |
| ITEM 18. | [FINANCIAL STATEMENTS](#a_035) | 94 |
| ITEM 19. | [EXHIBITS](#a_036) | 94 |

---

i

**INTRODUCTION**

In this annual report on Form 20-F, unless otherwise indicated, "we," "us," "our," "our Company," the "Company", "Luda Cayman", "Registrant" and "LUD" refer to Luda Technology Group Limited, a company organized in the Cayman Islands, its predecessor entities and its subsidiaries.

Unless indicated otherwise, references to:

● "China", "mainland China" or the "PRC" refers to the People's Republic of China, for the purposes of this annual report, excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan;

● "Companies Act" means the Companies Act (As Revised) of the Cayman Islands;

● "Controlling Shareholder" refers to the ultimate beneficial owner of the Company, who is Mr. Ma Biu;

● "Hong Kong" are to Hong Kong Special Administrative Region of the People's Republic of China ；

● "HK$" or "HKD" or "Hong Kong dollars" refers to the legal currency of Hong Kong ；

● "Hong Kong laws" refers to all applicable laws, statutes, rules, regulations, ordinances and other pronouncements having the binding effect of laws in Hong Kong;

● "Luda BVI" refers to Luda Investment Holding Limited, our British Virgin Island subsidiary and the direct holding company of Luda HK;

● "Luda HK" refers to Luda Development Limited, our Hong Kong subsidiary and the direct holding company of Luda PRC;

● "Luda PRC" refers to Luda (Taian) Industrial Company Limited, our PRC subsidiary and key operating company;

● "PRC government" or "PRC authorities", or variations of such words or similar expressions, refer to the central, provincial, and local governments of all levels in mainland China, including regulatory and administrative authorities, agencies and commissions, or any court, tribunal or any other judicial or arbitral body in mainland China;

● "PRC laws" refers to any and all officially published and publicly available laws, regulations, rules, and regulatory, administrative or other governmental measures, notices or circulars, and Supreme Court judicial interpretation of the PRC currently in force and publicly available in the PRC as of the date hereof;

● "RMB" and "Renminbi" refer to the legal currency of China;

● "SAFE" are to the State Administration of Foreign Exchange;

● "shares", "Shares", or "Ordinary Shares" refer to the ordinary shares of Luda Technology Group Limited, par value of HK$0.25 per share (equivalent to US$0.03); and

● "US$," "U.S. dollars," "$" and "dollars" are to the legal currency of the United States.

Our business is primarily conducted in the PRC and Hong Kong through its operating PRC subsidiary Luda PRC and operating Hong Kong subsidiary Luda HK. Luda PRC's reporting currency is RMB while Luda HK's reporting currency is HKD. The Company's operating activities are predominantly transacted in RMB. RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. This annual report contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Assets and liabilities are translated into U.S. dollars at the closing rate of exchange as of the balance sheet dates, the statement of income is translated using average rate of exchange in effect during the reporting periods, and the equity accounts are translated at historical exchange rates. Unless otherwise noted, all translations from RMB and HKD to U.S. dollars and from U.S. dollars to RMB and HKD in this annual report were calculated with reference to the table below. No representation is made that the RMB and HKD amounts could have been, or could be, converted, realized or settled into US$ at such rate, or at any other rate.

---

| | | | |
|:---|:---|:---|:---|
|  | **Years ended December 31,** | **Years ended December 31,** | **Years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Year end RMB: US$ exchange rate | 6.9931 | 7.2993 | 7.0999 |
| Year average RMB: US$ exchange rate | 7.1875 | 7.1957 | 7.0809 |
| Year end HKD: US$ exchange rate | 7.8000 | 7.8000 | 7.8000 |
| Year average HKD: US$ exchange rate | 7.8000 | 7.8000 | 7.8000 |

---

ii

**FORWARD-LOOKING STATEMENTS**

This annual report on Form 20-F contains "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that represent our beliefs, projections and predictions about future events. Known and unknown risks, uncertainties and other factors, including those listed under "Risk Factors," may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. All statements other than statements of historical fact are "forward-looking statements," including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management's beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as "may", "will", "should", "could", "would", "predicts", "potential", "continue", "expects", "anticipates", "future", "intends", "plans", "believes", "estimates" and similar expressions, as well as statements in the future tense, identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

● our goals and strategies;

● our future financial and operating results, including revenues, income, expenditures, cash balances and other financial items;

● our ability to execute our growth, expansion and acquisition strategies, including our ability to meet our goals;

● current and future economic and political conditions;

● our expectations regarding demand for and market acceptance of our services and the products and services we assist the distributions of;

● our expectations regarding our client base;

● competition in our industry;

● relevant government policies and regulations relating to our industry;

● our capital requirements and our ability to raise any additional financing which we may require;

● overall industry and market performance; and

● general economic and business conditions in the markets in which we operate.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in "Item 3.D. Risk Factors" and other sections in this annual report. You should thoroughly read this annual report and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This report contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. Our industry may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of our ordinary shares. In addition, the rapidly changing nature of the lockset and hardware marketplace industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents that we refer to in this report and any exhibits filed to this report completely and with the understanding that our actual future results may be materially different from what we expect.

iii

**PART I**

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| | |
|:---|:---|
| **ITEM 1.** | **IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS** |

---

Not Applicable.

---

| | |
|:---|:---|
| **ITEM 2.** | **OFFER STATISTICS AND EXPECTED TIMETABLE** |

---

Not Applicable.

---

| | |
|:---|:---|
| **ITEM 3.** | **KEY INFORMATION** |

---

**Our Holding Company Structure and Operations in China and Hong Kong** 

We are a Cayman Islands holding company without any operation and our operations are conducted by our wholly owned subsidiaries in China and Hong Kong and this structure involves unique risks to investors.

**Cautionary Statement Regarding Doing Business in the PRC**

There are legal and operational risks associated with being based in and having all our operations in China and Hong Kong.

The PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in certain areas in China, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. We do not believe that we are directly subject to these regulatory actions or statements, as we do not have a VIE structure and our business does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Since these statements and regulatory actions are new, it is highly uncertain how soon the legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business operations or our ability to accept foreign investments and list on a U.S. exchange. Any change in foreign investment regulations, and other policies in China or related enforcement actions by China government could result in a material change in our operations and/or the value of the securities we are registering for sale and could significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors or cause the value of our Shares to significantly decline or be worthless.

The Chinese government recently took regulatory actions on certain U.S. listed Chinese companies and made statement that it will exert more oversight and control over offerings and listings by Chinese companies that are conducted overseas, such as those related to the use of variable interest entities and data security or anti-monopoly concerns. On July 10, 2021, the CAC issued a revised draft of the Cybersecurity Review Measures ("Revised Draft"), which required that, among others, in addition to an "operator of critical information infrastructure," any "data processor" controlling personal information of no less than one million users that seeks to list in a foreign stock exchange should also be subject to cybersecurity review.

On December 28, 2021, the CAC, the National Development and Reform Commission ("NDRC"), and several other administrations jointly adopted and published the Measures for Cybersecurity Review (the "Measures"), which came into effect on February 15, 2022. The Measures reiterate that, if an "operator of critical information infrastructure" or "network platform operator" that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. The Measures further elaborates the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad.

We do not currently expect the Measures to have an impact on our business or operations as we do not believe that Luda PRC is deemed to be an "operator of critical information infrastructure," "data processor," or "network platform operator" controlling personal information of no less than one million users, that are required to file for cybersecurity review before listing in the U.S., because (i) as of the date of this annual report, Luda PRC is required to collect and retain some basic information furnished by our customers Luda PRC has collected and stored personal information far less than one million users, suppliers and employees in accordance with prevailing business practices; (ii) we do not place any reliance on collection and processing of any personal information to maintain our business operation; and (iii) data processed in our business should not have a bearing on national security nor affect or may affect national security; as of the date of this annual report, Luda PRC has not been involved in any investigations on cybersecurity or data security initiated by related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect. Therefore, we are not covered by the permission and requirements from the CSRC nor CAC, and except for the permissions with minimal impact on the operations of Luda PRC, we have received all necessary permissions to operate our business in China and no permission has been denied. Luda PRC has received all necessary permissions required to obtain from PRC authorities to operate its current business in China or issue shares to foreign investors, including Business License, Customs Registration Certificate, Bank Account Open Permit and Approval regarding Environmental Protection.

On July 7, 2022, the CAC issued the Security Assessment Measures, which came into effect on September 1, 2022. The Security Assessment Measures provide that certain types of data processors transferring important data or personal information collected and generated during operations within the territory of the PRC to an overseas recipient must apply for security assessment of cross-border data transfer. In addition, on September 28, 2023, CAC published the Provisions on Regulating and Promoting Cross -border Data Transfer (Draft for Comments), or the Cross -border Data Transfer Provisions. The Cross-border Data Transfer Provisions provide certain exemptions from obligations under the circumstances of cross-border data transfer, including, among others, the obligations for data security assessment, concluding a standard contract for provision of personal information abroad or passing the certification for personal information protection. However, the Cross-border Data Transfer Provisions were released for public comment only and their provisions and anticipated adoption date are subject to changes with substantial uncertainty, and their interpretation and implementation remain uncertain.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated No.1 to No.5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively, the Guidance Rules and Notice. The Trial Measures, together with the Guidance Rules and Notice, reiterate the basic supervision principles as reflected in the Draft Overseas Listing Regulations by providing substantially the same requirements for filings of overseas offering and listing by domestic companies, yet made the following updates compared to the and Draft Overseas Listing Regulations: (a) further clarification of the circumstances prohibiting overseas issuance and listing; (b) further clarification of the standard of indirect overseas listing under the principle of substance over form, and (c) adding more details of filing procedures and requirements by setting different filing requirements for different types of overseas offering and listing. Under the Trial Measures and the Guidance Rules and Notice, domestic companies conducting overseas securities offering and listing activities, either in direct or indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application. The companies that have already been listed on overseas stock exchanges or have obtained the approval from overseas supervision administrations or stock exchanges for its offering and listing and will complete their overseas offering and listing prior to September 30, 2023 are not required to make immediate filings for its listing yet need to make filings for subsequent offerings in accordance with the Trial Measures. The companies that have already submitted an application for an initial public offering to overseas supervision administrations prior to the effective date of the Trial Measures but have not yet obtained the approval from overseas supervision administrations or stock exchanges for the offering and listing may arrange for the filing within a reasonable time period and should complete the filing procedure before such companies' overseas issuance and listing.

On February 24, 2023, the CSRC, the Ministry of Finance, the National Administration of State Secrets Protection and National Archives Administration of China promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Archives Rules, which will come into force on March 31, 2023. According to the Archives Rules, domestic companies seeking for overseas offering and listing shall strictly comply with relevant laws and regulations of the PRC and the Archives Rules, enhance legal awareness of keeping state secrets and strengthening archives administration, establish a sound administration system of confidentiality and archives, and take necessary means to fulfill confidentiality and archives administration obligations. Such domestic companies shall not leak any state secret and working secret of government agencies, and shall not harm national security and public interest. In addition, a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any document and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level. Moreover, a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. The Archives Rules also specify that a domestic company that provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers and overseas regulators and individuals shall fulfill due procedures in accordance with applicable national regulations.

Our operations are located in Hong Kong and the PRC. As such we are subject to Hong Kong laws and PRC laws relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These laws apply not only to third-party transactions, but also other parties with which we have commercial relations. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance with these laws could result in penalties or other significant legal liabilities.

We believe, that as of the date of this annual report, we have obtained all necessary permissions for a domestic company in China to engage in similar businesses, and are not required to obtain other permissions by including the CSRC, CAC or any other PRC authorities for its operations or issue our Shares including the Shares being registered for sale to foreign investors under existing PRC laws and regulations, and have not received any requirement or were denied such permissions or approvals by any PRC authorities. According to the Measures, if an "operator of critical information infrastructure" or "network platform operator" that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. The Measures further elaborates the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. As of the date of this annual report, neither the Company nor its PRC Subsidiary possesses a large amount of personal information in their business operations or is recognized as an "operator of critical information infrastructure" by any authentic authority. Therefore, we do not believe that Luda PRC is deemed to be an "operator of critical information infrastructure," or "network platform operator" controlling personal information of no less than one million users. We are required to collect and retain some basic information furnished by our customers, suppliers and employees in accordance with prevailing business practices, but we do not handle personal and confidential data of more than 1,000 individuals in the ordinary course of business. As of the date of this annual report, we have not been involved in any investigations on cybersecurity or data security initiated by related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect. Our PRC subsidiary, Luda PRC, has received all necessary permissions required to obtain from PRC authorities to operate its current business in China or issue shares to foreign investors, including Business License, Customs Registration Certificate, Bank Account Open Permit and Approval regarding Environmental Protection.

**Cautionary Statement Regarding Holding Foreign Companies Accountable Act**

Our Ordinary Shares may be prohibited from being traded on a national exchange under the Holding Foreign Companies Accountable Act (the "HFCA Act") if the Public Company Accounting Oversight Board ("PCAOB") is unable to inspect our auditors for two consecutive years. On December 23, 2022, the Accelerating Holding Foreign Companies Accountable Act (the "AHFCA Act") was enacted, which amended the HFCA Act by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. On December 29, 2022, a legislation entitled "Consolidated Appropriations Act, 2023" (the "Consolidated Appropriations Act") was signed into law by President Biden, which contained, among other things, an identical provision to AHFCA Act and amended the HFCA Act by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three years. On December 16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. The PCAOB made its determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfils its responsibilities under the HFCA. The report further listed in its Appendix A and Appendix B, Registered Public Accounting Firms Subject to the Mainland China Determination and Registered Public Accounting Firms Subject to the Hong Kong Determination, respectively. Our current and predecessor auditors, AOGB CPA Limited and ZH CPA, LLC, respectively, are headquartered in Hong Kong, China and Colorado respectively. They are both registered with the PCAOB and are subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor's compliance with the applicable professional standards. In addition, they did not appear as part of the PCAOB's report of determinations under the lists in Appendix A or Appendix B of the report issued by the PCAOB on December 16, 2021. On August 26, 2022, the China Securities Regulatory Commission, or CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, or the Protocol, governing inspections and investigations of audit firms based in mainland China and Hong Kong and taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the Protocol, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong in 2022, and the PCAOB Board vacated its previous determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor's, control. The PCAOB is continuing to demand complete access in mainland China and Hong Kong moving forward and is already making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act if needed. As a result, the time period before the Company's securities may be prohibited from trading or delisted has been decreased accordingly. Notwithstanding the foregoing, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor, then such lack of inspection could cause our Ordinary Shares to be delisted from the stock exchange. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. See Item 3.D. "Risk Factors — Our Ordinary Shares may be delisted from a U.S. exchange and prohibited from being traded over-the-counter in the United States under the HFCA Act if the PCAOB determines in the future that it is unable to fully inspect or investigate our auditors. The delisting and cease of trading of our Ordinary Shares, or the threat of their being delisted or prohibited from being traded, may materially and adversely affect the value of your investment."

**Permission Required from Hong Kong Authorities**

Hong Kong is a Special Administrative Region of the PRC, having its own governmental and legal system that is separate from mainland China, and as a result, has its own distinct rules and regulations. Luda HK is the holding company of Luda PRC and is an operating subsidiary acting as a trading company. Based on our understanding of the current Hong Kong laws, as of the date of this annual report, we, including Luda HK, have received and obtained all requisite licenses, certificates, authorizations, permissions or approvals from the Hong Kong authorities to operate our business in Hong Kong, including but not limited to obtaining a relevant certificate of incorporation and business license, and that we, including Luda HK are not required to obtain any permission or approval from Hong Kong authorities to offer the shares of Luda Cayman to foreign investors. However, uncertainties still exist due to the possibility that laws, regulations, or policies in Hong Kong could change rapidly in the future. Should there be any change in applicable laws, regulations, or interpretations that we or any of our subsidiaries are required to obtain such permissions or approvals in the future, we will strive to comply with the then applicable laws, regulations, or interpretations. In the event that we, including Luda HK, (i) do not receive or fail to maintain such permissions or approvals in the future, (ii) inadvertently conclude that relevant licenses, certificates, authorizations, permissions or approvals were not required, or (iii) are required to obtain such licenses, certificates, authorizations, permissions or approvals in the future following applicable laws, regulations, or interpretation changes, any action taken by the Hong Kong government could significantly limit or completely hinder our operations and our ability to offer or continue to offer securities to investors and could cause the value of our securities to significantly decline or be worthless.

**Permission Required from PRC Authorities**

The PRC government has recently initiated a series of regulatory actions and made a number of public statements on the regulation over offerings of securities conducted overseas. On December 28, 2021, the Cyberspace Administration of China, National Development and Reform Commission, Ministry of Industry and Information Technology, The Ministry of Public Security, the Ministry of State Security, Ministry of Finance, Ministry of Commerce, People's Bank of China, State Administration for Market Regulation, State Administration of Radio and Television, China Securities Regulatory Commission, State Secrecy Administration and State Cryptography Administration jointly promulgated the Measures for Cybersecurity Review (2021 Version, the "Measures"), which became effective on February 15, 2022. The Measures require that among other things, and in addition to any "operator of critical information infrastructure", any "data processor" controlling personal information of no less than one million users (which to be further specified) which seeks to list in a foreign stock exchange should also be subject to cybersecurity review, and which the Measures further elaborate on the factors to be considered when assessing the national security risks of the relevant activities. As of the date of this annual report, we are not subject to cybersecurity review with the CAC to conduct business operations in China, given that: (i) we do not operate any network platform or provide any network service for individual users, (ii) all the customers and suppliers of Luda PRC are enterprises, (iii) we are required to collect and retain some basic information furnished by our customers, suppliers and employees in accordance with prevailing business practices, but we do not possess a large amount of personal information in our business operations, (iv) we are not recognized as "operators of critical information infrastructure" by any authentic authority, (v) we have not been involved in any investigations on cybersecurity or data security initiated by related governmental regulatory authorities, nor have we received any inquiry, notice, warning, or sanction in such respect. Nevertheless, the Measures was recently adopted and the CAC Notice for Soliciting Public Comments on the Regulations for the Administration of Network Data Security (Exposure Draft) is in the process of being formulated and the interpretation and application of these regulations are evolving. We have been closely monitoring regulatory developments in mainland China regarding any necessary approvals from the CSRC, the CAC, or other PRC governmental authorities required for the conduct of our business operations and overseas listings.

If we or our PRC subsidiary (i) do not receive or maintain such permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and require us to obtain such permissions or approvals in the future, we may face sanctions by the CSRC, the CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operations in China, delay or restrict the repatriation of the proceeds from overseas offering into China or take other actions that could have a material adverse effect on our business as well as the trading price of our Shares. We could be required to restructure our operations to comply with such regulations or potentially cease operations in the PRC entirely. The CSRC, the CAC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt overseas offering before settlement and delivery of our Shares. In addition, if the CSRC, the CAC or other regulatory PRC agencies later promulgate new rules requiring that we obtain their approvals for overseas offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any action taken by the PRC government could significantly limit or completely hinder our operations in the PRC and our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.

**Transfer of Cash To and From Our Subsidiaries**

On January 8, 2024, May 6, 2024 and August 26, 2024, Luda Cayman paid dividend of RMB9,250,000, RMB5,700,000 and RMB9,000,000, respectively, to Diamond Horses Group Limited. We may declare or pay dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.

We are permitted under the laws of the Cayman Islands to provide funding to our Operating Subsidiaries through loans and/or capital contributions without restriction on the amount of the funds loaned or contributed.

Subject to Cayman Islands law, the Companies Act and our amended and restated memorandum and articles of association, our board of directors may declare dividends in any currency. Under the laws of the Cayman Islands, an exempted company incorporated in the Cayman Islands may pay a dividend out of profit and/or share premium account, provided that in no circumstances may a dividend be paid out of the share premium if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business.

Under Hong Kong law, a Hong Kong company may only make a distribution out of profits available for distribution. There are no restrictions or limitations under the laws of Hong Kong imposed on the conversion of HK dollars into foreign currencies and the remittance of currencies out of Hong Kong, nor is there any restriction on foreign exchange to transfer cash between the Company and its subsidiaries, across borders and to U.S. investors, nor are there any restrictions or limitations on distributing earnings from our business and subsidiaries to the Company and U.S. investors.

Subject to PRC laws, payments of current account items, such as trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from State Administration of Foreign Exchange or SAFE by complying with certain procedural requirements. By contrast, approval from or registration with appropriate governmental authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as profit distributions and the repayment of foreign currency-denominated loans.

**Selected Financial Data**

In the table below, we provide you with historical selected financial data for our company. The selected consolidated statements of operations data for the fiscal years ended December 31, 2025, 2024 and 2023 and the selected consolidated balance sheets data as of December 31, 2025 and 2024 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1. The selected consolidated balance sheet data for the year ended December 31, 2023 have been derived from our audited consolidated balance sheet as of December 31, 2023, which is not included in this annual report. Our historical results do not necessarily indicate results expected for any future periods. The selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and related notes and "Item 5. Operating and Financial Review and Prospects" below. Our audited consolidated financial statements are prepared and presented in accordance with U.S. GAAP.

The summary consolidated balance sheet as of:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2024** | **2023** |
|  | *US$* | *US$* | *US$* |
| Total assets | 49125097 | 39305825 | 46697118 |
| Total liabilities | 26917376 | 26642285 | 29950119 |
| Total equity | 22207721 | 12663540 | 16746999 |

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The following table presents our summary consolidated statements of operations and comprehensive income:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | *US$* | *US$* | *US$* |
| Revenues | 33535351 | 44863430 | 51428054 |
| Cost of sales | (27615538) | (33458207) | (40533077) |
| Gross profit | 5919813 | 11405223 | 10894977 |
| Total operating expenses | (6978890) | (10949315) | (7024037) |
| Other income (expense), net | 2050301 | (552703) | (391464) |
| Income taxes | (434395) | (264221) | (446899) |
| Net income (loss) | 556829 | (361016) | 3032577 |

---

The summary consolidated statements of operations and cash flow:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | *US$* | *US$* | *US$* |
| Net cash (used in) provided by operating activities | (1708680) | 5457591 | 3332852 |
| Net cash used in investing activities | (11033445) | (2821353) | (1759266) |
| Net cash provided by (used in) financing activities | 8821775 | (2585153) | 2707362 |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 359102 | (113839) | (165164) |
| Net (decrease) increase in cash and cash equivalents | (3561248) | (62754) | 4115784 |

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**3. A. [Reserved]**

**3. B. Capitalization and Indebtedness**

Not Applicable.

**3. C. Reasons for the offer and use of proceeds**

Not Applicable.

 

**3. D. Risk Factors**

**Risks Related to Our Business**

 ****

***Our financial performance is dependent on our ability to continually secure new orders.***

We do not sign long-term agreement with any of our customers and our customers are engaged in a wide spectrum of industries such as the chemical, petrochemical, maritime and manufacturing industries and operate in various countries. We also sell to customers who are manufacturers, stockists and traders of steel products. There is no guarantee that our customers will continue to have demand for our products or place orders with us or that the volume of our orders will be maintained. As we do not enter into long-term contracts with our customers, the selling prices for some of our existing products may be subject to downward price revisions due to, inter alia, price competition from other approved suppliers, rapid technological changes and short product life cycles. Rapid technological changes leading to new products being introduced into the market at a faster pace may also cause selling prices of existing products to drop. In the event we are not able to maintain or increase the volume of our orders, or should the selling prices of our existing products decrease, our business, results of operations, financial position and cash flow may be materially and adversely affected.

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***We are affected by the macroeconomic, political, regulatory, social and other factors beyond our control mainly in the PRC and Hong Kong.***

Currently, we have operations in Hong Kong and the PRC. Our sales to customers in Hong Kong and the PRC comprise more than 50% of our total sales.

We are affected by macroeconomic factors, such as general economic conditions, population growth, infrastructure development, and market sentiment which are in part, influenced by government spending, infrastructure spending, development of industries (such as chemical, petrochemical, marine and manufacturing), tariffs policies, unemployment rates, real disposable income, inflation, recession, stock market performance, interest rate environment, regulatory policies, foreign investment, gross domestic product growth, business sentiment and economic outlook, all of which are beyond our control. Moreover, political and social stability, taxation, price and exchange control regulations, industry laws and regulations in the PRC and Hong Kong and tariffs or non-tariff barriers imposed on imported steel products may also affect our business. There is no assurance that such conditions will not develop in a manner that will have an adverse effect for our operations and financial performance.

***We are subject to changes in the VAT refund for our export sales and any adverse change in our tax treatment could have a material and adverse impact on our business and results of operations.***

On April 26, 2021, it was announced by the PRC Ministry of Finance and State Administration of Taxation that with effect from May 1, 2021, certain steel products would no longer be entitled to VAT refund for export sales with immediate effect. The products of our Company are in the list of products that are affected by the change of the VAT refund policy. The original VAT refund was 13%, but with effect from May 1, 2021, there is no refund. There is no assurance that our tax position will not be adversely affected by any future change in VAT refund policy in the PRC. If such adverse change in our tax treatment on VAT refund for our export sales arises, our business and results of operation may be materially and adversely affected.

***We are subject to the project execution risks.***

We have sales which fall under project contracts, where we supply our end-user customer specifically for their stated projects. For some of such projects, retention monies may be kept by the customers during the contract period which are to be released to us after the customers' acknowledgement that our products are satisfactory. Depending on the terms of the respective contracts, the release of the retention monies could take up to five (5) years following delivery and acceptance.

There is no assurance that the projects will be executed in accordance with its schedule. There can be no assurance that our customers will release the retention monies in full or on a timely basis. A delay in the execution of the project will result in delays in recognition of revenue, higher inventory holding costs and affect our liquidity position.

***We are subject to claims against us in relation to our sales contracts or operations.***

Our sales contracts with our customers include terms that provide for breach of contracts, liquidated damages and penalties triggered by certain events such as inability to fulfill the delivery obligations. As such, we may be involved in disputes with our customers, or subject to any material claims, damages, losses or product returns. These disputes may lead to legal or other proceedings and may damage our reputation and divert our resources and management's attention. Significant costs may have to be incurred in settling such disputes or defending ourselves in such proceedings. If we are not successful in defending ourselves in such proceedings, we may be liable for damages, the amount of which may be significant. In addition, we may have disagreements with regulatory bodies in the course of our operations, which may subject us to administrative proceedings or unfavorable decrees that may result in liabilities and cause other material and adverse effects on our business, results of operations and financial positions.

***We are affected by fluctuations in steel prices and supply of our raw materials.***

Our operations in the PRC include the manufacture of stainless steel and carbon steel flanges and fittings, and our main purchases are for stainless steel and carbon steel. Our head office in Hong Kong, Luda HK, sells our in-house products manufactured in the PRC, as well as steel pipes and valves manufactured by external parties. Should the orders that we receive exceed our production capacity or depending on the urgency of the said orders, we will also source for steel flanges and fittings from external suppliers. Additionally, some of our customers make blanket orders where order quantities are unfixed at the time of entering the contracts (which are contracts in relation to the supply of a stipulated list of products with specified quality, size and other dimensions, delivery lead-time and product prices for an agreed contract period) for which we are obliged to fulfil. Any increases in global prices of steel and other metals will result in increases in our costs of sales and our financial performance may be adversely affected.

Steel prices are determined based on demand and supply, which are in turn affected by economic conditions, import and export tariffs and policies, and prices of iron ore, manganese and other alloys. We source our raw materials mainly from the PRC. The price of steel billets and carbon steel is in turn determined by its demand and supply, including production capacity of steel billet and carbon steel manufacturers in the PRC and the demand for their products. While our pricing strategy is on cost plus basis where our sales managers and purchasing department typically work together on a targeted profit margin before tendering/making quotation for a project contract/sales order, we also take on blanket orders which require us to supply products during the contract period without fixing the order quantities. As these blanket orders with our customers typically only allow for price adjustments if the prices of steel exceed the pre-agreed fluctuation bands, we are exposed to the risk of increasing steel price within the fluctuation band which will affect the cost of sales as well as our margins related to blanket orders from customers where such cost increase within the fluctuation band is not passed on to customers by way of price adjustments during the contract period. As such, the volatility of steel prices will affect our ability to plan our working capital as well as maintain our financial performance.

Should there be a shortage of raw materials, our suppliers may not be able to meet our demand for stainless steel and carbon steel and we may not be able to source for alternative suppliers at comparable price and terms, to meet the supply shortage. This may affect our obligations to our customers, which will in turn adversely affect our reputation or increase our costs should we be liable to our customers for delayed delivery. Our working capital and financial performance will therefore be adversely affected.

***We are exposed to concentration risk, due to the geographical concentration of our suppliers in the PRC. If there is any disruption to our supply chain, our financial performance, results of operation and ongoing growth could be adversely affected.***

We rely on a limited number of suppliers and customers for our products, which exposes to supply chain and other risks. We have previously experienced, and may experience in the future, logistical constraints that cause delays. Although we believe we have redundancy and alternatives for the suppliers for the key components of our products, our reliance on a limited number of suppliers for the components and parts for our products and the geographic concentration among our suppliers increase our supply chain risk. Suppliers may also experience disruptions in their operations, including due to equipment breakdowns, labor strikes or shortages, shipping container shortages, financial difficulties, natural disasters, component or material shortages, cost increases, acquisitions, changes in legal or regulatory requirements, or other similar problems. The unavailability of any component or supplier could result in production delays and idle manufacturing facilities. In addition, we do not have long-term binding commitments with any of our suppliers and instead operate on a purchase order basis. Therefore, we have no guarantee that they will continue to supply products or components for us on an ongoing basis. In the event of interruption from any of our suppliers, we may not be able to replace or increase capacity from other sources or develop alternate or secondary sources without incurring material additional costs and substantial delays.

Our suppliers and partners have no obligation to continue to accept purchase orders from us, and we may be unable to get them to accept additional orders or engage an alternate supplier on terms that are acceptable to us, which may undermine our ability to deliver our products to customers in a timely manner. Identifying suitable suppliers and logistics partners is an extensive process that requires us to become satisfied with their quality control, technical capabilities, responsiveness and service, financial stability, regulatory compliance, and labor and other ethical practices. Accordingly, a loss of any of our significant suppliers or logistics partners could have an adverse effect on our business, financial condition, and results of operations.

***We are dependent on our suppliers.***

We are dependent on our suppliers to provide competitive, timely and reliable supply to us. The consistency of the level of support provided by our suppliers is crucial to maintaining our business operations and competitiveness in the industry. Our suppliers are generally not legally bound or committed to supply products to us under distributorship or agreements or arrangements for an agreed tenure or period, whether on an exclusive or non-exclusive basis. Accordingly, we obtain our products from our suppliers as and when required, subject to prevailing prices and availability.

Although we evaluate our suppliers on criteria including (a) scale of operations and production capacity; reputation; (c) product quality; and (d) relevant licenses and certifications obtained, we cannot guarantee that our suppliers will continue to meet our quality requirements, or be willing to continue supplying to us. We have diversified our purchases to different suppliers; however, in the event that our suppliers are unable to meet our sales orders requirements, and we are unable to obtain alternative supplies to meet our customers' needs, our competitiveness may be adversely affected. In addition, we will suffer from reduced margins if the cost of our supplies were to increase and we are unable to adjust our selling prices to take into account such increased costs. As such, our financial performance may be adversely affected.

***We may face product liability claims if the products we distribute are found to contain defects or are unfit for their intended purposes or uses.***

The products sold to our customers must comply with their stipulated specifications and quality standards. In the event that there are quality defects in our products, we may face claims from our customers or our customers may withhold their payment to us. If we are unable to obtain recourse from our suppliers or manufacturers of such products, our financial performance will be adversely affected.

Most of our customers inspect the products that we distribute upon or after accepting delivery. However, we cannot assure you that our customers will not demand compensation from us for the distribution of defective products or non-compliance with the contract specifications after acceptance of delivery. In the event the products that we distribute are found to be unfit for their intended purposes or uses or contain defects and our customers and/or users suffer personal injury, death or any other losses from the use of our products, we may be required to compensate our customers and/or users for the said losses. Currently, we do not maintain insurance for product liability. Although we have not experienced any product liability claims to date, any successful product liability claims against us in the future may have an adverse effect on our operations, prospects, and financial performance.

Further, even if we successfully defend ourselves against any such claims, we may have to incur substantial expense and resources in the process. In addition, we may not be able to seek from our suppliers or manufacturers, full or any indemnification or compensation as a result of personal injury, death or any other loss caused by their products for which we are liable for compensation.

***We are dependent on our skilled workers in the PRC and subject to increasing labor costs.***

Our business is highly dependent on skilled workers, who perform processing such as cutting, heat/surface treatment, lathe machining, inspection and marking. While our production lines are semi-automated, workers are still required in production and some of these processes require experience and skill to deliver quality-finish products. With increasing labor costs, urban migration, competition for labor and the general preference of younger workers to work in a light industry (as opposed to our industry which involves noise, heat and environmental hazards), we are exposed to the risks of shortage of skilled workers and increasing labor costs. Moreover, labor cost in the PRC has been on an increasing trend and is further subject to government regulations on minimum wage and statutory social welfare benefits payments. Should we face a shortage of skilled workers and unable to find suitable and timely replacements, our operations and financial performance will be adversely affected. In addition, increasing labor costs will adversely affect our working capital and financial performance.

 **

***We are subject to operational risks including equipment failure, workplace accidents and force majeure events.***

 **

The nature of our industry necessitates working with heavy equipment, and processes that involve heat, noise, pollution and hazards. Equipment failure and workplace accidents could have severe consequences, such as loss of life, serious injury, disruption in our operations, litigation and damage to our reputation. Some of our customer contracts provide for force majeure events, which would therefore allow our customers to terminate their contracts with us without penalty. On the other hand, should there be equipment failure or disruption in our operations, we may be subject to penalty and liquidated damages from our customers. Should there be operational risks that lead to prolonged disruption in our operations, penalties or litigation, our operations and financial performance will be adversely affected.

During the three years ended December 31, 2025, 2024, and 2023, none of the workplace accidents had resulted in labor disputes, litigation or penalties imposed by the relevant authorities. We had also not encountered significant operational risk that has materially and adversely affected our financial performance.

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***We may not have sufficient insurance coverage.***

We maintain insurance policies for our business, including for our building, motor vehicles and machinery. However, our insurance coverage may not be adequate, for instance, we do not purchase product warranty liability insurance and our Directors believe it is not common in our industry to procure such insurance. Although our Directors believe that we have sufficient insurance coverage in accordance with industry practices, and we will increase our insurance coverage when necessary, there is no guarantee that our existing insurance coverage is sufficient to indemnify us from possible losses or that we can be insured on terms which are acceptable to us.

***We are reliant on the renewal of our existing licenses and certifications.***

We have obtained licenses which allow us to manufacture steel flanges and pipe fittings. Steel flanges and fittings also have to adhere to various standards, and we have obtained various certifications for our products and management systems. Our range of certifications enable us to sell our in-house products to different geographic regions and industries. We strive to maintain the quality of our products and the production processes adhere to the standards of the licenses and certifications. However, should our licenses or certifications be revoked or not be renewed, financial performance will be adversely affected. During the three years ended December 31, 2025, 2024, and 2023, there was no incidence where our licenses and certifications were revoked or were not renewed.

***We are dependent on our management team.***

Our success is, to a large extent, attributable to our Executive Directors' strategies and visions as well as their involvement in key aspects of our business, including but not limited to the acquisition and maintenance of new and existing customer relationships, pricing of our products and purchases, and overall management of our operations. The business of our Company was founded by Mr. Ma Biu, our Controlling Shareholder, Chairman of the Board of Directors and Chief Executive Officer. Ms. Liu Liangping, our Director and Chief Operating Officer joined our Company since April 2007. Both of them are core management members. Further, majority of our team of executive officers have worked for more than 10 years in our Company. They possess extensive industry contacts and knowledge, and are familiar with our business operations and have established good relationships with our customers, suppliers and subcontractors.

Our Company's success and growth therefore depends on our ability to identify, hire, train and retain suitable, skilled and qualified key personnel. The loss of service of our Directors, executive officers or other key personnel without suitable and timely replacements or the inability to attract and retain qualified management personnel, will materially and adversely affect our operations and financial performance.

***We face competition from existing and new industry players.***

The steel forging industry is highly competitive and fragmented, and some of our competitors may have more sophisticated equipment, manpower, wider access to the PRC and overseas markets. Moreover, as the steel flanges and fittings products are mostly standardized items, our customers can easily procure such items from alternative suppliers. While we believe that we have a competitive edge with our access to a wide network of suppliers and higher production capacity which in turn shortens our delivery lead time and quality of the finished products, there is no guarantee that we can continue to maintain our competitive advantages or that other steel manufacturers will not encroach on our market share. If we fail to compete effectively, our financial performance will be materially and adversely affected.

***We may be subject to litigation, claims or other disputes.***

We may from time to time be involved in disputes arising from contracts with customers, suppliers, subcontractors or other third parties. Claims brought by customers against us may involve defective products or damages caused by the use of our steel flanges and fittings products. Claims may also arise from disputes with suppliers and subcontractors on matters relating to payment and/or contractual performance. Claims involving us could result in time-consuming and costly litigations, arbitration, administrative proceedings or other legal procedures. Expenses we incur in legal proceedings or arising from claims brought by or against us may materially and adversely affect our financial performance.

Moreover, liquidated damages, legal proceedings resulting in unfavorable judgment may harm our reputation, cause financial losses and damage our prospects of being awarded future contracts, thereby materially and adversely affecting our operations, financial performance and prospects.

***We are dependent on external financing to support our business growth.***

We rely on bank borrowings to finance our operations. Our total borrowings amounted to approximately US$12.7 million and US$12.3 million, which corresponded to a debt-to-equity ratio of 0.57 times and 0.97 times, as at December 31, 2025 and 2024, respectively.

Our ability to obtain adequate financing on terms which are acceptable to us depends on a number of factors such as our financial strength, our creditworthiness and our prospects, and other factors that are beyond our control, including general economic, industry, liquidity and political conditions, the terms on which financial institutions are willing to extend credit to us, the PRC's central bank's policy rates and cash reserve requirements for banks, and the availability of other sources of debt financing or equity financing. There may also be covenants that restrict our ability to pay dividends and/or restrict our flexibility in utilizing working capital to react to changes in the business environment. Additionally, our business requires significant investment in plant and machinery, and inability to finance the purchase of machinery can curtail our business growth. If all or a substantial portion of our bank facilities are withdrawn, or we cannot access additional banking facilities, our operations and financial performance will be adversely and materially affected.

In addition, our finance costs amounted to US$0.5 million, US$0.6 million, and US$0.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. These represented 11.7% of our profit before income tax for the year ended December 31, 2023. The percentage for year ended December 31, 2024 is not applicable as we recorded a loss before income tax during the year. These represented 52.6% of our profit before income tax for the year ended December 31, 2025. Given our reliance on these financing facilities to support our operations, any increase in interest rates may have a material and adverse effect on our financial performance.

***We are susceptible to fluctuations in foreign exchange rates that could result in us incurring foreign exchange losses.***

Our sales are made in RMB, US$, HK$ and Euro, while our purchases are made in RMB and US$. To the extent that our sales and purchases are not matched in the same currency, we may be exposed to significant fluctuations in exchange rates. Given that our revenue from customers outside of the PRC and Hong Kong amounted to US$11.1 million and US$8.0 million, representing 33.2% and 17.8% of our revenue for the years ended December 31, 2025 and 2024, respectively, we will face foreign translation risk as our international sales are denominated in currencies other than RMB and HK$. Our foreign translation income amounted to US$0.6 million and the foreign translation loss amounted to US$0.3 million for the years ended December 31, 2025 and 2024, respectively.

We have not entered into any hedging transactions or have any formal hedging policy to reduce our exposure to foreign currency exchange risks. In the future, we may hedge our material foreign currency translations after taking into consideration the quantum and impact of our foreign exchange risk exposure as well as the transaction costs of any hedging policy, and the prevailing economic and operating conditions. In any event, the availability and effectiveness of these hedges may be limited and we may not be able to hedge our exposure successfully, or at all.

***We are exposed to risks of infringement of our intellectual property rights and the unauthorized use of our trademarks by third parties.***

We have registered our trademarks and patents to protect our intellectual property rights in the PRC and Hong Kong. Should our trademarks be violated or infringed, there may be confusion by potential customers who have not previously worked with us.

Given our limited resources, we may not be able to effectively prevent third parties from violating our Company's intellectual property rights. There is also no assurance that we will be able to obtain adequate remedies in the event of a violation of our intellectual property rights by our competitors or other third parties. If we fail to protect our intellectual property rights adequately, there may be an adverse impact on our Company's reputation, goodwill and financial performance.

As of the date of this annual report, whilst we have not experienced any claims for intellectual property rights infringement, there is no assurance that the products, services, technologies and advertising we use in our business do not or will not infringe valid intellectual property rights held by third parties in the future. Additionally, for generic products that we purchased, we do not disclose to our customers the source of our supplies and such products are marketed under our brand name. In the event of any claims or litigation by third parties involving infringement of their intellectual property rights, whether with or without merit, our operations and financial performance may be adversely affected.

***We are exposed to risks in respect of outbreaks of communicable diseases.***

An outbreak of various communicable diseases such as COVID-19, severe acute respiratory syndrome, influenza A, the Middle East respiratory syndrome, avian influenza, hand, foot and mouth disease and/or other communicable diseases in the region or around the world could materially and adversely affect our business.

In particular, for COVID-19, our production operations in the Shandong Province of the PRC was once required to cease for approximately two (2) months during lockdown, which was considered a short period of cessation compared to other regions in the PRC which experienced more severe outbreaks. COVID-19 affected and continues to affect global demand in various industries, and projects requiring steel products had and continue to be put on hold or terminated. For overseas deliveries that require sea shipment, the timeliness of delivery is also affected as shipping containers would typically require a certain load before sailing and therefore a longer time was required to load the containers due to decreased shipment, or shipments may face congestion at the port, or docking may not be permitted at certain ports due to COVID-19. We also face shortages of containers and rising freight charges.

In the event that any of our employees are infected with a communicable disease, we may be required to temporarily suspend operations or shut down our production operations, or quarantine the relevant workers to prevent the spread of the disease. This may also result in delays in the fulfilment of our customers' orders. Therefore, depending on how a communicable disease outbreak affects demand, production, logistics, it could have a material and adverse impact on our operations and financial performance.

***The war in Ukraine could materially and adversely affect our business and results of operations.***

The recent outbreak of war in Ukraine has already affected global economic markets, including a dramatic increase in the price of oil and gas, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia's recent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia. Sanctions against Russia could adversely affect global energy and financial markets and thus could affect the global economy, our customers' businesses and potentially our business. As of the date of this annual report, to the best knowledge of the Company, we and our Hong Kong and PRC subsidiaries (i) do not have any direct business or contracts with any Russian or Ukraine entity as a supplier or customer, (ii) do not have any knowledge whether any our customers or suppliers have any direct business or contracts with any Russian entity, (iii) our business segments, products, lines of service, projects, or operations are not materially impacted by supply chain disruptions by the war in Ukraine, and (iv) have not been financially affected by the war in Ukraine. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by the war may magnify the impact of other risks described in this section. We cannot predict the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing. Prolonged unrest, intensified military activities or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and such effect could in turn have a material adverse effect on our business, financial condition, results of operations, and prospects.

Our board of directors will continue to monitor any potential risks that might arise due to the war in Ukraine which are specific to the Company, including but not limited to risks related to cybersecurity, sanctions, and supply chain, suppliers, or service providers in affected regions as well as risks connected with ongoing or halted operations or investments in affected regions.

***Our lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results or prevent fraud.***

Prior to listing, we were a private company with limited accounting personnel and resources to address our internal control over financial reporting. Our auditors and management has identified a material weakness in our internal control over financial reporting. The material weakness that has been identified relates to our lack of sufficient accounting and financial reporting personnel with requisite knowledge and comprehensive accounting and reporting policies and procedures relating to the application and compliance with SEC rules and regulations. We and our independent registered public accounting firm were not required to perform an evaluation of our internal control over financial reporting as of December 31, 2025 in accordance with the provisions of the Sarbanes-Oxley Act. Accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional material weaknesses.

We are in the process of implementing measures designed to improve our internal control over financial reporting to address the underlying causes of these material weaknesses, including (i) hiring additional accounting and financial reporting personnel with SEC reporting experience, (ii) expanding the capabilities of existing accounting and financial reporting personnel through continuous training and education in the accounting and reporting requirements under SEC rules and regulations and (iii) establishing effective monitoring and oversight controls for non-recurring and complex transactions to ensure the accuracy and completeness of our company's consolidated financial statements and relate disclosures.

Effective internal control over financial reporting is important to prevent fraud. The market for and trading price of our Shares may be materially and adversely affected if we do not have effective internal controls. We may not be able to discover problems in a timely manner and our current and potential shareholders may lose confidence in our financial reporting, which may harm our business and the trading price of our Shares. The absence of internal controls over financial reporting may inhibit investors from purchasing our Shares and may make it more difficult for us to raise funds in debt or equity financing. Additional material weaknesses or significant deficiencies may be identified in the future. If we identify such issues or if we are unable to produce accurate and timely financial statements, our stock price may decline and we may be unable to maintain compliance with the NYSE American Company Guide.

**Risks Related to Doing Business in China**

***PRC laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability to operate profitably. Rules and regulations in China may change quickly with little advance notice. Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the legal protections available to us.***

There are substantial uncertainties the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

The PRC legal system is based on written statutes, and prior court decisions have limited value as precedents. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and the enforcement of these laws, regulations and rules involves uncertainty.

In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, PRC's legal system is still in the process of improvement, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

Therefore, these risks may result in a material change in business operations, significant depreciation of the value of our ordinary shares, or a complete hinderance of our ability to offer or continue to offer our securities to investors. Recently, the Chinese government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is currently impossible to predict how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list on an U.S. or other foreign exchange.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy, than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, could materially and adversely affect our business and impede our ability to continue our operations.

***The Chinese government exerts substantial influence over the manner in which we must conduct our business activities. We are currently not required to obtain approval from Chinese authorities to list on U.S exchanges, however, if we were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.***

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Under the current government leadership, the government of the PRC has been pursuing reform policies which may have adversely affected China-based operating companies whose securities are listed in the United States, with significant policies changes being made from time to time without notice. Under the current government leadership, the government of the PRC has been pursuing reform policies which have adversely affected China-based operating companies whose securities are listed in the United States, with significant policies changes being made from time to time without notice. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.

Given recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.

***Changes in the economic policies of the PRC government may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.***

Our manufacturing base operates in the PRC and a significant portion of our revenues are derived from customers where the contracting entity is located in China. Accordingly, our business, financial condition, results of operations, prospects and certain transactions we may undertake may be subject, to a significant extent, to economic, political and legal developments in China.

China's economy has experienced significant growth in the past four decades, growth has been uneven, both geographically and among various sectors of the economy. Demand for our products in the PRC depends, in large part, on economic conditions in China. Any slowdown in China's economic growth may cause the potential customers of the PRC operating entities to delay or cancel their plans to purchase our products, which in turn could reduce our revenues.

Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises regulation in accordance with PRC laws and regulations over China's economic growth through allocating resources, controlling the incurrence and payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Changes in any of these policies, laws and regulations may materially affect the economy in China and could have a material adverse effect on our business, results of operations and may result in our inability to sustain our growth and expansion strategies and the value of our Ordinary Shares.

The PRC government has implemented various measures to encourage foreign investment and sustainable economic growth and to guide the allocation of financial and other resources. However, we cannot assure you that the PRC government will not repeal or alter these measures or introduce new measures that will have a negative effect on us, or more specifically, we cannot assure you that the PRC government will not initiate possible governmental actions or scrutiny to us, which could substantially affect our operation and the value of our Ordinary Shares may depreciate quickly.

***Uncertainties regarding the interpretation and application of PRC laws could adversely affect our operations and/or the value of the securities we are registering for sale.***

There are uncertainties regarding the interpretation and application of PRC laws and regulations. The PRC legal system is based on written statutes and their legal interpretations by the Standing Committee of the National People's Congress, or NPCSC. Previous court decisions may be cited for reference only. Since 1979, the PRC government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investment in the PRC. Our PRC subsidiary is subject to laws and regulations applicable to foreign investment in the PRC in general and laws and regulations applicable to foreign-invested enterprises in particular. However, as these laws and regulations are relatively new, and due to the limited volume of published cases and their non-binding nature, interpretation and enforcement of these laws and regulations involve uncertainties. We cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us and our foreign investors.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may result in substantial costs and diversion of resources and management attention.

***The approval or record filing of the CSRC, or other PRC government authorities may be required in connection with our future capital raising activities under the PRC laws. Failure to comply with such approval or record filing requirement could affect our operations, our ability to offer or continue to offer our securities and/or the value of the securities we are registering for sale.***

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, require CSRC approval for a listing involving offshore special purchase vehicles holding Chinese assets. We may be required to obtain approval from PRC authorities in order to continue our listing in NYSE American or add new listings on other overseas stock exchanges in the future but cannot provide assurance that we will be able to obtain such approval.

Based on its understanding of the current PRC laws and regulations, we believe that we will not be required to submit an application to the CSRC for the approval of the offering and trading of our Shares under the M&A Rules because (i) Luda PRC was not established through a merger or requisition of the equity or assets of a "PRC domestic company" as such term is defined under the M&A Rules, (ii) although Luda PRC is a PRC entity, it has been controlled by a non-PRC persons since its incorporation, and (iii) the CSRC currently has not issued any definitive rule or interpretation concerning whether an offering like ours under this document is subject to this regulation. However, the interpretation or implementation of the M&A Rules are subject to any new laws, rules, and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. If CSRC approval is required, it is uncertain whether we can or how long it will take us to obtain the approval and, even if we obtain such CSRC approval, such CSRC approval could be rescinded. We cannot assure you that relevant PRC government authorities, including the CSRC, would reach the same conclusion as us.

On July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law. The Opinion emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. As a follow-up, on December 24, 2021, the State Council issued a draft of the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies, and the CSRC issued a draft of Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies for public comments, collectively with the above draft of the Provisions, the Draft Overseas Listing Regulations. These Draft Overseas Listing Regulations propose to establish a new filing-based regime to regulate overseas offerings and listings by domestic companies. Specifically, an overseas offering and listing by a PRC company, whether directly or indirectly, an initial or follow-on offering, must be filed with the CSRC. The examination and determination of an indirect offering and listing will be conducted on a substance-over -form basis, and an offering and listing shall be deemed as a PRC company's indirect overseas offering and listing if the issuer meets the following conditions: (i) any of the operating income, gross profit, total assets, or net assets of the PRC enterprise in the most recent fiscal year was more than 50% of the relevant line item in the issuer's audited consolidated financial statement for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the principal place of business is in the PRC or carried out in the PRC. The issuer or its affiliated PRC entity, as the case may be, shall file with the CSRC for its initial public offering, follow-on offering and other equivalent offering activities. Particularly, the issuer shall submit the filing with respect to its initial public offering and listing within three business days after its initial filing of the listing application, and submit the filing with respect to its follow -on offering within three business days after the completion of the follow -on offering. Failure to comply with the filing requirements may result in fines to the relevant PRC companies, suspension of their businesses, revocation of their business licenses and operation permits and fines on the controlling shareholder and other responsible persons. These Draft Overseas Listing Regulations also set forth certain regulatory red lines for overseas offerings and listings by PRC enterprises.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated No.1 to No.5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively, the Guidance Rules and Notice. The Trial Measures, together with the Guidance Rules and Notice, reiterate the basic supervision principles as reflected in the Draft Overseas Listing Regulations by providing substantially the same requirements for filings of overseas offering and listing by domestic companies, yet made the following updates compared to the Draft Overseas Listing Regulations: (a) further clarification of the circumstances prohibiting overseas issuance and listing; (b) further clarification of the standard of indirect overseas listing under the principle of substance over form, and (c) adding more details of filing procedures and requirements by setting different filing requirements for different types of overseas offering and listing. Under the Trial Measures and the Guidance Rules and Notice, domestic companies conducting overseas securities offering and listing activities, either in direct or indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application. The companies that have already been listed on overseas stock exchanges or have obtained the approval from overseas supervision administrations or stock exchanges for its offering and listing and will complete their overseas offering and listing prior to September 30, 2023 are not required to make immediate filings for its listing yet need to make filings for subsequent offerings in accordance with the Trial Measures. The companies that have already submitted an application for an initial public offering to overseas supervision administrations prior to the effective date of the Trial Measures but have not yet obtained the approval from overseas supervision administrations or stock exchanges for the offering and listing may arrange for the filing within a reasonable time period and should complete the filing procedure before such companies' overseas issuance and listing.

On February 24, 2023, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China jointly issued the Provisions on Strengthening Confidentiality and Archives Administration in Respect of Overseas Issuance and Listing of Securities by Domestic Enterprises or the Confidentiality Provisions, which came into effect on March 31, 2023. The Confidentiality Provisions require that, among other things, (1) a domestic company that conducts overseas offering and listing both directly and indirectly should institute a sound confidentiality and archives administration system, and take necessary measures to fulfill confidentiality and archives administration obligations; (2) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; (3) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfil relevant procedures stipulated by applicable national regulations; (4) where a domestic company, after fulfilling relevant procedures, provides to securities companies, securities service providers and other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that will be detrimental to national security or public interest if leaked, a non-disclosure agreement shall be signed between the provider and receiver of such information; and (5) domestic companies, securities companies or securities service providers that discover any leakage or possible leakage of state secrets, working secrets of government agencies or any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall immediately take remedies and report to relevant state organs and units.

The PRC regulatory requirements regarding cybersecurity are evolving. For instance, various regulatory bodies in the PRC, including the CAC, the Ministry of Public Security, and the SAMR, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. The Cybersecurity Law, which was adopted by the National People's Congress on November 7, 2016, and the Cybersecurity Review Measures, which were promulgated on April 13, 2020, provide that personal information and important data collected and generated by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical information infrastructure operator purchases internet products and services that affect or may affect national security, it will be subject to cybersecurity review by the CAC. On January 4, 2022, the CAC, the NDRC, and several other administrations jointly adopted and published the New Measures for Cybersecurity Review ("Measures"), which came into effect on February 15, 2022 and amended the Revised Draft released on July 10, 2021. According to the Measures, if an "operator of critical information infrastructure" or "network platform operator" that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. Our business belongs to the steel flanges and fittings products manufacturing industry, which does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. As a result, the likelihood of us being subject to the review of the CAC is remote.

On June 10, 2021, the Standing Committee of the National People's Congress promulgated the Data Security Law, which took effect on September 1, 2021. The Data Security Law requires that data shall not be collected by theft or other illegal means, and also provides for a data classification and hierarchical protection system. The data classification and hierarchical protection system puts data into different groups according to its importance in economic and social development, and the damages it may cause to national security, public interests, or the legitimate rights and interests of individuals and organizations in case the data is falsified, damaged, disclosed, illegally obtained or illegally used. If any of our data processing activities conducted after the Data Security Law became effective were found to be not in compliance with this law, we could be ordered to make corrections, and under certain serious circumstances, such as severe data divulgence, we could be subject to penalties, including the revocation of our business licenses or other permits. Furthermore, the recently issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law require (i) speeding up the revision of the provisions on strengthening the confidentiality and archives management relating to overseas issuance and listing of securities and (ii) improving the laws and regulations relating to data security, cross -border data flow, and management of confidential information. As there remain uncertainties regarding the further interpretation and implementation of those laws and regulations, we cannot assure you that we will be compliant such new regulations in all respects, and we may be ordered to rectify and terminate any actions that are deemed illegal by the regulatory authorities and become subject to fines and other sanctions.

Our operations are located in Hong Kong and the PRC. As such we are subject to Hong Kong laws and PRC laws relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These laws apply not only to third-party transactions, but also other parties with which we have commercial relations. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance with these laws could result in penalties or other significant legal liabilities.

We believe, that as of the date of this annual report, we have obtained all necessary permissions for a domestic company in China to engage in similar businesses, and are not required to obtain other permissions by including the CSRC, CAC or any other PRC authorities for its operations or issue our Shares including the Shares being registered for sale to foreign investors under existing PRC laws and regulations, and have not received any requirement or were denied such permissions or approvals by any PRC authorities. According to the Measures, if an "operator of critical information infrastructure" or "network platform operator" that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. The Measures further elaborates the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. As of the date of this annua report, neither the Company nor its PRC Subsidiary possesses a large amount of personal information in their business operations or is recognized as an "operator of critical information infrastructure" by any authentic authority. Therefore, we do not believe that Luda PRC is deemed to be an "operator of critical information infrastructure," or "network platform operator" controlling personal information of no less than one million users. We are required to collect and retain some basic information furnished by our customers, suppliers and employees in accordance with prevailing business practices, but we do not handle personal and confidential data of more than 1,000 individuals in the ordinary course of business. As of the date of this annual report, we have not been involved in any investigations on cybersecurity or data security initiated by related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect. Our PRC subsidiary, Luda PRC, has received all necessary permissions required to obtain from PRC authorities to operate its current business in China or issue shares to foreign investors, including Business License, Customs Registration Certificate, Bank Account Open Permit and Approval regarding Environmental Protection.

However, given the recent events indicating greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, the interpretation or implementation of the Measures is subject to change, and we cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do. The enactment, interpretation and implementation of regulatory requirements related to current and future PRC laws, overseas securities offerings and other capital markets activities continue to evolve. PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Measures. They may also take actions requiring us, or making it advisable for us, to halt our future capital raising activities before the settlement and delivery of the Shares that we are offering. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we expect to take all reasonable measures and actions to comply therewith. In the event of a failure to comply, we may be required to suspend our relevant businesses and become subject to fines and other penalties. If the CAC or other PRC regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for any follow-on offering, we may be unable to obtain such approvals, which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.

***Our Ordinary Shares may be delisted from a U.S. exchange and prohibited from being traded over-the-counter in the United States under the HFCA Act if the PCAOB determines in the future that it is unable to fully inspect or investigate our auditors. The delisting and cease of trading of our Ordinary Shares, or the threat of their being delisted or prohibited from being traded, may materially and adversely affect the value of your investment.***

The HFCA Act was enacted in December 2020 and was subsequently amended in December 2022. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years beginning in 2021, the SEC shall prohibit our Ordinary Shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On June 22, 2021, the U.S. Senate passed the AHFCA Act, and on December 29, 2022, the Consolidated Appropriations Act was signed into law, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the delisting of our Company and the prohibition of trading in our Ordinary Shares if the PCAOB is unable to inspect our accounting firm at such future time.

According to Article 177 of the PRC Securities Law (last amended in March 2020), no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities in China. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas parties. Therefore, the audit working papers of our financial statements may not be fully inspected by the PCAOB without the approval of the PRC authorities. Our Ordinary Shares could be delisted and prohibited from being traded over-the-counter under the HFCA Act if the PCAOB determines in the future that it is unable to fully inspect or investigate our auditor which has a presence in China.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to determine, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC adopted amendments to finalize the implementation of disclosure and documentation measures, which require us to identify, in our annual report on Form 20-F, (1) the auditors that provided opinions to the financial statements presented in the annual report, (2) the location where the auditors' report was issued, and (3) the PCAOB ID number of the audit firm or branch that performed the audit work.

On August 26, 2022, the CSRC, the Ministry of Finance of China, and the PCAOB signed the Protocol, which established a specific and accountable framework for the PCAOB to conduct inspections and investigations of PCAOB-governed accounting firms in mainland China and Hong Kong. Pursuant to the Protocol, the PCAOB has the sole discretion in selecting the subject of its inspections and investigations without input from the Chinese authorities, and procedures are in place to allow PCAOB inspectors and investigators to review complete audit working papers of accounting firms located in mainland China and Hong Kong. On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong in 2022, and the PCAOB Board vacated its previous determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. We were not identified as a "Commission-identified issuer" under the HFCA Act since we filed our annual report on Form 20-F for the fiscal year ended December 31, 2024. However, it remains unclear whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong, which depends on a number of factors out of our and our auditor's control. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and will continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act if needed.

We dismissed ZH CPA, LLC and appointed AOGB CPA Limited as our independent registered public accounting firm, effective from November 24, 2025. Our current and predecessor auditors, AOGB CPA Limited and ZH CPA, LLC, respectively, as auditors of companies that are traded publicly in the United States and firms registered with the PCAOB, are subject to PCAOB regular inspections to assess its compliance with the applicable professional standards. AOGB CPA Limited and ZH CPA, LLC are headquartered in Hong Kong, China and Colorado, respectively, and, as of the date of this annual report, have not been determined by the PCAOB as being unable to be inspected or investigated completely.

Notwithstanding the foregoing, our ability to retain an auditor subject to PCAOB inspection and investigation, including but not limited to inspection of the audit working papers related to us, may depend on the relevant positions of U.S. and Chinese regulators. If, in the future, we have been identified by the SEC for two consecutive years as a "Commission-identified issuer" whose registered public accounting firm is determined by the PCAOB that it is unable to inspect or investigate completely because of a position taken by one or more authorities in China, the SEC may prohibit our Ordinary Shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. In addition, it remains unclear what the SEC's implementation process related to the above rules will entail or what further actions the SEC, the PCAOB or NYSE American will take to address these issues and what impact those actions will have on companies that have significant operations in China and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market). We cannot assure you whether regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. If we fail to meet the new listing standards specified in the HFCA Act, we could face possible delisting from the NYSE American, cessation of trading in over-the-counter market, deregistration from the SEC and/or other risks, which may materially and adversely affect the trading price of our Ordinary Shares or terminate the trading of our Ordinary Shares in the United States.

Furthermore, the PCAOB's inability to conduct inspections in China in the past prevented it from fully evaluating the audits and quality control procedures of our prior independent registered public accounting firm. As a result, we and our investors were deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors with presence in China in the past made it more difficult to evaluate the effectiveness of our prior independent registered public accounting firm's audit procedures or quality control procedures as compared to auditors outside of China that were subject to the PCAOB inspections, which could cause investors and potential investors in our Ordinary Shares to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

***You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China, based on United States or other foreign laws, against us, our directors, executive officers or the expert named in this annual report. Therefore, you may not be able to enjoy the protection of such laws in an effective manner.***

Luda Cayman was incorporated under the laws of the Cayman Islands, but all of our operations and assets are held by our operating subsidiaries, Luda PRC and Luda HK, in the PRC and Hong Kong respectively. In addition, substantial amount of our assets is located in the PRC and most of our senior executive officers and directors reside within the PRC or Hong Kong for a significant portion of the time. The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. There are no treaties or other forms of reciprocity between China and the United States for the mutual recognition and enforcement of court judgments. China Commercial Law Firm has further advised us that under PRC law, PRC courts will not enforce a foreign judgment against us or our officers and directors if the court decides that such judgment violates the basic principles of PRC law or national sovereignty, security or public interest, thus making the recognition and enforcement of a U.S. court judgment in China difficult.

The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands. In addition, it will be difficult for U.S. shareholders to originate actions against us in China in accordance with PRC laws because we were incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our Shares, to establish a connection to the PRC for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.

***Our management team lacks experience in managing a U.S. public company and complying with laws applicable to such company, the failure of which may adversely affect our business, financial condition and results of operations.***

Our current management team lacks experience in managing a U.S. publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to U.S. public companies. Prior to our listing in February 2025, we were a private company mainly operating our businesses in Hong Kong and mainland China. Our Company is now subject to significant regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors, and our management currently has no experience in complying with such laws, regulations and obligations. Our management team may not successfully or efficiently manage our transition to becoming a U.S. public company. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition and results of operations.

***We are a holding company and our ability to pay dividends is primarily dependent upon the earnings of, and distributions by, our PRC and Hong Kong subsidiaries.***

Luda Cayman is a holding company incorporated under the laws of the Cayman Islands with limited liability. The majority of our business operations are conducted through our subsidiaries, Luda PRC and Luda HK, and hence, our revenue and profit are substantially contributed by our PRC and Hong Kong subsidiaries. On January 8, 2024, May 6, 2024 and August 26, 2024, Luda Cayman paid dividend of RMB9,250,000, RMB5,700,000 and RMB9,000,000, respectively, to Diamond Horses Group Limited. We may consider paying further dividends in the near future. See "Dividend Policy".

Our ability to pay dividends to our shareholders is primarily dependent upon the earnings of our PRC and Hong Kong subsidiaries and its distribution of funds to us, primarily in the form of dividends. The ability of our PRC and Hong Kong subsidiaries to make distributions to us depends upon, among others, their distributable earnings. Under the PRC laws, payment of dividends is only permitted out of accumulated profits according to PRC accounting standards and regulations, and our PRC subsidiary is also required to set aside part of its after-tax profits to fund certain reserve funds that are not distributable as cash dividends. Other factors such as cash flow conditions, restrictions on distributions contained in our PRC subsidiary's articles of associations, restrictions contained in any debt instruments, withholding tax and other arrangements will also affect the ability of our PRC subsidiary to make distributions to us. These restrictions could reduce the amount of distributions that we receive from our PRC subsidiary, which in turn would restrict our ability to pay dividends on the Shares. The amounts of distributions that any of Luda Cayman's subsidiaries declared and made in the past are not indicative of the dividends that we may pay in the future. There is no assurance that we will be able to declare or distribute any dividend in the future.

Furthermore, there can be no assurance that the PRC government will not impose restrictions, regulation and limitation on the conversion of the RMB into foreign currencies and the remittance of currencies out of the mainland PRC. In response to the persistent capital outflow and the RMB's depreciation against the USD in the fourth quarter of 2016, the People's Bank of China and SAFE, have implemented a series of capital regulation measures, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments, and shareholder loan repayments. The PRC government may continue to strengthen its capital regulation, and our PRC subsidiary's dividends and other distributions may be subjected to tighter scrutiny in the future. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from its profits of our PRC subsidiary, if any. Any limitation on the ability of our PRC subsidiary to pay dividends or make other kinds of payments to us could have a material adverse effect on our ability to conduct our business.

***Our results of operation may be materially and adversely affected by a downturn in the global economy.***

All of our operations are currently located in the PRC and Hong Kong. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by the political, economic and social conditions in China and Hong Kong generally and by the continued economic growth in China and Hong Kong as a whole. While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us.

There exists uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world's leading economies, including the United States and the PRC. Unrest, terrorist threats and the potential for war in the Middle East and elsewhere may increase market volatility across the globe. Any prolonged slowdown in the global or the Chinese economy may affect potential customers' confidence in the financial market as a whole and have a negative impact on our financial condition. Further, recent global economic conditions including inflationary pressures, have not materially affected our operations in the PRC. However, continued pressure from global economic conditions may affect the PRC markets in the future and in turn, may affect our operations.

The continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs. We cannot assure that there will not be any unfavorable changes in the PRC economy that could impact the industries in which we operate, which could in turn diminish the demand for our services.

***It may be difficult for overseas shareholders and/or regulators to conduct investigation in China.***

According to Article 177 of the PRC Securities Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas parties. While detailed interpretation of or implementation rules under Article 177 of the PRC Securities Law is not yet available, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by investors in protecting your interests. Therefore, you may not be able to effectively enjoy the protection offered by the U.S. laws and regulations that are intended to protect public investors.

***Changes in international trade policies, trade disputes, barriers to trade, or the emergence of a trade war may dampen growth in China.***

Political events, international trade disputes, and other business interruptions could harm or disrupt international commerce and the global economy, and could have a material adverse effect on us and our customers, contract manufacturers, raw material vendors, and other partners. International trade disputes could result in tariffs and other protectionist measures which may materially and adversely affect our business.

There have also been concerns about the relationship between the PRC and other countries, including the surrounding Asian countries, which may potentially have economic effects. In particular, there is significant uncertainty about the future relationship between the United States and the PRC with respect to trade policies, treaties, government regulations and tariffs. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China.

Political uncertainty surrounding international trade disputes and the potential of the escalation to trade war and global recession could have a negative effect on customer confidence. We may have also access to fewer business opportunities, and our operations may be negatively impacted as a result.

***Fluctuations in currency exchange rates could have a material and adverse effect on the value of your investment.***

Our revenue and expenses have been and are expected to continue to be primarily denominated in RMB and HKD, and we are exposed to the risks associated with the fluctuation in the currency exchange rate of RMB and HKD. Should our functional currencies appreciate against other currencies, the value of any future financings, which are to be converted from US dollar or other currencies into RMB and/or HKD, would be reduced and might accordingly hinder our business development due to the lessened amount of funds raised. On the other hand, in the event of the devaluation of our functional currencies, the dividend payments of our Company, which are to be paid in US dollars after the conversion of the distributable profit denominated in RMB and/or HKD, would be reduced. Hence, substantial fluctuation in the currency exchange rate of our functional currencies may have a material adverse effect on our business, operations and financial position and the value of your investment in the Shares.

***We may be subject to civil complaints and regulatory actions under certain laws and regulations relating to labor, social insurance and housing provident fund.***

Pursuant to the PRC Labor Contract Law (the "Labor Contract Law"), which became effective in January 2008, and its implementing rules, which became effective in September 2008, was amended in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees' probation and unilaterally terminating labor contracts. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner. We believe our current practice complies with the Labor Contract Law and its amendments. As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment practice does not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. We could be required to provide additional compensation to our employees and our financial condition could be materially and adversely affected.

In accordance with the PRC Social Insurance Law and the Regulations on the Administration of Housing Fund and other relevant laws and regulations, the PRC has established a social insurance system and other employee benefits, including basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance, maternity insurance, housing fund, and a handicapped employment security fund, or collectively the "Employee Benefits". An employer is required to pay the Employee Benefits for its employees in accordance with the rates provided under relevant regulations and to withhold the social insurance and other Employee Benefits that should be assumed by the employees. An employer that has not made social insurance contributions at a rate and based on an amount prescribed by the law, or at all, may be ordered to rectify the non-compliance and pay the required contributions within a stipulated deadline and be subject to a late fee of up to 0.05% or 0.2% per day, as the case may be. If the employer still fails to rectify the failure to make social insurance contributions within the stipulated deadline, it may be subject to a fine ranging from 1 to 3 times of the amount overdue.

Although we have not received any order or notice from the local authorities nor any claims or complaints from our current and former employees regarding our non -compliance in this regard, we cannot assure you that we will not be subject to any order to rectify non-compliance in the future, nor can we assure you that there are no, or will not be any, employee complaints regarding social insurance payment or housing provident fund contributions against us, or that we will not receive any claims in respect of social insurance payment or housing provident fund contributions under the PRC laws and regulation.

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***There are significant uncertainties under the PRC Enterprise Income Tax Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary to our offshore subsidiaries may not enjoy certain treaty benefits.***

Our PRC subsidiary Luda PRC is the manufacturing base of our Company and generates a material part of our profits through its business operations. Under the PRC Enterprise Income Tax Law and its implementation rules, the profits of a foreign-invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and the PRC, such rate may be reduced to 5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in China company. Our current PRC subsidiary is wholly-owned by our Hong Kong subsidiary, Luda HK. Accordingly, Luda HK may qualify for a 5% tax rate in respect of distributions from its PRC subsidiary. Under the Notice of the State Administration of Taxation on Issues regarding the Administration of the Dividend Provision in Tax Treaties promulgated in 2009, the tax payer needs to satisfy certain conditions to enjoy the benefits under a tax treaty. These conditions include: (i) the tax payer must be the beneficial owner of the relevant dividends, and (ii) the corporate shareholder to receive dividends from the PRC subsidiary must have met the direct ownership thresholds during the 12 consecutive months preceding the receipt of the dividends. Further, the State Administration of Taxation ("SAT") promulgated the Notice on How to Understand and Recognize the "Beneficial Owner" in Tax Treaties in 2009, which limits the "beneficial owner" to individuals, enterprises or other organizations normally engaged in substantive operations, and sets forth certain detailed factors in determining "beneficial owner" status.

Entitlement to a lower tax rate on dividends according to tax treaties or arrangements between the PRC central government and governments of other countries or regions is subject to the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, which provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. As a result, we cannot assure you that we will be entitled to any preferential withholding tax rate under treaties for dividends received from our PRC subsidiary.

***PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental regulation of currency conversion may delay or prevent us from remitting the proceeds of any future offerings into China through loans or additional capital contributions to our PRC subsidiary, thereby diminishing our ability to fund and expand our business.***

Any funds we transfer to our PRC subsidiary Luda PRC, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with relevant governmental authorities in China regardless of the amount of the transfer. According to the relevant PRC regulations on foreign investment entities ("FIEs") in China, capital contributions to our PRC subsidiary are subject to the filing with the Ministry of Commerce of the People's Republic of China ("MOFCOM") or their respective local branches and registration with a local bank authorized by SAFE. In addition, (i) any foreign loan procured by our PRC subsidiary is required to be registered with SAFE or their respective local branches and (ii) our PRC subsidiary may not procure loans which exceed the difference between their respective total project investment amount and registered capital or twice of their net worth. We may not be able to complete such registrations or obtain necessary approvals on a timely basis with respect to future capital contributions or foreign loans by us to our PRC subsidiary. If we fail to complete such registrations, our ability to use the proceeds of any future offerings, and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign -Invested Enterprises, ("SAFE Circular 19"), which took effect as of June 1, 2015. SAFE Circular 19 launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of FIEs and allows FIEs to settle their foreign exchange capital at their discretion, but continues to prohibit FIEs from using the RMB fund converted from their foreign exchange capital for expenditure beyond their business scopes, providing entrusted loans or repaying loans between nonfinancial enterprises. The SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, ("SAFE Circular 16"), effective in June 2016. Pursuant to SAFE Circular 16, enterprises registered in China may also convert their foreign debts from foreign currency to RMB on a self-discretionary basis. SAFE Circular 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis which applies to all enterprises registered in China. SAFE Circular 16 reiterates the principle that RMB converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, while such converted RMB will not be provided as loans to its non-affiliated entities. As Circular 16 is relatively new, the interpretation and application and any other future foreign exchange related rules are subject to rules and regulations or detailed implementations and interpretations in any form in the future. Violations of these circulars could result in severe monetary or other penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to use Renminbi converted from the net proceeds of any future offerings and our concurrent private placement, to invest in or acquire any other PRC companies through our PRC subsidiary.

***If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.***

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its "de facto management body" within the PRC is considered a "resident enterprise" and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term "de facto management body" as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the SAT issued a circular, known as SAT Circular 82, partially abolished on December 29, 2017, which provides certain specific criteria for determining whether the "de facto management body" of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular applies only to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT's general position on how the "de facto management body" text should be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its "de facto management body" in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in China; (ii) decisions relating to the enterprise's financial and human resource matters are made or are subject to approval by organizations or personnel in China; (iii) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in China; and (iv) at least 50% of voting board members or senior executives habitually reside in China.

We believe that, as a Cayman Islands exempted company, Luda Cayman is not a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body." If the PRC tax authorities determine that our company is a PRC resident enterprise for enterprise income tax purposes, we would be subject to PRC enterprise income on our worldwide income at the rate of 25%. Furthermore, we would be required to withhold a 10% tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our Shares. In addition, non-resident enterprise shareholders may be subject to PRC tax on gains realized on the sale or other disposition of the Shares, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders and any gain realized on the transfer of the Shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may be withheld at source by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our Shares.

***We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.***

On February 3, 2015, the SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 extends its tax jurisdiction to transactions involving the transfer of taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets, as such persons need to determine whether their transactions are subject to these rules and whether any withholding obligation applies.

On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding of non-resident enterprise income tax.

Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such indirect transfer to the relevant tax authority. Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who pays for the transfer is obligated to withhold the applicable taxes currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.

We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the Shares in our offshore subsidiaries and investments. Our company may be subject to filing obligations or may be taxed if our company is a transferor in such transactions, and may be subject to withholding obligations if our company is a transferee in such transactions, under SAT Bulletin 7 and/or SAT Bulletin 37. For transfers of Shares of our company by investors who are non-PRC resident enterprises, our PRC subsidiary may be requested to assist in the filing under SAT Bulletin 7 and/or SAT Bulletin 37. As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

**Risk Related to Our Corporate Structure**

***We are incorporated under the law of the Cayman Islands and conduct substantially all of our operations, and all of our directors and executive officers reside, outside of the United States. You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited.***

We are incorporated under the laws of the Cayman Islands. We conduct our operations outside the United States and substantially all of our assets are located outside the United States. In addition, substantially all of our directors and executive officers named in this annual report reside outside the United States, and most of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers or to enforce judgments obtained in the United States courts against our directors and officers.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under the Cayman Islands laws are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the English common law, which has persuasive, but not binding authority, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under the Cayman Islands laws may not be as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

There is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of courts of the United States obtained against us or our directors of officers predicated upon the civil liability provisions of U.S. securities laws; and (ii) entertain original actions brought in the Cayman Islands against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

**Risks Related to Our Shares**

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***Our Share price may be volatile, and you may lose all or part of your investment. Such rapid and substantial price volatility, including any stock run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares.***

The price for our Shares may be volatile and subject to wide fluctuations in response to factors including the following:

● actual or anticipated fluctuations in results of operations;

● actual or anticipated changes in our growth rate relative to our competitors, as well as announcements by us or our competitors of significant business developments, changes in relationships with our target customers, manufacturers or suppliers, acquisitions or expansion plans;

● failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public, as well as variance in our financial performance from the expectations of market analysts;

● issuance of new or updated research or reports by securities analysts;

● Share price and volume fluctuations attributable to inconsistent trading volume levels of our Shares;

● additions or departures of key management or other personnel;

● our involvement in litigation;

● disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technology;

● announcement or expectation of additional debt or equity financing efforts;

● sales of our Shares or other securities by us, our insiders or our other shareholders, or the perception that these sales may occur in the future;

● the trading volume of our Shares;

● market conditions in our industry;

● changes in the estimation of the future size and growth rate of our markets;

● market conditions in our industry;

● changes in the estimation of the future size and growth rate of our markets; and

● general economic, market or political conditions in the United States or elsewhere.

These and other market and industry factors may cause the market price and demand for our Shares to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their Shares and may otherwise negatively affect the liquidity of our Shares. In addition, the stock market in general, and NYSE American and emerging growth companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Such rapid and substantial price volatility, including any stock run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares. Such broad market fluctuations, and other factors (such as variations in operating results, and changes in regulations affecting us and our industry) may adversely affect the market price of our Shares, if a market for them develops.

***Volatility in our Share price may subject us to securities litigation.***

The market for our Shares may have, when compared to seasoned issuers, significant price volatility and we expect that our Share price may continue to be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation, which could result in substantial costs and liabilities and could divert management's attention and resources.

***Our Shares are expected to initially trade under $5.00 per Share and thus would be known as a penny stock. Trading in penny stocks has certain restrictions and these restrictions could negatively affect the price and liquidity of our Shares.***

Our Shares are expected to initially trade below $5.00 per Share. As a result, our Shares would be known as a "penny stock", which is subject to various regulations involving disclosures to be given to you prior to the purchase of any penny stock. The SEC has adopted regulations which generally define a "penny stock" to be any equity security that has a market price of less than $5.00 per Share, subject to certain exceptions. Depending on market fluctuations, our Shares could be considered as a "penny stock". A penny stock is subject to rules that impose additional sales practice requirements on brokers/dealers who sell these securities to persons other than established Members and accredited investors. For transactions covered by these rules, the broker/dealer must make a special suitability determination for the purchase of these securities. In addition, a broker/dealer must receive the purchaser's written consent to the transaction prior to the purchase and must also provide certain written disclosures to the purchaser. Consequently, the "penny stock" rules may restrict the ability of broker/dealers to sell our Shares, and may negatively affect the ability of holders of our Shares to resell them. These disclosures require you to acknowledge that you understand the risks associated with buying penny stocks and that you can absorb the loss of your entire investment. Penny stocks generally do not have a very high trading volume. Consequently, the price of the stock is often volatile and you may not be able to buy or sell the stock when you want to.

***If we fail to meet applicable listing requirements, NYSE American may delist our Shares from trading, in which case the liquidity and market price of our Shares could decline.***

 ****

Assuming our Shares are listed on NYSE American, we cannot assure you that we will be able to meet the continued listing standards of NYSE American in the future. If we fail to comply with the applicable listing standards and NYSE American delists our Shares, we and our shareholders could face significant material adverse consequences, including:

● a limited availability of market quotations for our Shares;

● reduced liquidity for our Shares;

● a determination that our Shares are "penny stock", which would require brokers trading in our Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Shares;

● a limited amount of news about us and analyst coverage of us; and

● a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as "covered securities." Because we expect that our Shares will be listed on NYSE American, such securities will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, if we were no longer listed on NYSE American, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities.

***Certain recent initial public offerings of companies with public floats comparable to our anticipated public float have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. We may experience similar volatility, which may make it difficult for prospective investors to assess the value of our Ordinary Shares.***

In addition to the risks addressed above in "— Our Share price may be volatile, and you may lose all or part of your investment. Such rapid and substantial price volatility, including any stock run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares," our Ordinary Shares may be subject to extreme volatility that is seemingly unrelated to the underlying performance of our business. Recently, companies with comparable public floats and initial public offering sizes have experienced instances of extreme stock price run-ups followed by rapid price declines, and such stock price volatility was seemingly unrelated to the respective company's underlying performance. Although the specific cause of such volatility is unclear, our anticipated public float may amplify the impact the actions taken by a few shareholders have on the price of our Ordinary Shares, which may cause our share price to deviate, potentially significantly, from a price that better reflects the underlying performance of our business. Should our Ordinary Shares experience run-ups and declines that are seemingly unrelated to our actual or expected operating performance and financial condition or prospects, prospective investors may have difficulty assessing the rapidly changing value of our Ordinary Shares. In addition, investors of our Ordinary Shares may experience losses, which may be material, if the price of our Ordinary Shares declines or if such investors purchase shares of our Ordinary Shares prior to any price decline.

Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. Furthermore, the potential extreme volatility may confuse the public investors of the value of our stock, distort the market perception of our stock price and our Company's financial performance and public image and negatively affect the long-term liquidity of our Ordinary Shares, regardless of our actual or expected operating performance. If we encounter such volatility, including any rapid stock price increases and declines seemingly unrelated to our actual or expected operating performance and financial condition or prospects, it will likely make it difficult and confusing for prospective investors to assess the rapidly changing value of our Ordinary Shares and understand the value thereof.

***Our Controlling Shareholders have significant voting power and may take actions that may not be in the best interests of our other shareholders.***

As of the date of this annual report, Mr. Ma Biu, our Controlling Shareholders hold approximately 88.14% of our Shares. As a result, these shareholders will be able to control the management and affairs of our Company and most matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. The interests of these shareholders may not be the same as or may even conflict with your interests. For example, these shareholders could attempt to delay or prevent a change in control of us, even if such change in control would benefit our other shareholders, which could deprive our shareholders of an opportunity to receive a premium for their Shares as part of a sale of us or our assets, and might affect the prevailing market price of our Shares due to investors' perceptions that conflicts of interest may exist or arise. As a result, this concentration of ownership may not be in the best interests of our other shareholders.

***NYSE American may apply additional and more stringent criteria for our continued listing because we had a small public offering and our insiders hold a large portion of our listed securities.***

Under Section 101 of the NYSE American Company Guide, NYSE American has discretionary authority to deny initial listing, apply additional or more stringent criteria for the initial or continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes initial or continued listing of the securities on NYSE American inadvisable or unwarranted in the opinion of NYSE American, even though the securities meet all enumerated criteria for initial or continued listing on NYSE American.

Additionally, NYSE American has used its discretion to deny initial or continued listing or to apply additional and more stringent criteria in the instances, including but not limited to: (i) where the company engaged an auditor that has not been subject to an inspection by PCAOB, an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated sufficient resources, geographic reach, or experience to adequately perform the company's audit; (ii) where the company planned a small public offering, which would result in insiders holding a large portion of the company's listed securities. NYSE American was concerned that the offering size was insufficient to establish the company's initial valuation, and there would not be sufficient liquidity to support a public market for the company; and (iii) where the company did not demonstrate sufficient nexus to the U.S. capital market, including having no U.S. shareholders, operations, or members of the board of directors or management. Our initial public offering was relatively small and the insiders of our company hold a large portion of the company's listed securities following the offering. Therefore, we may be subject to the additional and more stringent criteria of NYSE American for our continued listing.

***Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our Share price or trading volume to decline.***

If a trading market for our Shares develops, the trading market will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts. As a newly public company, we may be slow to attract research coverage and the analysts who publish information about our Shares will have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our Share price, our Share price could decline. If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our Share price or trading volume to decline and result in the loss of all or a part of your investment in us.

***Investors may have difficulty enforcing judgments against us, our directors and management.***

Luda Cayman was incorporated under the laws of the Cayman Islands and a majority of our directors and officers reside outside the United States. Moreover, many of these persons do not have significant assets in the United States. As a result, it may be difficult or impossible to effect service of process within the United States upon these persons, or to recover against us or them on judgments of U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws.

There is uncertainty as to whether the courts of the Cayman Islands would recognize or enforce judgments of U.S. courts obtained in actions against us or our directors and officers predicated upon the civil liability provisions of the U.S. federal securities laws, or entertain original actions brought in the Cayman Islands against us or our directors and officers predicated solely upon U.S. federal securities laws. Further, there is no treaty in effect between the United States and the Cayman Islands providing for the enforcement of judgments of U.S. courts in civil and commercial matters, and there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States. Some remedies available under the laws of U.S. jurisdictions, including remedies available under the U.S. federal securities laws, may not be allowed in the Cayman Islands courts if contrary to public policy in the Cayman Islands. As a result of all of the above, it may be difficult for you to recover against us or our directors and officers based upon such judgments.

***The laws of the Cayman Islands relating to the protection of the interest of minority shareholders are different from those in the United States.***

Our corporate affairs are governed by the memorandum of association and articles of association, and by the Companies Act and common law of Cayman Islands. The rights of shareholders to take action against our directors, action by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands and the articles of association. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands.

The laws of the Cayman Islands relating to the protection of the interests of minority shareholders differ in certain respects from those established under statutes or judicial precedent in existence in the United States and other jurisdictions. Such differences may mean that the remedies available to our minority shareholders may be different from those they would have under the laws of other jurisdictions, including the United States. Potential investors should be aware that there is a risk that provisions of the Companies Act may not offer the same protection as the relevant laws and regulations in the United States may offer, and should consider obtaining independent legal advice on the implications of investing in foreign-incorporated companies.

***Our status as a "foreign private issuer" under the SEC rules will exempt us from the U.S. proxy rules and the more detailed and frequent Exchange Act, reporting obligations applicable to a U.S. domestic public company.***

We report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. In addition, our officers, directors and principal shareholders are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and the rules thereunder. Therefore, our shareholders may not know on a timely basis when our officers, directors and principal shareholders purchase or sell our Shares. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers also are exempt from

Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

***Our status as a foreign private issuer under the NYSE American Company Guide will allow us to adopt certain home country practices in relation to corporate governance matters which may differ significantly from the NYSE American corporate governance listing standards applicable to a U.S. domestic NYSE American listed company.***

As a foreign private issuer, we are permitted to take advantage of certain provisions in the NYSE American Company Guide that allow us to follow our home country law for certain governance matters. Certain corporate governance practices in our home country, the Cayman Islands, may differ significantly from corporate governance listing standards. Currently, we do not plan to rely on any home country practices with respect to our corporate governance. Under the NYSE American Company Guide, we may in the future decide to use the home country practices exemption with respect to some or all of the other corporate governance rules, provided that we disclose the requirements we are not following and describe the home country practices we are following. However, if we choose to follow home country practices in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the NYSE American corporate governance listing standards applicable to U.S. domestic issuers.

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***We will incur increased costs as a result of being a public company.***

We will incur significant legal, accounting and other expenses as a public company that we did not incur as a private company. Compliance with U.S. laws and regulations and the NYSE American Company Guide increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costly. As a public company, we will be required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

The Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC, impose various requirements on the corporate governance practices of public companies.

***Our status as an "emerging growth company" under the JOBS Act may make it more difficult to raise capital as and when we need it.***

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act ("JOBS Act") and will remain an emerging growth company until the earlier of (i) the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering in February 2025; (b) in which we have total annual gross revenue of at least US$1.235 billion; or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Shares that is held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter, and (ii) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior 3-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act in the assessment of the emerging growth company's internal control over financial reporting. If we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important. The JOBS Act also provides an emerging growth company with the permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies. We do not plan to opt-out of such exemptions afforded to an emerging growth company. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective data.

Because of the exemptions from various reporting requirements provided to us as an "emerging growth company," we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our reporting is not as transparent as the reporting of other companies in our industry. Such differences may prevent us from raising additional capital in the public market as and when we need it.

***There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our Ordinary Shares.***

A non-U.S. corporation will be a PFIC for any taxable year if either (1) at least 75% of its gross income for such year consists of certain types of "passive" income; or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income, or the asset test. Based on our current and expected income and assets, we do not presently expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets. In addition, there can be no assurance that the Internal Revenue Service, or IRS, will agree with our conclusion or that the IRS would not successfully challenge our position. Fluctuations in the market price of our Ordinary Shares may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test may be determined by reference to the market price of our Ordinary Shares. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets.

If we were to be, or become, classified as a PFIC for any taxable year during which a U.S. Holder holds our Shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. We urge U.S. investors to consult their tax advisors regarding the possible application of the PFIC rules.

**You are strongly urged to consult your tax advisors regarding the impact of our being a PFIC in any taxable year on your investment in our Shares as well as the application of the PFIC rules.**

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| | |
|:---|:---|
| **ITEM 4.** | **INFORMATION ON THE COMPANY** |

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**25.&nbsp;&nbsp;&nbsp;&nbsp; History and Development of the Company**

**Corporate history and structure**

We are a manufacturer and trader of stainless steel and carbon steel flanges and fittings products. Our history began with Luda HK which was incorporated in Hong Kong in 2004 and is principally engaged in the trading of steel flanges and fittings. Our Company is a holding company incorporated under the laws of the Cayman Islands with limited liability on October 21, 2021. Prior to the incorporation of our Company, the principal operations are carried out through Luda HK and Luda PRC which were founded by Mr. Ma Biu, our Controlling Shareholder. We have conducted a reorganization, primarily to facilitate our initial public offering, which was completed on December 19, 2023. The diagram below illustrates our corporate structure as of the date of this annual report:

![](ea028558901_img4.jpg)

For details of our principal shareholders' ownership, please refer to the beneficial ownership table in "Item 6. Directors, Senior Management and Employees—E. Share Ownership".

The background and ownership of our subsidiaries as of the date of this annual report are as follows:

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| | | |
|:---|:---|:---|
| **Name** | **Background** | **Ownership** |
| Luda BVI | Incorporated on October 25, 2021 under the laws of the BVI as an investment holding company and owned by Diamond Horses Group Limited prior to the reorganization. As part of the reorganization, Luda Cayman has entered into a sale and purchase agreement to acquire Luda BVI on August 14, 2023. The reorganization was completed on December 19, 2023. | 100% owned by Luda Cayman |
| Luda HK | Incorporated on February 20, 2004 as a private company limited by shares under the laws of Hong Kong and owned by Diamond Horses Group Limited prior to the reorganization. As part of the reorganization, Luda BVI has entered into a sale and purchase agreement to acquire Luda HK on August 14, 2023. The reorganization was completed on December 19, 2023. | 100% owned by Luda BVI |
| Luda PRC | Established by Luda HK and incorporated on April 4, 2005 as a private company limited by shares under the laws of the PRC. | 100% owned by Luda HK. |

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**Completion of the Initial Public Offering**

On February 26, 2025, our Company entered into an underwriting agreement, with Revere Securities LLC as the representative of several underwriters named thereof, in connection with our initial public offering ("IPO") of 2,500,000 ordinary shares, at a price of $4.00 per share. Our Company has also granted the underwriters a 45-day option to purchase up to an additional 375,000 Ordinary Shares to cover over-allotments (the "Over-Allotment Option"), if any.

The ordinary shares of our Company began trading on NYSE American LLC on February 27, 2025 under the ticker symbol "LUD".

On April 7, 2025, our Company issued and sold to the underwriter 190,000 Ordinary Shares at a price of $4.00 per share, pursuant to the partial exercise of the Over-Allotment Option, resulting in additional gross proceeds of approximately $760,000. As a result, our Company has raised aggregate gross proceeds of $10,760,000 in the IPO, including the exercise of the Over-Allotment Option, prior to deducting underwriting discounts and commissions and estimated offering expenses payable by our Company.

**Corporate Information**

Our principal executive office is located at Rooms 1604-1605, 16/F, YF Life Centre, 38 Gloucester Road, Wanchai, Hong Kong. Our phone number is + 852 2994 8774. Our registered offices Cayman Islands is located at the office of Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1 -1111, Cayman Islands.

Investors should submit any inquiries to the address and telephone number of our principal executive offices. We maintain a corporate website at *www.ludahk.com.* The information contained in, or accessible from, our website or any other website does not constitute a part of this annual report. Our agent for service of process in the United States is Cogency Global Inc., 122 East 42<sup>nd</sup> Street, 18<sup>th</sup> Floor, New York, NY 10168.

The SEC maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system.

See "Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Capital Expenditures" for a discussion of our capital expenditures.

**B. Business Overview**

We are a manufacturer and trader of stainless steel and carbon steel flanges and fittings products. Our history began with Luda HK which was incorporated in Hong Kong in 2004 and is principally engaged in the trading of steel flanges and fittings. In 2005, the Company's business expanded further upstream when Luda PRC was set up to commence the manufacturing of flanges and fittings with self-owned factory in China. We have established an operation history of over 20 years. We are principally engaged in (i) the manufacture and sale of stainless steel and carbon steel flanges and fittings products; and (ii) trading of steel pipes, valves, and other steel tubing products. We are headquartered in Hong Kong with manufacturing base in Taian City, Shandong Province of the PRC. Our sales network comprises customers from China, South America, Australia, Europe, Asia (excluding China) and North America and our customers comprise manufacturers and traders from the chemical, petrochemical, maritime and manufacturing industries.

**Our Products**

Our wide range of flanges and fittings products are used in various industries for construction of facilities, plants and equipment as well as some specific applications such as pressure equipment, marine and offshore applications. Products are available in a variety of sizes, shapes, and specifications to meet the specific requirements of different industries. We have the capabilities to manufacture our products in conformance with various countries' standards.

**Our in-house products — Steel flanges**

We manufacture and sell a broad line of steel flanges, including the following:

![](ea028558901_img5.jpg)

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| | |
|:---|:---|
|  | **Usage** |
| Blind flange | Flange that seals off or terminates the end of a piping system, for instance, to seal a nozzle opening on a pressure vessel. It does not have a center hole ("bore"). |
| Slip on flange | Flange that resembles a ring that is placed over the pipe end, and connected to the pipe or the fittings by two fillet welds. The bore size of a slip-on flange is larger than the outside diameter of the connecting pipe. |
| Plate flange | Flange that resembles a circular disk that is welded onto the end of a pipe and allows it to be bolted to another pipe. |
| Thread flange | Flange that is joined to pipes with external threads, that can be attached without welding. |
| Welding neck flange | Flange that has a long tapered hub that can be welded with a pipe, typically used in high-pressure and high/low temperatures applications that require an unrestricted flow of the fluid. |

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**Our in-house products — Steel fittings**

We manufacture and sell a broad line of steel fittings, including the following:

![](ea028558901_img6.jpg)

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| | |
|:---|:---|
|  | **Usage** |
| Elbow | Changes the direction of fluid flow. |
| Reducer | Changes pipe size to meet hydraulic flow requirements. |
| Cap | Covers the end of a pipe. |
| Tee | Combines fluid flow from multiple branches. |

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**Products sourced from external suppliers — Related steel piping products**

In addition to the aforementioned in-house products manufactured at our plant, we also trade high-quality steel valves, steel pipes and other piping system components sourced from trusted external suppliers.

Our stainless-steel products are ideal for hazardous chemical and petrochemical environments, as they offer superior resistance to corrosion, high temperatures, and contamination risk. Most of our products are made from austenitic stainless steel, which offers good durability and is well-suited for demanding industrial applications.

We also provide carbon steel products, which are characterized by a higher carbon content and lower levels of other alloy metals. Carbon steel is generally a less expensive material than stainless steel and has lower resistance to corrosion and heat. However, certain properties of carbon steel products can be strengthened through forging and heat treatment to enhance their performance for specific applications and scenarios.

The table below sets out our revenue by product categories for the periods indicated:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **US$** | **%** | **US$** | **%** | **US$** | **%** |
| Fittings | 11018432 | 32.9 | 13617429 | 30.4 | 9784712 | 19.0 |
| Flanges | 21732191 | 64.8 | 30923382 | 68.9 | 40773687 | 79.3 |
| Others | 784728 | 2.3 | 322619 | 0.7 | 869655 | 1.7 |
| Total | 33535351 | 100.0 | **44863430** | **100.0** | **51428054** | **100.0** |

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**Production**

We manufacture and offer our stainless steel and flanges fittings products that are of standardized design and specifications to our customers. The production process of our products varies model by model and our production process is certified under quality management systems ISO 9001:2015, Pressure Equipment Directive 2014/68/EU, AD2000-Merkblatt and API Specification Q1.

**<u>Steel flanges</u>**

The following chart illustrates the typical production workflow for steel flanges:

![](ea028558901_img7.jpg)

The production of steel flanges typically involves the following major steps:

***Cutting.*** Cutting the steel billets into the required size and dimensions using cutting machinery.

***Heating.*** Heating the sectioned billets to the required temperature in the furnace to achieve a malleable state for forging.

***Forging.*** Shaping the heated steel billets into required die-cast flange shapes by applying compressive force.

***Heat treatment.*** Put the die-cast flange shapes into a kiln at temperature of minimum 1,040 degree Celsius for the production of stainless-steel flanges or at lower temperature of about 900 degree Celsius for the production of carbon steel flanges and then cooling by running water or in air. This process is to fortify and to ensure the hardness, ductility, toughness, or magnetic properties of the flange shapes can achieve desired specifications.

***Machining.*** Removing the iron oxide scales using computer numerical control ("CNC") and lathe machines.

***Finishing.*** Drill the specific number and size of holes on the flanges, stamp product measurement and other details on the surface of the flanges, paint and galvanize the flanges for corrosion protection.

***Cleaning, Inspecting and Packing.*** The finished product is then cleaned and subject to final inspection before being packed and delivered to our customers.

The production process of steel flanges from cutting to packing takes approximately 20 to 30 days.

**<u>Steel fittings</u>**

The following chart illustrates the typical production workflow for steel fittings:

![](ea028558901_img8.jpg)

The production of steel fittings typically involves the following major steps:

***Cutting.*** Cutting steel pipes to the required shape and size using cutting machinery.

Depending on the specification of products, one or more of the following processes will be performed to produce the steel fittings:

***Hot forming.*** Heating the steel pipe with an induction heating coil and pushing it over a dye which allows the pipe to expand and bend simultaneously. This process is suited for fittings of carbon steel and alloy steel materials, and results in a rough form fittings.

***Cold forming.*** Pushing the cut pipe through a dye and form into its desired shape.

***Polishing and heat treatment.*** Put the die-cast flange shapes into a kiln at temperature of minimum 1,040 degree Celsius for the production of stainless-steel flanges or at lower temperature of about 900 degree Celsius for the production of carbon steel flanges and then cooling by running water or in air. This process is to fortify and to ensure the hardness, ductility, toughness, or magnetic properties of the flange shapes can achieve desired specifications.

***Shot blasting.*** Removing impurities from the surface of the steel fittings by using mechanical device.

***Bevelling and reforming.*** Smoothing out the ends of the steel fitting part.

***Finishing.*** Stamp product measurement and other details on the surface of the steel fittings, paint and galvanize the steel fittings for corrosion protection.

***Inspecting and Packaging.*** The finished product is then inspected before being packed and delivered to our customers, including reviewing its traceability, visual and surface inspection.

The production process of steel fittings from cutting to packing takes approximately 20 to 30 days.

**Production capacity**

Our factory is located in Taian City, Shandong Province of the PRC with total plant area of approximately 21,914 square meters ("sq m"). The manufacturing process is certified under quality management systems ISO 9001:2015, Pressure Equipment Directive 2014/68/EU, AD2000-Merkblatt and API Specification Q1.

**Customers**

For the years ended December 31, 2025, 2024 and 2023, we transacted with customers globally, which includes listed companies or state-owned enterprises in the PRC.

For the years ended December 31, 2025, 2024 and 2023, we had the following customers that accounted for more than 10% of our revenue:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Major customers representing more than 10% of the Company's revenues |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Customer A | $4037204 | 12.0% | $\* | \*% | $\* | \*% |
| &nbsp;&nbsp;&nbsp;Customer B | 3995291 | 11.9% | \* | \*% | \* | \*% |
| &nbsp;&nbsp;&nbsp;Customer C | 3552714 | 10.6% | \* | \*% | \* | \*% |
| &nbsp;&nbsp;&nbsp;Customer D | \* | \*% | 8228966 | 18.3% | \* | \*% |
| &nbsp;&nbsp;&nbsp;Customer E | \* | \*% | 5957404 | 13.3% | 8390058 | 16.3% |
| &nbsp;&nbsp;&nbsp;Customer F | \* | \*% | 5560578 | 12.4% | \* | \*% |
| &nbsp;&nbsp;&nbsp;Customer G | \* | \*% | 4497689 | 10.0% | 15852474 | 30.8% |

---

\* Represents less than 10% of the Company's revenue.

**Suppliers**

For the years ended December 31, 2025, 2024 and 2023, our suppliers are based in PRC who provide us with steel billets, finished and semi-finished steel flanges and pipe fittings. Depending on each client's specific needs, we purchase specific types of stainless-steel billet and different manufacturing techniques are used for processing raw materials into finished goods to make sure the products meet customer's quality standard.

We purchase our raw materials from a variety of sources and consolidate purchases among our top suppliers to improve cost and delivery terms. We maintain flexibility to purchase raw materials from a variety of sources to optimize cost efficiency and delivery lead time.

For the years ended December 31, 2025, 2024 and 2023, we had the following suppliers which accounted for more than 10% of our purchase:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Major suppliers representing more than 10% of the Company's purchase |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Supplier A | $\* | \*% | $\* | \*% | $11425454 | 23.8% |
| &nbsp;&nbsp;&nbsp;Supplier B | 4453329 | 17.7% | 3939174 | 12.4% | \* | \*% |
| &nbsp;&nbsp;&nbsp;Supplier C | \* | \*% | 4651267 | 14.7% | \* | \*% |
| &nbsp;&nbsp;&nbsp;Supplier D | 2682282 | 10.7% | \* | \*% | \* | \*% |

---

\* Represents less than 10% of the Company's purchase.

**Sales and Marketing**

Our sales team is responsible for exploring business opportunities and maintaining customer relationships. The team will also coordinate with sales representatives and external agents based in Brazil, Korea, and the PRC and seek to expand our overseas network.

Over the years, we have built up a broad and diversified customer base. Most of our customers are in the PRC and the rest are spread across the globe. The table below shows the breakdown of sales revenue by geographical locations of our customers during the period under review:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **FY2025** | **FY2025** | **FY2024** | **FY2024** | **FY2023** | **FY2023** |
| <br>**Revenue by International Markets:** | **Sales Amount**<br>**(In USD)** | **As %**<br>**of Sales** | **Sales Amount**<br>**(In USD)** | **As %**<br>**of Sales** | **Sales Amount**<br>**(In USD)** | **As %**<br>**of Sales** |
| People's Republic of China | $22397641 | 66.8% | $36863348 | 82.2% | $45237236 | 88.0% |
| South America | 6708846 | 20.0% | 4100965 | 9.1% | 2769090 | 5.3% |
| Asia excluding PRC | 2281627 | 6.8% | 871783 | 1.9% | 888563 | 1.7% |
| Australia | 1020860 | 3.0% | 1802150 | 4.0% | 1373689 | 2.7% |
| North America | 828038 | 2.5% | 699013 | 1.6% | 445423 | 0.9% |
| Europe | 219957 | 0.7% | 368772 | 0.8% | 666772 | 1.3% |
| Others | 78382 | 0.2% | 157399 | 0.4% | 47281 | 0.1% |
| **Total revenue** | $**33535351** | **100%** | $**44863430** | **100%** | $**51428054** | **100%** |

---

**Seasonality**

Generally, we do not experience any material seasonality in our business.

**Competition**

We operate in a highly fragmented and competitive industry and believe that factors which affect competitiveness in our business include pricing and quality, range of products and the product certifications and lead time to delivery. There were estimated to be more than 1,000 pipe fittings manufacturers/companies in PRC.

**Permits and licenses**

As of the date of this annual report, we and the operating entities have received from PRC government authorities all requisite permits or licenses needed to engage in the businesses currently conducted in China. Such permits and licenses include Business License, Special Equipment Registration and Certificate of High and New Technology Enterprises. The following table provides details on the material permits and licenses held by Luda PRC.

---

| | | | |
|:---|:---|:---|:---|
| **Description of approval/ license/permit/other regulatory requirements** | **Date of issue** | **Date of expiration** | **Regulatory authority** |
| Business License (No. 913709007731521882) | April 20, 2020 | April 3, 2035 | Administration for Market Regulation of Taian |
| Production License of Special Equipment People's Republic of China (Serial No. TS2737538- 2027) | March 6, 2023 | March 5, 2027 | Administration for Market Regulation of Shandong |
| A total of 56 Certificates of Type Test of Special Equipment in relation to the production of pressure pipeline components | From March 17, 2023 to April, 28, 2024 | No expiration date | Hebei Special Equipment Supervision and Inspection Institute |
| Certificate of High and New Technology Enterprises (No. GR202337003102) | November 29, 2023 | November 29, 2026 | Department of Science & Technology of Shandong Province Shandong Provincial Department of Finance <br> Shandong Provincial Tax Service, State Taxation Administration |
| Customs Declaration Entity Registration (No. 3709942919) | September 11, 2014 | No expiration date | Customs of PRC, Taian Branch |
| Discharges of Pollutants from Stationary Sources of Pollution Registration (No. 913709007731521882001Z) | March 13, 2024 | March 12, 2029 | Taian Environmental Protection Bureau |
| Food Business License (No. JY33709830042776) | May 17, 2022 | May 16, 2027 | Administrative Approval Service Bureau of Feicheng City, Taian |
| Certificate of Motor Vehicle Registration (No. Lu J635NF) | May 24, 2023 | No expiration date | Taian Traffic Police Detachment, Public Security Bureau |
| Special Equipment Utilization Registration (Serial No. Che 11 Lu J40094(19)) | June 26, 2019 | No expiration date | Administration for Market Regulation of Taian |
| Special Equipment Utilization Registration (Serial No. Che 11 Lu J40138(18)) | October 26, 2018 | No expiration date | Taian Quality and Technical Supervision Bureau |
| Special Equipment Utilization Registration (Serial No. Che 11 Lu J40033 (19)) | April 12, 2019 | No expiration date | Administration for Market Regulation of Taian |
| Certificate of Special Equipment Service Registration (Serial No. Qi 27 Lu JB0021(15)) | July 13, 2015 | No expiration date | Taian Quality and Technical Supervision Bureau |
| Special Equipment Utilization Registration (Serial No. Qi 17 Lu J40129 (18)) | September 14, 2018 | No expiration date | Taian Quality and Technical Supervision Bureau |
| Special Equipment Utilization Registration (Serial No. Qi 17 Lu JB0195 (13)) | September 3, 2013 | No expiration date | Taian Quality and Technical Supervision Bureau |
| Planning Permit of Construction Engineering (Serial No. Jian Zi No. 370983202310026) | July 18, 2023 | No expiration date | Feicheng Natural Resources and Planning Bureau |
| Building Construction Permit (Serial No.370983202310120101) | October 12, 2023 | No expiration date | Administrative Approval Service Bureau of Feicheng City, Taian |
| Building Construction Completion and Acceptance Permit (Serial No.3709832310090002) | August 2, 2024 | No expiration date | Taian Building Construction Quality Supervision Station |

---

**Intellectual Property**

Our success and future revenue growth depend, in part, on our ability to protect our intellectual property. We rely primarily on patents, trademarks, copyrights and trade secret laws, as well as confidentiality procedures, to protect our proprietary technologies and processes. We rely on a combination of trademark law and confidentiality and non-disclosure agreements to protect our intellectual property rights. We also regularly monitor any infringement or misappropriation of our intellectual property rights.

 

As of the date of this annual report, we have registered the following trademarks:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Nature and description of Intellectual Property Right (including Intellectual Property Number)** | **Granted by** | **Date of Approval** | **Duration of right (including expiry date)** | **Right of renewal** | **Other remarks** | **Acquisition Method** |
| ![](ea028558901_img9.jpg) <br>(19024680) | Trademark Office of National Intellectual Property Administration, PRC ("Trademark Office") | June 21, 2017 | June 20, 2027 | Subject to an application within 12 months before the expiry of the duration of right. | Classification:6 Flanges of metal; Stainless flanges; Carbon steel flanges; welding neck flanges; forging flanges | Original Acquisition Nil |
| ![](ea028558901_img10.jpg)<br>(6332104) | Trademark Office | March 28, 2020 | March 27, 2030 | Subject to an application within 12 months before the expiry of the duration of right. | Classification:6<br> Flanges of metal | Original Acquisition Nil |
| ![](ea028558901_img11.jpg)<br>(19024679) | Trademark Office | March 7, 2017 | March 6, 2027 | Subject to an application within 12 months before the expiry of the duration of right. | Classification:6 Steel alloy; Valves of metal (other parts of machines); Elbows of metal for pipes; Junctions of metal for pipes; Flanges of metal; Stainless flanges; Carbon steel flanges; welding neck flanges; forging flanges | Original Acquisition Nil |

---

*As of the date of this annual report, we have registered the following patents:*

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Patent number** | **Patent type** | **Registration<br> Date** | **Expiration<br> Date** | **Acquisition<br> Method** | **Registered<br> Owner** |
| 1 | 2016205291864 | Utility model patent – Gas forging tank door | June 3, 2016 | June 2, 2026 | Original Acquisition | Luda PRC Nil |
| 2 | 2016205291883 | Utility model patent – Blanking mold for flange production | June 3, 2016 | June 2, 2026 | Original Acquisition | Luda PRC Nil |
| 3 | 2016205291898 | Utility model patent – Manual cutter gauge | June 3, 2016 | June 2, 2026 | Original Acquisition | Luda PRC Nil |
| 4 | 2016205291915 | Utility model patent – Gas forging loading car | June 3, 2016 | June 2, 2026 | Original Acquisition | Luda PRC Nil |
| 5 | 2016205291934 | Utility model patent – Mobile platform for equipment inspection | June 3, 2016 | June 2, 2026 | Original Acquisition | Luda PRC Nil |
| 6 | 2016205291953 | Utility model patent – Platform for pipe repair | June 3, 2016 | June 2, 2026 | Original Acquisition | Luda PRC Nil |
| 7 | 2019211728203 | Utility model patent – Large diameter blind plate hooks | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |
| 8 | 2019211728383 | Utility model patent – Debris protection device for CNC drilling machine | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |
| 9 | 2019211728398 | Utility model patent – Simple CNC lathe protective cover | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |
| 10 | 2019211728260 | Utility model patent – Elbow pipe blasting equipment | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |
| 11 | 2019211735527 | Utility model patent – Device for grabbing hot raw materials from a high-heat furnace | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |
| 12 | 2019211728379 | Utility model patent – Twist drill bit and drill sleeve storage toolbox | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |
| 13 | 2019211735531 | Utility model patent – Automatic briquetting device for flange debris | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Patent number** | **Patent type** | **Registration Date** | **Expiration<br> Date** | **Acquisition<br> Method** | **Registered<br> Owner** |
| 14 | 2019211735508 | Utility model patent – Automatic conveyor device for transporting round steel | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |
| 15 | 201921173557X | Utility model patent – Automatic double-sided bevelling machine | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |
| 16 | 2019211735512 | Utility model patent – Conveyor device for connecting regenerative heating furnace and reaming machine | July 24, 2019 | July 23, 2029 | Original Acquisition | Luda PRC Nil |
| 17 | 2021108658194 | Invention patent – An intelligent hydraulic baler | July 29, 2021 | July 28, 2041 | Original Acquisition | Luda PRC Nil |
| 18 | 2021108658315 | Invention patent – Pipe bending welding device for metal products processing | July 29, 2021 | July 28, 2041 | Original Acquisition | Luda PRC Nil |
| 19 | 2021230937926 | Utility model patent – Connecting type shot blasting machine with a guard mechanism | December 10, 2021 | December 9, 2031 | Original Acquisition | Luda PRC Nil |
| 20 | 2021231126942 | Utility model patent – Vertical drilling machine with improved drilling accuracy | December 10, 2021 | December 9, 2031 | Original Acquisition | Luda PRC Nil |
| 21 | 2021231225685 | Utility model patent – Automatic hole reaming machine with a hole adjustment mechanism | December 10, 2021 | December 9, 2031 | Original Acquisition | Luda PRC Nil |
| 22 | 2021231133113 | Utility model patent – A CNC lathe positioning clamping device | December 10, 2021 | December 9, 2031 | Original Acquisition | Luda PRC Nil |
| 23 | 2022206287433 | Utility model patent – High- efficiency double- chamber heat storage burner forging heating furnace | March 22, 2022 | March 21, 2032 | Original Acquisition | Luda PRC Nil |
| 24 | 2021200174583 | Utility model patent – An industrial marking machine with pre- cleaning function | January 4, 2021 | January 3, 2031 | Original Acquisition | Luda PRC Nil |
| 25 | 2021200051418 | Utility model patent – A kind of fixing device for bending pipe welding which is easy to limit position | January 4, 2021 | January 3, 2031 | Original Acquisition | Luda PRC Nil |
| 26 | 2021200174598 | Utility model patent – High- efficiency closed cooling tower capable of preventing dust pollution | January 4, 2021 | January 3, 2031 | Original Acquisition | Luda PRC Nil |
| 27 | 2021200046072 | Utility model patent – Automate tapping machine | January 4, 2021 | &nbsp;&nbsp;&nbsp;&nbsp;January 3, 2031 | Original Acquisition | Luda PRC Nil |
| 28 | 2021228794799 | Utility model patent – Drill bit grinding machine with liquid-cooled structure | November 23, 2021 | November 22, 2031 | Original Acquisition | Luda PRC Nil |

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Patent number** | **Patent type** | **Registration<br> Date** | **Expiration<br> Date** | **Acquisition<br> Method** | **Registered Owner** | **Encumbrance** |
| 29 | 2021228869189 | Utility model patent – Water-saving automatic pass-through type workpiece spray cleaning machine | November 23, 2021 | November 22, 2031 | Original Acquisition | Luda PRC | Nil |
| 30 | 2021228794905 | Utility model patent – Automatic packaging machine with cutting function | November 23, 2021 | November 22, 2031 | Original Acquisition | Luda PRC | Nil |
| 31 | 2022215716616 | Utility model patent – A kind of flange machining jig | June 22, <br> 2022 | June 21, 2032 | Original Acquisition | Luda PRC | Nil |
| 32 | 2023210588781 | Utility model paten – A kind of stainless steel shaped flange | May 6, 2023 | May 5, 2033 | Original Acquisition | Luda PRC | Nil |
| 33 | 2023210588739 | Utility model paten – A flange welding device for flange fittings production | May 6, 2023 | May 5, 2033 | Original Acquisition | Luda PRC | Nil |
| 34 | 2023211868281 | Utility model paten – A kind of automatic welding equipment for metal pipe fittings | May 17,<br> 2023 | May 16, 2033 | Original Acquisition | Luda PRC | Nil |
| 35 | 2023214496878 | Utility model paten – A new type of flange surface roughness meter | June 8, <br> 2023 | June 7, 2033 | Original Acquisition | Luda PRC | Nil |
| 36 | 2024204064571 | Utility model patent – Surface pretreatment device for forging pipe fittings processing | March 4,<br> 2024 | March 3, 2034 | Original Acquisition | Luda PRC | Nil |
| 37 | 2024204064590 | Utility model patent – One step device for forging tee pipe fittings | March 4, 2024 | March 3, 2034 | Original Acquisition | Luda PRC | Nil |
| 38 | 2024204064618 | Utility model patent – Pipe fitting packaging positioning mechanism for pipe fitting production | March 4,<br> 2024 | March 3, 2034 | Original Acquisition | Luda PRC | Nil |
| 39 | 2024206606457 | Utility model patent – A new type of flange production mold | April 2, <br> 2024 | April 1, 2034 | Original Acquisition | Luda PRC | Nil |
| 40 | 2019201616767 | Utility model patent – Automatic flange cleaning device | January 30, 2019 | January 29, 2029 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 41 | 201920161409X | Utility model patent – Packing rack | January 30, 2019 | January 29, 2029 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 42 | 2019201623845 | Utility model patent – Processing tool for double groove welding | January 30, 2019 | January 29, 2029 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 43 | 2019201701331 | Utility model patent – Auxiliary spreader to support spraying and hoisting of pipe fitting | January 31, 2019 | January 30, 2029 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Patent number** | **Patent type** | **Registration<br> Date** | **Expiration<br> Date** | **Acquisition<br> Method** | **Registered<br> Owner** | **Encumbrance** |
| 44 | 2019201701897 | Utility model patent – Auxiliary frame to lift blind plates | January 31, 2019 | January 30, 2029 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 45 | 2019113854563 | Invention patent – Cutting mechanism for fully automatic stainless-steel tube cutting | December 28, 2019 | December 27, 2039 | Derivative Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 46 | 2018213946443 | Utility model patent – Workpiece inspection device | August 28, 2018 | August 27, 2028 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 47 | 2018213953080 | Utility model patent – New borehole flange drilling tool | August 28, 2018 | August 27, 2028 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 48 | 2018213935754 | Utility model patent – Multi-purpose mold to slide flanges for forging | August 28, 2018 | August 27, 2028 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 49 | 2018213953095 | Utility model patent – Double- headed groove equipment | August 28, 2018 | August 27, 2028 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 50 | 2017216684359 | Utility model patent – Set of mold used to make high-necked flanges | December 5, 2017 | December 4, 2027 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 51 | 2019201701350 | Utility model patent – caliper tool too for flange forging | January 31, 2019 | January 30, 2029 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Bank of Taian, Feicheng Branch |
| 52 | 2022205352933 | Utility model patent – A new type of natural gas furnace environmental protection nitrogen oxide treatment device | March 14, 2022 | March 13, 2032 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Postal Savings Bank of China, Feicheng Branch |
| 53 | 2022205353669 | Utility model patent – High safety fiber laser cutting machine | March 14, 2022 | March 13, 2032 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Postal Savings Bank of China, Feicheng Branch |
| 54 | 2022206287556 | Utility model patent – Magnetic pipe cutting machine for easy cleaning of iron chips | March 22, 2022 | March 21, 2032 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Postal Savings Bank of China, Feicheng Branch |
| 55 | 2022215202078 | Utility model patent – Flange processing reverse mechanism | June 17, 2022 | June 16, 2032 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Postal Savings Bank of China, Feicheng Branch |
| 56 | 2022215202097 | Utility model patent – Cooling device for flange forging production | June 17, 2022 | June 16, 2032 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Postal Savings Bank of China, Feicheng Branch |
| 57 | 2022215689322 | Utility model patent – Receiver flange grinding and rust removal device | June 22, 2022 | June 21, 2032 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Postal Savings Bank of China, Feicheng Branch |
| 58 | 2022223647317 | Utility model patent – Flange rotary machining platform | September 6, 2022 | September 5, 2032 | Original Acquisition | Luda PRC | Being pledge to Luda PRC's loan at Postal Savings Bank of China, Feicheng Branch |

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As of the date of this annual report, we have registered the following copyrights:

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>**Copyright number** | **Category of**<br>**Works** | **Date of completion of**<br>**work** | **Date of Initial**<br>**Publication** | **Registered**<br> **Owner** |
| ![](ea028558901_img10.jpg)<br> Guo Zuo Deng Zi-2014-F-00143945 | Art | May 1, 2005 | May 1, 2005 | Luda PRC |

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**Awards and accreditations**

As of the date of this annual report, our Company received the following awards and accreditations:

---

| | | | |
|:---|:---|:---|:---|
| <br>**Description of awards/accreditations** | **Date of**<br>**issue** | **Date of**<br>**expiration** | **Regulatory**<br>**authority** |
| Certificate in relation to Manufacturing and Sales of Steels Flanges, Forgings and Pipe Fittings (Certificate Registration No. TUV100083155) | February 13, 2024 | February 12, 2027 | TUV SUD Asia Pacific<br> TUV SUD Group |

---

---

| | | | |
|:---|:---|:---|:---|
| <br>**Description of awards/accreditations** | **Date of**<br>**issue** | **Date of**<br>**expiration** | **Regulatory**<br>**authority** |
| QTR Qualification Test Record NORSOK M-650 | February 4, 2021 | April 27, 2026 | TUV SUD Industries Service GmbH |
| *(The renewal application has been submitted and examined. The Company is currently awaiting the issuance of new certificate.)* | *(The renewal application has been submitted and examined. The Company is currently awaiting the issuance of new certificate.)* | *(The renewal application has been submitted and examined. The Company is currently awaiting the issuance of new certificate.)* | *(The renewal application has been submitted and examined. The Company is currently awaiting the issuance of new certificate.)* |
| ABS Certificate of Forging Facility and Process Approval in relation to Steel Forging and Stainless Steel Forging components for marine applications (Certificate No. FOR-T2442346) | August 31, 2023 | October 23, 2028 | ABS |
| Recognition for BV MODE II SCHEME (Certificate No. SMS.W.II./122215/B.0) | July 27, 2023 | August 8, 2027 | Bureau Veritas Marine & Offshore |
| Approval of Manufacturer Certificate (Certificate No. AMMM00002KR Rev No. 3) | October 6, 2025 | September 12, 2028 | DNV GL |
| Certificate of Works Approval in relation to Forging and Steel Forgings (Certificate No. QD23PWA00047_01) | October 18, 2023 | October 30, 2027 | China Classification Society |
| Certificate of Works Approval in relation to Steel Pipe Fittings (Certificate No. QD23PWA00047_02) | October 18, 2023 | October 30, 2027 | China Classification Society |
| Certificate of Registration in relation to Manufacture of Steel Flanges, Forgings and Pipe Fittings (Registration No. Q1-2235) | March 31, 2024 | March 31, 2027 | American Petroleum Institute |
| Certificate of Registration in relation to Manufacture of Steel Flanges, Forgings and Pipe Fittings in relation to ISO 9001:2015 (APIQR Registration No. 2331) | March 31, 2024 | March 31, 2027 | American Petroleum Institute Quality Registrar (APIQR) |
| Certificate in relation to forged flanges and seamless pipe fittings (Certificate No. DGR-0036-QS-W 681/2015/MUC-001) | March 3, 2024 | February 27, 2027 | TUV SUD Industries Service GmbH |
| Registration of Fittings in relation to comply with the requirements of PIPE FLANGES AND FLANGED FITTINGS NPS 1/2 THROUGH NPS 24 (ASME B16.5) (CRN: 0B09888.5R2) | September 26, 2025 | September 26, 2035 | Technical Standards & Safety Authority (TSSA) |
| Registration of Fittings in relation to comply with the requirements of FACTORY-MADE WROUGHT BUTTWELDING FITTINGS (ASME B16.9) (CRN: 0A10221.5R2) | October 14, 2025 | October 14, 2035 | Technical Standards & Safety Authority (TSSA) |

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| | | | |
|:---|:---|:---|:---|
| <br>**Description of awards/accreditations** | **Date of**<br>**issue** | **Date of**<br>**expiration** | **Regulatory**<br>**authority** |
| Environmental Management System Certificate (Certificate No. ZM034124E33431R0M) | November 22, 2024 | November 21, 2027 | Shan Dong ZhengMing Certification Service Co., Ltd. |
| Occupational Health and Safety Management System Certificate (Certificate No. ZM034124S33432R0M) | November 22, 2024 | November 21, 2027 | Shan Dong ZhengMing Certification Service Co., Ltd. |
| Energy Management System Certificate (Certificate No. ZM034124EN30051R0M) | November 22, 2024 | November 21, 2027 | Shan Dong ZhengMing Certification Service Co., Ltd. |
| Certificate of Authority to use Official API Monogram (in the scope of Blind and Test Flanges at PSL1, Psl2) (License Num. 6A-2260) | March 3, 2024 | March 31, 2027 | American Petroleum Institute |
| Approval of Steel Forgings (in the scope of Steel forgings, Carbon, Carbon/Manganese Steel. Maximum weight 450kg/0.45 tons) (Certificate No. LR2032729WA) | October 20, 2023 | October 19, 2026 | Lloyd's Register |
| CRC — Certificado de Registro Cadastral (Certificate No. 7000230889-0) | January 19, 2026 | January 15, 2027 | PETROBRAS |

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**Facilities**

Our principal executive office is located in Hong Kong, where we leased an office with an aggregate area of approximately 6,400 square feet, under two separate lease terms. The first lease covers from August 28, 2025 to August 27, 2027 at a monthly rent of $13,128 and the first three months are rent-free with a $0.13 license fee charged for fitting-out works. The second lease covers from November 7, 2025 to November 6, 2027 at a monthly rent of $13,338 and the first two months are rent-free with a $0.13 license fee charged for fitting-out works.

We continued to lease a flat in Hong Kong from a related party, Won Fittings Company Limited, for document storage purposes. The flat has a total area of approximately 3,460 square feet. The lease term was from April 1, 2025 to March 31, 2026 and was renewed for further term from April 1, 2026 to March 31, 2027. The monthly rent is $6,795.

There is no private land ownership in China. Individuals and entities are permitted to acquire land use rights for specific purposes and for limited periods. Upon expiration of the term of grant, renewal is possible subject to the payment of a new land premium and execution of a new land grant contract. Granted land use rights are transferable and may be used as security for borrowings and other obligations.

We believe that the offices and product facilities that we currently own in the PRC and/or leased in Hong Kong are adequate to meet our needs for the immediate future. As of the date of this annual report, we own the following properties:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Address** | **Estate<br> Rights No.** | **Certificate No.** | **Usage** | **Size** | **Tenure** | **Encumbrance** |
| 1 | High-tech zone, Feicheng City | Lu (2016) Fei Cheng Shi<br> Budongchanquan<br> No. 0001526 | Lu Fei Cheng<br> Guoyong<br> (2013)<br> No.040003 | Office and<br> Production | Area of land:<br> 25,702.39 sq m<br> Area of plant<br> comprising two (2)<br> properties on land: (1)<br> F0006: 3,787.2m2;<br> (2) F0010: 3,704.01m2 | Land use<br> rights from<br> March 26,<br> 2013 to<br> March 26,<br> 2063  | Mortgaged to Luda PRC's loan at Shandong Feicheng Rural Commercial Bank Co., Ltd  |
| 2 | High-tech zone, Feicheng City | Lu (2021) Fei Cheng Shi<br> Budongchanqua<br> No. 0081166 | Lu Fei Cheng<br> Guoyong<br> (2007)<br> No.040038 | Production | Production Area of land: 29,544.54 sq m<br> Area of plant<br> comprising eight (8)<br> properties on land:<br> 14,423.61 sq m | Land use<br> rights from<br> December 31, 2006 to<br> December 31, 2056 | Mortgaged to Luda PRC's loan at Bank<br> of China, Feicheng<br> Branch |
| 3 | No. 20-157<br> Qian Fo Shan<br> Road, Dong Ying City | Lu (2020) Dong<br> Ying Shi<br> Budongchanquan<br> No. 0249808 | N/A | Commercial use | Exclusive and shared floor area: 84.24 sq m and 2.68 sq m | Until August 22, 2052 | Nil |
| 4 | Room 302, Unit 1, Building 33, No. 89, Shizhong Road, Shikou Town, Dongying District | Lu (2024) Dong<br> Ying Shi<br> Budongchanqua<br> No. 0066978 | Dong<br> Guoyong<br> (2014)<br> No.014140 | Commercial /Residential | Building Area: 116.07 sq m | Land use<br> rights from<br> September 18, 2013 to<br> September 17, 2083 | Nil |
| 5 | Room 502, Unit 1, Building 29, No. 89, Shizhong Road, Shikou Town, Dongying District | Lu (2024) Dong<br> Ying Shi<br> Budongchanquan<br> No. 0066976 | Dong<br> Guoyong<br> (2014)<br> No.014140 | Commercial /Residential | Building Area: 103.38 sq m | Land use<br> rights from<br> September 18, 2013 to<br> September 17, 2083 | Nil |

---

 

**Our Competitive Strengths**

***Experienced management team***

 **

Our Company is headed by our Chief Executive Officer, Mr. Ma Biu who is the founder of the Company and Chief Operating Officer, Ms. Liu Liangping who joined the Company since 2007. Our management team also comprises technical team members and experts in the flange and pipe fitting industry, including the General Manager, Deputy General Manager and Head of Production who have been serving the Company for more than 10 years. We are confident that our management teams' profound knowledge and experience will serve as a solid foundation to our success in the business and enable us to stay competitive and capture market opportunities.

***Broad product portfolio***

 ****

We offer an extensive range of approximately 12,000 types of products under four main categories, namely carbon steel flanges, stainless steel flanges, carbon steel fittings and stainless-steel fittings. The diverse product range can cater for the requirement of customers from different industries.

***Solid customer base and established reputation***

 ****

For the years ended December 31, 2025, 2024 and 2023, we transacted with customers globally, which includes listed companies or state-owned enterprises in the PRC. We have accumulated specialized knowledge and good understanding of product requirements that meet the specific application of our customers, particularly in the chemical and petrochemical industries. We have established our reputation by consistently delivered quality products of different material grade and technical specifications that satisfy customers' requirements.

***Established business relationships with suppliers***

 ****

Our raw materials and products are sourced from approved vendors, who are reliable and reputable manufacturers, stockists, and traders. Through our years of partnership, we have established a stable relationship with our suppliers and we are able to secure timely and reliable supplies for our production needs.

***Stringent quality control systems***

Luda PRC has been awarded ISO 9001:2015, as well as Pressure Equipment Directive 2014/68/EU, Annex I, Section 4.3 and AD 2000-Merkblatt W 0 and EN764-5, Para 4.2 and Norsok M-650. The Pressure Equipment Directive is a mandatory standard in Europe and Norsok M-650 is a manufacturing qualification specific to the Norwegian offshore industry that is an internationally trusted certification. We are able to manufacture in conformance with international product and quality management standards.

 **

***Technological achievements from research and development***

 **

We proactively engaged in research and development in our in-house laboratory. We are awarded the Certificate of High and New Technology Enterprises by PRC government as a testament of our technological achievements. Since 2016, we have registered 55 utility patents and 3 invention patents for tooling and equipment to enhance our production of steel flanges and fittings products.

**Regulations**

**Laws and Regulations in the PRC**

**Laws and Regulations In Relation to Foreign Investment**

*Foreign Investment Law*

On March 15, 2019, the National People's Congress promulgated the Foreign Investment Law of the PRC, or the Foreign Investment Law, which came into effect on January 1, 2020 and replaced the three major existing laws regulating foreign investment in PRC, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino -foreign Cooperative Joint Venture Enterprise Law of the PRC and the Wholly Foreign-invested Enterprise Law of the PRC, together with their implementation rules and ancillary regulations. Meanwhile, the Regulations for the Implementation of the Foreign Investment Law was promulgated by the State Council on December 26, 2019 and came into force as of January 1, 2020, which provided clarification and elaboration for the relevant provisions of the Foreign Investment Law. The organization form, organization and activities of foreign-invested enterprises shall be governed, among others, by the PRC Company Law and the PRC Partnership Enterprise Law. Foreign-invested enterprises set up prior to the implementation of the Foreign Investment Law may retain the original business organization and so on within five years after the implementation of this Law.

The Foreign Investment Law is legislated to further expand opening-up, vigorously promote foreign investment and protect the legitimate rights and interests of foreign investors. According to the Foreign Investment Law, foreign investments are entitled to pre-entry national treatment and are subject to negative list management system. The pre-entry national treatment refers to the treatment given to foreign investors and their investments at the stage of investment access shall not be less favorable than that of domestic investors and their investments. The negative list management system means that the state implements special administrative measures for access of foreign investment in specific fields.

Foreign investors' investment, earnings and other legitimate rights and interests in PRC shall be protected in accordance with the law, and all national policies on supporting the development of enterprises shall equally apply to foreign-invested enterprises. Among others, the state ensures that foreign-invested enterprises participate in the formulation of standards in an equal manner and that foreign -invested enterprises participate in government procurement activities through fair competition according to the law. Further, the state shall not expropriate any foreign investment except under special circumstances. In special circumstances, the state may levy or expropriate the investment of foreign investors under the law for the need of the public interest. The expropriation and requisition shall be conducted in accordance with legal procedures and timely and reasonable compensation shall be provided. In carrying out business activities, foreign-invested enterprises shall comply with relevant laws and regulations on labor protection.

*Foreign Investment Industrial Policy*

Investment activities in the PRC by foreign investors are principally governed by the Catalog of Industries for Encouraging Foreign Investment, or the Encouraging Catalog, and the Special Administrative Measures for Access of Foreign Investments, or the Negative List, which were promulgated and are amended from time to time by the Ministry of Commerce of the PRC, or MOFCOM and the National Development and Reform Commission, or NDRC, and together with the Foreign Investment Law and their respective implementation rules and ancillary regulations. The Encouraging Catalog and the Negative List provide the basic regulatory framework for foreign investment in the PRC, classifying businesses into three categories regarding foreign investment: "encouraged," "restricted," and "prohibited." On October 26, 2022, the MOFCOM and the NDRC released the Catalog of Industries for Encouraging Foreign Investment (2022 Edition), which became effective on January 1, 2023, to substitute the previous one. On September 6, 2024, the MOFCOM and the NDRC promulgated the Special Administrative Measures for Access of Foreign Investments (Negative List) (2024 Edition), or the Negative List 2024, which came into force on November 1, 2024, to replace the previous Negative List.

**Laws and Regulations In Relation to Workplace Safety and Special Equipment**

*Production Safety Law*

 

In accordance with the Production Safety Law of the PRC, which took effect on November 1, 2002 and subsequently amended on August 31, 2014 and June 10, 2021, and other laws and regulations to production safety, production enterprises shall strengthen work safety management, enhance work safety conditions, promote work safety standardization and improve work safety levels. The entity which does not meet safety conditions prescribed by this law and other relevant laws, administrative regulations, and national or industry standards should not engage in production and the other business activities. To assure work safety rules being observed in production process, business entities should establish and improve work safety responsibility systems and work safety policies which specify the responsible person for each position, the scope of duties and the evaluation criteria. Business entities shall provide their employees with labor protection products and work safety training. Where the primary person in charge of a business entity fails to perform his or her duties in work safety as provided for in the Production Safety Law, he or she would be subject to legal liabilities regarding the seriousness of work safety accident.

*Use of Special Equipment*

 

Pursuant to the Law of the PRC on the Safety of Special Equipment promulgated on June 29, 2013 and effective on January 1, 2014, special equipment refers to boilers, pressure vessels (including gas cylinders), pressure pipelines, elevators, cranes, passenger cable -ways, large entertainment facilities and in-plant (in-factory) special motor vehicles that involve great danger to the personal and property safety, as well as other special equipment applicable to the law according to relevant laws and administrative regulations. Special equipment producers shall be licensed by the relevant department in charge of the safety supervision and administration of special equipment before engaging in relevant production activities. Special equipment users shall use special equipment produced with a permit and passing inspection, and such users shall, before or within 30 days after putting special equipment to use, register the use with the department responsible for special equipment safety supervision and administration, obtain a use registration certificate. The entities using special equipment shall have special equipment safety management personnel, testing personnel and operating personnel with corresponding qualifications in accordance with the relevant state provisions. They shall conduct routine maintenance and regular self-check of the special equipment used by them and conduct regularly check and repair the safety accessories and safety protection devices, and keep records thereof.

In addition to the regulations above, according to the Regulations on Safety Supervision over Special Equipment issued on March 11, 2003 and amended by the State Council on January 24, 2009, special equipment users shall make a request for the periodic inspection to a special equipment inspection and testing institution as required by the safety technical codes for the periodic inspection.

**Laws and Regulations In Relation to Product Quality**

*Product Quality*

 

The principal legal provisions on product liability are set out under the Product Quality Law of the PRC issued by the Standing Committee of the National People's Congress, or SCNPC, on February 22, 1993 and was recently amended on December 29, 2018. The Product Quality Law requests that the producers shall have their own proper regulations for the management of product quality, rigorously implementing quality regulations, quality liabilities and relevant measures for their assessment. As prescribed in this law, producers shall be responsible for the quality of products they produce and they shall be liable for failing to meet the prescribed quality standards. Violation of the Product Quality Law may result in fines and the violator will be ordered to suspend its operations, or its business license will be revoked and criminal liability may be incurred if the case is serious enough to constitute a crime.

**Laws and Regulations In Relation to Import and Export Trade**

 

*Customs Law*

 

Pursuant to the PRC Customs Law, promulgated by the SCNPC on January 22, 1987, amended on July 8, 2000, June 29, 2013, December 28, 2013, November 7, 2016, November 4, 2017, and April 29, 2021 and came into force on April 29, 2021, unless otherwise stipulated, the consignee or consignor of import and export goods may take import and export goods through Customs declaration procedures and pay duties themselves, and Customs clearing enterprises which are authorized by the consignee or consignor of import and export goods and have been granted registration by Customs may also take import and export goods through Customs declaration procedures and pay duties. Where a consignee or consignor of import or export goods or a Customs clearing enterprise handles Customs declaration procedures, they shall be subject to registration by Customs in accordance with law. Customs clearing personnel shall obtain the occupational qualifications for Customs clearances in accordance with law. Where an enterprise has not been registered by Customs in accordance with law, and where personnel have not obtained their professional qualifications for Customs clearances in accordance with law, they shall not engage in Customs declarations.

Import and Export Commodity Inspection Law

In accordance with the PRC Import and Export Commodity Inspection Law, which was promulgated by the SCNPC on February 21, 1989, amended on April 28, 2002, June 29, 2013, April 27, 2018, December 29, 2018 and April 29, 2021 and effective on April 29, 2021, and the Implementing Regulation for the PRC Import and Export Commodity Inspection Law, which was promulgated by the State Council on August 31, 2005, amended on July 18, 2013, February 6, 2016, March 1, 2017, March 2, 2019 and March 29, 2022 and effective on May 1, 2022, the General Administration of Customs of China is responsible for the inspection of import and export commodities nationwide, the formulation and adjustment of the catalog of import and export commodities that shall be inspected, as well as the announcement and implementation of the catalog. The import and export commodities included in the catalogue shall be inspected, otherwise the related bodies may be confiscated of their illegal income and subjected to a fine ranging from 5% to 20% of the value of the goods, and where the case constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.

**Laws and Regulations in relation to Intellectual Property Rights**

*Patent*

According to the Patent Law of the PRC, or the Patent Law, promulgated by the SCNPC on March 12, 1984 and amended on September 4, 1992, August 25, 2000, December 27, 2008, and October 17, 2020, the latest amendment took effect on June 1, 2021, respectively, and the Implementation on Rules of the Patent Law of the PRC, or the Implementation Rules of the Patent Law, promulgated by the State Council on June 15, 2001, respectively amended on December 28, 2002, January 9, 2010 and December 11, 2023, the patent administrative department under the State Council is in charge of the administration of patent-related work nationwide and the patent administration departments of provincial or autonomous regions or municipal governments are responsible for administering patents within the respective administrative areas. The Patent Law and Implementation Rules of the Patent Law provide for three types of patents, namely "inventions," "utility models" and "designs." Invention patents are valid for twenty years, utility model patents are valid for ten years, and since June 1, 2021, the validation period for design patents whose application date is after June 1, 2021 are extended to fifteen years in each case from the date of application. The Chinese patent system adopts a "first come, first file" principle, which means that where more than one person files a patent application for the same invention, a patent will be granted to the person who files the application first. An invention or a utility model must possess novelty, inventiveness and practical applicability to be patentable. A third party must obtain the consent or proper license from the patent owner to use the patent. Otherwise, the unauthorized use constitutes an infringement on the patent rights.

 

*Trademark*

 

According to the Trademark Law of the PRC promulgated by the SCNPC on August 23, 1982, and amended on February 22, 1993, October 27, 2001, August 30, 2013 and April 23, 2019, respectively, the Trademark Office of the State Administration for Industry and Commerce Authority, or the SAIC, under the State Council is responsible for the registration and administration of trademarks in mainland China. The Trademark Review and Adjudication Board was established by the SAIC to resolve trademark disputes. Registered trademarks are valid for 10 years from the date of approval of registration. A registrant may apply for renewal of the registration within twelve months before the expiration date of the registration. If the registrant fails to apply in a timely manner, a grace period of six additional months may be granted. If the registrant fails to apply in a timely manner, the registered trademark shall be deregistered. Renewed registrations are valid for ten years. The State Council promulgated the Implementing Regulations of the Trademark Law of the PRC on August 3, 2002, on April 29, 2014, the State Council issued the revised Implementing Regulations of the Trademark Law of the PRC, which clarifies the requirements of applying for trademark registration and renewal.

 

*Copyright*

 

Pursuant to the Copyright Law of the PRC, which was first promulgated by the SCNPC on September 7, 1990 and became effective from June 1, 1991, and was amend on October 27, 2001, February 26, 2010, and November 11, 2020 and effected on June 1, 2021, respectively, copyrights include personal rights such as the right of publication and that of attribution as well as property rights such as the right of production and that of distribution. Except as otherwise provided in the Copyright Law of the PRC, reproducing, distributing, performing, projecting, broadcasting or compiling a work or communicating the same to the public via an information network without permission from the owner of the copyright therein shall constitute infringements of copyrights. The infringer shall, according to the circumstances of the case, undertake to cease the infringement, take remedial measures and compensate for damages, etc.

**Laws and Regulations In Relation to Social Security and Housing Provident Funds**

*Employment*

 

The Labor Law of the PRC, which was promulgated on July 5, 1994, effective since January 1, 1995, and amended on August 27, 2009, and December 29, 2018, the Labor Contract Law of the PRC, which was promulgated on June 29, 2007, and amended on December 28, 2012, and the Implementation Regulations of the Labor Contract Law of the PRC, which was promulgated and became effective on September 18, 2008, are the principal regulations that govern employment and labor matters in the PRC. According to the aforementioned laws and regulations, labor contracts shall be concluded in writing if labor relationships are to be or have been established between employers and the employees. Employers are prohibited from forcing employees to work above certain time limit and employers shall pay employees for overtime work in accordance with national regulations. In addition, wages shall not be lower than the local minimum wage standard. Employers shall establish a system for labor safety and sanitation, strictly comply with national standards, and provide relevant education to its employees. Employees are also required to work under safe and sanitary conditions.

*Social Insurance and Housing Fund*

 

Under the PRC Social Insurance Law that was promulgated by the SCNPC on October 28, 2010, and came into force as of July 1, 2011, and was most recently amended on December 29, 2018 (also the effective date), together with other laws and regulations, employers are required to pay basic pension insurance, unemployment insurance, basic medical insurance, employment injury insurance, maternity insurance, and other social insurance for its employees at specified percentages of the salaries of the employees, up to a maximum amount specified by the local government regulations from time to time. When an employer fails to pay social insurance premiums in full, relevant social insurance collection agency shall order it to make up the shortfall within the prescribed period and may impose a late payment fee of 0.05% per day of the outstanding amount from the due date. If such employer still fails to make up for the shortfalls within the prescribed time limit, the relevant administrative authorities shall impose a fine of one to three times the outstanding amount upon such employer.

In accordance with the Regulations on the Management of Housing Provident Fund promulgated by the State Council in April 3, 1999 and amended on March 24, 2002, and March 24, 2019 (which became effective as of March 24, 2019), employers shall register at the designated administrative centers and open bank accounts for depositing employees' housing funds. Employer and employee are also required to pay and deposit housing provident funds, with an amount no less than 5% of the monthly average salary of the employee in the preceding year in full and on time. When an employer fails to pay the housing provident fund in full, the designated administrative centers shall order it to make the payment and deposit within a prescribed time limit; If the payment and deposit have not been made by the expiration of the time limit, an application for enforcement may be made to a people's court.

**Laws and Regulations In Relation to Environmental Protection**

*Environmental Protection*

 

Pursuant to the PRC Environmental Protection Law, which the trial implementation was promulgated on September 13, 1979, and was promulgated by the SCNPC on December 26, 1989, amended on April 24, 2014, and effective on January 1, 2015, any entity which discharges or will discharge pollutants in the course of its operations or other activities shall implement effective environmental protection safeguards and procedures to control and properly dispose of exhaust gases, waste water, waste residue, dust, malodorous gases, radioactive substances, noise, vibrations, electromagnetic radiation, and other hazards produced during such activities.

Environmental protection authorities impose various administrative penalties on individuals or enterprises that violate the Environmental Protection Law. Such penalties include warnings, fines, orders to rectify within a prescribed period, orders to cease construction, orders to restrict or suspend production, orders to make recovery, orders to disclose relevant information or make an announcement, imposition of administrative action against relevant responsible persons, and orders to shut down enterprises. Any person or entity that pollutes the environment resulting in damage could also be held liable under the Civil Code of the PRC. In addition, environmental organizations may also bring lawsuits against any entity that discharges pollutants detrimental to the public welfare.

*Environmental Assessment and Management of Construction Projects*

 

The Environmental Impact Assessment Law of the PRC, or Environmental Impact Assessment Law, was issued by the SCNPC on October 28, 2002 and came into force on September 1 2003, and was amended on July 2, 2018, December 29, 2018. Under the provisions of the Environmental Impact Assessment Law, the PRC government applied the environmental impact evaluation system to construction projects and implemented classification management in accordance with the degree of environmental impact of the construction project.

The State Council promulgated and implemented the Regulations on Environmental Protection Management of Construction Projects on November 29, 1998, which was amended on July 16, 2017 and came into force on October 1, 2017. The Ministry of Environment Protection (the predecessor of the Ministry of Ecological Environment of the PRC) issued the Interim Measure for Environmental Protection Acceptance of Construction Projects on November 20, 2017. In accordance with the above regulations, upon completion of a construction project for which an environmental impact report or an environmental impact statement has been prepared, the construction unit shall implement acceptance check of the supporting environmental facilities being constructed and prepare an acceptance report pursuant to the standards and procedures required by the administrative department of environmental protection, and such supporting environmental protection facilities shall be put into operation simultaneously or used together with the main body of the project. If a construction unit violates the aforesaid provisions, it could be ordered to rectify within a specified time limit and charged a fine of more than RMB 200,000 less than RMB 1.0 million; if it fails to make rectification within the time limit, a fine of more than RMB 1.0 million but less than RMB 2.0 million shall be imposed on it and the construction unit could even be ordered to cease its production or operation, or to close down when material environmental pollution is caused.

*Regulations Related to Fire Control*

Pursuant to the PRC Fire Safety Law, which was promulgated by the SCNPC on April 29, 1998, amended on October 28, 2008 and April 23, 2019, and April 29, 2021, and the Interim Provisions on Administration of Fire Control Design Review and Acceptance of Construction Project promulgated by the Ministry of Housing and Urban-Rural Development on April 1, 2020 and amended on August 21, 2023, the construction entity of a large-scale crowded venue (including the construction of a manufacturing plant whose size is over 2,500 square meters) and other special construction projects must apply for fire prevention design review with fire control authorities, and complete fire assessment inspection and acceptance procedures after the construction project is completed. The construction entity of other construction projects must complete the filing for fire prevention design and the fire safety completion inspection and acceptance procedures within five business days after passing the construction completion inspection and acceptance. If the construction entity fails to pass the fire safety inspection before such venue is put into use or fails to conform to the fire safety requirements after such inspection, it will be subject to (i) orders to suspend the construction of projects, use of such projects, or operation of relevant business, and (ii) a fine between RMB30,000 and RMB300,000.

**Laws and Regulations In Relation to Taxation**

 

*Enterprise Income tax*

 

According to the Enterprise Income Tax Law of the PRC, or the EIT Law, which was promulgated on March 16, 2007, became effective from January 1, 2008 and amended on February 24, 2017 and December 29, 2018, respectively, an enterprise established outside mainland China with de facto management bodies within mainland China is considered a resident enterprise for mainland China enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. The Implementing Rules of the Enterprise Income Law of the PRC, or the Implementing Rules of the EIT Law defines a de facto management body as a managing body that in practice exercises "substantial and overall management and control over the production and operations, personnel, accounting, and properties" of the enterprise. Non-mainland China resident enterprises without any branches in mainland China pay an enterprise income tax in connection with their income originating from mainland China at the tax rate of 10%.

On February 3, 2015, the State Taxation Administration, or SAT, issued the Announcement on Several Issues Concerning the Enterprise Income Tax on Indirect Transfer of Assets by Non -Resident Enterprises, or the SAT Circular 7, as amended in 2017. The SAT Circular 7 repeals certain provisions in the Notice of the State Administration of Taxation on Strengthening the Administration of Enterprise Income Tax on Income from Equity Transfer by Non-Resident Enterprises, or the SAT Circular 698, issued by SAT on December 10, 2009 and the Announcement on Several Issues Relating to the Administration of Income Tax on Non -resident Enterprises issued by SAT on March 28, 2011 and clarifies certain provisions in the SAT Circular 698. The SAT Circular 7 provides comprehensive guidelines relating to, and heightening the Chinese tax authorities' scrutiny on, indirect transfers by a non-resident enterprise of assets (including assets of organizations and premises in mainland China, immovable property in mainland China, equity investments in mainland China resident enterprises), or the PRC Taxable Assets. For instance, when a non-resident enterprise transfers equity interests in an overseas holding company that directly or indirectly holds certain mainland China Taxable Assets and if the transfer is believed by the Chinese tax authorities to have no reasonable commercial purpose other than to evade enterprise income tax, the SAT Circular 7 allows Chinese tax authorities to reclassify the indirect transfer of PRC Taxable Assets into a direct transfer and therefore impose a 10% rate of mainland China enterprise income tax on the non-resident enterprise. The SAT Circular 7 lists several factors to be taken into consideration by tax authorities in determining whether an indirect transfer has a reasonable commercial purpose.

However, regardless of these factors, the overall arrangements relating to an indirect transfer that satisfies all of the following criteria will be deemed to lack a reasonable commercial purpose: (i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly or indirectly from mainland China Taxable Assets; (ii) at any time during the one -year period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise(excluding cash) is comprised directly or indirectly of investments in mainland China, or during the one-year period before the indirect transfer, 90% or more of its income is derived directly or indirectly from mainland China; (iii) the functions performed and risks assumed by the intermediary enterprise and any of its subsidiaries and branches that directly or indirectly hold the mainland China Taxable Assets are limited and are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gain derived from the indirect transfer of the mainland China Taxable Assets is lower than the potential mainland China tax on the direct transfer of those assets. On the other hand, indirect transfers falling into the scope of the safe harbors under the SAT Circular 7 may not be subject to mainland China tax under the SAT Circular 7. The safe harbors include qualified group restructurings, public market trades and exemptions under tax treaties or arrangements.

On October 17, 2017, SAT issued the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or the SAT Circular 37, which became effective on December 1, 2017. Certain provisions of the SAT Circular 37 were repealed by the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents issued by SAT on June 15, 2018. According to the SAT Circular 37, the balance after deducting the equity net value from the equity transfer income shall be the taxable income amount for equity transfer income. Equity transfer income refers to the consideration received by the equity transferor from the equity transfer, including various income in monetary form and non -monetary form. Equity net value shall mean the tax computation basis for obtaining the said equity. The tax computation basis for equity is calculated based on: (i) the actual costs of capital contribution paid by the equity transferor to a PRC resident enterprise at the time of investment and equity participation, or (ii) the actual costs of equity transfer paid at the time of acquisition of such equity to the original transferor of the said equity. Where there is reduction or appreciation of value during the equity holding period, and the gains or losses may be confirmed pursuant to the rules of the finance and tax authorities of the State Council, the equity net value shall be adjusted accordingly. When an enterprise computes equity transfer income, it shall not deduct the amount in the shareholders' retained earnings, such as undistributed profits, of the investee enterprise, which may be distributed based on the said equity. In the event of partial transfer of equity under multiple investments or acquisitions, the enterprise shall determine the costs corresponding to the transferred equity in accordance with the transfer ratio, out of all costs of the equity.

Under the SAT Circular 7 and the Law of the PRC on the Administration of Tax Collection promulgated by the SCNPC on September 4, 1992 and amended on February 28, 1995, April 28, 2001, June 29, 2013, and April 24, 2015, in the case of an indirect transfer, entities or individuals obligated to pay the transfer price to the transferor shall act as withholding agents. Where the withholding agent fails to make the withholding, and the transferor of the equity does not pay the tax payable amount, the tax authority may impose late payment interest on the transferor. In addition, the tax authority may also hold the withholding agents liable and impose a penalty of ranging from 50% to 300% of the unpaid tax. The penalty imposed on the withholding agents may be reduced or waived if the withholding agents have submitted the relevant materials in connection with the indirect transfer to the mainland China tax authorities in accordance with the SAT Circular 7.

According to the Circular of Printing the Administrative Measures for Recognition of High-Tech Enterprises issued by Ministry of Science and Technology, Ministry of Finance of the PRC, or MOF and SAT on April 14, 2008, and amended on January 29, 2016 and came into effect since January 1, 2016, upon the accreditation of the qualification of High -tech enterprises, such enterprises may apply for the entitlement of the preferential enterprise income tax treatment since the current year beginning from the valid period approved by the accreditation. A "high and new technology enterprise" is entitled to a favorable statutory tax rate of 15% and such an enterprise should keep all statutory required relevant materials in case of future inspection. This qualification is reassessed by relevant government authorities every three years.

*Withholding tax on dividend distribution*

 

The EIT Law imposes a standard withholding tax rate of 20% on dividends and other mainland China-sourced income of non-mainland China resident enterprises which have no establishment or place of business in mainland China, or if established, the relevant dividends or other mainland China-sourced income are in fact not associated with such establishment or place of business in mainland China. However, the Implementing Rules of the EIT Law reduced the rate from 20% to 10%, effective from January 1, 2008 and amended on April 23, 2019.

However, a lower withholding tax rate might be applied if there is a tax treaty or similar agreement between mainland China and the jurisdiction of the foreign holding company, for example, pursuant to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, or the Double Tax Avoidance Arrangement, issued by the SAT and the Government of the Hong Kong Special Administrative Region on August 21, 2006, and other applicable mainland China laws, if a Hong Kong resident enterprise directly owns at least 25% of the shares of a mainland China resident enterprise paying the dividends, the 10% withholding tax on the dividends that the Hong Kong resident enterprise receives from a mainland China resident enterprise may be reduced to 5% upon receiving approval from the tax authority in charge.

Based on the Notice on Relevant Issues Relating to the Enforcement of Dividend Provisions in Tax Treaties issued on February 20, 2009 by the SAT, if the relevant mainland China tax authorities determine, at their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such mainland China tax authorities may adjust the preferential tax treatment. The Announcement of the State Administration of Taxation on Issues concerning "Beneficial Owners" in Tax Treaties, promulgated by the SAT on February 3, 2018 and took effect on April 1, 2018, further specifies the analysis standard in determining one's qualification for beneficial owner status.

In addition, the Administrative Measures for Convention Treatment for Non-resident Taxpayers, which promulgated by the SAT on October 14, 2019, and became effective on January 1, 2020, requires that non-resident taxpayers claiming treaty benefits shall be handled in accordance with the principles of "self-assessment, claiming for the enjoyment of treaty benefits, and retention of the relevant materials for future inspection." Where a non-resident taxpayer self-assesses and concludes that it satisfies the criteria for claiming treaty benefits, it may enjoy treaty benefits at the time of tax declaration or at the time of withholding through a withholding agent, and simultaneously collect and retain the relevant materials in accordance with the provisions of these Measures for future inspection, and subject to subsequent administration by relevant competent tax authorities.

 

*Value-Added Tax*

 

Pursuant to the Interim Regulations on Value-Added Tax of the PRC, which was promulgated by the State Council on December 13, 1993 and amended on November 10, 2008, February 6, 2016 and November 19, 2017, respectively, and the Implementation Rules for the Interim Regulations on Value -Added Tax of the PRC, which was promulgated by MOF on December 25, 1993, and as amended by MOF and SAT on December 15, 2008 and as amended by MOF on October 28, 2011, and became effective on November 1, 2011, entities or individuals engaging in sale of goods, provision of processing services, repairs and replacement services, selling services, sales of intangible assets or importation of goods within the territory of mainland China shall pay value-added tax, or VAT. Unless otherwise specified, the VAT rate is 17% on sales and 6% on the services. On April 4, 2018, MOF and SAT jointly issued the Circular of the Ministry of Finance and the State Administration of Taxation on Adjustment of Value-Added Tax Rates, or the Circular 32, pursuant to which (i) for VAT taxable sales acts or import of goods originally subject to VAT rates of 17% and 11%, respectively, such tax rates shall be reduced to 16% and 10%, respectively; (ii) for purchase of agricultural products originally subject to tax rate of 11%, such tax rate shall be adjusted to 10%; (iii) for purchase of agricultural products for the purpose of production and sales or consigned processing of goods subject to tax rate of 16%, such tax shall be calculated at the tax rate of 12%; (iv) for exported goods originally subject to tax rate of 17% and export tax refund rate of 17%, the export tax refund rate shall be reduced to 16%; and (v) for exported goods and cross-border taxable acts originally subject to tax rate of 11% and export tax refund rate of 11%, the export tax refund rate shall be adjusted to 10%. Circular 32 became effective on May 1, 2018 and shall supersede existing provisions which are inconsistent with Circular 32.

On March 20, 2019, MOF, SAT and the General Administration of Customs jointly promulgated the Announcement on Relevant Policies for Deepening Value -Added Tax Reform, which became effective on April 1, 2019 and stipulates that (i) with respect to VAT taxable sales acts or import of goods originally subject to VAT rates of 16% and 10%, respectively, such tax rates shall be reduced to 13% and 9%, respectively; (ii) with respect to purchase of agricultural products originally subject to tax rate of 10%, such tax rate shall be adjusted to 9%; (iii) with respect to purchase of agricultural products for the purpose of production or consigned processing of goods subject to tax rate of 13%, such tax shall be calculated at the tax rate of 10%; (iv) with respect to export of goods and services originally subject to tax rate of 16% and export tax refund rate of 16%, the export tax refund rate shall be reduced to 13%; and (v) with respect to export of goods and cross-border taxable acts originally subject to tax rate of 10% and export tax refund rate of 10%, the export tax refund rate shall be adjusted to 9%.

**Regulation In Related to M&A Regulation and Overseas Listing**

On August 8, 2006, six PRC governmental agencies jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and amended on June 22, 2009. The M&A Rules requires, among other things, that if an overseas company established or controlled by PRC companies or individuals, or PRC Citizens, intends to acquire equity interests or assets of any other PRC domestic company affiliated with the PRC Citizens, such acquisition shall be submitted to the MOFCOM for approval. The M&A Rules also require offshore special purpose vehicles established to pursue overseas listing of equity interests in PRC companies and controlled directly or indirectly by PRC companies or individuals to obtain the approval of the Chinese Securities Regulatory Commission, or the CSRC, prior to the listing and trading of such special purpose vehicle's securities on any stock exchange overseas.

On February 17, 2023, the CSRC promulgated Trail Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures and five supporting guidelines, which will become effective on March 31, 2023. According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall fulfil the filing procedures with the CSRC; if a domestic company fails to complete the filing procedure, such domestic company may be subject to administrative penalties; (2) if the issuer satisfies both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer's audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers responsible for operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) if the domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and shall submit the filings to the CSRC within three business days after the submission of the overseas offering and listing application. Further, at the press conference held for the Trial Measures on February 17, 2023, officials from the CSRC clarified that a six-month transition period will be granted to domestic companies which, before the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges (such as the completion of hearing in the market of Hong Kong or the completion of registration in the market of the United States), but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC in accordance with the requirements.

On February 24, 2023, the CSRC, MOF, National Administration of State Secrets Protection and National Archives Administration of China promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Archives Rules, which will come into force on March 31, 2023. According to the Archives Rules, domestic companies seeking for overseas offering and listing shall strictly comply with relevant laws and regulations of the PRC and the Archives Rules, enhance legal awareness of keeping state secrets and strengthening archives administration, establish a sound administration system of confidentiality and archives, and take necessary means to fulfill confidentiality and archives administration obligations. Such domestic companies shall not leak any state secret and working secret of government agencies, and shall not harm national security and public interest. In addition, a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any document and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level. Moreover, a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. The Archives Rules also specify that a domestic company that provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers and overseas regulators and individuals shall fulfill due procedures in accordance with applicable national regulations.

The Anti-Monopoly Law, which was promulgated by the SCNPC on August 30, 2007 and became effective on August 1, 2008 and was amended on June 24, 2022 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by MOFCOM before they can be completed. Moreover, on February 3, 2011, the General Office of the State Council promulgated the Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or Circular 6, which officially established a security review system for mergers and acquisitions of domestic enterprises by foreign investors. In addition, on August 25, 2011, MOFCOM issued the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Regulations, which became effective on September 1, 2011, to implement Circular 6. According to Circular 6, a security review is required for mergers and acquisitions by foreign investors having "national defense and security" concerns and mergers and acquisitions by which foreign investors may acquire the "de facto control" of domestic enterprises with "national security" concerns. Under the MOFCOM Security Review Regulations, MOFCOM will focus on the substance and actual impact of the transaction when deciding whether a specific merger or acquisition is subject to security review. If MOFCOM decides that a specific merger or acquisition is subject to security review, it will submit it to the Inter -Ministerial Panel, an authority established under the Circular 6 led by the NDRC, and MOFCOM under the leadership of the State Council, to implement the security review. The regulations prohibit foreign investors from structuring transactions through trusts, indirect investments, leases, loans, contractual arrangements control or offshore transactions to bypass the security review. On February 7, 2021, the Anti -Monopoly Committee of the State Council promulgated the Anti-monopoly Guidelines for the Platform Economy Sector, or the Anti-monopoly Guideline, aiming to improve anti-monopoly administration on online platforms. The Anti-monopoly Guideline, operating as the compliance guidance under the existing PRC anti-monopoly regulatory regime for platform economy operators, specifically prohibits certain acts of the platform economy operators that may have the effect of eliminating or limiting market competition, such as concentration of undertakings. The Decision of the SCNPC to Amend the Anti-Monopoly Law of the PRC, or the Decision on Amending the Anti-Monopoly Law, was adopted on June 24, 2022, and became effective as of August 1, 2022. The Decision on Amending the Anti -Monopoly Law strengthens the regulation on the internet platforms, requiring that undertakings shall not use data and algorithms, technologies, capital advantages, platform rules, and other measures to engage in monopolistic conduct; and also escalates in full scale the administrative penalties for monopolistic conducts, for the failure to notify the anti-monopoly agencies on the proposed concentration of undertakings, the state council anti-monopoly enforcement agency may order to reinstate the original status prior to the concentration and impose a fine up to ten percent of the operator's last year's sales revenue, provided that the concentration of undertakings has or may have an effect on excluding or limiting competition; if the concentration does not have the effect on excluding or limiting competition, a fine up to RMB 5 million may be imposed on operators. Since such provisions are relatively new, uncertain still remains as to the interpretation and implementation of such laws and regulations.

**Regulations In Related to Foreign Exchange**

The principal regulations governing foreign currency exchange in mainland China are the Administrative Regulations on Foreign Exchange of the PRC, or the Foreign Exchange Administrative Regulation, which were promulgated by the State Council on January 29, 1996, became effective on April 1, 1996 and was amended on January 14, 1997 and August 1, 2008 (which became effective on August 5, 2008), respectively, and the Administrative Regulations on Foreign Exchange Settlement, Sales and Payment, which was promulgated by People's Bank of China, or the PBOC, on June 20, 1996 and became effective on July 1, 1996. Under these regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. By contrast, approval from or registration with appropriate governmental authorities or the designated banks is required where RMB is to be converted into foreign currency and remitted outside of mainland China to pay capital account items such as the repayment of foreign currency-denominated loans, direct investment overseas and investments in securities or derivative products outside of mainland China. Foreign Invested Enterprises, or FIEs, are permitted to convert their after-tax dividends into foreign exchange and to remit such foreign exchange out of their foreign exchange bank accounts in mainland China.

On March 30, 2015, SAFE promulgated the Circular on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or the SAFE Circular 19, which came into effect on June 1, 2015 and subsequently revised in December 30, 2019 and March 23, 2023. Pursuant to the SAFE Circular 19, the foreign currency capital contribution to an FIE in its capital account may be converted into RMB on a discretional basis.

On June 9, 2016, SAFE issued the Circular on Reforming and Regulating Policies on the Management of the Settlement of Foreign Exchange of Capital Accounts, or the SAFE Circular 16. The SAFE Circular 16 unifies the discretional foreign exchange settlement for all the domestic institutions. The Discretional Foreign Exchange Settlement refers to the foreign exchange capital in the capital account which has been confirmed by the relevant policies subject to the discretional foreign exchange settlement (including foreign exchange capital, foreign loans and funds remitted from the proceeds from the overseas listing) can be settled at the banks in accordance with the actual operational needs of the domestic institutions. The proportion of Discretional Foreign Exchange Settlement of the foreign exchange capital is temporarily determined as 100%. Violations of SAFE Circular 19 or SAFE Circular 16 could incur administrative penalties under the Foreign Exchange Administrative Regulation and relevant provisions.

Furthermore, SAFE Circular 16 stipulates that the use of foreign exchange incomes of capital accounts by FIEs shall follow the principles of authenticity and self-use within the business scope of the enterprises. The foreign exchange incomes of capital accounts and capital in RMB obtained by the FIE from foreign exchange settlement shall not be used for the following purposes: (i) directly or indirectly used for the payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or financial schemes other than bank-guaranteed products unless otherwise stipulated by relevant laws and regulations; (iii) used for granting loans to non-affiliated enterprises, unless otherwise permitted by the scope of its business; and (iv) used for the construction or purchase of real estate that is not for self-use (except for real estate enterprises).

On October 23, 2019, SAFE promulgated the Circular of the SAFE on Further Promoting the Facilitation of Cross-border Trade and Investment, or the SAFE Circular 28. The SAFE Circular 28 stipulates that non-investment FIEs may use capital to carry out domestic equity investment in accordance with the law under the premise of not violating the negative list and the projects invested are true and in compliance with laws and regulations.

On April 10, 2020, SAFE issued Circular of the SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business Growth, or the SAFE Circular 8. The SAFE Circular 8 stipulates that under the condition that the use of funds is genuine and compliant with current administrative provisions on use of income related to capital account, enterprises are allowed to use income under capital account such as capital funds, foreign debts, and overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing the veracity of such payment.

**Regulations Relating to Dividend Distribution**

The principal regulations governing distribution of dividends of wholly foreign-owned enterprises, or WFOEs, include the Company Law of PRC. Under these regulations, WFOEs in mainland China may pay dividends only out of their accumulated profits, if any, determined in accordance with the mainland China accounting standards and regulations. In addition, foreign investment enterprises in mainland China shall allocate at least 10% of their accumulated profits each year, if any, to fund certain reserve funds unless these reserves have reached 50% of the registered capital of the enterprises. These reserves are not distributable as cash dividends.

**Laws and Regulations in Hong Kong**

*Business Registration*

 

The Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong) requires every entity which carries on a business in Hong Kong to apply for business registration and to display the valid business registration certificate at the place of business. Any person who fails to apply for business registration or display a valid business registration certificate at the place of business shall be guilty of an offence and shall be liable to a fine of HK$5,000 and imprisonment for one year.

*Import and Export*

 

Regulations 4 and 5 of the Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong) (the "IAE Registration Regulations") provide that every person who imports or exports any article other than an exempted article shall lodge an accurate and complete import or export declaration relating to such article using services provided by a specified body with the Commissioner of Customs and Excise within 14 days after the importation or exportation of the article.

Any person failing to declare within 14 days after the importation or exportation of the article without reasonable excuse is liable to a fine of HK$2,000 upon summary conviction, and after the date of conviction, to a fine of HK$100 in respect of every day during which his failure or neglect to lodge the declaration in that manner continues. Furthermore, the IAE Registration Regulations also provides that any person knowingly or recklessly lodges any declaration with the Commissioner of Customs and Excise that is inaccurate in any material particular shall be liable to a fine of HK$10,000 upon summary conviction.

In addition to any fines imposed, an administrative penalty (which ranges from HK$20 to HK$200 per incident depending on the time of lodging the declaration and the total value of the articles specified in the declaration) would also be payable for late declaration.

**Sale of Goods Ordinance**

Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) provides that where a seller sells goods in the course of a business, there is an implied condition that (i) where the goods are purchased by description, the goods shall correspond with the description; (ii) the goods supplied are of merchantable quality; and (iii) the goods shall be reasonably fit for the purpose for which they are purchased. Otherwise, a buyer has the right to reject the defective goods unless he or she has had a reasonable opportunity to examine the goods. A breach of the implied term may give rise to a civil action for breach of contract by the customers. However, no criminal liability arises from such breach of implied term.

 

*Trade Descriptions*

 

The Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) prohibits false trade descriptions, false, misleading or incomplete information, false marks and misstatements in respect of goods in the course of trade. Under the Trade Descriptions Ordinance, it is an offence for a person, in the course of trade or business, to apply a false or misleading trade description to any goods or supply any goods with false or misleading trade descriptions, forge any trade mark or falsely apply any trade mark to any goods, or engages in relation to a consumer in a commercial practice that is a misleading omission, is aggressive, or constitutes bait advertising, a bait and switch, or wrongly accepting payment for a product.

A person who commits any such offence is subject to, on conviction on indictment, a fine of HK$500,000 and imprisonment for five years, and, on summary conviction, to a fine of HK$100,000 and imprisonment for two years.

*Taxation*

 

The Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) ("IRO") regulates taxes on property, earnings and profits in Hong Kong. The IRO provides that every person including corporations, partnerships, trustees and bodies of persons, carrying on any trade, profession or business in Hong Kong are liable for tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business. As at the Latest Practicable Date, the standard profits tax rate for corporations is at 8.25% on assessable profits up to HK$2,000,000 and 16.5% on any part of assessable profits over HK$2,000,000. The IRO also contains provisions relating to, among others, permissible deductions for outgoings and expenses, set-offs for losses and allowances for depreciations.

**Employment**

*Employment Ordinance*

 

The Employment Ordinance (Chapter 57 of the Laws of Hong Kong) provides for, among other things, the basic employment protection of wages to all employees to regulate the general conditions of employment and for matters connected therewith.

The Employment Ordinance provides that where a contract of employment is terminated, any sum due to the employee shall be paid to him as soon as is practicable and in any case not later than seven days after the day of termination. Under the Employment Ordinance, any employer who willfully and without reasonable excuse fails to pay the said sum due to the employee within seven days after the day of termination, commits an offence and is liable to a fine of HK$350,000 and to imprisonment for three years.

Further, the Employment Ordinance provides that if any wages or any sum earned by the employee for work done over the period commencing on the expiry of his wage period next preceding the time of termination up to that time are not paid within seven days from the day on which they become due, the employer shall pay interest at a specified rate on the outstanding amount of wages or sum from the date on which such wages or sum become due up to the date of actual payment. Any employer who willfully and without reasonable excuse fails to pay such wages or sum within seven days from the day on which they become due, commits an offence and is liable on conviction to a fine of HK$10,000.

*Mandatory Provident Fund Schemes Ordinance*

 

The Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) ("MPFSO") provides that every employer must take all practicable steps to ensure that each employee is covered under a Mandatory Provident Fund (MPF) scheme. An employer who fails to comply with such a requirement may face a fine and imprisonment. The MPFSO provides that an employer must, for each contribution period, (a) from the employer's own funds, contribute to the relevant MPF scheme the amount determined in accordance with the MPFSO; and (b) deduct from the employee's relevant income for that period as a contribution by the employee to that scheme the amount determined in accordance with the MPFSO.

The amount to be contributed and/or deducted by an employer for a contribution period is in the case of a casual employee who is a member of an industry scheme, an amount determined by reference to a scale specified in an order made in accordance with the MPFSO.

 

*Employees' Compensation Ordinance*

 

The Employees' Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) ("ECO") establishes a no-fault and non-contributory employee compensation system for work injuries and lays down the rights and obligations of employers and employees respectively in respect of injuries or death caused by accidents arising out of and in the course of employment, or by prescribed occupational diseases.

Under the ECO, if an employee sustains an injury or dies as a result of an accident arising out of and in the course of his employment, his employer is generally liable to pay compensation even if the employee might have committed acts of faults or negligence when the accident occurred. Similarly, an employee who suffers incapacity arising from an occupational disease or dies from an occupational disease is entitled to receive the same compensation as that payable to employees injured in occupational accidents.

Under the ECO, an employer must notify the Commissioner for Labor of any work accident by submitting the prescribed form (within fourteen days after the accident for general work accidents and within seven days after the accident for fatal accidents), irrespective of whether the accident gives rise to any liability to pay compensation. If the happening of such accident was not brought to the notice of the employer or did not otherwise come to his knowledge within such period of seven or fourteen days (as the case may be), then such notice shall be given not later than seven days or, as may be appropriate, fourteen days after the happening of the accident was first brought to the notice of the employer or otherwise came to his knowledge.

The ECO further provides that all employers are required to take out insurance policies to cover their liabilities under the ECO and common law for injuries at workplace for all of their employees. An employer failing to do so is liable on conviction upon indictment to a fine of HK$100,000 and to imprisonment for two years, and on summary conviction to a fine of HK$100,000 and imprisonment for one year.

*Minimum Wage Ordinance*

The prescribed minimum hourly wage rate (currently set at HK$40 per hour) for every employee is governed by the Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong) (the "MWO"). Section 15 of the MWO provides that any provision of employment contract which purports to extinguish or reduce the right, benefit or protection conferred on the employee under the MWO is void.

**C. Organizational structure**

See "Item 4. Information on the Company—A. History and Development of the Company — Corporate history and structure".

**D. Property, Plants and Equipment**

See "Item 4. Information on the Company—A. History and Development of the Company — Facilities".

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| | |
|:---|:---|
| **ITEM 4A.** | **UNRESOLVED STAFF COMMENTS** |

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Not Applicable

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| | |
|:---|:---|
| **ITEM 5.** | **OPERATING AND FINANCIAL REVIEW AND PROSPECTS** |

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*You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Item 3. Key Information—D. Risk Factors" or in other parts of this annual report on Form 20-F.*

 

**5. A. Operating Results**

**Overview**

We are a manufacturer and trader of stainless steel and carbon steel flanges and fittings products. Our history began with Luda HK which was incorporated in Hong Kong in 2004 and is principally engaged in the trading of steel flanges and fittings. In 2005, the Company's business expanded further upstream when Luda PRC was set up to commence the manufacturing of flanges and fittings with self-owned factory in China. We have established an operation history of over 20 years. We are principally engaged in (i) the manufacture and sale of stainless steel and carbon steel flanges and fittings products; and (ii) trading of steel pipes, valves, and other steel tubing products. We are headquartered in Hong Kong with manufacturing base in Taian City, Shandong Province of the PRC. Our sales network comprises customers from China, South America, Australia, Europe, Asia (excluding China) and North America and our customers comprise manufacturers and traders from the chemical, petrochemical, maritime and manufacturing industries.

For the years ended December 31, 2025 and 2024, total revenue was approximately $33.5 million and $44.9 million, respectively. Our gross profit and net income were approximately $5.9 million and $0.6 million, respectively, for the year ended December 31, 2025 ("FY2025"), as compared to our gross profit and net loss of $11.4 million and $0.4 million, respectively, for the year ended December 31, 2024 ("FY2024"). For the year ended December 31, 2023 ("FY2023"), our gross profit and net income of $10.9 million and $3.0 million, respectively.

**Our Operating Segments**

We organize and report our business in two operating segments, being (i) Hong Kong Trading; and (ii) PRC Manufacturing. Hong Kong Trading mainly represents trading of flanges and fittings products sourced from suppliers and this operating segment is conducted through Luda HK. PRC Manufacturing is the largest business segment of the Company that contributes approximately 73.3%, 83.8% and 89.4% of the total revenue in FY2025, FY2024 and FY2023, respectively and represents trading and manufacturing of our inhouse flanges and fittings products. This operating segment is conducted through Luda PRC. We present segment information after elimination of inter-company transactions. In general, revenue, cost of revenue and operating expenses are directly attributable, or are allocated, to each segment. Since Luda HK and Luda PRC are two separate operating entities, the relevant revenue, costs and expenses incurred by the respective entities can be allocated to the corresponding operating segments directly.

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| | | | |
|:---|:---|:---|:---|
|  | **For the years ended <br> December 31,** | **For the years ended <br> December 31,** | **For the years ended <br> December 31,** |
|  | **2025** | **2024** | **2023** |
| **Revenue** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $8961686 | $7282272 | $5461367 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 25080099 | 38102258 | 46155510 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction | (506434) | (521100) | (188823) |
| **Total revenue** | $**33535351** | $**44863430** | $**51428054** |
| **Cost of sales** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $6978182 | $5655693 | $4341978 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 21224333 | 28323614 | 36418495 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction | (586977) | (521100) | (227396) |
| **Total cost of sales** | $**27615538** | $**33458207** | $**40533077** |
| **Gross Profit** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $1983504 | $1626579 | $1119389 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 3855766 | 9778644 | 9737015 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction | 80543 | - | 38573 |
| **Total gross profit** | $**5919813** | $**11405223** | $**10894977** |
| **Selling Expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $661262 | $417823 | $190198 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 1144930 | 5924928 | 2519178 |
| **Total selling expense** | $**1806192** | $**6342751** | $**2709376** |
| **General and Administrative Expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $2374450 | $2268421 | $1756780 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 1265653 | 954538 | 1193408 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction | 80543 | - | - |
| **Total general and administrative expense** | $**3720646** | $**3222959** | $**2950188** |
| **Segment net income (loss):** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $2445459 | $5059493 | $2780297 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 495604 | 1379362 | 3995034 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction | (2384234) | (6799871) | (3742754) |
| **Total segment net income (loss)** | $**556829** | $**(361016)** | $**3032577** |

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| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| **Segment assets** |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $30803643 | $17112819 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 35824110 | 36286620 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction | (17502656) | (14093614) |
| **Total segment assets** | $**49125097** | $**39305825** |

---

The following table summarized the Company's long-lived assets, including property, plant and equipment, net, intangible assets, net, and operating lease right-of-use assets, net by geographical regions:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
| **Long-lived assets** | **2025** | **2024** |
| &nbsp;&nbsp;&nbsp;— HK | $524634 | $56637 |
| &nbsp;&nbsp;&nbsp;— PRC | 5650058 | 5768949 |
| **Total long-lived assets** | $**6174692** | $**5825586** |

---

**Key factors affecting operating results**

We believe the following key factors may affect our results of operations:

***Economic conditions in the PRC and Hong Kong***

A substantial part of our operations is located in the PRC and Hong Kong. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in China and Hong Kong generally and by continued economic growth in the PRC and Hong Kong. Economy in China is sensitive to global economic conditions. Any prolonged slowdown in the global or Chinese economy may affect potential customers' confidence in financial market as a whole and have a negative impact on our business, results of operations and financial condition.

***Trade war or restrictions***

A significant portion of our business originates from customers in the PRC and therefore depends on the level of trade activities in China. Therefore, we are subject to risks related to the changes in trade policies, tariff regulations, embargoes, or other trade restrictions adverse to our customers' business. Tariffs restrictions imposed by the U.S. on China exports intensified during 2019 which resulted in a negative impact to the international trading activities globally and have attributed to the overall decrease in the cargo shipment volume of Hong Kong. Although an agreement has been entered into between the U.S. and China on January 15, 2020, to suspend certain planned tariff, our results of operation may be adversely affected if the trade war or restrictions further intensify, whether in the form of embargo, tariff, or otherwise, and may further affect the relationship between the U.S. and China or more countries in the future.

 **

***Market demand and competition***

 **

The steel forging industry is highly competitive and fragmented. The ability for us to maintain competitiveness in the market is critical to for our business development. It is important for us to maintain competitiveness in terms of pricing and quality, variety of products, product certifications and lead time to delivery.

***Market supplies and cost of sales***

 ****

Our cost of sales includes cost of raw materials, labor cost, depreciation, transportation, utilities and other costs which directly affects our profitability. Supplies and prices of the raw materials can be affected by varies factors, such as transportation, seasonal fluctuations, market demand, politics, and economics factors. Unstable or reduced supply of these raw materials will increase our procurement costs and if we are not able to increase the sales prices to cover the increased costs, our profitability may be adversely affected.

***Relationship with customers***

 ****

A significant portion of our revenue was derived from recurring customers and our sales to the top 5 customers accounted for approximately 49.9%, 59.7% and 59.5% of our total revenue for FY2025, FY2024 and FY2023, respectively. Hence, our future growth depends on our ability to retain current customers and expand our customer base. If we are unable to retain and expand our client base, or any of the major customers substantially reduces the purchase orders, our business operation and financial performance would be adversely affected.

The above does not list all the material risk factors that may affect our results of operations. The above-mentioned risks and others are discussed in more detail in the section titled "3.D. Risk Factors".

**Results of Operations**

**Comparison of FY2025 and FY2024**

The following table sets forth the consolidated results of our operations for FY2025 and 2024, respectively:

---

| | | |
|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** |
|  | **2025** | **2024** |
| **Revenues** | $**33535351** | $**44863430** |
| **Cost of sales** | **(27615538)** | **(33458207)** |
| **Gross profit** | **5919813** | **11405223** |
| **Operating expenses** |  |  |
| Selling expenses | $(1806192) | $(6342751) |
| General and administrative expenses | (3720646) | (3222959) |
| Research and development expenses | (1452052) | (1383605) |
| **Total operating expenses** | **(6978890)** | **(10949315)** |
| **(Loss) income from operations** | **(1059077)** | **455908** |
| **Other income (expenses)** |  |  |
| Interest expenses | (520916) | (556156) |
| Other income, net | 2571217 | 3453 |
| **Total other income (expenses), net** | $**2050301** | $**(552703)** |
| **Income (loss) before income taxes** | $**991224** | $**(96795)** |
| Income taxes | (434395) | (264221) |
| **Net income (loss)** | $**556829** | $**(361016)** |
| **Other comprehensive income (loss):** |  |  |
| Foreign currency translation adjustment | 605921 | (344879) |
| **Comprehensive income (loss)** | $**1162750** | $**(705895)** |

---

**Revenues**

Revenues decreased by approximately $11.3 million or 25.3% from $44.9 million in FY2024 to $33.5 million in FY2025, mainly because of the decrease in sales by Luda PRC to customers in the PRC market. Revenue generated by Luda PRC represented approximately 73.3% and 83.8% of the total revenue of the Company in FY2025 and FY2024, respectively.

The following table sets forth the breakdown of our revenue by geographic areas for FY2025 and FY2024, respectively:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **FY2025** | **FY2025** | **FY2024** | **FY2024** |
| <br>**Revenue by International Markets:** | **Sales Amount**<br>**(In USD)** | **As %**<br>**of Sales** | **Sales Amount**<br>**(In USD)** | **As %**<br>**of Sales** |
| People's Republic of China | $22397641 | 66.8% | $36863348 | 82.2% |
| South America | 6708846 | 20.0% | 4100965 | 9.1% |
| Asia excluding PRC | 2281627 | 6.8% | 871783 | 1.9% |
| Australia | 1020860 | 3.0% | 1802150 | 4.0% |
| North America | 828038 | 2.5% | 699013 | 1.6% |
| Europe | 219957 | 0.7% | 368772 | 0.8% |
| Others | 78382 | 0.2% | 157399 | 0.4% |
| **Total revenue** | $**33535351** | **100%** | $**44863430** | **100%** |

---

As shown in the table above, our sales were largely generated from the PRC market. The net decrease in total revenue by approximately $11.3 million, or 25.3% in FY2025 was mainly attributable to decrease in sales in the PRC market.

The following table sets forth the breakdown of our revenue by category of products for FY2025 and FY2024, respectively:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **US$** | **%** | **US$** | **%** |
| Fittings | 11018432 | 32.9 | 13617429 | 30.4 |
| Flanges | 21732191 | 64.8 | 30923382 | 68.9 |
| Others | 784728 | 2.3 | 322619 | 0.7 |
| **Total** | **33535351** | **100.0** | **44863430** | **100.0** |

---

The following table sets forth the breakdown of our revenue stream for FY2025 and FY2024, respectively:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **US$** | **%** | **US$** | **%** |
| Self-manufactured production sales revenue | 24573665 | 73.3 | 37581158 | 83.8 |
| Trading sales revenue | 8961686 | 26.7 | 7282272 | 16.2 |
| **Total revenue** | **33535351** | **100.0** | **44863430** | **100.0** |

---

The drop in sales in FY2025 was largely driven by our inhouse products manufactured in Luda PRC and sold in the PRC market.

**Cost of sales**

Cost of sales consists primarily of cost of materials, direct labor costs, and overhead costs. Our cost of sales decreased by approximately $5.8 million, or 17.5% in FY2025 as compared with FY2024. The decrease was mainly attributable to a reduction in cost of materials, which was in line with the decline in revenue.

**Gross profit**

Our total gross profit decreased by approximately $5.5 million, or 48.1%, from approximately $11.4 million for FY2024 to $5.9 million for FY2025. The decrease in total gross profit was driven by the decline in revenue and gross profit margin. Our gross profit margin declined from approximately 25.4% in FY2024 to 17.7% in FY2025.

**Total operating expenses**

*Selling expenses*

 

Selling expenses represented approximately 5.4% and 14.1% of total sales in FY2025 and FY2024, respectively. Selling expenses are mainly sales commissions for bidding consultation, freight expenses and entertainment expenses incurred by Luda PRC. The decrease in selling expenses by approximately $4.5 million in FY2025 was mainly attributable to decrease in sales consulting fee by $4.6 million.

*General and administrative expenses*

 

General and administrative expenses are mainly management and office staff salaries and employee benefits, expected credit loss, depreciation of office furniture and equipment, staff salaries and bonus, transportation and entertainment, statutory audit fees, bank charges and other office expenses incurred. The increase in general and administrative expenses by approximately $0.5 million in FY2025 was mainly attributable to increase in employee compensation and audit fee.

*Research and Development expenses*

 

Our research and development expenses mainly comprised materials used for research and development, salaries for research employees, contract services and supplies attributable to the development of new products as well as improvements in existing processes. Our research and development expenses remained stable at approximately $1.5 million and $1.4 million in FY2025 and FY2024, respectively.

**Other income (expenses), net**

*Interest expenses*

 

Our finance expense mainly comprised interest expense on bank and other borrowings. The interest expense remained stable at approximately $0.5 million and $0.6 million in FY2025 and FY2024, respectively.

*Other income, net*

Our other income, net amounted to $2.6 million and $3 thousand in FY2025 and FY2024, respectively. The increase was mainly due to unrealized and realized fair value gain of short-term investments of approximately $0.9 million and $0.7 million, respectively, gain on extinguishment of consulting expenses payable of approximately $0.6 million and dividend income from short-term investments of approximately $0.2 million in FY2025.

**Income taxes**

We are subject to income tax on an entity basis on profit arising in or derived from the jurisdiction in which the Company and its subsidiaries domicile or operate. Income tax expense includes the Hong Kong income tax, PRC enterprise income tax, deferred tax and PRC dividend withholding tax.

Our income tax expense amounted to $0.4 million and $0.3 million for FY2025 and FY2024, respectively. The increase was mainly due to income before income tax in FY2025 and net loss before income tax in FY2024. The effective tax rate was 43.9% in the year ended December 31, 2025, while the effective tax rate for the year ended December 31, 2024 was not applicable due to the pre-tax loss.

**Net income (loss)**

We recorded a net income of approximately $0.6 million for the year ended December 31, 2025, as compared to a net loss of $0.4 million for the year ended December 31, 2024. Such increase in net income was due to the reasons as discussed above. Net profit margin increase from approximately -0.8% in FY2024 to 1.7% in FY2025.

**Comparison of FY2024 and FY2023**

The following table sets forth the consolidated results of our operations for FY2024 and FY2023, respectively:

---

| | | |
|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** |
|  | **2024** | **2023** |
| **Revenues** | $**44863430** | $**51428054** |
| **Cost of sales** | **(33458207)** | **(40533077)** |
| **Gross profit** | **11405223** | **10894977** |
| **Operating expenses:** |  |  |
| Selling expenses | $(6342751) | $(2709376) |
| General and administrative expenses | (3222959) | (2950188) |
| Research and development expenses | (1383605) | (1364473) |
| **Total operating expenses** | (10949315) | (7024037) |
| **Income from operations** | 455908 | 3870940 |
| **Other income (expenses)** |  |  |
| Interest expenses | (556156) | (406692) |
| Other income, net | 3453 | 15228 |
| **Total other expenses, net** | $**(552703)** | $**(391464)** |
| **(Loss) income before taxes** | $**(96795)** | $**3479476** |
| Income taxes | (264221) | (446899) |
| **Net (loss) income** | $**(361016)** | $**3032577** |
| **Other comprehensive income (loss):** |  |  |
| Foreign currency translation adjustment | (344879) | (566358) |
| **Comprehensive (loss) income** | $**(705895)** | $**2466219** |

---

**Revenues**

Revenues decreased by approximately $6.6 million or 12.8% from $51.4 million in FY2023 to $44.9 million in FY2024, mainly because of the decrease in sales by Luda PRC to customers in the PRC market. Revenues generated by Luda PRC represented approximately 83.8% and 89.4% of the total revenues of the Company in FY2024 and FY2023, respectively.

The following table sets forth the breakdown of our revenue by geographic areas for FY2024 and FY2023, respectively:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **FY2024** | **FY2024** | **FY2023** | **FY2023** |
| <br>**Revenues by International Markets:** | **Sales Amount**<br>**(In USD)** | **As %**<br>**of Sales** | **Sales Amount**<br>**(In USD)** | **As %**<br>**of Sales** |
| People's Republic of China | $36863348 | 82.2% | $45237236 | 88.0% |
| South America | 4100965 | 9.1% | 2769090 | 5.3% |
| Australia | 1802150 | 4.0% | 1373689 | 2.7% |
| Asia excluding PRC | 871783 | 1.9% | 888563 | 1.7% |
| Europe | 368772 | 0.8% | 666772 | 1.3% |
| North America | 699013 | 1.6% | 445423 | 0.9% |
| Others | 157399 | 0.4% | 47281 | 0.1% |
| **Total revenues** | $**44863430** | **100%** | $**51428054** | **100%** |

---

As shown in the table above, our sales were largely generated from the PRC market. The net decrease in total revenues by approximately $6.6 million, or 12.8% in FY2024 was mainly attributable to decrease in sales in the PRC market.

The following table sets forth the breakdown of our revenue by category of products for FY2024 and FY2023, respectively:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2024** | **2024** | **2023** | **2023** |
|  | **US$** | **%** | **US$** | **%** |
| Fittings | 13617429 | 30.4 | 9784712 | 19.0 |
| Flanges | 30923382 | 68.9 | 40773687 | 79.3 |
| Others | 322619 | 0.7 | 869655 | 1.7 |
| **Total** | **44863430** | **100.0** | **51428054** | **100.0** |

---

The following table sets forth the breakdown of our revenue stream for FY2024 and FY2023, respectively:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2024** | **2024** | **2023** | **2023** |
|  | **US$** | **%** | **US$** | **%** |
| Self-manufactured production sales revenue | 37581158 | 83.8 | 45966687 | 89.4 |
| Trading sales revenue | 7282272 | 16.2 | 5461367 | 10.6 |
| **Total revenue** | **44863430** | **100.0** | **51428054** | **100.0** |

---

The drop in sales in FY2024 was largely driven by our inhouse products manufactured in Luda PRC and sold in the PRC market.

**Cost of sales**

Cost of sales consists primarily of cost of materials, direct labor costs, overhead costs. Our cost of sales decreased by approximately $7.1 million, or 17.5% in FY2024 as compared with FY2023. The decrease was mainly attributable to a reduction in cost of materials, which was in line with the decline in revenue.

**Gross profit**

Our total gross profit increased by approximately $0.5 million, or 4.7%, from approximately $10.9 million for FY2023 to $11.4 million for FY2024. The increase in total gross profit was driven by the improvement in our gross profit margin. Our gross profit margin improved from approximately 21.2% in FY2023 to 25.4% in FY2024.

**Total operating expenses**

*Selling expenses*

 

Selling expenses represented approximately 14.1% and 5.3% of total sales in FY2024 and FY2023, respectively. Selling expenses are mainly sales commissions for bidding consultation, freight expenses and entertainment expenses incurred by Luda PRC. The increase in selling expenses by approximately $3.6 million in FY2024 was mainly attributable to increase in sales consulting fee by $3.5 million.

*General and administrative expenses*

 

General and administrative expenses are mainly management and office staff salaries and employee benefits, expected credit loss, depreciation of office furniture and equipment, staff salaries and bonus, transportation and entertainment, statutory audit fees, bank charges and other office expenses incurred by Luda HK. The increase in general and administrative expenses by approximately $0.3 million in FY2024 was mainly attributable to increase of employee compensation and benefits, and professional fee, and partially offset by the decrease of the allowance of expected credit loss.

 

*Research and Development expenses*

 

Our research and development expenses mainly comprised materials used for research and development, salaries for research employees, contract services and supplies attributable to the development of new products as well as improvements in existing processes. Our research and development expenses remained stable at approximately $1.4 million and $1.4 million in FY2024 and FY2023, respectively.

**Other expense, net**

*Interest expenses*

 

Our finance expense mainly comprised interest expense on bank borrowings. The interest expense increased by approximately $0.2 million, or 36.8%, from approximately $0.4 million for FY2023 to approximately $0.6 million for FY2024, and such increase was due to an increase in average loan balances in FY2024.

**Income tax expense**

We are subject to income tax on an entity basis on profit arising in or derived from the jurisdiction in which the Company and its subsidiaries domicile or operate. Income tax expense includes the Hong Kong income tax, PRC enterprise income tax, deferred tax and PRC dividend withholding tax.

Our income tax expense amounted to approximately $0.3 million and $0.4 million for FY2024 and FY2023, respectively. The decrease was mainly due to net loss before income tax in FY2024. The effective tax rate for FY2023 was 12.8%, while the effective tax rate for FY2024 is not applicable due to the pre-tax loss.

**Net income**

We recorded a net loss of approximately $0.36 million for the year ended December 31, 2024, as compared to a net income of $3.0 million for the year ended December 31, 2023. Such decrease in net income was due to the reasons as discussed above. Net profit margin decreased from approximately 5.9% in FY2023 to -0.8% in FY2024.

**5. B. Liquidity and Capital Resources**

**Liquidity and Capital Resources** 

We have financed our operations primarily through cash flows from operations and loans from banks and related parties, if necessary.

As of December 31, 2025, we had cash and cash equivalents of $4,516,669 and restricted cash of $255,255 and outstanding bank borrowings of $12,451,851 and margin loan of $216,312, of which the borrowings of approximately $10.9 million will be payable within one year and the bank borrowings of $1.8 million will be payable after one year. The bank borrowings bore an annual effective interest rate ranging from 2.64% to 6.95%. As of December 31, 2025, our current assets were approximately $40.0 million, and our current liabilities were approximately $24.5 million.

As of December 31, 2024, we had cash and cash equivalents of $8,132,655 and restricted cash of $200,517 and outstanding bank borrowings of $12,289,550, of which the bank borrowings of approximately $11.7 million will be payable within one year and the bank borrowings of $0.6 million will be payable after one year. The bank borrowings bore an annual effective interest rate ranging from 3.2% to 8.27%. As of December 31, 2024, our current assets were approximately $31.9 million, and our current liabilities were approximately $25.9 million.

As of December 31, 2023, we had cash and cash equivalents of $8,082,691 and restricted cash of $313,235 and outstanding bank borrowings of $11,914,093, of which the bank borrowings of approximately $11.2 million will be payable within one year and the bank borrowings of $0.8 million will be payable after one year. The bank borrowings bore an annual effective interest rate ranging from 2.66% to 8.06%. As of December 31, 2023, our current assets were approximately $39.5 million, and our current liabilities were approximately $28.7 million.

In view of the current cash and bank balances, funds generated by operating activities and the bank borrowings, we believe our Company has sufficient resources to meet the working capital needs in the next 12 months from the date the audited financial statements are issued. However, our ability to meet the liquidity and capital requirement will be subject to future economic conditions and other factors which are beyond our control.

**Cash Flows**

 

A summary of the sources and uses of cash and cash equivalents is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years end December 31,** | **For the years end December 31,** | **For the years end December 31,** |
|  | **2025** | **2024** | **2023** |
|  | ***US$*** | ***US$*** | ***US$*** |
| **Selected Consolidated Statements of Cash Flows Data:** |  |  |  |
| Net cash (used in) provided by operating activities | (1708680) | 5457591 | 3332852 |
| Net cash used in investing activities | (11033445) | (2821353) | (1759266) |
| Net cash provided by (used in) financing activities | 8821775 | (2585153) | 2707362 |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 359102 | (113839) | (165164) |
| Net (decrease) increase in cash and cash equivalents | (3561248) | (62754) | 4115784 |

---

*Operating Activities*

 

In FY2025, our net cash used in operating activities was approximately $1.7 million, which primarily reflected cash inflow from our net income of approximately $0.6 million adjusted for (i) net cash used in of non-cash expenses of approximately $1.3 million, which mainly consisted of fair value changes of short-term investments, depreciation, gain on extinguishment of consulting expenses payable and provisions for inventory, and (ii) net decrease in cash of approximately $1.0 million mainly attributable to cash inflow arising from (i) decrease in inventory of approximately $0.8 million, which offset by cash outflow arising from (ii) increase in contract assets of approximately $0.6 million, (iii) increase in notes receivable of approximately $0.6 million, (iv) increase in accounts, other payables, accruals and income taxes payable of approximately $0.3 million and (v) decrease in refundable liabilities of approximately $1.0 million.

In FY2024, our net cash provided by operating activities was approximately $5.5 million, which primarily reflected cash outflow from our net loss of approximately $0.4 million adjusted for (i) net non-cash expenses of approximately $0.9 million, which mainly consisted of depreciation, fair value changes of investment in equity securities, provisions for inventory and deferred IPO cost, and (ii) net increase in cash of approximately $4.9 million mainly attributable to cash inflow arising from (i) decrease in accounts receivables of approximately $3.0 million; (ii) decrease in contract assets current and non-current of approximately $2.4 million; (iii) decrease in notes receivables of approximately $1.6 million; and (iv) decrease in inventories of approximately $1.2 million, which were offset by cash outflow arising from decrease in trade and other payables of approximately $1.9 million.

In FY2023, our net cash provided by operating activities was approximately $3.3 million, which primarily reflected cash inflow from our net income of approximately $3.0 million adjusted for (i) net non-cash expenses of approximately $1.2 million, which mainly consisted of depreciation, provisions for inventory and allowance for expected credit loss, and (ii) net decrease in cash of approximately $0.9 million mainly attributable to cash outflow arising from (i) increase in inventories of approximately $1.6 million; (ii) increase in contract assets current and non-current of approximately $0.6 million; and (iii) increase in accounts receivables of approximately $1.0 million, which were offset by cash inflow arising from (i) increase in refundable liabilities of approximately $1.6 million; (ii) decrease in notes receivable of approximately $0.3 million; and (iii) decrease in other current assets of approximately $0.4 million.

*Investing Activities*

 

Net cash used in investing activities for FY2025 was approximately $11.0 million, mainly representing cash payments to purchase short-term investments, cash proceeds from disposal of short-term investment and cash payment for purchase of property, plant and equipment.

Net cash used in investing activities for FY2024 was approximately $2.8 million, mainly representing payments for investment in equity security and cash payment for purchase of property, plant and equipment and cash payment for purchase of investment in equity security.

 

Net cash used in investing activities for FY2023 was approximately $1.8 million, mainly represent cash payment for purchase of property, plant and equipment and cash payment for purchase of investment in equity security.

*Financing Activities*

In FY2025, net cash provided by financing activities was approximately $8.8 million, mainly consisted of net proceeds from initial public offering of approximately $8.9 million, net proceeds from share over-allotment of $0.7 million and proceeds from bank loans of $14.7 million, which were offset by repayments of bank loans of $15.0 million and payment of deferred offering cost of approximately $0.6 million.

In FY2024, net cash used in financing activities was approximately $2.6 million, mainly consisted of repayments on bank loans of approximately $13.9 million and dividend paid of approximately $3.4 million, which were offset by proceeds from bank loans of approximately $14.5 million.

For FY2023, net cash provided by financing activities was approximately $2.7 million, mainly consisted of proceeds from bank borrowings of $12.9 million, which is offset by (i) payment of deferred costs related to initial public offering of $0.6 million; (ii) dividend payment of $0.6 million; and (iii) repayments on bank borrowings of $8.9 million.

**Off-Balance Sheet Arrangements**

The Company has restricted cash held in designated bank accounts as secured deposits for issuance of letter of credit and bank guarantee to assure product quality and/or contract performance as requested by some of our customers. As of December 31, 2025, December 31, 2024 and December 31, 2023, restricted cash was $255,255, $200,517 and $313,235, respectively. As of December 31, 2025, the credit line secured by restricted cash amounted to $255,255. Save as the restricted cash, the Company has no other off-balance sheet arrangements.

**Leased Properties**

We have leased an office in Hong Kong with a total area of approximately 6,400 square feet, under two separate lease terms. The first lease covers from August 28, 2025 to August 27, 2027 at a monthly rent of $13,128 and the first three months are rent-free with a $0.13 license fee charged for fitting-out works. The second lease covers from November 7, 2025 to November 6, 2027 at a monthly rent of $13,338 and the first two months are rent-free with a $0.13 license fee charged for fitting-out works.

We continued to lease a flat in Hong Kong from a related party, Wong Fittings Company Limited, for document storage purposes. The flat has a total area of approximately 3,460 square feet. The lease term was from April 1, 2025, to March 31, 2026 and was renewed for further term from April 1, 2026, to March 31, 2027. The monthly rent is $6,795.

**Contractual obligations**

The following table summarizes our contractual obligations as of December 31, 2025:

---

| | | | |
|:---|:---|:---|:---|
|  | **Payment due by period** | **Payment due by period** | **Payment due by period** |
|  | **Less than**<br>**1 year** | **More than**<br>**3 years** |<br>**Total** |
| Borrowings | $10894987 |  | 12668163 |

---

**Capital Expenditures**

For the years ended December 31, 2025, 2024 and 2023, we purchased $458,221, $1,078,271 and $1,758,567, respectively, of property and equipment, respectively, mainly for use in our operations.

**5. C. Research and Development, Patents and Licenses, etc.**

See "Item 4. Information on the Company—B. Business Overview — Intellectual Property".

**D. Trend Information**

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2024 to December 31, 2025 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

**E. Critical Accounting Estimates** 

The discussion of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our estimates and assumptions on an ongoing basis using the vest information available. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to our consolidated financial statements.

Critical accounting policies are those policies that, in management's view, are the most important in the portrayal of our financial condition and results of operations. The notes to the consolidated financial statements also include disclosure of significant accounting policies. The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our consolidated financial statements. These critical accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Those critical accounting policies and estimates that require the most significant judgment are discussed further below.

*Allowance for expected credit losses*

The Company considered various factors, including nature, historical collection experience, the age of the accounts receivable, other receivables, notes receivable and contract assets, credit quality and specific risk characteristics of its customers, current economic conditions, forecasts of future economic conditions, reversion period, and qualitative and quantitative adjustments to develop an estimate of credit losses. The Company has adopted loss rate method and individual specific valuation method to calculate the credit loss and considered the relevant factors of the historical and future conditions of the Company to make reasonable estimation of the risk rate. For accounts receivable and other receivables aged less than 360 days, notes receivables and contract assets, the Company uses the loss rate method, which is a combination of historical rate method and adjustment rate method, to estimate the credit loss. For accounts receivable aged over 360 days and overdue retainage receivable, the Company uses the individual specific valuation method to estimate the credit loss.

The Company believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. Actual results could differ from these estimates. To the extent that there are material differences between these estimates and the actual results, future financial statements will be affected.

 

*Allowance for inventory valuation*

Inventories are stated at the lower of cost or net realizable value. Cost is calculated on the weighted average basis and includes all costs to acquire and other costs to bring the inventories to their present location and condition. The Company records adjustments to inventory for excess quantities, obsolescence or impairment when appropriate to reflect inventory at net realizable value. These adjustments are based upon a combination of factors including current sales volume, market conditions, lower of cost or market analysis and expected realizable value of the inventory. Any excess of the cost over the net realizable value of each item of inventories is recognized as an allowance for inventory valuation. Once inventory is written-down, a new, lower-cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. The Company recognized change in allowance for inventory valuation of $303,834, $210,377 and $231,715 in cost of sales for the years ended December 31, 2025, 2024 and 2023, respectively.

*Sales returns*

A significant area of judgment affecting reported revenue and net income is estimate of sales return, which represents that portion of gross revenues not expected to be realized. In determining estimate of sales returns, management takes into account (i) repurchase percentage stipulated in sales agreements with certain customers or ii) estimated return rate base on historical experience and industry practice for those sales agreement without repurchase terms. The Company determines repurchase terms in sales contracts as sales return rather than repurchase arrangement as repurchase price usually are the same as selling price.

The Company recognizes purchase obligations derived from sales returns as refundable liabilities and the related product costs as inventory to be returned on the balance sheet at the end of each financial period. The estimate is based on accumulated sales revenue and stipulated repurchase percentage or estimated return rate. No significant sales return occurred historically, therefore, the Company determined that estimated return rates for those sales agreements without repurchase terms are not significant, and refundable liability as of December 31, 2025 and December 31, 2024 mainly represents obligations related to sales agreements with repurchase term.

The Company generally provides rights of return up to certain percentage of contract for certain customers. As of December 31, 2025 and December 31, 2024, refundable liabilities of $331,737 and $1,303,748 were provided, respectively.

---

| | |
|:---|:---|
| **ITEM 6.** | **DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES** |

---

**6. A. Directors and Executive Officers**

The following table sets forth information regarding our executive officers and directors as of the date of this report.

---

| | | |
|:---|:---|:---|
| **Directors and Executive Officers** | **Age** | **Position/Title** |
| Ma Biu | 54 | Chairman, Director and Chief Executive Officer |
| Liu Liangping | 44 | Director and Chief Operating Officer |
| Zhang Dajun | 53 | Director and Chief Marketing Officer |
| Yung Chi Man | 53 | Chief Financial Officer |
| Gu Zhaoyang | 60 | Independent Director |
| Yan Jonathan Jun | 63 | Independent Director |
| Shin Ho Chuen | 36 | Independent Director |

---

**Mr. Ma Biu** is our Chairman of the Board of Directors, Director and Chief Executive Officer, and he is responsible for the overall strategic direction and development of our Company. Mr. Ma is the spouse of our Director, Ms. Liu Liangping. Mr. Ma started his career in the steel manufacturing business at his father's steel forging business, Luda (HK) Industrial Company Limited, which has been deregistered. He started out as sales manager in February 1999 and eventually became director of the company from October 2002 until it was deregistered in July 2016.

Mr. Ma holds an Executive Master of Business Administration from The Hong Kong University of Science and Technology, a Master of Social Science in Counselling from The University of South Australia and a Bachelor of Arts from The Chinese University of Hong Kong (the "CUHK"), each of which were attained in June 2016, April 2004 and December 1995 respectively. Additionally, Mr. Ma earned a MicroMasters Program in Supply Chain Management from MITx in June 2023.

**Ms. Liu Liangping** is our Director and Chief Operating Officer, and she is responsible for overall operations of the Company. Ms. Liu is the spouse of our Director, Mr. Ma Biu. Ms. Liu started out her career in our Company from April 2007 as a procurement manager. Since January 2018, she was appointed as director of Luda HK and Chief Operating Officer of the Company. Ms. Liu was appointed as Financial Director of Genius Development Workshop Company Limited in September 2020.

Ms. Liu holds a Bachelor of Arts in Accounting from University of Bedfordshire, a Master of Business Administration from the CUHK and a Master of Arts from Southwest University, each of which were attained in July 2022, November 2021 and June 2009 respectively. Additionally, Ms. Liu earned a MicroMasters Program in Supply Chain Management from MITx in June 2023.

**Mr. Zhang Dajun is** our Director and Chief Marketing Officer. Mr. Zhang is responsible for overseeing the development and execution of the Group's marketing strategy. Mr. Zhang has over 30 years of extensive experience in marketing to his role.

Mr. Zhang has served as the general manager and a director of our Luda (Taian) Industrial Company Limited, our People's Republic of China subsidiary, since June 2007 and September 2020, respectively. From July 2003 to June 2007, Mr. Zhang held the position of deputy general manager at Feicheng City Huatai Medical Equipment Co., Limited, where he was responsible for medical equipment sales. From July 1993 to June 2003, Mr. Zhang served as a sales executive of Feicheng City Medical Company.

**Mr. Yung Chi Man,** Chief Financial Officer, joined our Company in June 2022 and is responsible for financial reporting, compliance and investor relations of our Company.

Mr. Yung graduated from the Greenwich University with Master of Business Administration in June 2017 and the University of South Australia with Bachelor of Accountancy in January 2006. He has been a fellow member of the CPA Australia since April 2014.

Mr. Yung had more than 20 years of experience in accounting, finance and management in different industries. Prior to joining the Company, he was Finance Manager of a subsidiary of Kader Holdings Company Limited (stock code: 0180.HK) from April 2018 to December 2021. He joined a subsidiary of Human Health Holdings Limited (stock code: 1419.HK) as Finance Manger from June 2015 handling an IPO project. After listing, he transitioned to Operational Finance & General Affair Manager overseeing for strategic management until April 2018.

**Dr. Gu Zhaoyang** is our Independent Director. He has been a Professor of Accountancy at the CUHK since January 2013 and Director of CUHK's MBA in Finance Program since July 2023. Dr. Gu has published in top accounting journals and has taught financial and management accounting at the undergraduate, MBA, EMBA and PHD levels.

Since June 2019, Dr. Gu has been serving as an independent non-executive director of Shanghai Pharmaceuticals Holding Co. Ltd. (stock code: 601607.SS and 2607.HK), whereas he has also acted as the Chairman of the company's audit committee.

Dr. Gu obtained a Bachelor of Arts in English from Tsinghua University in July 1988 and a Master of Arts in International Management from Renmin University of China in July 1991. Furthermore, he obtained a Master of Arts in Economics in August 1993 and a Doctorate of Philosophy in Accounting in August 1999 from Tulane University. Dr. Gu became a Certified Public Accountant (non -practicing) with the Virginia State Board for Accountancy of USA in November 1995.

**Mr. Yan Jonathan Jun** is our Independent Director. Mr. Yan had been the President of China Global Philanthropy Institute from September 2020 to March 2025. He had been the Director of Global Finance Education Center of PBC School of Finance, Tsinghua University from May 2013 to September 2020.

Mr. Yan has been serving as an Independent Non-Executive Director of Huabao International Holdings Limited (stock code: 00336.HK) since May 2019. Furthermore, he has been serving as an Independent Non-Executive Director of Shandong Hi-Speed Holdings Group Limited (stock code: 00412.HK), an Independent Director of Hichain Logistics Company, Limited (stock code: 300873.SZ) and an Independent Non -Executive Director of Autostreets Development Limited (stock code: 02443.HK) since May 2020, May 2022 and May 2024 respectively.

Mr. Yan obtained a Bachelor Diploma in Engineering from Changsha Railway Institute in 1984. Furthermore, he obtained a Graduate Diploma in Administration and Master of Management from University of Technology, Sydney in 1993 and 1997 respectively.

**Mr. Shin Ho Chuen** is our Independent Director. He has been a partner of David Fong & Co. since August 2020. Mr. Shin is an experienced counsel specialized in corporate finance and advising on public listing on the Stock Exchange of Hong Kong. Mr. Shin also provides legal services related to mergers and acquisitions.

Mr. Shin has been an independent director of Onion Global Limited (stock code: OGBLY) and an independent non-executive director of Jiading International Group Holdings Limited (stock code: 8153.HK) since March 2022 and February 2023 respectively.

Mr. Shin obtained a Bachelor of Laws degree and a Postgraduate Certificate in Laws from the CUHK in November 2012 and July 2013 respectively. He was admitted as a Solicitor in Hong Kong in March 2016.

 

*Family Relationships*

 

Save for our Chairman of the Board of Directors, Director and Chief Executive Officer, Mr. Ma Biu, and our Director, Ms. Liu Liangping, being spouses, there are no family relationships among our directors and executive officers.

**6. B. Compensation**

For so long as we qualify as a foreign private issuer, we are not required to comply with the proxy rules applicable to U.S. domestic companies, including the requirement applicable to emerging growth companies to disclose the compensation of our executive officers on an individual, rather than an aggregate basis. For FY2025 and FY2024, we paid an aggregate compensation of approximately $1,246,911 and $788,160 in cash to our directors and executive officers, respectively. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. We have also not made any agreements with our directors or executive officers to provide benefits upon termination of employment.

Our PRC subsidiary is required by law to make contributions equal to certain percentages of each employee's salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.

**Equity Incentive Plans**

We have not adopted any equity compensation plans as of the date of this annual report.

**Clawback Policy**

Our board of directors have adopted a clawback policy (the "Clawback Policy") permitting the Company to seek the recoupment of incentive compensation received by any of the Company's current and former executive officers (as determined by the board in accordance with Section 10D of the Exchange Act) and such other senior executives/employees who may from time to time be deemed subject to the Clawback Policy by the board (collectively, the "Covered Executives"). The amount to be recovered will be the excess of the incentive compensation paid to the Covered Executive based on the erroneous data over the incentive compensation that would have been paid to the Covered Executive had it been based on the restated results, as determined by the board. If the board cannot determine the amount of excess incentive compensation received by the Covered Executive directly from the information in the accounting restatement, then it will make its determination based on a reasonable estimate of the effect of the accounting restatement. For FY2024, we have not sought any recoupment of incentive compensation of the Covered Executives.

**6. C. Board Practices**

**Employment Agreements, Director Agreements and Indemnification Agreements**

We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for an initial period of three years, and will be automatically renewed unless otherwise agreed in writing. We may terminate, at any time, without advance notice or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties.

We may also terminate an executive officer's employment without cause upon six-month advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as expressly required by applicable law of the jurisdiction where the executive officer is based. An executive officer may terminate his or her employment at any time with a six-month prior written notice, provided that during the initial period of three years, he or she is not entitled to terminate the employment agreement without prior consent of the Board.

In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment.

Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers, agents or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executive officer's termination, or in the year preceding such termination, without our express consent.

We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.

**Terms of Directors and Officers**

Our directors may be appointed by an ordinary resolution of its shareholders. In addition, our board may, by the affirmative vote of a simple majority of our directors present and voting at a board meeting appoint any person as a director either to fill a casual vacancy on its board or as an addition to the existing board. Our directors are not subject to a term of office and will hold office until such time as they resign or otherwise removed from office by ordinary resolution of the shareholders. Our director will be cease to be a director automatically if, among other thing, the director (i) becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his office by notice in writing to our Company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of our board and our board resolves that his office be vacated; (v) is prohibited by law from being a director or; (vi) is removed from office pursuant to the laws of the Cayman Islands or any other provisions of our articles of association, as amended and restated from time to time.

Our officers are selected by and serve at the discretion of our board of directors.

**Duties of Directors**

Under Cayman Islands law, our directors owe fiduciary duties to our Company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider in good faith to be in the best interests of our Company. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our Company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. In fulfilling their duty of care to our Company, our directors must ensure compliance with the memorandum and articles of association of our Company, as amended and restated from time to time. Our Company has the right to seek damages if a duty owed by our directors is breached.

As set out above, our directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self -dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the memorandum and articles of association or alternatively by shareholder approval at general meetings. Our amended and restated memorandum and articles of association provides that following such disclosure and subject to any special requirement for the Company's audit committee (the "Audit Committee") approval under applicable law or the listing rules of NYSE American, and unless disqualified by the chairperson of the relevant meeting, such director may vote in respect of any transaction or arrangement in which he or she is interested and may be counted in the quorum of the meeting. Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:

● convening shareholders' annual and extraordinary general meetings and reporting its work to shareholders at such meetings;

● declaring dividends and distributions;

● appointing officers and determining the term of office of the officers;

● exercising the borrowing powers of our company and mortgaging the property of our company; and

● approving the transfer of Shares in our company, including the registration of such Shares in our Share register.

**Code of Business Conduct and Ethics, Insider Trading Policy and Executive Compensation Recovery Policy**

We adopted (i) a code of business conduct and ethics; (ii) Insider Trading Policy that applies to our Directors, officers, and employees, including our chief executive officer, chief financial officer, principal accounting officer or controller or persons performing similar functions; and (iii) Executive Compensation Recovery Policy that applies to our officers, and employees, including our chief executive officer, chief financial officer, principal accounting officer or controller or persons performing similar functions, (collectively the "Policies"). The Policies, any amendments to the Policies, and any waivers of the Policies for our Directors, executive officers and senior finance executives are available on our website to the extent required by applicable U.S. federal securities laws and the corporate governance rules of NYSE American.

**Qualification**

There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.

**Committees of the Board of Directors**

We are considered a "controlled company" under the NYSE American Company Guide as more than 50% of the voting power of our shares were held by a single entity. A controlled company is not required to comply with the NYSE American corporate governance rules requiring a board of directors to have a majority of independent directors to have independent audit, compensation, and nominating and corporate governance committees. Our board of directors currently consists of five directors. We have established an audit committee, a compensation committee and a nominating and corporate governance committee.

***Audit Committee.*** Our Audit Committee consists of Dr. Gu Zhaoyang, Mr. Yan Jonathan Jun, and Mr. Shin Ho Chuen. All of them are financially literate and two of whom have accounting or related financial management expertise. Dr. Gu Zhaoyang is the chairperson of our Audit Committee. The Audit Committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The Audit Committee will be responsible for, among other things:

● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

● reviewing with the independent auditors any audit problems or difficulties and management's response;

● discussing the annual audited financial statements with management and the independent auditors;

● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

● reviewing and approving all proposed related-party transactions;

● meeting separately and periodically with management and the independent auditors; and

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

***Compensation Committee.*** Our compensation committee consists of Mr. Yan Jonathan Jun, Dr. Gu Zhaoyang, and Mr. Shin Ho Chuen. We have determined that each of our compensation committee members satisfies the "independence" requirements of the NYSE American Company Guide. Mr. Yan Jonathan Jun is the chairman of our compensation committee. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. The compensation committee will be responsible for, among other things:

● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;

● reviewing periodically and approving any incentive compensation or equity plans, programs, or similar arrangements; and

● selecting compensation consultant, legal counsel, or other adviser only after taking into consideration all factors relevant to that person's independence from management.

 ****

***Nominating and Corporate Governance Committee.*** Our nominating and corporate governance committee consists of Mr. Shin Ho Chuen, Dr. Gu Zhaoyang, and Mr. Yan Jonathan Jun. Mr. Shin Ho Chuen is the chairman of our nominating and corporate governance committee. We have determined that each of our nominating and corporate governance committee members satisfies the "independence" requirements of Rule 5605(a)(2) of the NYSE American Company Guide. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee will be responsible for, among other things:

● selecting and recommending to the board nominees for election by the shareholders or appointment by the board;

● reviewing annually with the board the current composition of the board in regard to characteristics such as independence, knowledge, skills, experience, and diversity;

● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and

● advising the board periodically in regard to significant developments in the law and practice of corporate governance, as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.

**Involvement in Certain Legal Proceedings**

To the best of our knowledge, none of our directors or executive officers has, during the past ten years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.

**6. D. Employees**

As of December 31, 2025, 2024 and 2023, we had a total of 160, 162 and 159 employees. The following table sets forth the breakdown of our employees as of December 31, 2025 by function:

---

| | | |
|:---|:---|:---|
| **Department** | **Hong Kong** | **PRC** |
| Management | 7 | 2 |
| Finance | 2 | 5 |
| Administration | 2 | 1 |
| Sales and Marketing | 3 | 22 |
| Production and related | 0 | 100 |
| Support | 1 | 15 |
| **Total** | 15 | 145 |

---

Our employees are not covered by any collective bargaining agreement. We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes as of the date of this annual report.

**6. E. Share Ownership**

The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the date of this annual report for:

● each person or entity known by us to own beneficially more than 5% of our outstanding Shares;

● each of our directors and executive officers; and

● all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include ordinary shares issuable upon the exercise of options that are immediately exercisable or exercisable within 60 days of the date hereof.

Except as otherwise indicated, all of the shares reflected in the table are ordinary shares and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose.

The calculations in the table below are based on 22,690,000 ordinary shares issued and outstanding as of the date of this annual report.

Except as otherwise indicated in the table below, addresses of our directors, executive officers and named beneficial owners are in care of Luda Technology Group Limited, Rooms 1604-1605, 16/F, YF Life Centre, 38 Gloucester Road, Wanchai, Hong Kong.

---

| | | |
|:---|:---|:---|
| <br>**Name of Beneficial Owner** | **Ordinary Shares**<br>**Number of Shares** | **Beneficially Owned**<br>**Percentage of Shares** |
| *Directors and Executive Officers:* |  |  |
| Ma Biu | 20000000 | 88.14% |
| Liu Liangping | Nil |  |
| Zhang Dajun | Nil |  |
| Yung Chi Man | Nil |  |
| Gu Zhaoyang | Nil |  |
| Yan Jonathan Jun | Nil |  |
| Shin Ho Chuen | Nil |  |
| *5% or Greater Shareholders:* |  |  |
| Diamond Horses Group Limited<sup>(1)</sup> | 20000000 | 88.14 |
|  | 20000000 | 88.14% |

---

(1) The registered address of Diamond Horses Group Limited, a British Virgin Islands company, is Vistra Corporate
Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. 20,000,000 ordinary shares directly held by Diamond
Horses Group Limited of which Ma Biu is the sole shareholder and holds the voting and dispositive power over the ordinary shares held
by such entity.

**6. F. Disclosure of a registrant's action to recover erroneously awarded compensation**

Not applicable.

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| | |
|:---|:---|
| **ITEM 7.** | **MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS** |

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**7. A. Major Shareholders**

See "Item 6. Directors, Senior Management and Employees—E. Share Ownership" for a description of our major shareholders.

**7. B. Related Party Transactions**

**Transactions with Related Parties**

In addition to the executive officer and director compensation arrangements discussed in "Employment Agreements, Director Agreements and Indemnification Agreements", set forth below are our related party transactions that occurred since the beginning of our preceding three fiscal years up to the date of December 31, 2024 and subsequent periods. The "related party transactions" are transactions identified in accordance with the rules prescribed under Part I, Item 7B of SEC Form 20-F, with respect to transactions or loans between the Company and (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the Company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the Company, and close members of any such individual's family; (d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including directors and senior management of companies and close members of such individuals' families; and I enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence.

**Nature of Relationships with Related Parties**

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| | | |
|:---|:---|:---|
| **No.** | **Names of related parties** | **Relationship** |
| 1 | Won Fittings Company Limited | Wholly owned by Ms. Liu Liangping. |
| 2 | Ma Biu | Chairman, Director, and Chief Executive Officer |
| 3 | Liu Liangping | Director and Chief Operating Officer |
| 4 | Diamond Horses Group Limited (Formerly known as "Luda Group Ltd.") | Controlling shareholder of the Company |

---

**Summary of Related Party Transactions:**

A summary of trade transactions with a related party for FY2025, FY2024 and FY2023 are listed below:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended** | **For the years ended** | **For the years ended** |
|  | **December 31,** | **December 31,** | **December 31,** |
|  | *US$* | *US$* | *US$* |
| **Rental expenses charged by a related party:** | **2025** | **2024** | **2023** |
| Won Fittings Company Limited | 81538 | 81538 | 80385 |

---

From January 1, 2026 to the date of this annual report, the rental expenses charged by Won Fittings Company Limited amounted to $30,577.

The Company's short-term bank borrowings are guaranteed by Mr. Ma Biu and Ms. Liu Liangping, and properties owned by Mr. Ma Biu and Ms. Liu Liangping.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  |  | *US$* | *US$* | *US$* |
| **Due to related parties:** | **Nature** | **2025** | **2024** | **2023** |
| Ma Biu | Advance from a related party | $— | $— | $1405 |
| Diamond Horses Group Limited | Advance from a related party |  |  | 24080 |
| Total |  | $— | $— | $25485 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  |  | *US$* | *US$* | *US$* |
| **Due from related parties:** | **Nature** | **2025** | **2024** | **2023** |
| Liu Liangping | Advance to a related party |  |  | 215995 |

---

The due to related party balances as of December 31, 2023 are unsecured, interest-free and due on demand. As of December 31, 2024 and 2025, and the date of this annual report, there was no balance of amount due to related party.

The due from related party balances as of December 31, 2023 are unsecured, interest-free and due on demand. The balances were fully settled in February 2024. As of December 31, 2024 and 2025, and the date of this annual report, there was no balance of amount due from related party.

The Company declared nil, $3,377,564 and $247,731 dividend distributed to Diamond Horses Group Limited for the years ended December 31, 2025, 2024 and 2023, respectively, and paid $nil, $3,377,564 and $630,785 for FY2025, FY2024 and FY2023, respectively. As of December 31, 2025, 2024 and 2023, dividend payable to Diamond Horses Group Limited is nil, nil and nil, respectively.

**Employment Agreements, Director Agreements and Indemnification Agreements**

See "Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Employment Agreements, Director Agreements and Indemnification Agreements".

**Policies and Procedures for Related Party Transactions**

Our board of directors has created an Audit Committee which will be tasked with review and approval of all related party transactions.

**7. C. Interests of Experts and Counsel**

Not Applicable.

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| | |
|:---|:---|
| **ITEM 8.** | **FINANCIAL INFORMATION** |

---

**8. A. Consolidated Statements and Other Financial Information**

The financial statements required by this item may be found at the end of this annual report on Form 20-F, beginning on page F-1.

**Legal Proceedings**

From time to time, we may become a party to various legal or administrative proceedings arising in the ordinary course of our business, including actions with respect to intellectual property infringement, violation of third-party licenses or other rights, breach of contract, and labor and employment claims. We are currently not a party to, and we are not aware of any threat of, any legal or administrative proceedings that, in the opinion of our management, are likely to have any material and adverse effect on our business, financial condition, cash flow, or results of operations.

**Dividends**

On January 8, 2024, May 6, 2024 and August 26, 2024, Luda Cayman paid dividend of RMB9,250,000, RMB5,700,000 and RMB9,000,000, respectively, to Diamond Horses Group Limited. We may declare or pay dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.

The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors, subject to compliance with applicable Cayman Islands laws. Our board of directors will take into account general economic and business conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and other implications on the payment of dividends by us to our shareholders or by our subsidiaries to us, and such other factors as our board of directors may deem relevant.

Subject to the Companies Act and our amended and restated memorandum and articles of association, our board of directors may authorize payment of a dividend to shareholders at such time and of such an amount out of profits and/or our share premium account, if shares have been issued at a premium, provided that in no circumstances may a dividend be paid if the dividend payment would result in the company being unable to pay its debts as they fall due in the ordinary course of business.

As we are a holding company, we rely on dividends paid to us by our subsidiaries for our cash requirements, including funds to pay any dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. Our ability to pay dividends to our shareholders will depend on, among other things, the availability of dividends from our PRC subsidiary Luda PRC.

Cash dividends, if any, on our Shares will be paid in U.S. dollars.

As an exempted company, we are not subject to any income, withholding or capital gains taxes in the Cayman Islands. Our shareholders will not be subject to any income, withholding or capital gains taxes in the Cayman Islands with respect to their shares and dividends received on those shares, nor will they be subject to any estate or inheritance taxes in the Cayman Islands.

**8. B. Significant Changes**

Except as disclosed elsewhere in this annual report, no other significant changes to our financial condition have occurred since the date of the annual financial statements contained herein.

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|:---|:---|
| **ITEM 9.** | **THE OFFER AND LISTING** |

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**9. A. Offer and Listing Details**

Our ordinary shares began trading on the NYSE American on February 27, 2025, under the symbol "LUD". Our initial public offering of an aggregate 2,500,000 Ordinary Shares at a price of $4.00 per share to the public, for a total gross proceeds of US$10.0 million to the Company, before deducting underwriting discounts and offering expenses, closed on February 28, 2025. All of the shares are being offered by the Company.

**9. B. Plan of Distribution**

Not Applicable.

**9. C. Markets**

Our Ordinary Shares have been listed on the NYSE American on February 27, 2025, under the symbol "LUD".

**9. D. Selling Shareholders**

Not Applicable.

**9. E. Dilution**

Not Applicable.

**9. F. Expenses of the Issuer**

Not Applicable.

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|:---|:---|
| **ITEM 10.** | **ADDITIONAL INFORMATION** |

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**10. A. Share Capital**

Not Applicable.

**10. B. Memorandum and Articles of Association**

We incorporate by reference into this Annual Report the description of our Memorandum and Articles of Association of the Registrant, as currently in effect, Exhibit 3.2, and the description of differences in corporate laws contained in our registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024.

**10. C. Material Contracts**

We have not entered into any material contracts other than in the ordinary course of business and other than those described in this annual report.

**10. D. Exchange Controls**

**Cayman Islands**

Currently there is no exchange control regulations in the Cayman Islands and Hong Kong applicable to us and shareholders.

**10. E. Taxation**

The following summary of the material Cayman Islands, Hong Kong, PRC and U.S. tax consequences of an investment in our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date hereof, all of which are subject to change, possibly with retroactive effect. This summary is not intended to be, nor should it be construed as, legal or tax advice and is not exhaustive of all possible tax considerations. This summary also does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local, or under the tax laws of jurisdictions other than the Cayman Islands, Hong Kong, PRC and the United States. Investors should consult their own tax advisors with respect to the tax consequences of the acquisition, ownership and disposition of our ordinary shares.

**Cayman Islands Taxation**

The following is a discussion on certain Cayman Islands income tax consequences of an investment in our securities. The discussion is a general summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor's particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.

Payments of dividends and capital in respect of our securities will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of the securities nor will gains derived from the disposal of the securities be subject to Cayman Islands income or corporation tax.

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or brought within, the jurisdiction of the Cayman Islands. The Cayman Islands are a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman Islands. Under the laws of the Cayman Islands, no stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands).

The Company has been incorporated under the laws of the Cayman Islands as an exempted company with limited liability and, as such, has received an undertaking from the Governor in Cabinet of the Cayman Islands to the effect that, for a period of 20 years from the date of the undertaking, being April 28, 2022, no law that thereafter is enacted in the Cayman Islands imposing any tax or duty to be levied on profits, income or on gains or appreciation shall apply to our Company or its operations; and that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (a) on or in respect of the shares, debentures or other obligations of our Company; or (b) by way of the withholding, in whole or in part of, any relevant payment as defined in the Tax Concessions Act of the Cayman Islands.

**People's Republic of China Taxation**

According to the Enterprise Income Tax Law of the PRC (the "Income Tax Law") and the Implementation Regulations of Enterprise Income Tax Law of the PRC, the enterprise income tax for both domestic and foreign-invested enterprises are unified at 25%.

According to the Income Tax Law, income such as dividends, rental, interest and royalty from the PRC derived by a non-resident enterprise which has no establishment in the PRC or has establishment but the income has no relationship with such establishment is subject to a 10% withholding tax, which may be reduced if the foreign jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement, unless the relevant income is specifically exempted from tax under the applicable income tax laws, regulations, notices and decisions which relate to foreign invested enterprises and their investors.

According to the Notice of the State Administration of Taxation on Issues Relating to the Administration of the Dividend Provision in Tax Treaties, the corporate recipients of dividends distributed by PRC enterprises must satisfy the direct ownership thresholds at all times during the twelve (12) consecutive months preceding the receipt of the dividends.

According to the EIT Law and its implementation rules allow certain "high and new technology enterprises with strong government support" that independently own core intellectual property and meet statutory criteria to benefit from a reduced corporate income tax rate of 15%.

According to the Administrative Regulations on the Certification of High-Tech Enterprises, any enterprise that is certified as a high-tech enterprise shall be granted such status for a period of three years if it continues to meet the qualifications of a high-tech enterprise during such period.

**Hong Kong Taxation**

Luda HK is incorporated in Hong Kong and was subject to 16.5% Hong Kong profits tax on their taxable income assessable profits generated from operations arising in or derived from Hong Kong for the years of assessment of 2024/2025, 2023/2024 and 2022/2023. Hong Kong profits tax rates for corporations are 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000. Under Hong Kong tax laws, Luda HK is not taxed on their foreign-sourced income. In addition, payments of dividends from Luda HK to us is not subject to any withholding tax in Hong Kong.

**Certain United States Federal Income Tax Considerations**

The following discussion is a summary of U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of the ownership and disposition of our ordinary shares. This summary applies only to U.S. Holders that hold our ordinary shares as capital assets (generally, property held for investment) and that have the U.S. dollar as their functional currency. This summary is based on U.S. federal tax laws in effect as of the date of this annual report, on U.S. Treasury regulations in effect or, in some cases, proposed as of the date of this annual report, and judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which could apply retroactively and could affect the tax consequences described below. No ruling has been sought from the Internal Revenue Service ("IRS") with respect to any U.S. federal income tax considerations described below, and there can be no assurance that the IRS or a court will not take a contrary position. Moreover, this summary does not address the U.S. federal estate, gift, backup withholding, and alternative minimum tax considerations, or any state, local, and non-U.S. tax considerations, relating to the ownership and disposition of our ordinary shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:

● financial institutions or financial services entities;

● insurance companies;

● pension plans;

● cooperatives;

● regulated investment companies;

● real estate investment trusts;

● broker-dealers;

● traders that elect to use a mark-to-market method of accounting;

● governments or agencies or instrumentalities thereof;

● certain former U.S. citizens or long-term residents;

● tax-exempt entities (including private foundations);

● persons liable for alternative minimum tax;

● persons holding stock as part of a straddle, hedging, conversion or other integrated transaction;

● persons whose functional currency is not the U.S. dollar;

● passive foreign investment companies;

● controlled foreign corporations;

● persons that actually or constructively own 5% or more of the total combined voting power of all classes of our voting stock; or

● partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ordinary shares through such entities.

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**General**

For purposes of this discussion, a "U.S. Holder" is a beneficial owner of our ordinary shares that is, for U.S. federal income tax purposes:

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia;

● an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

● a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions, or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our ordinary shares and their partners are urged to consult their tax advisors regarding an investment in our ordinary shares.

***Taxation of Dividends and Other Distributions on our Ordinary Shares***

Subject to the discussion below under "Passive Foreign Investment Company Rules," any cash distributions (including the amount of any PRC tax withheld) paid on our ordinary shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a "dividend" for U.S. federal income tax purposes. A non-corporate U.S. Holder will be subject to tax on dividend income from a "qualified foreign corporation" at a lower applicable capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period requirements are met. A non -U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will generally be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the United States that the U.S. Secretary of Treasury determines is satisfactory for purposes of this provision and includes an exchange of information program, or (ii) with respect to any dividend it pays on stock that is readily tradable on an established securities market in the United States, including NYSE American. It is unclear whether dividends that we pay on our ordinary shares will meet the conditions required for the reduced tax rate. However, in the event that we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law, we may be eligible for the benefits of the United States -PRC income tax treaty. If we are eligible for such benefits, dividends we pay on our ordinary shares, would be eligible for the reduced rates of taxation described in this paragraph. You are urged to consult your tax advisor regarding the availability of the lower rate for dividends paid with respect to our ordinary shares. Dividends received on our ordinary shares will not be eligible for the dividends-received deduction allowed to corporations.

Dividends will generally be treated as income from foreign sources for U.S. foreign tax credit purposes and will generally constitute passive category income. Depending on the U.S. Holder's individual facts and circumstances, a U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit not in excess of any applicable treaty rate in respect of any foreign withholding taxes imposed on dividends received on our ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for U.S. federal income tax purposes, in respect of such withholding, but only for a year in which such U.S. Holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and their outcome depends in large part on the U.S. Holder's individual facts and circumstances. Accordingly, U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

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***Taxation of Sale or Other Disposition of Ordinary Shares***

Subject to the discussion below under "Passive Foreign Investment Company Rules," a U.S. Holder will generally recognize capital gain or loss upon the sale or other disposition of ordinary shares in an amount equal to the difference between the amount realized upon the disposition and the U.S. Holder's adjusted tax basis in such ordinary shares. Any capital gain or loss will be long term if the ordinary shares have been held for more than one year and will generally be U.S.-source gain or loss for U.S. foreign tax credit purposes. Long-term capital gains of non-corporate taxpayers are currently eligible for reduced rates of taxation. In the event that gain from the disposition of the ordinary shares is subject to tax in the PRC, such gain may be treated as PRC-source gain under the United States-PRC income tax treaty. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our ordinary shares, including the availability of the foreign tax credit under their particular circumstances.

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***Passive Foreign Investment Company Rules***

 **

A non-U.S. corporation, such as our company, will be classified as a PFIC, for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of "passive" income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For this purpose, cash and cash equivalents are categorized as passive assets and the company's goodwill and other unbooked intangibles are taken into account as non-passive assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.

Based on our current composition of assets, subsidiaries and market capitalization (which will fluctuate from time to time), we do not expect to be or become a PFIC for U.S. federal income tax purposes. However, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income and assets. Furthermore, the composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets. Under circumstances where our revenue from activities that produce passive income significantly increase relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase. In addition, because there are uncertainties in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain income and assets as non-passive or our valuation of our tangible and intangible assets, each of which may result in our becoming a PFIC for the current or subsequent taxable years. If we were classified as a PFIC for any year during which a U.S. Holder held our ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder held our ordinary shares even if we cease to be a PFIC in subsequent years, unless certain elections are made.

If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares, and unless the U.S. Holder makes a mark -to-market election (as described below), the U.S. Holder will generally be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder's holding period for the ordinary shares), and (ii) any gain realized on the sale or other disposition of ordinary shares. Under these rules,

● the U.S. Holder's gain or excess distribution will be allocated ratably over the U.S. Holder's holding period for the ordinary shares;

● the amount allocated to the current taxable year and any taxable years in the U.S. Holder's holding period prior to the first taxable year in which we are classified as a PFIC (each, a "pre-PFIC year"), will be taxable as ordinary income;

● the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and

● an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each prior taxable year, other than a pre-PFIC year, of the U.S. Holder.

If we are treated as a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares, or if any of our subsidiaries is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of any lower-tier PFICs for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

As an alternative to the foregoing rules, a U.S. Holder of "marketable stock" in a PFIC may make a mark-to-market election with respect to such stock, provided that such stock is "regularly traded" within the meaning of applicable U.S. Treasury regulations. If our ordinary shares qualify as being regularly traded, and an election is made, the U.S. Holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ordinary shares held at the end of the taxable year over the adjusted tax basis of such ordinary shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ordinary shares over the fair market value of such ordinary shares held at the end of the taxable year, but such deduction will only be allowed to the extent of the amount previously included in income as a result of the mark-to-market election. The U.S. Holder's adjusted tax basis in the ordinary shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the U.S. Holder will not be required to take into account the gain or loss described above during any period that such corporation is not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our ordinary shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.

Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder's indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.

Furthermore, as an alternative to the foregoing rules, a U.S. Holder that owns stock of a PFIC generally may make a "qualified electing fund" election regarding such corporation to elect out of the PFIC rules described above regarding excess distributions and recognized gains. However, we do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.

If a U.S. Holder owns our ordinary shares during any taxable year that we are a PFIC, the U.S. Holder must generally file an annual Internal Revenue Service Form 8621 and provide such other information as may be required by the U.S. Treasury Department, whether or not a mark-to-market election is or has been made. If we are or become a PFIC, you should consult your tax advisor regarding any reporting requirements that may apply to you.

You should consult your tax advisors regarding how the PFIC rules apply to your investment in our ordinary shares.

***Non-U.S. Holders***

Cash dividends paid or deemed paid to a Non-U.S. Holder with respect to the ordinary shares generally will not be subject to U.S. federal income tax unless such dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States).

In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other taxable disposition of the ordinary shares unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of such sale or other disposition and certain other conditions are met (in which case, such gain from U.S. sources generally is subject to U.S. federal income tax at a 30% rate or a lower applicable tax treaty rate).

Cash dividends and gains that are effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States) generally will be subject to regular U.S. federal income tax at the same regular U.S. federal income tax rates as applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.

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***Information Reporting and Backup Withholding***

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Certain U.S. Holders are required to report information to the Internal Revenue Service relating to an interest in "specified foreign financial assets," including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds $50,000 (or a higher dollar amount prescribed by the Internal Revenue Service), subject to certain exceptions (including an exception for shares held in custodial accounts maintained with a U.S. financial institution). These rules also impose penalties if a U.S. Holder is required to submit such information to the Internal Revenue Service and fails to do so.

In addition, dividend payments with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares may be subject to additional information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on IRS Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any required information. We do not intend to withhold taxes for individual shareholders. However, transactions effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.

The preceding discussion of U.S. federal tax considerations is for general information purposes only. It is not tax advice. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state, local and foreign tax consequences of purchasing, holding and disposing of our ordinary shares, including the consequences of any proposed change in applicable laws.

**10. F. Dividends and Paying Agents**

Not Applicable.

**10. G. Statement by Experts**

Not Applicable.

**10. H. Documents on Display**

We have previously filed with the SEC our registration statements on Form F-1 (File No. 333-283680), as amended.

We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we are required to file reports, including annual reports on Form 20-F, and other information with the SEC. All information filed with the SEC can be obtained over the internet at the SEC's website at www.sec.gov or inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at www.sec.gov that contains reports and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. You may also visit us on the world wide web at www.ludahk.com. However, information contained on our website does not constitute a part of this annual report.

**10. I. Subsidiary Information**

For a listing of our subsidiaries, see "Item 4. Information on the Company—A. History and Development of the Company".

**10. J. Annual Report to Security Holders**

Not Applicable.

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| **ITEM 11.** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |

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***Liquidity risk***

We are exposed to liquidity risk, which is the risk that we will be unable to provide sufficient capital resources and liquidity to meet our commitments and business needs. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. When necessary, we will turn to other financial institutions to obtain short-term funding to meet the liquidity shortage.

***Interest rate risk***

As of December 31, 2025, we had outstanding bank borrowings of approximately $12.5 million, of which the bank borrowings of approximately $10.7 million will be payable within one year and the bank borrowings of $1.8 million will be payable after one year. The bank borrowings bore an annual effective interest rate ranging from 2.64% to 6.95%. Our exposure to interest rate risk primarily relates to the interest rate on our outstanding loans which carry variable interest rate. For illustration purpose and based on the outstanding loans of the Group as at December 31, 2025, if the interest rates of floating rate loans increase by 1%, our interest expenses will increase by approximately $32,785 or 6.3%. We have not been exposed to material risks due to changes in interest rates. An increase, however, may raise the cost of any debt we incur presently and in the future and result in an adverse impact on our income.

***Foreign Exchange Risk***

Foreign exchange risk is the risk that the value of financial assets or liabilities will fluctuate due to changes in foreign exchange rates. We are exposed to foreign exchange risk from our business which is denominated in currencies other than US$(i.e. RMB). Consequently, the exchange rate to our currency relative to other foreign currencies may change in a manner that has an adverse effect on the value of that portion of our assets or liabilities denominated in currencies other than US$. For FY2025, we recorded income on foreign currency translation amounting to approximately $0.6 million. For FY2024 and FY2023, we recorded loss on foreign currency translation amounting to approximately $0.3 million and $0.6 million respectively. Our currency exposure is measured and monitored on a regular basis by the manager.

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| **ITEM 12.** | **DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**25. A. Debt Securities**

Not Applicable.

**B. Warrants and Rights**

Not Applicable.

**C. Other Securities**

Not Applicable.

**D. American Depositary Shares**

Not Applicable.

**PART II**

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| **ITEM 13.** | **DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES** |

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None.

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|:---|:---|
| **ITEM 14.** | **MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS** |

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**Material Modifications to the Rights of Security Holders**

See "Item 10—Additional Information—B. Memorandum and Articles of Association" for a description of the rights of securities holders, which remain unchanged.

**Use of Proceeds**

The following "Use of Proceeds" information relates to the registration statement on Form F-1, as amended (File number: 333-283680) in relation to the initial public offering of 2,500,000 ordinary shares of the Company. Our initial public offering was announced on February 26, 2025 and closed on February 28, 2025. Revere Securities LLC. was the representative of the underwriters for our initial public offering. We offered and sold 2,500,000 ordinary shares at a price of $4.00 per share and received net proceeds of approximately $8.9 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The registration statement was declared effective by the SEC on February 26, 2025. The total expenses incurred for our company's account in connection with our initial public offering was approximately $2.4 million, which included approximately $1.0 million in underwriting discounts and commissions for the initial public offering and approximately $1.4 million in other costs and expenses for our initial public offering. None of the transaction expenses included payments to directors or officers of our company or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of the net proceeds we received from the initial public offering were paid, directly or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates.

In relation to initial public offering, our Company has granted the underwriters a 45-day option to purchase up to an additional 375,000 ordinary shares to cover over-allotments, if any. On April 7, 2025, the Company issued and sold to the underwriter 190,000 ordinary shares at a price of $4.00 per share, pursuant to the partial exercise of the Over-Allotment Option, resulting in additional gross proceeds of approximately $760,000. As a result, the Company has raised aggregate gross proceeds of $10,760,000 in the IPO, including the exercise of the Over-Allotment Option, prior to deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

As of the date of this annual report, we had used the net proceeds received from our initial public offering coupled with working capital to purchased $8.0 million of participating shares in a fund, a segregated portfolio of Global A Plus Investment SPC Limited (the "Fund"). The Fund was redeemed on December 29, 2025. We intend to use the funds to invest in the projects according to the use of proceeds as described in our registration statement on Form F-1 as setting up a manufacturing plant, acquisition of upstream supplier, purchase of machineries, computer system enhancement and working capital.

---

| | |
|:---|:---|
| **ITEM 15.** | **CONTROLS AND PROCEDURES** |

---

**Disclosure Controls and Procedures**

Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report, as required by Rule 13a-15(b) under the Exchange Act.

Based upon that evaluation, our management has concluded that, as of December 31, 2025, our disclosure controls and procedures were effective.

**Management's Annual Report on Internal Control over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15 (f) under the Exchange Act. Our management, with the participation of our chief executive officer and our chief financial officer, evaluated the effectiveness of our internal control over financial reporting based on criteria established in the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2025.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

**Attestation report of the registered public accounting firm**

We did not include an attestation report of the company's registered public accounting firm in this annual report on Form 20-F, in accordance with SEC rules under which "emerging growth companies," including the Company, are not required to provide the auditor attestation report.

**Changes in Internal Control over Financial Reporting**

Other than those disclosed above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

---

| | |
|:---|:---|
| **ITEM 16.** | **[Reserved]** |

---

None.

---

| | |
|:---|:---|
| **ITEM 16.A.** | **AUDIT COMMITTEE FINANCIAL EXPERT** |

---

Our Board of Directors has determined that Dr. Gu Zhaoyang qualifies as an "audit committee financial expert", and is independent for the purposes of the Rule 5605(c)(2) of the NYSE American Company Guide and meets the independence standards under Rule 10A-3 under the Exchange Act.

---

| | |
|:---|:---|
| **ITEM 16.B.** | **CODE OF ETHICS** |

---

Our board of directors has adopted a code of business conduct and ethics, which is applicable to all of our directors, officers, and employees. We have filed our code of business conduct and ethics as Exhibit 14.1 of our registration statement on Form F-1 (file No. 333-283680) filed with the SEC on December 6, 2024. Our code of business conduct and ethics is publicly available on our website.

---

| | |
|:---|:---|
| **ITEM 16.C.** | **PRINCIPAL ACCOUNTANT FEES AND SERVICES** |

---

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by our principal external auditors, for the periods indicated.

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended<br> December 31, <br> 2025** | **Year Ended<br> December 31, <br> 2024** | **Year Ended<br> December 31, <br> 2023** |
|  | *US$* | *US$* | *US$* |
| Audit fees | 217500 | 270000 | 270000 |
| Audit related fees |  | 30000 | 30000 |
| Tax fees |  |  |  |
| All other fees | - | - | - |
| **Total** | 217500 | 300000 | 300000 |

---

Our Audit Committee and board of directors have adopted pre-approval policies and procedures. In accordance with these policies and procedures, the Audit Committee pre-approved the audit, tax, and other non-audit services provided by AOGB CPA Limited and ZH CPA, LLC for the fiscal year ended December 31, 2025, and by ZH CPA, LLC for the fiscal years ended December 31, 2023 and 2024. Consistent with our Audit Committee 's responsibility for engaging our independent auditors, all audit and permitted non-audit services require pre-approval by the Audit Committee. The full Audit Committee approves proposed services and fee estimates for these services. One or more independent directors serving on the Audit Committee may be delegated by the full Audit Committee to pre-approve any audit and non-audit services. Any such delegation shall be presented to the full Audit Committee at its next scheduled meeting. Pursuant to these procedures, the Audit Committee approved the foregoing audit services provided by our principal external auditors.

For the fiscal year ended December 31, 2025, the audit fees of $207,500 and $10,000 were incurred for services provided by AOGB CPA Limited and ZH CPA, LLC, respectively.

---

| | |
|:---|:---|
| **ITEM 16D.** | **EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES** |

---

Not Applicable.

---

| | |
|:---|:---|
| **ITEM 16E.** | **PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS** |

---

Neither we nor any "affiliated purchaser," as defined in Rule 10b-18(a)(3) of the Exchange Act, purchased any of our equity securities during the period covered by this annual report.

---

| | |
|:---|:---|
| **ITEM 16F.** | **CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT** |

---

**Discontinuation of the Services from ZH CPA, LLC and appointment of AOGB CPA Limited**

As previously announced in the Form 6-K filed by the Company with the SEC on November 24, 2025 (the "Nov 6-K"), the Company reported the dismissal of ZH CPA, LLC ("ZH") effective November 24, 2025. The dismissal of ZH has been considered and approved by the Audit Committee of the Board and by the Board.

ZH's reports on the Company's financial statements for the fiscal years ended December 31, 2024 and 2023 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. Furthermore, during the Company's two most recent fiscal years audited by ZH and through November 24, 2025, there have been no disagreements with ZH on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to ZH's satisfaction, would have caused ZH to make reference to the subject matter of any such disagreements in connection with its reports on the Company's financial statements for such periods.

For the fiscal years ended December 31, 2024 and 2023 and through November 24, 2025, there were no "reportable events" as that term is described in Item 16F(a)(1)(v) of the Form 20-F.

The Company provided ZH with a copy of the above disclosure prior to filing the Nov 6-K with the SEC. The Company requested that ZH furnish the Company with a letter addressed to the SEC stating whether or not it agrees with the above statement. The letter was filed as Exhibit 99.1 to the Nov 6-K and is incorporated by reference herein.

The Company has appointed AOGB CPA Limited ("AOGB") as successor auditor of the Company effective November 24, 2025 to audit the Company's consolidated financial statements for the fiscal year ending December 31, 2025. The appointment of AOGB has been approved by the Board and the Audit Committee.

During the Company's fiscal years ended December 31, 2024 and 2023 and through November 24, 2025, neither the Company nor anyone acting on the Company's behalf consulted AOGB with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on Luda's consolidated financial statements, and neither a written report was provided to Luda nor oral advice was provided that the new independent registered public accounting firm concluded was an important factor considered by Luda in reaching a decision as to the accounting, auditing or financial reporting issue; nor (ii) any matter that was either the subject of a disagreement as defined in Item 16F(a)(1)(iv) of Form 20-F or a reportable event as described in Item 16F(a)(1)(v) of Form 20-F.

---

| | |
|:---|:---|
| **ITEM 16G.** | **CORPORATE GOVERNANCE** |

---

Not required.

---

| | |
|:---|:---|
| **ITEM 16H.** | **MINE SAFETY DISCLOSURE** |

---

Not Applicable.

---

| | |
|:---|:---|
| **ITEM 16I.** | **DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS** |

---

Not Applicable.

---

| | |
|:---|:---|
| **ITEM 16J.** | **INSIDER TRADING POLICIES** |

---

The Company has adopted an insider trading policy governing the purchase, sale and other dispositions of our securities by directors, senior management and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to the Company. A copy of our Insider Trading Policy is filed as Exhibit 11.2 to this annual report on Form 20-F.

---

| | |
|:---|:---|
| **ITEM 16K.** | **CYBERSECURITY** |

---

**Risk Management and Strategy**

We adhere to the definitions provided in Item 16K, recognizing the critical significance of implementing strong cybersecurity measures to safeguard our information systems and the sensitive data they hold. Our priority is to protect our information and systems from unauthorized access, use, disclosure, disruption, modification, or destruction. We identify and assess material risks from cybersecurity threats to our information systems and the information residing in our information systems by monitoring and evaluating our threat environment on an ongoing basis using various methods including, for example, using manual and automated tools that identify cybersecurity threats, conducting scans of the threat environment, and conducting risk assessments.

We manage material risks from cybersecurity threats to our information systems and the information residing in our information systems through various processes and procedures, including, depending on the environment, risk assessment, incident detection and response, vulnerability management, disaster recovery and business continuity plans, internal controls within our accounting and financial reporting functions, encryption of data, network security controls, access controls, physical security, asset management, systems monitoring, and employee training.

As of the date of this annual report, we are not aware of any risks from cybersecurity threats, including as a result of any cybersecurity incidents, which have materially affected or are reasonably likely to materially affect our Group, including our business strategy, results of operations, or financial condition.

**Cybersecurity Governance**

Our board of directors holds oversight responsibility over our Group's risk management and strategy, including material risks related to cybersecurity threats. This oversight is executed directly by our board of directors and through its committees. Our audit committee oversees the management of our Group's major financial risk exposures, the steps management has taken to monitor and control such exposures, and the process by which risk assessment and management is undertaken and handled, which would include cybersecurity risks, in accordance with its charter. The audit committee holds regular meetings and receives periodic reports from management regarding risk management, including major financial risk exposures from cybersecurity threats or incidents.

As we do not have a dedicated board committee exclusively focused on cybersecurity, our full board is primarily responsible for overseeing the implementation of our cybersecurity strategy. This includes assessing and managing material risks arising from cybersecurity threats, as well as identifying, evaluating, and addressing any cybersecurity incidents.

As of the date of this annual report, the Company has not encountered cybersecurity incidents that the company believes to have been material to the Company taken as a whole.

**PART III**

---

| | |
|:---|:---|
| **ITEM 17.** | **FINANCIAL STATEMENTS** |

---

We have elected to provide financial statements pursuant to Item 18.

---

| | |
|:---|:---|
| **ITEM 18.** | **FINANCIAL STATEMENTS** |

---

The consolidated financial statements and related notes required by this item are contained on pages F-1 through F-36.

---

| | |
|:---|:---|
| **ITEM 19.** | **EXHIBITS** |

---

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 1.1 | [Current Effective Amended and Restated Memorandum and Articles of Association (incorporated herein by reference to Exhibit 3.2 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](http://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex3-2_luda.htm) |
| 2.1 | [Specimen Certificate for the Shares (incorporated herein by reference to Exhibit 4.1 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](https://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex4-1_luda.htm) |
| 2.2 | [Description of Securities (incorporated herein by reference to Exhibit 2.2 to the report on 20-F (File No. 001-42289), as filed with the SEC on April 30, 2025)](http://www.sec.gov/Archives/edgar/data/1984124/000121390025037162/ea023867101ex2-2_ludatech.htm) |
| 4.1 | [Form of Underwriters' Warrants (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](https://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex4-2_luda.htm) |
| 4.2 | [Unofficial English translation of the office lease agreement dated March 30, 2023 between Luda Development Limited and Won Fittings Company Limited (incorporated herein by reference to Exhibit 10.1 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](https://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex10-1_luda.htm) |
| 4.3 | [Form of service agreement between the Company and its independent directors of the Registrant (incorporated herein by reference to Exhibit 10.2 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](https://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex10-2_luda.htm) |
| 4.4 | [Employment agreement of executive director between the Company and Ma Biu (incorporated herein by reference to Exhibit 10.3 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](https://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex10-3_luda.htm) |
| 4.5 | [Employment agreement of executive director between the Company and Liu Liangping (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](https://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex10-4_luda.htm) |
| 4.6 | [Tenancy Agreement dated April 1, 2025 between Luda Development Limited and Won Fittings Company Limited (incorporated herein by reference to Exhibit 4.6 to the report on 20-F (File No. 001-42289), as filed with the SEC on April 30, 2025)](http://www.sec.gov/Archives/edgar/data/1984124/000121390025037162/ea023867101ex4-6_ludatech.htm) |
| 4.7 | [Form of Warrant Cancellation Agreement (incorporated herein by reference to Exhibit 10.1 to the report on Form 6-K (File No. 001-42289), as filed with the SEC on July 15, 2025)](http://www.sec.gov/Archives/edgar/data/1984124/000121390025063979/ea024898401ex10-1_ludatech.htm) |
| 4.8 | [Letter of ZH CPA, LLC dated November 24, 2025. (Incorporated herein by reference to Exhibit 99.1 to the report on Form 6-K (file No. 001-42289), filed with the SEC on November 24, 2025)](http://www.sec.gov/Archives/edgar/data/1984124/000121390025114023/ea026694901ex99-1_luda.htm) |
| 4.9\* | [Tenancy Agreement I dated September 2, 2025 between Luda Technology Group Limited and Pioneer Time Investment Limited](ea028558901ex4-9.htm) |
| 4.10\* | [Tenancy Agreement II dated September 2, 2025 between Luda Technology Group Limited and Pioneer Time Investment Limited](ea028558901ex4-10.htm) |
| 4.11\* | [Tenancy Agreement I dated November 12, 2025 between Luda Development Limited and Pioneer Time Investment Limited](ea028558901ex4-11.htm) |
| 4.12\* | [Tenancy Agreement II dated November 12, 2025 between Luda Development Limited and Pioneer Time Investment Limited](ea028558901ex4-12.htm) |
| 11.1 | [Code of Business Conduct and Ethics (incorporated herein by reference to Exhibit 14.1 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](https://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex14-1_luda.htm) |
| 11.2 | [Insider Trading Policy (incorporated herein by reference to Exhibit 14.3 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](http://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex14-3_luda.htm) |
| 12.1\* | [Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ea028558901ex12-1.htm) |
| 12.2\* | [Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ea028558901ex12-2.htm) |
| 13.1\* | [Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ea028558901ex13-1.htm) |
| 13.2\* | [Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ea028558901ex13-2.htm) |
| 21.1 | [List of subsidiaries of the Company (incorporated herein by reference to Exhibit 21.1 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](http://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex21-1_luda.htm) |
| 97.1 | [Executive Compensation Recovery Policy (incorporated by reference to Exhibit 14.2 to the registration statement on Form F-1 (File No. 333-283680), as amended, initially filed with the SEC on December 6, 2024)](https://www.sec.gov/Archives/edgar/data/1984124/000121390024106566/ea022004401ex14-2_luda.htm) |
| 101.INS | Inline XBRL Instance Document \* |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document \* |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document \* |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document \* |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document \* |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document \* |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

\* Furnished with this annual report on Form 20-F

**SIGNATURES**

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

---

| | | |
|:---|:---|:---|
|  | **LUDA TECHNOLOGY GROUP LIMITED** | **LUDA TECHNOLOGY GROUP LIMITED** |
|  | */s/ Ma Biu* | */s/ Ma Biu* |
|  | Name: | Ma Biu |
|  | Title: | Chief Executive Officer |
| Date: May 15, 2026 |  |  |

---

**LUDA TECHNOLOGY GROUP LIMITED**

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page** |
| [Report of Independent Registered Public Accounting Firm (PCAOB #7020)](#f_007) | F-2 |
| [Report of Independent Registered Public Accounting Firm (PCAOB #6413)](#f_001) | F-3 |
| [Consolidated Balance Sheets as of December 31, 2025 and 2024](#f_002) | F-4 |
| [Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2025, 2024 and 2023](#f_003) | F-5 |
| [Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2025, 2024 and 2023](#f_004) | F-6 |
| [Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023](#f_005) | F-7 |
| [Notes to the Consolidated Financial Statements](#f_006) | F-9 |

---

![](ea028558901_img12.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Shareholders of Luda Technology Group Limited

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheets of Luda Technology Group Limited and its subsidiaries (the "Company") as of December 31, 2025, and the related consolidated statements of operations and comprehensive income, changes in shareholders' equity, and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ AOGB CPA Limited

Hong Kong, Hong Kong

May 15, 2026

We have served as the Company's auditor since 2025.

AOGB CPA Limited, Suite 2501-03, Tesbury Centre, 28 Queen's Road East, Admiralty, Hong Kong

Tel: 2152-2238, Website: *www.aogb.com*

---

| | |
|:---|:---|
| ![](ea028558901_img1.jpg) | ![](ea028558901_img2.jpg) |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**To the Board of Directors and Shareholders of** 

**Luda Technology Group Limited**

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheet of Luda Technology Group Limited and its subsidiaries (the "Company") as of December 31, 2024, and the related consolidated statements of operations and comprehensive (loss) income, changes in shareholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the "PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ ZH CPA, LLC

We served as the Company's auditor from 2022 through November 24, 2025.

Denver, Colorado

April 30, 2025

![](ea028558901_img3.jpg)

**LUDA TECHNOLOGY GROUP LIMITED**

**CONSOLIDATED BALANCE SHEETS**

**AS OF DECEMBER 31, 2025 AND 2024**

**(in U.S. dollar, except share data)**

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | **December 31, <br> 2024** |
| **Assets** | | |
| **Current assets** | | |
| Cash and cash equivalents | $4516669 | $8132655 |
| Restricted cash | 78959 | 200517 |
| Accounts receivable, net | 13483520 | 13165058 |
| Notes receivable, net | 966447 | 381878 |
| Redemption receivable, net | 8222754 | **—**  |
| Prepayments, deposits and other receivables, net | 437971 | 479613 |
| Advance to suppliers | 148959 | 33043 |
| Inventories, net | 4704386 | 4868035 |
| Inventories to be returned | 262291 | 939404 |
| Deferred costs | **—**  | 671321 |
| Contract assets - current, net | 1220925 | 1591188 |
| Short-term investments | 5732433 | 1390475 |
| Other current assets | 217949 |  |
| **Total current assets** | $**39993263** | $**31853187** |
| **Non-current assets** |  |  |
| Restricted cash – non-current | $176296 | $— |
| Property, plant and equipment, net | 4980105 | 5124432 |
| Intangible assets, net | 711156 | 701154 |
| Operating lease right-of-use assets, net | 483431 |  |
| Deferred tax assets | 622879 | 552966 |
| Contract assets - non-current, net | 1832158 | 667456 |
| Other receivables - non-current, net | 325809 | 406630 |
| **Total non-current assets** | $**9131834** | $**7452638** |
| **Total assets** | $**49125097** | $**39305825** |
| **Liabilities and shareholders' equity** |  |  |
| **Current liabilities** |  |  |
| Short-term loans | $10894987 | $11675074 |
| Accounts payable | 10567115 | 8673801 |
| Contract liabilities | 128192 | 221770 |
| Other payables and accruals | 2318929 | 3975334 |
| Operating lease liabilities, current | 293803 |  |
| Income taxes payable | 1652 | 1652 |
| Refundable liabilities | 331737 | 1303748 |
| **Total current liabilities** | $**24536415** | $**25851379** |
| **Non-current liabilities** |  |  |
| Long-term loans | $1773176 | $614476 |
| Operating lease liabilities - non-current | 234843 |  |
| Deferred tax liabilities | 372942 | 176430 |
| **Total non-current liabilities** | $**2380961** | $**790906** |
| **Total liabilities** | $**26917376** | $**26642285** |
| **Commitments and contingencies** |  | **—**  |
| **Shareholders' equity** |  |  |
| Ordinary shares, $0.03 (equivalent to HK$0.25) par value, 4,000,000,000 shares authorized, 22,690,000 and 20,000,000 shares issued and outstanding as of December 31, 2025 and 2024, respectively | $727244 | $641026 |
| Additional paid-in capital | 8295213 |  |
| Statutory reserve | 2365592 | 2253177 |
| Retained earnings | 11816891 | 11372477 |
| Accumulated other comprehensive loss | (997219) | (1603140) |
| **Total equity** | $**22207721** | $**12663540** |
| **Total liabilities and shareholders' equity** | $**49125097** | $**39305825** |

---

See accompanying notes to the consolidated financial statements.

**LUDA TECHNOLOGY GROUP LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023 (in U.S. dollar, except share data)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** |
|  | **2025** | **2024** | **2023** |
| **Revenues** | $33535351 | $44863430 | $51428054 |
| Cost of sales | (27615538) | (33458207) | (40533077) |
| **Gross profit** | **5919813** | **11405223** | **10894977** |
| **Operating expenses:** |  |  |  |
| Selling expenses | $(1806192) | $(6342751) | $(2709376) |
| General and administrative expenses | (3720646) | (3222959) | (2950188) |
| Research and development expenses | (1452052) | (1383605) | (1364473) |
| Total operating expenses | **(6978890)** | **(10949315)** | **(7024037)** |
| **(Loss) income from operations** | **(1059077)** | **455908** | **3870940** |
| **Other income (expenses)** |  |  |  |
| Interest expenses | (520916) | (556156) | (406692) |
| Other income, net | 2571217 | 3453 | 15228 |
| **Total other income (expenses), net** | **2050301** | **(552703)** | **(391464)** |
| **Income (loss) before income taxes** | 991224 | (96795) | 3479476 |
| Income taxes | (434395) | (264221) | (446899) |
| **Net income (loss)** | $**556829** | $**(361016)** | $**3032577** |
| **Other comprehensive income (loss):** |  |  |  |
| Foreign currency translation adjustment | 605921 | (344879) | (566358) |
| **Comprehensive income (loss)** | $**1162750** | $**(705895)** | $**2466219** |
| **Weighted average number of ordinary shares\*:** |  |  |  |
| Basic and diluted | 22242767 | 20000000 | 20000000 |
| **Earnings (loss) per share\*:** |  |  |  |
| Basic and diluted | $0.03 | $(0.02) | $0.15 |

---

*\** *Shares presented on a retroactive basis to reflect the reorganization in note 1.*

See accompanying notes to the consolidated financial statements.

**LUDA TECHNOLOGY GROUP LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023 (in U.S. dollar, except share data)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares** | **Ordinary Shares** | | | | | |
|  | **Number of <br> Shares\*** | **Amount** |<br>**Additional**<br>**paid-in <br> capital** | **Accumulated**<br>**Other**<br>**Comprehensive<br> Loss** |<br>**Statutory <br> Reserve** |<br>**Retained <br> Earnings** |<br>**Total equity** |
| **Balance as of January 1, 2023** | **20000000** | $**641026** | $— | $**(691903)** | $**1721266** | $**12858122** | $**14528511** |
| Net income |  |  |  |  |  | 3032577 | 3032577 |
| Transfer to statutory reserve |  |  |  |  | 399503 | (399503) |  |
| Foreign currency translation adjustment |  |  |  | (566358) |  |  | (566358) |
| Dividend declared |  |  |  |  |  | (247731) | (247731) |
| **Balance as of December 31, 2023** | **20000000** | $**641026** |  | $**(1258261)** | $**2120769** | $**15243465** | $**16746999** |
| Net loss |  |  |  |  |  | (361016) | (361016) |
| Transfer to statutory reserve |  |  |  |  | 132408 | (132408) |  |
| Foreign currency translation adjustment |  |  |  | (344879) |  |  | (344879) |
| Dividend declared |  |  |  |  |  | (3377564) | (3377564) |
| **Balance as of December 31, 2024** | **20000000** | $**641026** |  | $**(1603140)** | $**2253177** | $**11372477** | $**12663540** |
| Net income |  |  |  |  |  | 556829 | 556829 |
| Transfer to statutory reserve |  |  |  |  | 112415 | (112415) |  |
| Foreign currency translation adjustment |  |  |  | 605921 |  |  | 605921 |
| Issuance of shares under initial public offering | 2500000 | 80128 | 7604179 |  |  |  | 7684307 |
| Issuance of shares under over-allotment | 190000 | 6090 | 691034 |  |  |  | 697124 |
| **Balance at of December 31, 2025** | **22690000** | $**727244** | $**8295213** | $**(997219)** | $**2365592** | $**11816891** | $**22207721** |

---

*\** *Shares presented on a retroactive basis to reflect the reorganization in note 1.*

See accompanying notes to the consolidated financial statements.

**LUDA TECHNOLOGY GROUP LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023 (in U.S. dollar)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended <br> December 31,** | **For the years ended <br> December 31,** | **For the years ended <br> December 31,** |
|  | **2025** | **2024** | **2023** |
| **Cash flows from operating activities:** |  |  |  |
| Net income (loss) | $**556829** | $**(361016)** | $**3032577** |
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Amortization expenses | 20139 | 20116 | 20442 |
| &nbsp;&nbsp;&nbsp;Depreciation expenses | 581723 | 460494 | 449678 |
| &nbsp;&nbsp;&nbsp;Allowance for inventory valuation | 303834 | 210377 | 231715 |
| &nbsp;&nbsp;&nbsp;(Reversal of) provision for allowance for expected credit losses | (117438) | (27137) | 714384 |
| &nbsp;&nbsp;&nbsp;Fair value changes of short-term investments | (1631751) | 398654 |  |
| &nbsp;&nbsp;&nbsp;Expensed deferred initial public offering cost | **—**  | 137596 |  |
| &nbsp;&nbsp;&nbsp;(Gain) loss on disposal of property, plant and equipment | (38286) | (9962) | 13926 |
| &nbsp;&nbsp;&nbsp;Gain on extinguishment of consulting expenses payable | (564918) |  |  |
| &nbsp;&nbsp;&nbsp;Deferred tax expenses | 145937 | (265469) | (186300) |
| Changes in operating assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Inventories | 803486 | 1158627 | (1636282) |
| &nbsp;&nbsp;&nbsp;Contract assets | (616700) | 2419355 | (596041) |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 306867 | 2959961 | (1017999) |
| &nbsp;&nbsp;&nbsp;Notes receivable | (557927) | 1587449 | 301548 |
| &nbsp;&nbsp;&nbsp;Prepayments and other receivables | 65717 | (78716) | 350977 |
| &nbsp;&nbsp;&nbsp;Advance to suppliers | (115566) | (24753) | 83048 |
| &nbsp;&nbsp;&nbsp;Refundable liabilities | (1001257) | (923120) | 1624975 |
| &nbsp;&nbsp;&nbsp;Accounts, other payables, accruals and income taxes payable | 314319 | (1926096) | (44503) |
| &nbsp;&nbsp;&nbsp;Notes payable |  | (138971) | 141225 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | (95371) | (2147) | 2005 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 45215 |  |  |
| &nbsp;&nbsp;&nbsp;Other current assets | (217949) |  |  |
| &nbsp;&nbsp;&nbsp;Other long-term assets | 104417 | (137651) | (152523) |
| **Net cash (used in) provided by operating activities** | $**(1708680)** | $**5457591** | $**3332852** |
| **Cash flows from investing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of short-term investments | (20982405) | (1769528) | (1360) |
| &nbsp;&nbsp;&nbsp;Proceeds from disposal of short-term investments | 10298313 |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of property, plant and equipment | (458221) | (1078271) | (1758567) |
| &nbsp;&nbsp;&nbsp;Proceeds from disposal of property, plant and equipment | 108868 | 26446 | 661 |
| **Net cash used in investing activities** | $**(11033445)** | $**(2821353)** | **(1759266)** |
| **Cash flows from financing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Net proceeds from initial public offering | 8915989 |  |  |
| &nbsp;&nbsp;&nbsp;Net proceeds from share over-allotment | 696792 |  |  |
| &nbsp;&nbsp;&nbsp;Payment of deferred offering cost | (565937) | (20026) | (633891) |
| &nbsp;&nbsp;&nbsp;Dividends paid | **—**  | (3377564) | (630785) |
| &nbsp;&nbsp;&nbsp;Advance from related parties | **—**  | 215995 | 25486 |
| &nbsp;&nbsp;&nbsp;Repayments to related parties | **—**  | (25487) | (17192) |
| &nbsp;&nbsp;&nbsp;Proceeds from bank loans | 14749713 | 14529278 | 12903494 |
| &nbsp;&nbsp;&nbsp;Repayments on bank loans | (14974782) | (13907349) | (8939750) |
| **Net cash provided by (used in) financing activities** | $**8821775** | $**(2585153)** | **2707362** |
| &nbsp;&nbsp;&nbsp;Effect of exchange rate changes on cash, cash equivalents and restricted cash | 359102 | (113839) | (165164) |
| **Net (decrease) increase in cash and cash equivalents, and restricted cash** | $(3561248) | $(62754) | 4115784 |
| **Cash and cash equivalents, and restricted cash at beginning of the year** | 8333172 | 8395926 | 4280142 |
| **Cash and cash equivalents, and restricted cash at end of the year** | $**4771924** | $**8333172** | **8395926** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended <br> December 31,** | **For the years ended <br> December 31,** | **For the years ended <br> December 31,** |
|  | **2025** | **2024** | **2023** |
| **Reconciliation to amounts on consolidated balance sheet** |  |  |  |
| Cash and cash equivalents | $4516669 | $8132655 | $8082691 |
| Restricted cash | 255255 | 200517 | 313235 |
| **Supplemental disclosure of cash flow information** |  |  |  |
| Cash received for interest | 9100 | 23461 | 48765 |
| Cash paid for interests | 473435 | 530185 | 455457 |
| Cash paid for income tax (note 1) | 204455 | 557354 | 954109 |
| **Supplemental disclosures of non-cash financing and investing activities** |  |  |  |
| Right-of-use assets obtained in exchange for new operating lease liabilities | 535901 | **—**  | **—**  |
| Capitalization of deferred costs | 671321 | **—** | **—** |

---

Note:

1. During the year ended December 31, 2025, the Company has
paid income taxes (including withholding tax for dividend income) of $155,192, $49,263, $nil and $nil in the PRC, HK, BVI and Cayman,
respectively.

See accompanying notes to the consolidated financial statements

**LUDA TECHNOLOGY GROUP LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES**

**(a) Organization and principal activities**

Luda Technology Group Limited ("Luda Cayman") is a holding company incorporated under the laws of the Cayman Islands on October 21, 2021, with one share issued to Diamond Horses Group Limited ("DHGL"). At the time of incorporation, Luda Cayman had an authorized share capital of Hong Kong Dollars ("HKD" or "HK$") 1,000,000,000 (United State Dollars ("USD", "US$", "$") 128,205,128) divided into 1,000,000,000 ordinary shares of a nominal or par value of HK$1 (US$0.1282) each.

The Company and its subsidiaries (collectively referred as the "Company") are principally engaged in (i) the manufacture and sale of stainless steel and carbon steel flanges and fittings products; and (ii) trading of steel pipes, valves, and other steel tubing products. We are headquartered in Hong Kong with manufacturing base in Taian City, Shandong Province of the People's Republic of China (the "PRC").

Details of the Company and its subsidiaries after reorganization are set out below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of Entity** | **Date of<br> Incorporation** | **Place of <br> Incorporation** | **% of <br> Ownership** | **Principal <br> Activities** |
| Luda Technology Group Limited ("Luda Cayman") | October 21, 2021 | Cayman Islands | Parent | Investment holding |
| Luda Investment Holding Limited ("Luda BVI") | October 25, 2021 | British Virgin Islands | 100% | Investment holding |
| Luda Development Limited ("Luda HK") | February 20, 2004 | Hong Kong | 100% | Trading of steel pipes, valves, and other steel tubing products |
| Luda (Taian) Industrial Company ("Luda PRC") | April 4, 2005 | The PRC | 100% | Manufacture and sale of stainless steel and carbon steel flanges and fittings products |

---

Luda BVI was incorporated under the laws of the British Virgin Islands on October 25, 2021, with one share at no par value issued to DHGL which is owned by our Founder and controlling shareholder Mr. Ma Biu. Luda BVI is a holding company with no operations. The following entities are all directly and indirectly 100% owed by DHGL prior to the completion of the Company's initial public offering on February 27, 2025.

Luda HK was incorporated under the laws of Hong Kong on February 20, 2004, with 5,000,000 shares at HK$1 issued to DHGL. Luda HK was a trading company for steel pipes, valves, and other steel tubing products.

Luda PRC was incorporated on April 4, 2005 as a wholly owned subsidiary of Luda HK under the laws of the PRC. Luda PRC was set up to commence the manufacturing of flanges and fittings with self-owned factory in China.

**(b) Reorganization**

On August 14, 2023, Luda Cayman entered into a sale and purchase agreement to acquire 100% ownership of Luda BVI from DHGL at consideration of HK$1.00 to be satisfied by the issue and allotment of one share of par value of HK$1.00 each to DHGL. On August 14, 2023, Luda BVI entered into a sale and purchase agreement to acquire 100% ownership of Luda HK from DHGL at the consideration of HK$4,999,998 to be satisfied by the issue and allotment by Luda Cayman of 4,999,998 shares of par value of HK$1.00 each to DHGL.

Upon the completion of the above transactions and prior to the completion of subdivision on December 19, 2023, DHGL held 5,000,000 ordinary shares at par value of HK$1(US$0.1282), representing 100% of the issued and outstanding shares of the Company.

On December 19, 2023, the Company subdivided each issued and unissued share of par value of HK$1.00 each into four shares of par value of HK$0.25 each. Upon completion of the above subdivision, the Company's authorized share capital became 4,000,000,000 shares with par value of HK$0.25 (US$0.03) each and the Company's issued share capital became HK$5,000,000 divided into 20,000,000 shares of par value of HK$0.25 each.

Before and after the above reorganization, the Company and its subsidiaries resulting from reorganization has always been under the common control of the same controlling shareholder, DHGL or the Founder. Accordingly, the combination has been treated as a corporate restructuring (reorganization) of entities under common control and thus the current group structure has been retroactively presented in prior periods as if such structure existed at that time and in accordance with ASC 805-50-45-5, the entities under common control are presented on a combined basis for all periods to which such entities were under common control.

The consolidation of the Company and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Results of operations for the periods presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**(c) Initial public offering ("Offering")**

On February 27, 2025, the ordinary shares of the Company began trading on NYSE American LLC under the ticker symbol "LUD". On February 28, 2025, the Company consummated its Offering of 2,500,000 ordinary shares, par value HK$0.25 (equivalent to $0.03) per share (the "Ordinary Shares"), at a public offering price of $4.00 per share. The Offering was conducted on a firm commitment basis, after deducting certain underwriting expenses, the Company received net proceeds of US$8,915,989.

In connection with the IPO, the Company granted the underwriters a 45-day option to purchase up to an additional 375,000 Ordinary Shares (the "Over-Allotment Option") to cover over-allotments, if any. On April 7, 2025, the underwriters partially exercised the Over-Allotment Option, and the Company issued and sold an additional 190,000 Ordinary Shares at the offering price of $4.00 per share, generating additional net proceeds of $696,792.

**Basis of presentation and principles of consolidation**

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities Exchange Commission ("SEC").

The consolidated financial statements include the financial statements of the Company and its all subsidiaries. A subsidiary is an entity (including a structured entity), directly and indirectly, controlled by the Company. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.

**Use of estimates**

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosed of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from those estimates. If actual results significantly differ from the Company's estimates, the Company's financial condition and results of operations could be materially impacted.

Significant accounting estimates reflected in the Company's consolidated financial statements include, but not limited to allowance for expected credit losses on accounts receivable, notes receivable, contract assets and other current assets, allowance for inventory valuation and sales returns.

**Foreign currency translation**

Transactions denominated in other than the functional currencies are re-measured into the functional currency of the entity at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currency at the prevailing rates of exchange at the balance sheet date. The resulting exchange differences are reported in the consolidated statement of operations and comprehensive income (loss).

The functional and reporting currency of the Company is United State Dollars. The financial records of the Company's subsidiaries in the PRC and Hong Kong ("HK") are maintained in their local currencies, as their functional currency which are Chinese Yuan ("RMB") and Hong Kong Dollars. In general, for consolidation purposes, assets and liabilities of the Company's subsidiaries whose functional currency is not US$ are translated into US$, in accordance with Accounting Standards Codifications ("ASC") Topic 830-30, "Translation of Financial Statement", using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income (loss) within the consolidated statements of shareholders' equity.

Total foreign translation adjustments income (loss) was $605,921, $(344,879) and $(566,358) for the years ended December 31, 2025, 2024 and 2023. The balance sheet amounts of subsidiary in the PRC, with the exception of its shareholders' equity on December 31, 2025 and 2024 were translated at RMB6.9931 and RMB7.2993 to $1.0000, respectively. The shareholders' equity accounts were stated at their historical rate. The average translation rates applied to statement of income of PRC subsidiary for the fiscal years ended December 31, 2025, 2024 and 2023 were RMB7.1875, RMB7.1957 and RMB7.0809 to $1.0000, respectively. The balance sheet amounts of subsidiary in HK, with the exception of its shareholders' equity on December 31, 2025 and 2024, and the average translation rates applied to statement of income for fiscal years ended December 31, 2025, 2024 and 2023, were all translated at HK$7.8000 to $1.0000. This rate reflects the pegged exchange rate under the Linked Exchange Rate System in Hong Kong, which has remained stable throughout the periods presented.

**Cash and cash equivalents**

Cash and cash equivalents primarily consist of cash and deposits with financial institutions which are unrestricted as to withdrawal and use. Cash equivalents consist of highly liquid investments that are readily convertible to cash generally with original maturities of three months or less when purchased.

The Company maintains certain bank accounts in Hong Kong. Cash balances in bank accounts in Hong Kong are protected under Deposit Protection Scheme in accordance with the Deposit Protection Scheme Ordinance. The maximum protection is up to HK$800,000 per depositor per Scheme member, including both principal and interest. As of December 31, 2025 and 2024, cash and cash equivalents in Hong Kong was $1,494,125 and $783,945, respectively.

The Company also maintains certain bank accounts in the PRC. Cash balances in bank accounts in the PRC are protected under Deposit Guarantee Scheme in accordance with the Deposit Insurance Regulation in PRC. The maximum protection is up to RMB500,000 per depositor per Scheme member, including both principal and interest. As of December 31, 2025 and 2024, cash and cash equivalents in the PRC was $3,022,544 and $7,348,710, respectively.

**Restricted cash**

The Company's restricted cash mainly represents the secured deposits held in designated bank accounts for issuance of letter of credit and bank guarantee and is presented separately on the consolidated balance sheets and is included in the total cash and cash equivalents in the consolidated statements of cash flows. As of December 31, 2025 and 2024, restricted cash was $255,255 and $200,517 respectively.

**Allowance for expected credit losses**

The Company have adopted loss rate method and individual specific valuation method to calculate the credit loss and considered the reverent factors of the historical and future conditions of the Company to make reasonable estimation of the risk rate. For accounts receivable and other receivables aged less than 360 days, notes receivable and contract assets, the Company uses the loss rate method, which is a combination of historical rate method and adjustment rate method, to estimate the credit loss. For accounts receivable aged over 360 days and overdue retainage receivable, the Company uses the individual specific valuation method to estimate the credit loss.

The Company believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. Actual results could differ from these estimates. To the extent that there are material differences between these estimates and the actual results, future financial statements will be affected.

**Accounts receivable, net**

Accounts receivable are recognized initially at fair value and subsequently adjusted for any allowance for expected credit loss. The Company grants credit to customers, without collateral, under normal payment terms (typically 30 to 120 days after invoicing). Generally, invoicing occurs after the products were delivered. The carrying value of such receivables, net of allowance for expected credit loss, represents its estimated realized value. The Company expects to collect the outstanding balance of accounts receivable within one year.

The allowance for expected credit loss recognized against accounts receivable as of December 31, 2025 and 2024 was $1,911,104 and $1,929,117, respectively.

**Notes receivable, net**

Notes receivable are recorded at the face amount, adjusted for any allowance for expected credit loss. Notes receivable are issued by PRC financial institutions and corporates. The Company's notes receivable generally mature and are due for payment 120 to 180 days from the date of issuance of notes and are classified as current assets.

The allowance for expected credit loss recognized against notes receivable as of December 31, 2025 and December 31, 2024 was $8,780 and $3,053, respectively.

**Redemption receivable, net**

Redemption receivable represents the receivable from redemption of the short-term investment in a private fund, without collateral and under payment terms of 120 days. It is initially recognized at fair value and subsequently adjusted for any allowance for expected credit loss.

The allowance for expected credit loss recognized against redemption receivable as of December 31, 2025 and 2024 was $54,579 and $nil, respectively.

**Inventories, net**

Inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the weighted-average method. The Company records adjustments to inventory for excess quantities, obsolescence or impairment when appropriate to reflect inventory at net realizable value. These adjustments are based upon a combination of factors including current sales volume, market conditions, lower of cost or market analysis and expected realizable value of the inventory.

The allowance for inventory valuation recognized as of December 31, 2025 and 2024 was $1,614,284 and $1,247,384, respectively, and effect of change in allowance for inventory valuation are recognized in cost of sales.

**Contract assets, net**

Contract assets, excluding any amounts presented as receivable, all the Company's contract assets were retainage. Certain of our contracts contain retention provisions whereby a portion of the revenue earned is withheld from payment as a form of security until contractual provisions are satisfied. Allowance for expected credit loss on contract assets was assessed in accordance with ASC 326.

The allowance for expected credit loss recognized against contract assets as of December 31, 2025 and December 31, 2024 was $51,727 and $108,664, respectively.

**Short-term investments**

The Company's short-term investments included investment in equity securities with readily determinable fair values and investment in a private fund with variable returns which is redeemable on demand after certain lock-up period.

The investment in equity securities is measured at fair value with changes in unrealized gains and losses included in current period operations according to ASC subtopic 321-10. During the years ended December 31, 2025, 2024 and 2023, the Company purchased certain publicly-listed equity securities through various open market transactions and accounted for such investments as "financial assets at FVTPL" and subsequently measure the investments at fair value. The Company recognized an unrealized fair value gain (loss) of short-term investments of $939,352, $(398,654), and $1,359, respectively, in the consolidated statements of operations and comprehensive income (loss) and included in other income, net for the years ended December 31, 2025, 2024 and 2023, respectively.

The investment in private fund represented the Company's investment in participating shares of Stable Income Fund SP, a segregated portfolio of Global A Plus Investment SPC Ltd, an independent third party. The Company elected the fair value method at the date of initial recognition and carries such investment at fair value in accordance with ASC 825, *Financial Instruments*, for investments with variable returns referenced to performance of underlying assets. Change in the fair value of such investment is reflected in the consolidated statements of operations and comprehensive income (loss) as realized fair value gain (loss) of short-term investments included in other income, net. Fair value is estimated based on the net assets value provided by financial institutions at the end of each reporting period. During the years ended December 31, 2025, 2024 and 2023, the Company recognized a gain of $318,359, $nil and $nil. The investment had been fully redeemed as of December 31, 2025. As of December 31, 2025 and 2024, the balance of investment in private fund is $nil and $nil, respectively.

**Other current assets**

The Company's other current assets represent cash in transit for fund transfers initiated and deducted from the Company's bank account prior to the year-end date, but not yet been reflected in the recipient's bank record due to banking process time. These amounts are expected to be settled within the next business day following the period end. Other current assets are carried at cost, less any applicable allowance for credit losses.

There is no allowance for expected credit loss recognized for both years ended December 31, 2025 and 2024.

**Fair value of financial instruments**

The Company applies the provisions of ASC 820, *Fair Value Measurements and Disclosures*, to the financial instruments that are required to be carried at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs that prioritizes the information used to develop our assumptions regarding fair value. Fair value measurements are separately disclosed by level within the fair value hierarchy.

The Company's financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, contract assets, notes receivable, other receivables, other current assets, short-term investments, short-term loans, accounts payable, other payables and refundable liabilities.

The carrying amount of long-term loans reported in the balance sheet approximates their fair value due to their fixed interest rates that approximate current market rates for similar instruments.

The Company holds certain equity securities that are measured at fair value through profit or loss ("FVTPL") in accordance with the applicable accounting standards. The fair value of these equity securities is determined based on quoted market prices in active markets (Level 1). The carrying amount of the investment in equity securities reported in the balance sheet approximates their fair value due to their classification as FVTPL and the use of quoted market prices in active markets.

The carrying value of the Company's financial instruments mentioned above are approximate fair value because of the short-term nature of these items.

The Company noted no transfers between levels during any of the periods presented. Except for investment in equity securities, the Company did not have any other instruments that were measured at fair value on a recurring nor non-recurring basis as of December 31, 2025 and 2024.

**Employee benefit expenses**

The Company compensates its employees through short-term employee benefits and defined contribution plans. Short-term employee benefits are recognized at the undiscounted amount of the benefits expected to be paid as and when employees rendered the services. All short-term employee benefits are recognized as an expense. A liability is recognized for benefits accruing to employees (such as wages and salaries) after deducting any amount already paid.

Payments to defined contribution plans are recognized as an expense when employees have rendered service entitling them to the contributions.

All eligible employees of the Company in the PRC are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. The Company is required to accrue for these benefits based on certain percentages of the qualified employees' salaries and to make contributions to the plans out of the amounts accrued. The PRC government is responsible for the medical benefits and the pension liability to be paid to these employees and the Company's obligations are limited to the amounts contributed. The Company recorded retirement benefit expenses for PRC staff of $344,778, $373,200 and $473,134 for the years ended December 31, 2025, 2024 and 2023, respectively.

All salaried employees of the Company in Hong Kong are enrolled in a Mandatory Provident Fund Scheme ("MPF scheme") scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance, within two months of employment. The MPF scheme is a defined contribution retirement plan administered by an independent trustee. The Company makes regular contributions of 5% of the employee's relevant income to the MPF scheme, subject to a maximum of $194 (equivalent to HKD 1,500) per month. Contributions to the plan vest immediately. The Company recorded retirement benefit expenses for HK staff of $29,084, $23,976 and $19,995 for the years ended December 31, 2025, 2024 and 2023, respectively.

In June 2022, the Hong Kong government gazetted the Mandatory Provident Fund Schemes (Amendment) Ordinance 2021 (the "Amendment Ordinance"), which will eventually abolish the statutory right of an employer to reduce its long service payment payable to a Hong Kong employee by drawing on its mandatory contributions to the MPF scheme. The abolition will officially take effect on the Transition Date (i.e. May 1, 2025). Separately, the Hong Kong government is also expected to introduce a subsidy scheme to employers for a period of 25 years after the Transition Date on the LSP payable by employers up to a certain amount per employee per year. Among other things, once the abolition of the offsetting mechanism takes effect, an employer can no longer use any of the accrued benefits derived from its mandatory MPF contributions (irrespective of the contributions made before, on or after the Transition Date) to reduce the long service payment in respect of an employee's service from the Transition Date. However, where an employee's employment commenced before the Transition Date, the employer can continue to use the above accrued benefits to reduce the long service payment in respect of the employee's service up to that date; in addition, the long service payment in respect of the service before the Transition Date will be calculated based on the employee's monthly salary immediately before the Transition Date and the years of service up to that date. The Company has assessed that the Amendment Ordinance has no material impact on the Company's LSP liability with respect to employees in Hong Kong.

**Property, plant, and equipment, net**

Property, plant, and equipment are stated at cost less accumulated depreciation and impairment loss, and include expenditure that substantially increases the useful lives of existing assets. Expenditures for repairs and maintenance, which do not extend the useful life of the assets, are expensed as incurred, whereas significant renewals and betterments are capitalized. Depreciation is provided over their estimated useful lives with an estimated residual value of the assets, using the straight-line method. Estimated useful lives are as follows:

---

| | |
|:---|:---|
| **Asset type** | **Estimated useful life** |
| Buildings | 5 – 20 years |
| Plant and machinery | 3 – 10 years |
| Furniture and fixture | 3 – 10 years |
| Computers and office equipment | 3 – 10 years |
| Motor vehicles | 3 – 5 years |

---

When assets are sold or retired, their costs and accumulated depreciation are derecognized from the consolidated financial statements and any gain or loss resulting from their disposal is recognized in the period of disposition as an element of other income.

**Intangible assets, net**

Intangible assets are non-monetary assets without physical substance. These items are initially measured at cost and subsequently carried at cost less any accumulated amortization and impairment losses. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful lives, which is as follows:

---

| | |
|:---|:---|
| **Category** | **Useful life** |
| Land use-right | 50 years |
| Patents | 10 years |

---

**Impairment of long-lived assets**

The Company accounts for impairment of long-lived assets in accordance with the relevant ASC, primarily ASC 360, *Property, Plant, and Equipment*, and ASC 350, *Intangibles — Goodwill and Other*. Long-lived assets consist primarily of property, plant and equipment and intangible assets.

For property, plant and equipment, in accordance with ASC 360, the Company evaluates the carrying value whenever a triggering event occurs, or when events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated. Examples of triggering events include significant disposals of a portion of assets or adverse changes in the market or business environment. If the asset group is determined not to be recoverable, the Company measures the fair value and recognizes an impairment loss if the fair value is less than the carrying amount. The determination of fair value, based on reasonable and supportable assumptions and projections, requires significant subjective judgment. Depending on the assumptions and estimates used, the fair value of the asset group can vary within a range of outcomes. The Company considers the likelihood of possible outcomes in determining the best estimate of fair value.

For intangible assets, in accordance with ASC 350, the Company evaluates indefinite-lived intangible assets for impairment at least annually or more frequently if triggering events occur, by comparing their fair value to their carrying amount. Definite-lived intangible assets are amortized over their estimated useful lives and are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Company did not record any impairment charges related to its long-lived assets for the years ended December 31, 2025, 2024, and 2023. There can be no assurance, however, that future events will not negatively impact the Company's operations or financial position, which could result in future impairment charges.

**Leases**

The Company adopted this Accounting Standards Update ("ASU") and related amendments as of January 1, 2021 and made an accounting policy election to not include leases with an initial term of 12 months or less on the balance sheets and the short term lease expenses. The Company elected to apply the package of practical expedients for existing arrangements entered into prior to January 1, 2021 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and (c) initial direct costs. No cumulative-effect adjustment to retained earnings was required upon adoption of Topic 842 as payments made under operating leases are also recognized as an expense on a straight-line basis over the lease term prior to the adoption of ASC 842. The Company makes an accounting policy election not to separate non-lease components to measure the lease liability and lease asset.

 

 

*Operating leases*

Upon adoption of ASC 842, the lease liabilities are recognized upon lease commencement for operating leases based on the present value of lease payments over the lease term, operating leases are recognized as right-of-use assets ("ROU") in non-current assets and lease liabilities in non-current liabilities in the consolidated balance sheets if the initial lease term is greater than 12 months. For all operating leases with an initial term of 12 months or less the Company elects to recognizes as short term lease and expenses lease payments on a straight-line basis over the lease term.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, management uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Management uses the implicit rate when readily determinable. Lease expense is recognized on a straight-line basis over the lease term and are included in general and administrative ("G&A") expenses.

During the years ended December 31, 2025, 2024 and 2023, the Company incurred total operating lease expenses of $147,521, $81,538 and $80,385, respectively. A portion of operating lease expenses relates to an office lease with a related party, Won Fittings Company Limited, which is wholly owned by a director, Ms. Liu Liangping (Note 21).

**Value-added taxes ("VAT")**

Sales revenue represents the invoiced value of goods, net of VAT. The Company's products manufactured and sold by the PRC subsidiary are subject to a VAT on the gross sales price. The Company is subject to a VAT rate of 13%. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products, and other expenses.

**Revenue Recognition**

The Company recognizes revenue in accordance with ASC Topic 606 *Revenue from Contracts with Customers*. Revenue is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Revenue is recognized when the following 5-step revenue recognition criteria are met:

1) Identify the contract with a customer

2) Identify the performance obligations in the contract

3) Determine the transaction price

4) Allocate the transaction price

5) Recognize revenue when or as the entity satisfies a performance obligation.

The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer's ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations.

In determining the transaction price the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled.

The Company allocates the transaction price to each distinct product based on their relative standalone selling price.

Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company's performance obligation is satisfied at a point in time), which typically occurs at delivery.

<u>Revenue from the self-manufactured production sales</u>

Revenue from self-manufactured production sales generates from both domestic and oversea customers. For domestic self-manufactured production sales, revenue is recognized at the point in time control of the products is transferred, generally upon customer receipt based upon the standard contract terms. For oversea self-manufactured sales, the Company sells its products either under free onboard ("FOB") shipping point term or under FOB destination term. For sales under FOB shipping point term, the Company recognize revenues when products are loaded on the vessels. Product delivery is evidenced by warehouse shipping logs as well assigned shipping bills from the shipping companies. For sales under FOB destination term, the Company recognize revenues when the products are delivered and accepted by customers.

Revenue from the self-manufactured production sales are recognized net of expected sales return and value added taxes. The Company does not routinely permit customers to return products, while in certain conditions product changes are allowed, and historically customer returns have been immaterial and due to the nature of Company's products, there was warranty offered per contract. However historically warranty expenses were immaterial. The Company's sales returns are generally recognized according to i) repurchase percentage stipulated in sales agreements with certain customers or ii) estimated return rate base on historical experience and industry practice for those sales agreement without repurchase terms. The Company determines repurchase terms in sales contracts as sales return rather than repurchase arrangement as repurchase price usually are the same as selling price.

The Company recognized purchase obligation derived from sales return as refundable liability and related product cost that will be returned as inventories to be returned on balance sheet at end of each financial period. The estimate is based on accumulated sales revenue and stipulated repurchase percentage or estimated return rate. No significant sales return occurred historically, therefore, the Company determined estimated return rates for those sales agreements without repurchase terms are not significant, refundable liability as of December 31, 2025 and 2024 represents obligations related to sales agreements with repurchase term.

The Company generally provides rights of return up to certain percentage of contract for certain customers. As of December 31, 2025 and 2024, refundable liabilities of $331,737 and $1,303,748 were provided, respectively.

<u>Revenue from trading sales to overseas market</u>

For trading sales, the Company presents the revenue on a gross basis as the Company act as principal in trading sales. Prices are determined based on negotiations with the Company's customers and are not subject to adjustment. the Company sells its products either under free onboard ("FOB") shipping point term or under FOB destination term. For sales under FOB shipping point term, the Company recognize revenues when products are loaded on the vessels. Product delivery is evidenced by warehouse shipping logs as well assigned shipping bills from the shipping companies. For sales under FOB destination term, the Company recognize revenues when the products are delivered and accepted by customers.

Shipping and handling activities are considered to be fulfillment activities rather than promised services and are not, therefore, considered to be separate performance obligations. Payment terms for product sales are generally set at 30 – 120 days after the consideration becomes due and payable.

 

*Disaggregation of revenue*

The Company disaggregates its revenue by business model which the Company believes best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. The Company's disaggregation of revenue for the years ended December 31, 2025, 2024 and 2023 is as following:

---

| | | | |
|:---|:---|:---|:---|
| | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| <br>**Revenue stream** | **2025** | **2024** | **2023** |
| Self-manufactured production sales revenue | $24573665 | $37581158 | $45966687 |
| Trading sales revenue | 8961686 | 7282272 | 5461367 |
| **Total revenue** | $**33535351** | $**44863430** | $**51428054** |

---

The table below shows the breakdown of sales revenue by geographical locations of our customers for the years ended December 31, 2025, 2024 and 2023:

---

| | | | |
|:---|:---|:---|:---|
| | **For years ended December 31,** | **For years ended December 31,** | **For years ended December 31,** |
| <br>**Revenue by International Markets:** | **2025** | **2024** | **2023** |
| The PRC | $22397641 | $36863348 | $45237236 |
| South America | 6708846 | 4100965 | 2769090 |
| Australia | 1020860 | 1802150 | 1373689 |
| Europe | 219957 | 368772 | 666772 |
| North America | 828038 | 699013 | 445423 |
| Asia excluding the PRC | 2281627 | 871783 | 888563 |
| Others | 78382 | 157399 | 47281 |
| **Total revenue** | $**33535351** | $**44863430** | $**51428054** |

---

The table below sets out our revenue by product categories for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
| | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| <br>**Revenue by product** | **2025** | **2024** | **2023** |
| Fittings | $11018432 | $13617429 | $9784712 |
| Flanges | 21732191 | 30923382 | 40773687 |
| Others | 784728 | 322619 | 869655 |
| **Total** | $**33535351** | $**44863430** | $**51428054** |

---

**Contract liabilities**

A contract liability is recognized when the customer pays consideration before the Company recognized the related revenue. A contract liability would also be recognized if the Company has an unconditional right to receive consideration before the Company recognized the related revenue.

Contract liability at the beginning of each reporting period recognized in revenue for years ended December 31, 2025, 2024 and 2023 are $201,471, $203,507 and $214,626, respectively.

**Cost of sales**

Cost of sales consists primarily of cost of materials, direct labor costs and overhead costs that are directly attributable to products and services provided.

**Selling expenses**

Selling expenses include sales commission for bidding consultation, freight expenses and entertainment expenses.

**General and administrative expenses**

General and administrative expenses include management and office staff salaries and employee benefits, depreciation of office furniture and equipment, staff salaries, transportation and entertainment, bank charges, expected credit loss charge, other office expenses and audit fees.

**Research and development costs**

Research and development activities are directed toward the development of new products as well as improvements in existing processes. These costs, which primarily include salaries, contract services and supplies, are expensed as incurred.

**Income taxes**

Current income taxes are recorded in accordance with the regulations of the relevant tax jurisdictions. The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, *Income Tax*. Under this method, deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between carrying amounts of existing assets and liabilities in the financial statements and their respective tax basis, and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of comprehensive income in the period of change. Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely than not that amount of the deferred tax assets will not be realized. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

To the extent applicable, the Company records interest and penalties as other expenses. All of the tax returns of the Company's PRC subsidiary remain subject to examination by the PRC tax authorities for five years from the date of filing. The fiscal years for tax purpose in the PRC are ended at December 31. All of the tax returns of the Company's HK subsidiary remain subject to examination by HK tax authorities for seven years from the date of filing.

The Company and its subsidiaries are not subject to U.S. tax laws and local state tax laws. The Company's income and that of its related entities must be computed in accordance with Chinese and Hong Kong tax laws, as applicable, and all of which may be changed in a manner that could adversely affect the amount of distributions to shareholders. There can be no assurance that Income Tax Laws of PRC and Hong Kong will not be changed in a manner that adversely affects shareholders. In particular, any such change could increase the amount of tax payable by the Company, reducing the amount available to pay dividends to the holders of the Company's ordinary shares.

**Comprehensive income (loss)**

Comprehensive income (loss) is defined as the change in equity during the year from transactions and other events, excluding the changes resulting from investments by owners and distributions to owners, and is not included in the computation of income tax expense or benefit. Accumulated comprehensive income (loss) consists of foreign currency translation. The Company presents comprehensive income (loss) in accordance with ASC Topic 220, "Comprehensive Income".

**Earnings (loss) per share**

The Company calculates earnings (loss) per share in accordance with ASC Topic 260 "Earnings per Share." Basic earnings (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential ordinary shares equivalents had been issued and if the additional common shares were dilutive. As of December 31, 2025 and 2024, there were no dilution impact.

**Commitments and contingencies**

In the normal course of business, the Company is subject to contingencies, including legal proceedings and environmental claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company's management has evaluated all such proceedings and claims that existed as of December 31, 2025 and 2024.

**Segment reporting**

The Company follows FASB ASC Topic 280, Segment Reporting, segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker ("CODM"), or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker, who is our chief executive officer, manages the business under two operating segments, which are our reportable segments: (1) Hong Kong trading, and (2) PRC manufacturing.

**Related party**

In general, related parties exist when there is a relationship that offers the potential for transactions at less than arm's-length, favorable treatment, or the ability to influence the outcome of events different from that which might result in the absence of that relationship. A related party may be any of the following: a) an affiliate, which is a party that directly or indirectly controls, is controlled by, or is under common control with another party; b) a principle owner, owner of record or known beneficial owner of more than 10% of the voting interest of an entity; c) management, which are persons having responsibility for achieving objectives of the entity and requisite authority to make decision; d) immediate family of management or principal owners; e) a parent Company and its subsidiaries; and f) other parties that have ability to significant influence the management or operating policies of the entity. The Company discloses all significant related party transactions.

**Recently issued accounting pronouncements**

 

The Company is an "emerging growth company" ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

 

*<u>New accounting standards which have been adopted</u>*

In December 2023, the FASB issued ASU No. 2023-09, *Income Taxes (Topic 740) Improvements to Income Tax Disclosures*, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this Update are effective for annual periods beginning after December 15, 2024. The Company adopted this update beginning January 1, 2025 and the required information was disclosed in Note 22.

*<u>New accounting standards which have not yet been adopted</u>*

In November 2024, the FASB issued ASU No. 2024-03, *Income Statement (Topic 22) - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)*. ASU No. 2024-03 requires publicly traded business entities to disclose specified information about the components of certain costs and expenses that are currently disclosed in the financial statements. In January 2025, the FASB issued ASU No. 2025-01, which clarifies the effective date of ASU No. 2024-03. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company does not expect to adopt ASU No. 2024-03 early and is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In August 2025, the FASB issued ASU No. 2025-05, *Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Trade Receivables and Contract Assets*. ASU No. 2025-05 provides a practical expedient and accounting policy election to allow entities to measure expected credit losses on certain trade receivables and contract assets using a provision matrix approach. The ASU is effective for annual periods beginning after December 15, 2025, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its credit loss estimation methodology.

In September 2025, the FASB issued ASU No. 2025-06, *Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software*, which is intended to improve the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the potential effect of this ASU on its accounting for internal-use software development costs.

In December 2025, the FASB issued ASU No. 2025-10, *Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities*, which provides updated guidance on how to recognize, measure, and present government grants. The ASU will be effective for annual reporting periods beginning after December 15, 2028, including interim periods within those fiscal years. with early adoption permitted. The Company is assessing the effect of this update on its consolidated financial statements.

Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company's consolidated balance sheets, statements of operations and comprehensive income (loss) and statements of cash flows.

**NOTE 3 — SHORT-TERM INVESTMENTS**

Short-term investments as of December 31, 2025 and 2024 consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Investment in equity securities with readily determinable fair value | $5732433 | $1390475 |

---

During the years ended December 31, 2025, 2024 and 2023, $939,352, $(398,654) and $1,359 of unrealized gain (loss) from investment in equity securities were included in other income, net in the statement of operation and comprehensive income (loss), respectively.

During the years ended December 31, 2025, 2024 and 2023, $692,399, $nil and $nil of realized gain from investment in equity securities were included in other income, net in the statement of operation and comprehensive income (loss), respectively.

**NOTE 4 — ACCOUNTS RECEIVABLE, NET**

Accounts receivable, net as of December 31, 2025 and 2024 consists of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Accounts receivable, | $15394624 | $15094175 |
| Less: allowance for expected credit loss | (1911104) | (1929117) |
| Accounts receivable, net | $**13483520** | $**13165058** |

---

The movement of allowances for credit loss for the years ended December 31, 2025, 2024 and 2023 were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Balance at beginning of the year | $1929117 | $1905008 | $1341865 |
| (Reversal)/addition | (99437) | 75975 | 601272 |
| Exchange adjustments | 81424 | (51866) | (38129) |
| Balance at end of the year | $**1911104** | $**1929117** | $**1905008** |

---

**NOTE 5 — NOTES RECEIVABLE, NET**

Notes receivable, net as of December 31, 2025 and 2024 consists of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Notes receivable | $975227 | $384931 |
| Less: allowance for expected credit loss | (8780) | (3053) |
| Notes receivable, net | $**966447** | $**381878** |

---

**NOTE 6 — CONTRACT ASSETS, CURRENT AND NON-CURRENT, NET and Contract LIABILITIES**

Contract assets - current and non-current and contract liabilities as of December 31, 2025 and 2024 consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Contract assets - current | $1238460 | $1680374 |
| Less: allowance for expected credit loss | (17535) | (89186) |
| Contract assets - current, net | $**1220925** | $**1591188** |
| Contract assets – non-current | 1866350 | 686934 |
| Less: allowance for expected credit loss | (34192) | (19478) |
| Contract assets – non-current, net | $**1832158** | $**667456** |
| Contract liabilities: |  |  |
| Payments received or receivable (contracts receivable) in excess of revenue recognized on uncompleted contracts (contract liability), excluding retainage | $**(128192)** | $**(221770)** |

---

The Company recognized $201,471, $203,507 and $214,626 of revenue for the years ended December 31, 2025, 2024 and 2023, respectively, that were included in the contract liabilities at the beginning of the respective periods.

**NOTE 7 — INVENTORIES, NET**

Inventories, net as of December 31, 2025 and 2024 consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Raw materials | $3545114 | $3128599 |
| Work in progress | 2022375 | 1876800 |
| Finished goods | 696160 | 666405 |
| Goods in transit |  | 399304 |
| Other consumables | 55021 | 44311 |
| Less: allowance for inventories valuation | (1614284) | (1247384) |
| **Total inventories, net** | $**4704386** | $**4868035** |

---

The movement of allowances for inventories valuation for the years ended December 31, 2025, 2024 and 2023 were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Balance at beginning of the year | $1247384 | $1069201 | $862736 |
| Additions | 303834 | 210377 | 231715 |
| Exchange adjustments | 63066 | (32194) | (25250) |
| Balance at end of the year | $**1614284** | $**1247384** | $**1069201** |

---

**NOTE 8 — REDEMPTION RECEIVABLE, NET** 

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Redemption receivable | $8277333 | $— |
| Less: allowance for expected credit loss | (54579) |  |
| **Redemption receivable, net** | $**8222754** | $**—**  |

---

On March 18, 2025, the Company invested $8,000,000 into a Stable Income Fund SP, a segregated portfolio of Global A Plus Investment SPC Ltd. (the "Fund"), an independent third party, which was classified as a short-term investment. On December 29, 2025, the Company fully redeemed its investment in the Fund and recognized a realized gain of $318,359 included in other income, net for the year ended December 31, 2025. As of December 31, 2025, the balance represents the receivable from such redemption, which was subsequently settled in April 2026.

**NOTE 9 — PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES, NET**

Prepayments, deposits and other receivables, net as of December 31, 2025 and 2024 consists of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Prepaid operating expenses | $91267 | $66211 |
| Other receivables | 37414 | 38420 |
| Refundable deposits | 629473 | 710816 |
| Prepayments for equipment | 5885 | 5638 |
| Income tax recoverable | 8382 | 91173 |
| Less: allowance for expected credit loss (note 1) | (8641) | (26015) |
| **Prepayments, deposits and other receivables, net** | $**763780** | $**886243** |
| Current | $437971 | $479613 |
| Non-current | 325809 | 406630 |
|  | $**763780** | $**886243** |

---

Note:

1. The allowance for expected credit loss is contributed by
other receivables and refundable deposits only.

**NOTE 10 — PROPERTY, PLANT AND EQUIPMENT, NET**

Property, plant and equipment, net as of December 31, 2025 and 2024 consists of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Buildings | $2765931 | $2649902 |
| Construction in process | 698462 | 702746 |
| Plant and machinery | 5026985 | 4505039 |
| Furniture and fixture | 897742 | 793664 |
| Computers and office equipment | 192556 | 146161 |
| Motor vehicles | 577831 | 880923 |
| Total property plant and equipment, at cost | 10159507 | 9678435 |
| Less: accumulated depreciation | (5179402) | (4554003) |
| **Total property, plant and equipment, net** | $**4980105** | $**5124432** |

---

During the years ended December 31, 2025, 2024 and 2023, (i) depreciation expenses of $581,723, $460,494 and $449,678 were incurred, respectively; and (ii) gain (loss) on disposal of property, plant and equipment of $38,286, $9,962, $(13,926), were incurred, respectively on the consolidated statements of operations and comprehensive income (loss). For the years ended December 31, 2025, 2024 and 2023, no impairment was recognized for property, plant and equipment.

As of December 31, 2025 and 2024, the Company pledged buildings to secure banking facilities granted to the Company. The carrying values of the pledged buildings to secure bank loans by the Company are shown in Note 14.

**NOTE 11 — INTANGIBLE ASSETS, NET**

Intangible assets as of December 31, 2025 and 2024 consist of the following:

---

| | | |
|:---|:---|:---|
| | **As of December 31,** | **As of December 31,** |
| <br>**Intangible Assets** | **2025** | **2024** |
| Land use rights, costs | $1009188 | $966853 |
| Patent, costs | 5148 | 4932 |
| Accumulated amortization | (303180) | (270631) |
| **Total intangible assets, net** | $**711156** | $**701154** |

---

The land use rights represents the Company's land use rights of plant in Taian City, Shandong Province of the PRC, which had been pledged to secure the Company's banking facilities granted to the Company as of December 31, 2025 and 2024. The carrying values of the pledged land use rights to secure bank loans by the Company are shown in Note 14.

Amortization expense was $20,139, $20,116 and $20,442 for the years ended December 31, 2025, 2024 and 2023, respectively. For the years ended December 31, 2025, 2024 and 2023, no impairment of intangible assets was recognized.

**NOTE 12 — LEASES**

As of December 31, 2025, the Company entered into 6 new operating lease agreements for use of office premises and carpark spaces in Hong Kong, with lease terms ranging from 1 to 2 years.

As of December 31, 2024, the Company entered into 1 new operating lease agreement for use of office premise in Hong Kong, with lease term 1 year.

The Company excluded short-term leases (those with lease terms of less than one year at inception) from the measurement of operating lease liabilities or operating lease right-of-use assets. The following tables summarize the lease expense, as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Operating lease expenses | $60657 | $— | $— |
| Short-term lease expenses | 86864 | 81538 | 80385 |
| Total lease expenses | $**147521** | $**81538** | $**80385** |

---

During the years ended December 31, 2025, 2024 and 2023, the Company recorded the operating lease expenses and short-term lease expenses which are included in the "General and administrative expenses" on consolidated statements of operations and comprehensive income (loss).

The Company's operating lease right-of-use assets and operating lease liabilities recognized in the consolidated balance sheets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets, net | $**483431** | $**—**  |

---

During the years ended December 31, 2025, 2024 and 2023, there are no impairment loss was recognized.

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Operating lease liabilities: |  |  |
| Current operating lease obligation | $293803 | $— |
| Non-current operating lease obligation | 234843 |  |
| Total | $**528646** | $**—** |

---

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Weighted average remaining lease term (years) | 1.76 |  |
| Weighted average discount rate | 5.36% |  |

---

The following is a maturity analysis of the annual undiscounted cash flows for operating lease liabilities as of December 31, 2025:

---

| | |
|:---|:---|
| Years ending December 31, |  |
| 2026 | $314576 |
| 2027 | 240100 |
| **Total undiscounted lease payment** | 554676 |
| Less: imputed interest | (26030) |
| **Lease liabilities recognized in the consolidated balance sheet** | $528646 |

---

**NOTE 13 — OTHER PAYABLES AND ACCRUED LIABILITIES**

Other payables and accrued liabilities as of December 31, 2025 and 2024 consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Accrued staff salaries | $1233008 | $1350655 |
| VAT and other tax payable | 311900 | 210733 |
| Accrued administrative expenses | 389907 | 2195226 |
| Other payables | 384114 | 218720 |
| **Total** | $**2318929** | $**3975334** |

---

**NOTE 14 — LOANS**

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Bank loans | $12451851 | $12289550 |
| Margin loan (note 1) | 216312 |  |
| **Total** | $**12668163** | $**12289550** |

---

---

| | | |
|:---|:---|:---|
| Current | $10894987 | $11675074 |
| Non-current | 1773176 | 614476 |
|  | $**12668163** | $**12289550** |

---

Bank loans consisted of the following at December 31, 2025:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Bank Name** | **Outstanding Amount - RMB** | **Outstanding Amount - HKD** | **Outstanding Amount - USD** | **Issuance Date** | **Expiration<br> Date** | **Interest** |
| Heng Sang Bank ("HSB") (note 2) | NA | 795662 | 102008 | 2025/09/23 | 2026/01/21 | &nbsp;&nbsp;&nbsp;&nbsp;SOFR+3.08% |
| HSB (note 2) | NA | 1127123 | 144503 | 2025/09/30 | 2026/01/28 | &nbsp;&nbsp;&nbsp;&nbsp;SOFR+3.08% |
| HSB (note 2) | NA | 1385520 | 177631 | 2025/10/23 | 2026/02/20 | &nbsp;&nbsp;&nbsp;&nbsp;SOFR+3.08% |
| HSB (note 2) | NA | 1554081 | 199241 | 2025/11/11 | 2026/03/11 | &nbsp;&nbsp;&nbsp;&nbsp;SOFR+3.08% |
| HSB (note 2) | NA | 918392 | 117742 | 2025/11/21 | 2026/03/23 | &nbsp;&nbsp;&nbsp;&nbsp;SOFR+3.08% |
| HSB (note 2) | NA | 837787 | 107409 | 2025/12/08 | 2026/04/08 | &nbsp;&nbsp;&nbsp;&nbsp;SOFR+3.08% |
| HSB (note 2) | NA | 1664221 | 213362 | 2025/12/29 | 2026/04/28 | SOFR+3.08% |
| HSB (note 3) | NA | 2872915 | 368322 | 2022/10/06 | 2032/10/06 | BLR-2.25% |
| Industrial and Commercial Bank of China (Asia) Limited ("ICBC") (note 3) | NA | 6000000 | 769231 | 2024/09/27 | 2030/05/18 | HIBOR+2.7% |
| ICBC (note 3) | NA | 2500000 | 320513 | 2025/08/28 | 2026/08/26 | HIBOR+2.7% |
| ICBC (note 3) | NA | 2500000 | 320513 | 2025/10/31 | 2026/10/29 | HIBOR+2.7% |
| ICBC (note 4) | NA | 1508453 | 193391 | 2025/10/15 | 2026/02/12 | ARR+2.25% |
| ICBC (note 4) | NA | 1908330 | 244658 | 2012/09/03 | 2032/09/03 | HIBOR+2% |
| Bank of China Limited (note 5) | 8350000 | NA | 1194034 | 2025/08/21 | 2026/08/09 | 2.80% |
| Bank of Taian Co., Ltd. (note 6) | 9000000 | NA | 1286983 | 2025/06/18 | 2026/06/15 | 3.30% |
| China Everbright Bank Company Limited (note 7) | 5000000 | NA | 714990 | 2025/01/23 | 2026/01/22 | 3.20% |
| Bank of communications | 8000000 | NA | 1143985 | 2025/05/29 | 2026/05/25 | 2.80% |
| Industrial Bank Co., Ltd. (note 7) | 8000000 | NA | 1143985 | 2025/11/27 | 2026/11/26 | 2.70% |
| Postal Savings Bank of China Co., Ltd. (note 8) | 5000000 | NA | 714990 | 2025/08/25 | 2026/08/24 | 3.17% |
| Bank of Qingdao Co., Ltd. (note 7) | 8000000 | NA | 1143985 | 2025/08/20 | 2026/08/18 | 3.10% |
| Shandong Feicheng Rural Commercial Bank Co., Ltd (note 5) | 12800000 | NA | 1830375 | 2025/05/16 | 2028/05/15 | 2.90% |
| Less: Reclassification of short-term loan to long-term loan | (12400000) | NA | (1773176) | 2025/05/16 | 2028/05/15 | 2.90% |
| **Total short-term bank loan** | **51750000** | **25572484** | **10678675** |  |  |  |
| **Total long-term bank loan** | **12400000** |  | **1773176** |  |  |  |

---

Bank loans consisted of the following at December 31, 2024:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Bank Name** | **Outstanding Amount–RMB** | **Outstanding Amount–HKD** | **Outstanding Amount– USD** | **Issuance Date** | **Expiration Date** | **Interest** |
| HSB (note 2) | NA | 644356 | 82610 | 2020/12/01 | 2025/12/01 | BLR-2.25% |
| HSB (note 2) | NA |  |  | 2020/12/01 | 2025/12/01 | BLR-2.25% |
| HSB (note 2) | NA | 1416883 | 181652 | 2024/10/22 | 2025/2/19 | SOFR+3.08% |
| HSB (note 2) | NA | 2145115 | 275015 | 2024/10/30 | 2025/2/27 | SOFR+3.08% |
| HSB (note 2) | NA | 1145800 | 146897 | 2024/11/06 | 2025/3/06 | SOFR+3.08% |
| HSB (note 2) | NA | 1311254 | 168109 | 2024/12/04 | 2025/4/03 | SOFR+3.08% |
| HSB (note 2) | NA | 1545684 | 198165 | 2024/12/17 | 2025/4/16 | SOFR+3.08% |
| HSB (note 2) | NA | 710498 | 91090 | 2024/12/18 | 2025/4/17 | SOFR+3.08% |
| HSB (note 3) | NA | 3246694 | 416243 | 2022/10/06 | 2032/10/06 | BLR-2.25% |
| Less: Reclassification of short-term loan to long-term loan | NA | (2875119) | (368605) | 2022/10/06 | 2032/10/06 | BLR-2.25% |
| ICBC (note 3) | NA | 2500000 | 320513 | 2024/08/23 | 2025/08/22 | HIBOR+2.7% |
| ICBC (note 3) | NA | 6000000 | 769231 | 2024/09/27 | 2025/09/26 | HIBOR+2.7% |
| ICBC (note 4) | NA | 716668 | 91881 | 2024/11/13 | 2025/3/13 | ARR+2.25% |
| ICBC (note 3) | NA | 2500000 | 320513 | 2024/11/15 | 2025/11/14 | HIBOR+2.7% |
| ICBC (note 4) | NA | 2142813 | 274720 | 2012/09/03 | 2032/09/03 | HIBOR+2% |
| Less: Reclassification of short-term loan to long-term loan | NA | (1917791) | (245871) | 2012/09/03 | 2032/09/03 | HIBOR+2% |
| Bank of China Limited (note 5) | 8350000 | NA | 1143945 | 2024/09/06 | 2025/09/06 | 3.20% |
| Bank of Taian Co., Ltd. (note 6) | 10000000 | NA | 1369994 | 2024/06/13 | 2025/06/11 | 3.45% |
| China Everbright Bank Company Limited (note 9) | 8000000 | NA | 1095995 | 2024/01/26 | 2025/01/16 | 3.60% |
| Bank of communications (note 7) | 5000000 | NA | 684997 | 2024/05/24 | 2025/05/24 | 3.70% |
| Industrial Bank Co., Ltd. (note 7) | 8000000 | NA | 1095995 | 2024/10/31 | 2025/10/30 | 3.30% |
| Postal Savings Bank of China Co. Ltd. (note 8) | 5000000 | NA | 684997 | 2024/09/09 | 2025/09/08 | 3.52% |
| Bank of Qingdao Co., Ltd. (note 7) | 8000000 | NA | 1095995 | 2024/09/03 | 2025/08/29 | 3.75% |
| Shandong Feicheng Rural Commercial Bank Co., Ltd (note 5) | 13000000 | NA | 1780993 | 2024/05/20 | 2025/05/12 | 3.45% |
| **Total short-term loan** | **65350000** | **21232855** | **11675074** |  |  |  |
| **Total long-term loan** |  | **4792910** | **614476** |  |  |  |

---

Note:

1. During the year ended December 31, 2025, the Company borrowed an aggregate amount of $280,415 from its investment margin account to finance the acquisition of equity securities, with pledging the assets (i.e. equity securities and cash) in the Company's investment account as collateral. The interest rate for such margin loan is charged at 6.80% per annum with interest only payable daily. The margin loan has no maturity but is repayable on demand as the custodian can issue a margin call at any time, therefore the margin loan is recorded as a current liability on the Company's consolidated balance sheets.

As of December 31, 2025, the assets in the Company's investment account pledged as collateral for the margin loan were equity securities of amounted to $2,480,398.

2. The Company's controlling shareholder and director,
Mr. Ma Biu, together with the Company's director, Ms. Liu Liangping, and Luda PRC provided unlimited personal and corporate guarantee
for the loans, respectively. In addition, the loans were secured by certain properties held under Ms. Liu Liangping.

3. Mr. Ma Biu and Ms. Liu Liangping provided unlimited personal guarantee
for the loans. In addition, Hong Kong Mortgage Corporation Limited under the small and medium-sized enterprises Financing Guarantee Scheme
provided corporate guarantee for 80% - 100% of the loan.

4. Mr. Ma Biu and Ms. Liu Liangping provided unlimited personal
guarantee for the loans. In addition, the loans were secured by certain properties held under Mr. Ma Biu.

5. Mr. Ma Biu and Ms. Liu Liangping provided unlimited personal
guarantee for the loans. In addition, the loans were secured by the Company's building with carrying value of approximately $1,573,692
(2024: $1,438,626).

6. The loan is secured by the Company's patent rights,
which were registered under the laws of the PRC.

7. Mr. Ma Biu and Ms. Liu Liangping provided unlimited personal
guarantee for the loans.

8. Mr. Ma Biu and Ms. Liu Liangping provided unlimited personal
guarantee for the loans. In addition, the loans were secured by the Company's patent rights, which were registered under the laws
of the PRC.

9. Mr. Ma Biu and Ms. Liu Liangping provided unlimited personal guarantee for the loans. In addition, the loans were secured by certain properties held under Mr. Ma Biu and Ms. Liu Liangping.

10. As of December 31, 2025, bank loans totaling $1,382,211 with original
maturities exceeding one year were classified as current liabilities due to the inclusion of repayment on demand clauses.

"SOFR" stands for Secured Overnight Financing Rate.

"HIBOR" stands for Hong Kong Interbank Offered Rate.

"ARR" stands for Alternative Reference Rate.

"BLR" stands for Best Lending Rate.

The carrying amounts of the Company's buildings and land use rights pledged as collateral for bank loans are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Buildings, net | $865239 | $740555 |
| Land use right, net | 708453 | 698071 |
| Total | $**1573692** | $**1438626** |

---

For the years ended December 31, 2025, 2024 and 2023, interest expense on all loans amounted to $474,959, $530,185 and $455,457, respectively.

**NOTE 15 — OTHER INCOME, NET**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Unrealized fair value gain (loss) of short-term investments | $939352 | $(398654) | $1359 |
| Realized fair value gain (loss) of short-term investments (note 1) | 692399 |  |  |
| Dividend income from short-term investments | 180590 |  |  |
| Gain on extinguishment of consulting expenses payable (note 2) | 564918 |  |  |
| Refund of VAT | 105444 | 427503 |  |
| Others, net | 88514 | (25396) | 13869 |
|  | $2571217 | $3453 | $15228 |

---

Note:

&nbsp;&nbsp;&nbsp;&nbsp;1. It included $318,359 and $374,040 realized fair value gain from the
redemption of the Company's investment in Stable Income Fund SP and the sales of equity investments in the year ended December 31,
2025, respectively.

2. During the year ended December 31, 2025, the Company and one of its consultancy service providers executed a termination agreement pursuant to which both parties agree to terminate the consultancy service arrangement. In connection with this termination, the service provider has granted an unconditional waiver of the Company's consulting expenses payable of $564,918.

**NOTE 16 — SELLING EXPENSES**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Commission paid | $268733 | $169422 | $144476 |
| Consulting expenses | 268931 | 4974139 | 1485807 |
| Employee compensation and benefits | 124405 | 112450 | 105987 |
| Entertainment expenses | 207226 | 227284 | 247713 |
| Freight charges | 716356 | 675134 | 592053 |
| Other expenses | 220541 | 184322 | 133340 |
|  | $**1806192** | $**6342751** | $**2709376** |

---

**NOTE 17 — GENERAL AND ADMINSTRATIVE EXPENSES**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Amortization expenses | $20139 | $43778 | $30530 |
| Audit fee | 237774 | 35897 | 35897 |
| Bad debt charges |  |  | 13926 |
| Consulting expenses | 48087 | 58174 | 122167 |
| Depreciation expenses | 116781 | 78031 | 85160 |
| Employee compensation and benefits | 1988455 | 1725710 | 816526 |
| Entertainment expenses | 64516 | 21567 | 16939 |
| (Reversal of)/provision for allowance for expected credit losses | (117438) | (27137) | 714383 |
| Operating lease expenses | 60657 |  |  |
| Listing expenses |  |  | 230787 |
| Other expenses | 709275 | 531186 | 685021 |
| Professional fee | 469195 | 579507 | 40328 |
| Short-term lease expenses (note 1) | 86864 | 81538 | 80385 |
| Other taxes | 36341 | 94708 | 78139 |
|  | $**3720646** | $**3222959** | $**2950188** |

---

Note:

1. During the years ended December 31, 2025, 2024, and 2023, short-term
lease expenses included office premise lease payments of $81,538, $81,538 and $80,385, respectively, charged by Won Fittings Company Limited,
an entity controlled by Ms. Liu Liangping, a director of the Company. The remaining balance of short-term lease expenses for the year
ended December 31, 2025 was paid to an independent third party.

**NOTE 18 — RESEARCH AND DEVELOPMENT EXPENSES**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Depreciation expenses | $163925 | $137983 | $99713 |
| Direct cost | 941991 | 961080 | 947183 |
| Employee compensation and benefits | 212887 | 223646 | 260118 |
| Other expenses | 133249 | 60896 | 57459 |
|  | $**1452052** | $**1383605** | $**1364473** |

---

**NOTE 19 — ORDINARY SHARE** 

As of December 31, 2025 and 2024, the Company's authorized share capital will be HKD1,000,000,000 divided into 4,000,000,000 ordinary shares with a HK$0.25 (equivalent to $0.03) par value per share. The issued and outstanding number of ordinary shares was 22,690,000 and 20,000,000 shares as of December 31, 2025 and 2024, respectively.

*Initial Public Offering*

On February 27, 2025, the ordinary shares of the Company began trading on NYSE American LLC under the ticker symbol "LUD". On February 28, 2025, the Company consummated its Offering of 2,500,000 ordinary shares, par value HK$0.25 (equivalent to $0.03) per share, at a public offering price of $4.00 per share. The Offering was conducted on a firm commitment basis, after deducting certain underwriting expenses, the Company received net proceeds of US$8,915,989.

In connection with the IPO, the Company granted the underwriters the Over-Allotment Option to cover over-allotments, if any. On April 7, 2025, the underwriters partially exercised the Over-Allotment Option, and the Company issued and sold an additional 190,000 Ordinary Shares at the offering price of $4.00 per share, generating additional net proceeds of $696,792.

**NOTE 20 — STATUTORY RESERVE AND ADDITIONAL PAID-IN CAPITAL**

*Statutory reserve*

The statutory reserve represents restricted retained earnings. The Company's PRC subsidiary is required to transfer 10% of their net income, as determined under PRC accounting rules and regulations, to a statutory reserve fund until such reserve balance reaches 50% of the Company's registered capital. The registered share capital of the Company's PRC subsidiary was $14,743,590 (HK$115,000,000) and its maximum reserve balance was $7,731,795 (HK$57,500,000) as of December 31, 2025 and 2024.

Under the PRC laws and regulations, statutory surplus reserves are restricted to set-off against losses, expansion of production and operation and increasing registered capital of the respective company and are not distributable other than upon liquidation. The reserves are not allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor are they allowed for distribution except under liquidation. Amounts restricted include the PRC subsidiary's paid-in capital and statutory reserves. As of December 31, 2025 and 2024, the statutory reserve subject to such restrictions amounted to $2,365,592 (RMB16,000,966) and $2,253,177 (RMB15,408,737), respectively.

*Additional paid-in capital*

As of December 31, 2025 and 2024, the additional paid-in capital of the Company was $8,295,213 and $nil, respectively.

**NOTE 21 — RELATED PARTY TRANSACTIONS**

---

| | |
|:---|:---|
| **Names of Related Party:** | **Existing Relationship with the Company** |
| Won Fittings Company Limited | Wholly owned by Ms. Liu Liangping. |
| Mr. Ma Biu | Chairman, Director, and Chief Executive Officer |
| Ms. Liu Liangping | Director and Chief Operating Officer |
| Diamond Horses Group Limited (Formerly known as "Luda Group Ltd.") | Controlling shareholder of the Company |

---

**Summary of Related Party Transactions:**

A summary of trade transactions with a related party for years ended December 31, 2025, 2024 and 2023 are listed below:

---

| | | | |
|:---|:---|:---|:---|
| | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| <br>**Rental expenses charged by a related party:** | **2025** | **2024** | **2023** |
| Won Fittings Company Limited | $81538 | $81538 | $80385 |

---

Details of the guarantees and collaterals provided by Mr. Ma and Ms. Liu are disclosed in Note 14.

The Company declared $nil, $3,377,564 and $247,731 dividend distributed to Diamond Horses Group Limited for the years ended December 31, 2025, 2024 and 2023, respectively, and paid $nil, $3,377,564 and $630,785 for the years ended December 31, 2025, 2024 and 2023, respectively.

**NOTE 22 — INCOME TAXES**

*Cayman*

Luda Cayman is incorporated in Cayman Island as an offshore holding company. For the period ended December 31, 2025, 2024 and 2023, no provision was recognized for Luda Technology Group Limited.

*BVI* 

Luda BVI is incorporated in BVI as an offshore holding company. For the years ended December 31, 2025, 2024 and 2023, no provision was recognized for Luda BVI.

*Hong Kong*

Luda HK is incorporated in Hong Kong. On December 21, 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the "Bill'') which introduces the two-tiered profits tax rates regime. The Bill was signed into law on December 28, 2018 and was gazetted on the following day.

Under the two-tiered profits tax rates regime, the first HK$2 million of its profits of the qualifying entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%.

*PRC*

Luda PRC, the Company's operating subsidiary in PRC, was entitled High and New Technology Enterprise ("HNTE") and enjoyed preferential tax rate of 15% for a three-year validity period from August 17, 2020. Thus, Luda PRC is eligible for a 15% preferential tax rate from August 17, 2020 to August 17, 2023. As of December 31, 2023, the eligibility of HNTE was renewed and Luda PRC enjoyed another preferential tax rate of 15% for a three-year validity period from November 29, 2023. Thus, Luda PRC is eligible for a 15% preferential tax rate from November 29, 2023 to November 29, 2026.

Pursuant to the PRC Corporate Income Tax Law, a 10% withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprises established in the PRC. The requirement became effective from January 1, 2008 and applies to earnings after December 31, 2007. A lower withholding tax rate may be applied if there is a tax treaty between the PRC and the jurisdiction of the foreign investors. For the Company, the applicable rate is 5%. The Company is therefore liable for withholding taxes on dividends distributed by Luda PRC in respect of earnings generated from January 1, 2008.

As of December 31, 2025 and 2024, deferred tax liabilities have been recognized for withholding taxes that would be payable on the undistributed earnings that are subject to withholding taxes of the Company's subsidiaries established in the PRC. Up to the date of the report, the Company has no intention to reinvest the undistributed earnings and calculate the deferred tax liabilities based on the whole amount of undistributed earnings of Luda PRC. The aggregate amount of temporary differences associated with investments in subsidiaries in the PRC for which deferred tax liabilities have been recognized approximately $nil and US$23,050 as of December 31, 2025 and 2024 respectively, which is 5% of the undistributed earnings of Luda PRC approximately $nil and US$461,000 respectively.

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2025 and 2024, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2025, 2024 and 2023, respectively, and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from December 31, 2025.

Our income tax expense amounted to $434,395, $264,221 and $446,899 for the years ended December 31, 2025, 2024 and 2023, respectively. The increase was mainly due to change from loss before income tax for the year ended December 31, 2024 to income before income tax for the year ended December 31, 2025. The effective tax rate was 43.8% and 12.8% in the year ended December 31, 2025 and 2023, while the effective tax rate for the years ended December 31, 2024 is not applicable due to the pre-tax loss.

The Company recognized valuation allowance of $478,875 and $283,630 for deferred tax assets as of December 31, 2025 and 2024, respectively, as it is more likely than not that this portion of the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

The PRC statutory tax rate of 25% is used for the effective tax rate reconciliation as substantially all of the Company's operations are based in the PRC.

Upon adoption of ASU No. 2023-09 as described in Note 2, the reconciliation of income before income taxes computed at the PRC statutory rate to the income tax expense for the year ended December 31, 2025 was as follows:

---

| | | |
|:---|:---|:---|
|  | **For the year ended<br> December 31, 2025** | **For the year ended<br> December 31, 2025** |
|  | **Amount** | **Percent** |
| Income before income taxes | $991224 |  |
| Income before income taxes computed at the PRC statutory income tax rate | 247805 | 25% |
| *Foreign tax effect:* |  |  |
| &nbsp;&nbsp;&nbsp;Statutory tax rate difference between Hong Kong and the PRC | (30855) | (3.1)% |
| &nbsp;&nbsp;&nbsp;Statutory tax rate difference between Cayman and the PRC | 162668 | 16.4% |
| &nbsp;&nbsp;&nbsp;Statutory tax rate difference between BVI and the PRC | 3603 | 0.4% |
| *Tax credit:* |  |  |
| &nbsp;&nbsp;&nbsp;R&D additional deduction | (325558) | (32.8)% |
| &nbsp;&nbsp;&nbsp;Tax at concessionary rate | (8820) | (0.9)% |
| *Non-taxable or non-deductible items* |  |  |
| &nbsp;&nbsp;&nbsp;Tax effect of non-deductible expense | 35178 | 3.5% |
| &nbsp;&nbsp;&nbsp;Tax effect of non-taxable income | (30265) | (3.1)% |
| Change in valuation allowances | 195245 | 19.7% |
| PRC dividend withholding tax | 49263 | 5.0% |
| Under provision in previous years | 157841 | 15.9% |
| Others | (21710) | (2.2)% |
| **Income tax expense** | $**434395** | **43.8%** |

---

During the year ended December 31, 2025, the Company has paid income taxes (including withholding tax for dividend income) of $155,192, $49,263, $nil and $nil in the PRC, HK, BVI and Cayman, respectively.

Per the consolidated statements of operations and comprehensive (loss) income, the income tax expenses for the Company can be reconciled to the (loss) income before income taxes for the years ended December 31, 2024 and 2023 as follows:

---

| | | |
|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2024** | **2023** |
| (Loss) income before taxes | $(96795) | $3479476 |
| Cayman Islands statutory income tax rate |  |  |
| Income tax calculated at statutory rate |  |  |
| Rate differences in various jurisdictions | 1082355 | 487611 |
| Tax effect of non-taxable income | (1122273) | (1564) |
| R&D additional deduction | (198766) | (287423) |
| Tax effect of non-deductible expenditure | 311177 | 192798 |
| Change in deferred income tax allowance | 117607 | 120664 |
| PRC dividend withholding tax | 339590 | 121113 |
| Deferred income tax recovery | (265469) | (186300) |
| **Income tax expenses** | $**264221** | $**446899** |

---

Income taxes for the years ended December 31, 2025, 2024 and 2023 are attributed to the Company consisting of:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Current income tax - PRC | $239195 | $190100 | $512086 |
| Deferred income tax - PRC | (70048) | (265469) | (186300) |
| Deferred income tax - HK | 215985 |  |  |
| PRC dividend withholding tax - HK | 49263 | 339590 | 121113 |
| **Income tax expenses** | $**434395** | $**264221** | $**446899** |

---

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2025 and 2024 are presented below:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| **Deferred tax assets** |  |  |
| Tax loss | $477825 | $283630 |
| Allowance for expected credit losses | 297132 | 310139 |
| Decelerated tax depreciation for HK |  | 1153 |
| Refundable liability | 10417 | 54566 |
| Inventory provision | 242143 | 187108 |
| Unrealized fair value changes in short-term investments | 74237 |  |
| Less: valuation allowance | (478875) | (283630) |
| **Total** | $**622879** | $**552966** |

---

During the years ended December 31, 2025 and 2024, the Company recognized the valuation allowance of $478,875 and $283,630, respectively, against its deferred tax asset, primarily related to net operating loss carryforwards for Luda HK. Based on historical taxable income and projections of future results, management determined it is more likely than not that these deferred tax assets will not be realized.

As of December 31, 2025 and 2024, the Company had net operating loss carry forwards of $2,895,910 (equivalent to approximately HK$22,588,099) and $1,718,967 (equivalent to approximately HK$13,407,945), respectively. No tax losses were utilized during the years ended December 31, 2025 and 2024.

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| **Deferred tax liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Accelerated tax depreciation for the PRC | $136297 | $153380 |
| &nbsp;&nbsp;&nbsp;Accelerated tax depreciation for HK | 2200 |  |
| &nbsp;&nbsp;&nbsp;Undistributed earnings of PRC subsidiary |  | 23050 |
| &nbsp;&nbsp;&nbsp;Unrealized fair value changes in short-term investments | 234445 |  |
| **Total** | $**372942** | $**176430** |

---

**NOTE 23 — SIGNIFICANT RISKS AND UNCERTAINTIES**

*Concentration of Risks*

Concentration of major customers and suppliers:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Major customers representing more than 10% of the Company's revenues |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Customer A | $4037204 | 12.0% | $\* | \*% | $\* | \*% |
| &nbsp;&nbsp;&nbsp;Customer B | $3995291 | 11.9% | $\* | \*% | $\* | \*% |
| &nbsp;&nbsp;&nbsp;Customer C | $3552714 | 10.6% | $\* | \*% | $\* | \*% |
| &nbsp;&nbsp;&nbsp;Customer D | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; \* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\*% | $8228966 | 18.3% | $\* | \*% |
| &nbsp;&nbsp;&nbsp;Customer E | $&nbsp;&nbsp;&nbsp;&nbsp;\* | \*% | $5957404 | 13.3% | $8390058 | 16.3% |
| &nbsp;&nbsp;&nbsp;Customer F | $\* | \*% | $5560578 | 12.4% | $\* | \*% |
| &nbsp;&nbsp;&nbsp;Customer G | $&nbsp;&nbsp;&nbsp;&nbsp;\* | \*% | $4497689 | 10.0% | $15852474 | 30.8% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Major customers of the Company's accounts receivable |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Customer C | $2636843 | &nbsp;&nbsp;&nbsp;&nbsp; 17.1% | $\* | \*% |
| &nbsp;&nbsp;&nbsp;Customer D | $&nbsp;&nbsp;&nbsp;&nbsp;\* | &nbsp;&nbsp;&nbsp;&nbsp; \*% | $2718597 | 18.0% |
| &nbsp;&nbsp;&nbsp;Customer E | $\* | \*% | $1582693 | 10.5% |
| &nbsp;&nbsp;&nbsp;Customer F | $\* | \*% | \* | \*% |
| &nbsp;&nbsp;&nbsp;Customer G | $2543460 | 16.5% | $1704452 | 11.3% |

---

The loss of our significant customer or the failure to attract new customers could have a material adverse effect on our business, consolidated results of operations and financial condition.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Major suppliers representing more than 10% of the Company's purchase |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Supplier A | $&nbsp;&nbsp;&nbsp;&nbsp; \* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\*% | $\* | \*% | $11425454 | 23.8% |
| &nbsp;&nbsp;&nbsp;Supplier B | $4453329 | 17.7% | $3939174 | 12.4% | $\* | \*% |
| &nbsp;&nbsp;&nbsp;Supplier C | $\* | \*% | $4651267 | 14.7% | $\* | \*% |
| &nbsp;&nbsp;&nbsp;Supplier D | $2682282 | 10.7% | $\* | \*% | $\* | \*% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Major suppliers of the Company's accounts payables |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Supplier A | $\* | \*% | $1378928 | 15.9% |
| &nbsp;&nbsp;&nbsp;Supplier B | $2084843 | 19.7% | $1499161 | 17.3% |
| &nbsp;&nbsp;&nbsp;Supplier C | $&nbsp;&nbsp;&nbsp;&nbsp;\* | \*% | $1645008 | 19.0% |
| &nbsp;&nbsp;&nbsp;Supplier E | $1234813 | 11.7% | $\* | \*% |

---

\* Represents less than 10% of the Company's total amount or balance.

The Company believes there are numerous other suppliers that could be substituted should the supplier become unavailable or non-competitive.

 

*Exchange Rate Risks*

The Company operates in the PRC, which may give rise to significant foreign currency risks mainly from fluctuations and the degree of volatility of foreign exchange rates between the USD and the RMB. Strengthening of the RMB against the USD would result in a negative impact of the Company's net income and/or its financial position.

 

*Currency Convertibility Risks*

The Company's operating activities are predominantly (over 80% to 90%) transacted in RMB and USD. While USD is freely convertible into other currencies, RMB is not freely convertible into other currencies. which are not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People's Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. Approval of foreign currency payments by the People's Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers' invoices, shipping documents and signed contracts.

 

*Credit Risks*

Credit risk is the potential financial loss to the Company resulting from the failure of a customer or a counterparty to settle its financial and contractual obligations to the Company, as and when they fall due. As the Company does not hold any collateral, the maximum exposure to credit risk is the carrying amounts of accounts receivable, other receivables, notes receivable, contract assets, restricted cash and cash and cash equivalents presented on the consolidated balance sheet. The Company has no other financial assets which carry significant exposure to credit risk.

 

*Interest Rate Risks*

The Company is exposed to fair value interest rate risk primarily relates to the fixed-rate loans. The Company is also exposed to cash flow interest rate risk primarily relates to the variable-rate loans and bank balances. The Company has not used any derivative instruments to mitigate its exposure associated with interest rate risk.

 

*Risks and Uncertainties*

The operations of the Company are located in Hong Kong and the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Hong Kong and PRC, as well as by the general state of Hong Kong and PRC economy. The Company's results may be adversely affected by changes in the political, regulatory and social conditions in Hong Kong and the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.

 

*Liquidity Risks*

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 150-180 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

**NOTE 24 — COMMITMENT AND CONTINGENCIES**

Other than the lease commitments and debt obligations as disclosed in the notes to the consolidated financial statements, the Company did not have any significant financial or capital commitments as of December 31, 2025 and 2024, and through the issuance date of these consolidated financial statements.

In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable, and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation as of December 31, 2025 and 2024, and through the issuance date of these consolidated financial statements.

**NOTE 25 — SEGMENT REPORTING**

The Company follows Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 280, Segment Reporting, as amended by Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires companies to disclose segment information based on how management allocates resources and evaluates operating performance. The Company's chief operating decision maker ("CODM") is the Chief Executive Officer. The CODM regularly reviews financial information, including segment revenue, gross profit, significant segment expenses (selling expenses and general and administrative expenses), segment net income (loss), and segment assets to evaluate segment performance and allocate resources accordingly. Based on the internal management reporting and assessment, the Company determined that it operates in two reportable segments: Hong Kong Trading and PRC Manufacturing. The Company's primary measure of segment performance is segment net income (loss). Other key measures reviewed by the CODM include segment revenue, segment gross profit, significant segment expenses (selling expenses and general and administrative expenses), and segment assets.

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Revenue** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $8961686 | $7282272 | $5461367 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 25080099 | 38102258 | 46155510 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction (note 1) | (506434) | (521100) | (188823) |
| **Total revenue** | $**33535351** | $**44863430** | $**51428054** |
| **Cost of sales** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $6978182 | $5655693 | $4341978 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 21224333 | 28323614 | 36418495 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction (note 1) | (586977) | (521100) | (227396) |
| **Total cost of sales** | $**27615538** | $**33458207** | $**40533077** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Gross profit** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $1983504 | $1626579 | 1119389 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 3855766 | 9778644 | 9737015 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction (note 1) | 80543 |  | 38573 |
| **Total gross profit** | $**5919813** | $**11405223** | **10894977** |
| **Selling expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $661262 | $417823 | 190198 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 1144930 | 5924928 | 2519178 |
| **Total selling expenses** | $**1806192** | $**6342751** | **2709376** |
| **General and administrative expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $2374450 | $2268421 | 1756780 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 1265653 | 954538 | 1193408 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction (note 1) | 80543 |  |  |
| **Total general and administrative expenses** | $**3720646** | $**3222959** | **2950188** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Segment net income (loss):** |  |  |  |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $2445459 | $5059493 | $2780297 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 495604 | 1379362 | 3995034 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction (note 2) | (2384234) | (6799871) | (3742754) |
| **Total segment net income (loss)** | $**556829** | $**(361016)** | $**3032577** |

---

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
| **Segment assets** | **2025** | **2024** |
| &nbsp;&nbsp;&nbsp;— Hong Kong Trading | $30803643 | $17112819 |
| &nbsp;&nbsp;&nbsp;— PRC Manufacturing | 35824110 | 36286620 |
| &nbsp;&nbsp;&nbsp;Elimination of internal transaction (note 3) | (17502656) | (14093614) |
| **Total segment assets** | $**49125097** | $**39305825** |

---

Note:

&nbsp;&nbsp;&nbsp;&nbsp;1. The internal transaction represents sales from PRC Manufacturing segment to Hong Kong trading segment.

2. The internal transaction mainly represents dividend income distributed from PRC Manufacturing segment to Hong Kong trading segment.

3. The internal transaction mainly represents Hong Kong Trading segment's investment in PRC Manufacturing segment, in the form of investment in subsidiary.

The following table summarized the Company's long-lived assets, including property, plant and equipment, net, intangible assets, net, and operating lease right-of-use assets, net by geographical regions:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
| **Long-lived assets** | **2025** | **2024** |
| &nbsp;&nbsp;&nbsp;—HK | $524634 | $56637 |
| &nbsp;&nbsp;&nbsp;—PRC | 5650058 | 5768949 |
| **Total long-lived assets** | $**6174692** | $**5825586** |

---

**NOTE 26 — SUBSEQUENT EVENTS**

The Company evaluated all events and transactions that occurred after December 31, 2025 up through May 15, 2026, which is the date of these consolidated financial statements are available to be issued. Except as disclosed below or elsewhere, there was no other subsequent event occurred that would require recognition or disclosure in the Company's consolidated financial statements.

**note 27** **— RESTRICTED NET ASSETS**

PRC laws and regulations permit payments of dividends by the Company's subsidiaries incorporated in the PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the Company's subsidiaries incorporated in the PRC are required to annually appropriate 10% of their profit after taxation to the statutory fund reserve (including the general reserve fund and enterprise expansion fund, where appropriate) prior to payment of any dividends, unless such fund has reached 50% of the registered capital of the respective company. Furthermore, registered share capital and capital reserve accounts are also restricted from distribution. As a result of the restrictions described above and elsewhere under PRC laws and regulations, the Company's subsidiaries incorporated in the PRC are restricted in their ability to transfer a portion of their net assets to the Company in the form of dividends. Furthermore, cash transfers from the Company's PRC subsidiaries to their parent companies outside of China are subject to PRC government control of currency conversion. Shortages in the availability of foreign currency may temporarily delay the ability of the PRC subsidiaries to remit sufficient foreign currency to pay dividends or other payments to the Company, or otherwise satisfy their foreign currency denominated obligations. The restricted portion amounted to approximately $16,774,079 and $15,241,658 as of December 31, 2025 and 2024, respectively. Except for the above or disclosed elsewhere, there is no other restriction on the use of proceeds generated by the Company's subsidiaries to satisfy any obligations of the Company.

The Company performed a test on the restricted net assets of its subsidiaries in accordance with Securities and Exchange Commission Regulation S — X Rule 4-08(e)(3), "General Notes to Financial Statements" and concluded that the restricted net assets exceed 25% of the consolidated net assets of the Company as of December 31, 2025 and 2024 and the condensed financial information of the parent company is set out in Note 28.

**NOTE 28 — CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY**

The following condensed financial information of the parent company have been prepared using the same accounting policies as set out in the Company's consolidated financial statements, except that the parent company's investment in its subsidiary is presented at cost and such investment is presented on the separate condensed balance sheets of the parent company as "Investment in a subsidiary".

The parent company is a Cayman Islands company and, therefore, is not subjected to income taxes for all years presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company.

As of December 31, 2025 and 2024, there were no material commitments or contingencies, significant provisions for long-term obligations, mandatory dividend or redemption requirements of redeemable shares or guarantees of the Parent Company except for those which have been separately disclosed in the consolidated financial statements, if any.

***(a)***  ***Condensed balance sheets*** 

 ****

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| **Assets** |  |  |
| **Current assets:** |  |  |
| Cash and cash equivalents | $331946 | $5019 |
| Due from subsidiaries | 649611 |  |
| Redemption receivable, net | 8222754 |  |
| Prepayments, deposits and other receivables, net | 68789 |  |
| Deferred offering cost |  | 671321 |
| **Total current assets** | **9273100** | **676340** |
| **Non-current assets:** |  |  |
| Investment in a subsidiary | —<br> \* | —<br> \* |
| Plant and equipment | 8076 |  |
| Operating lease right-of-use assets | 217185 |  |
| **Total non-current assets** | **225261** | **—**  |
| **Total assets** | $**9498361** | $**676340** |
| **Current liabilities:** |  |  |
| Amount due to a subsidiary | $806594 | $176237 |
| Other payables and accruals | 211475 |  |
| Operating lease liabilities | 147752 |  |
| **Total current liabilities** | **1165821** | **176237** |
| **Non-current liabilities:** |  |  |
| Operating lease liabilities | 101677 |  |
| **Total non-current liabilities** | **101677** | **—**  |
| **Total liabilities** | $**1267498** | $**176237** |
| **Shareholders' equity:** |  |  |
| Ordinary shares, $0.03 (equivalent to HK$0.25) par value, 4,000,000,000 shares authorized, 20,000,000 and 22,690,000 shares issued and outstanding as of December 31, 2025 and 2024, respectively | $727244 | $641026 |
| Additional paid-in capital | 8295213 |  |
| Accumulated deficit | (791594) | (140923) |
| **Total shareholders' equity** | **8230863** | **500103** |
| **Total liabilities and shareholders' equity** | $**9498361** | $**676340** |

---

*\** *Amount less than $1.*

 ****

***(b)***  ***Condensed statements of operations and comprehensive (loss) income*** 

---

| | | | |
|:---|:---|:---|:---|
|  | **For the year ended<br> December 31,<br> 2025** | **For the year<br> ended December 31,<br> 2024** | **For the year<br> ended December 31,<br> 2023** |
| **Operating expenses:** | | | |
| General and administrative expenses | $(918255) | $(140942) | $— |
| **Total operating expenses** | (918255) | (140942) |  |
| **Loss from operations** | (918255) | (140942) |  |
| &nbsp;&nbsp;&nbsp;Other income, net | 267584 | 19 |  |
| &nbsp;&nbsp;&nbsp;Dividend income from subsidiaries |  | 3377564 | 247731 |
| **Total other income, net** | 267584 | 3377583 | 247731 |
| **(Loss) income before income taxes** | (650671) | 3236641 | 247731 |
| Income taxes |  |  |  |
| **Net (loss) income and comprehensive (loss) income** | $**(650671)** | $**3236641** | $**247731** |

---

***(c)***  ***Condensed statements of cash flows*** 

 ****

---

| | | | |
|:---|:---|:---|:---|
|  | **For the year<br> ended<br> December 31,<br> 2025** | **For the year<br> ended<br> December 31,<br> 2024** | **For the year<br> ended<br> December 31,<br> 2023** |
| **Cash flows from operating activities:** | | | |
| Net (loss) income | $(650671) | $3236641 | $247731 |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Fair value changes of short-term investments | (318359) |  |  |
| &nbsp;&nbsp;&nbsp;Provision for allowance for expected credit losses | 54579 |  |  |
| &nbsp;&nbsp;&nbsp;Expensed deferred listing fee |  | 137596 |  |
| Changes in operating assets and liabilities: | 706 |  |  |
| &nbsp;&nbsp;&nbsp;Prepayment, deposit and other receivables, net | (68789) |  |  |
| &nbsp;&nbsp;&nbsp;Other payables and accruals | 217383 |  |  |
| &nbsp;&nbsp;&nbsp;Lease liabilities - operating leases | 32244 |  |  |
| **Net cash (used in) provided by operating activities** | $**(732907)** | $**3374237** | $**247731** |
| **Cash flows from investing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of short-term investments | $(7958974) | $— | $— |
| &nbsp;&nbsp;&nbsp;Advance to a subsidiary | (649611) |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of plant and equipment | (8782) |  |  |
| **Net cash used in investing activities** | $**(8617367)** | $— | $**—**  |
| **Cash flows from financing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Issuance of ordinary shares | $— | $— | $641026 |
| &nbsp;&nbsp;&nbsp;Net proceeds from initial public offering | 8915989 |  |  |
| &nbsp;&nbsp;&nbsp;Net proceeds from share over-allotment | 696792 |  |  |
| &nbsp;&nbsp;&nbsp;Payment of deferred offering cost | (565937) | (20026) | (633891) |
| &nbsp;&nbsp;&nbsp;Advance from a subsidiary | 630357 | 28372 |  |
| &nbsp;&nbsp;&nbsp;Repayment to a subsidiary |  |  | (7135) |
| &nbsp;&nbsp;&nbsp;Dividend paid |  | (3377564) | (247731) |
| **Net cash provided by (used in) financing activities** | $**9677201** | $**(3369218)** | $**(247731)** |
| **Net increase in cash and cash equivalents** | $326927 | $5019 | $— |
| **Cash and cash equivalents at beginning of year** | 5019 |  |  |
| **Cash and cash equivalents at end of year** | $**331946** | $**5019** | $**—**  |

---

 ****

 ****

## Exhibit 4.9

**Exhibit 4.9**

**THIS LICENCE** is made the 2<sup>nd</sup> day of September 2025

**BETWEEN**

(I) **PIONEER TIME INVESTMENT LIMITED (RECEIVERS AND MANAGERS APPOINTED),** a company
 incorporated in the British Virgin Islands, whose principal place of business in Hong Kong is situated at 17th Floor, One Island
 East, Taikoo Place, 18 Westlands Road, Quarry Bay, Hong Kong (hereinafter called the **Licensor** which expression shall where
 the context so admits include the person for the time being entitled to the reversion immediately expectant on the term hereby
 created) of the one part; and

(2) **LUDA TECHNOLOGY GROUP LIMITED,** a company incorporated
in Cayman Islands, whose principal place of business in Hong Kong is situated at Unit H, 13th Floor, Kaiser Estate Phase 2, 47-53 Man
Yue Street, Hunghom, Kowloon, Hong Kong (Business Registration No.73994197) (hereinafter called the **Licensee)** of the other part.

**WHEREAS**

(A) Immediately before this Licence, the Licensor (as landlord) and the Licensee (as tenant) have
 entered into a tenancy agreement in respect of the Premises for a term of one (1) year and nine (9) months commencing on 28<sup>th
</sup>November 2025 (the **Tenancy Agreement)** and subject to such other terms and conditions therein contained.

(B) To facilitate the Licensee's fitting-out works at the Premises,
the Licensor has agreed to grant and the Licensee has agreed to take a licence of the Premises for a term of three (3) months in the
manners hereinafter appearing.

**IT IS AGREED** as follows:

**1.**  **<u>lnterpretation</u>** 

In this Licence, unless the context otherwise requires or expressly provides, the following words shall have the following meanings respectively:

**Commencement Date** means the date of commencement of the licence herein created as set out in Part 1 of the Schedule hereto;

**Building** means YF LIFE CENTRE, No. 25 Jaffe Road and No. 38 Gloucester Road, Wanchai, Hong Kong;

**Deed of Mutual Covenant** means the Deed of Mutual Covenant (if any);

**Government** means the Government of the Hong Kong Special Administrative Region;

**Licence Fee** means the monthly licence fee (if any) as set out in Part 3 of the Schedule hereto payable by the Licensee to the Licensor in accordance with Clause 4 hereof exclusive of service charges and rates;

**Licence Period** means the licence period set out in Part 2 of the Schedule hereto;

**Service Charges** means the monthly management charges in respect of the Premises as set out in Part 3 of the Schedule;

**Manager** means the incorporated owners of the Building or the Manager of the Building from time to time appointed to manage the Building under the Deed of Mutual Covenant (if any); and

**Premises** means the licensed area as described in Part 4 of the Schedule hereto.

2. <u>The Licence</u> 

The Licensor shall subject to the payment of the Licence Fee (if any) and other payments in accordance with this Licence make available to the Licensee during the Licence Period the non-exclusive right to use the Premises Together with the right to use (in common with the Licensor and all others having the like right and subject to the Licensor's right to restrict such use) the entrances staircases landings passages pipes conduits risers ducts channels lifts and toilets in the Building in so far as the same are necessary for the proper use and enjoyment of the Premises.

3. <u>Licence Period</u> 

The Licence created under this Licence shall be for the Licence Period.

4. <u>Licence Fee etc.</u> 

4.1 The Licensee shall pay to the Licensor the Licence Fee (if
any) and Service Charges upon signing of this Licence.

4.2 The Licensee shall pay and discharge all rates imposed by
the Government on the Premises for the Licence period upon demand from the Licensor.

4.3 The Licensee shall punctually pay and discharge all deposits
and charges in respect of the water, gas, electricity and other utilities consumed on the Premises.

5. <u>The Licensee's Obligations</u> 

The Licensee hereby agrees with the Licensor as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to submit for the Licensor's approval the design, layout and
draft plans of the Premises (such approval shall not be unreasonably withheld or delayed) and shall maintain the Premises in a good and
clean condition (fair wear and tear, inherent and structural defects excepted) from time to time throughout the Licence Period to the
reasonable satisfaction of the Licensor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to observe obey and comply with such House Rules (if any)
as may from time to time be made in accordance with the Deed of Mutual Covenant of the Building (if any);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to be responsible to the Licensor for the acts neglect omissions
and default of all workmen, contractors, servants, employees, agents and invitees of the Licensee with regard to the exercise of the
rights of the Licensee under this Licence and anything done or omitted in connection therewith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) to indemnify and keep the Licensor indemnified against all
claims, demands, actions and proceedings brought by any person, firm or company against the Licensor arising out of or in connection
with this Licence and against all loss, damages, costs or expenses paid or incurred by the Licensor as a result thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) not
to cause or permit or suffer or permit to be produced on or in the Premises any sound or noise or vibration (including sound produced
by broadcasting from television, radio or any apparatus or instrument capable of producing or reproducing music or sound or vibration)
or other acts or things in or on the Premises which is or are or may be or become a nuisance or annoyance to any other tenants or occupier
of the Building or any user or customer of the same or to the Licensor or which in the reasonable opinion of the Licensor may prejudicially
affect the Premises or any other parts of the Building or any adjoining or adjacent premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) not to place or leave or suffer or to permit to be placed or left any boxes, furniture, articles or rubbish
at the entrances of or on any part of the staircases, passages or landings or other parts of the Building used in common with other tenants
or occupiers thereof or otherwise encumber the same. Without prejudice to any other remedy it may have under this Licence, the Licensor
or any of its servants or agents may without any prior notice to the Licensee remove any such obstruction and dispose of the same as it
may in its absolute discretion think fit without incurring any liability therefor to the Licensee or any other person whomsoever and the
Licensee shall pay to the Licensor forthwith on demand all costs and expenses incurred in connection with such removal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) not to do or permit or suffer to be done any act, deed, matter or thing whatsoever which amounts to a
breach of any rule of law or legislation in Hong Kong or any of the terms, conditions and covenants under which the Building is held from
the Government or of the Deed of Mutual Covenant of the Building (if any) and the Licensee shall keep the Licensor fully indemnified against
any such breach;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) not to use the Premises or any part thereof for any purpose other than as set forth in Part 5 of the Schedule hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) not to commence operation of its business unless and until all approval licence permit and consent required
by any appropriate Government authorities and departments in connection with the Licensee's use and occupation of the Premises are obtained.
The Licensee shall provide copies (certified as true by a director of the Licensee) of the relevant licence and approval for the Licensor's
record;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) not to make any erection, installation of equipment and accessories and other installations, fixture or
addition whatsoever on or to the Premises without obtaining the Licensor's prior written approval (such approval shall not be unreasonably
withheld or delayed) and if such prior written approval is given, such installations shall in all aspects comply with all relevant laws,
regulations, practice directions and guidelines;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) not to use the Premises as sleeping quarters or as domestic premises within the meaning of any Ordinance for the time being in force;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) not to use the Premises for the manufacture of goods or merchandise or for the storage of goods or merchandise
other than goods or merchandise reasonably required in connection with the Licensee's business carried on therein nor to keep or store
or cause or permit or suffer to be kept or stored any extra hazardous or dangerous goods within the meaning of Dangerous Goods Ordinance
and the regulations thereunder or any statutory modification or re-enactment thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) not to use or cause permit or suffer to be used any part of the Premises for gambling or for any illegal immoral or improper purpose
or in anyway so as to cause nuisance inconvenience or damage or danger to the Licensor or the tenants or
occupiers of the Building or to users and customers of the same; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) to perform and observe all its obligations under the Tenancy Agreement (except for payment of rent) as if they had been repeated in
this Licence.

**6.**  **<u>Termination</u>** 

6.1 Notwithstanding any provisions in this Licence, the Licence
created under this Licence shall be terminated upon the Licensee committing breach of the terms of this Licence and failing to rectify
such breach within seven (7) days from the date of receipt of the Licensor's written demand for want of rectification and it shall be
lawful for the Licensor (as landlord) to terminate the Tenancy Agreement immediately by giving a notice of termination after the expiry
of the 7-day period to the Licensee and thereupon this Licence and the Tenancy Agreement shall absolutely be determined and the deposit
payable under the Tenancy Agreement shall be absolutely and fully forfeited to the Licensor (as landlord) under the Tenancy Agreement
without prejudice to any right of action of the Licensor to claim against the Licensee all rent payable for the unexpired Term of the
tenancy had the Tenancy Agreement not been terminated under this Clause, which, for the avoidance of doubt, the Licensee acknowledges
that such payment is liquidated damages and not penalty.

6.2 The termination of this Licence for whatever reason shall be without prejudice to any right of action
of the Licensor in respect of any outstanding breach or non-observance or non-performance of any of the agreements, stipulations, terms
and conditions contained in this Licence and on the Licensee's part to be observed and performed.

6.3 Upon expiration or sooner termination of the Licence created under this Licence and unless the Tenancy
Agreement shall continue to be effective and valid, the Licensee shall deliver the Premises to the Licensor in bare-shell and good condition
reasonably satisfactory to the Licensor.

6.4 Notwithstanding anything herein contained to the contrary, the Licensee acknowledges and understands that
the grant of this Licence is conditional upon the validity and subsistence of the Tenancy Agreement by the Licensee. The Licensee acknowledges
and agrees that this Licence shall become automatically null and void upon rescission or cancellation of the Tenancy Agreement.

**7.**  **<u>Licence not a tenancy</u>** 

7.1 It is hereby agreed and declared by the parties hereto that this Licence is not intended to confer and
will not confer exclusive possession of the Premises upon the Licensee nor to create legal relationship of landlord and the tenant between
the parties.

7.1 This Licence shall not be assigned, transferred, mortgaged, pledged or charged to or in favour of any
third party.

7.2 The Licensee shall not do or permit or suffer to be done any act, deed, matter or thing whereby any person
or persons not a party to this Licence obtains any right under this Licence.

**8.**  **<u>Exclusions</u>** 

It is hereby further agreed that the Licensor shall not be liable or responsible for

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any damage caused to any personal property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the loss or theft of any article or thing on or left within
the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any injury or damage to the Licensee or to its contractors,
servants, employees, agents or invitees or to its or their property caused by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any defects, breakdown or malfunction or want of repair in or
to any area of the Building or any facilities of the Building;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any act neglect omission or default of the Licensor or of the
contractors, servants, employees, agents or licensees of either of them;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) fire, flooding, the overflow or leakage of water or other calamities
beyond the control of the Licensor

Unless the same is/are caused by the gross negligence and wilful neglect of the Licensor or its agent and the Licensee shall fully indemnify the Licensor against all claims actions and proceedings by third parties in respect of such damage loss or injuries caused by any act neglect omission or default of the Licensee or its contractors, servants, employees and agents Provided that nothing in this Clause shall be construed as imposing on the Licensor any duty to insure against any of the said liabilities.

9. <u>No Warranty</u> 

The Licensor hereby expressly declares that the Licensor does not warrant or guarantee that the Premises are fit for any particular kind of use or business or for the use or business to be carried out by the Licensee and the Licensee shall be responsible for the application of all necessary licences required for the operation of the kind of use or business or trade to be carried out by the Licensee at the Premises from all relevant bodies and/or Government departments and the Licensor shall not be in any way responsible for the non-issuance of any licences for whatever reasons.

10. <u>Notices</u> 

Any notice required to be given by one party to the other shall be sufficiently served on such other party by sending the same by prepaid post to or by facsimile or left at the last known address of such party in Hong Kong and shall be deemed to have been served (in the case of a notice sent by post) 1 day after the posting of the same and (in the case of a notice by facsimile) upon completion of transmission with full transmission report thereof and (in the case of a notice left at the address aforesaid) on the date of delivery of the same to such address.

11. <u>Stamp Duty and Costs</u> 

Each party shall bear its own costs in relation to the preparation approval completion and execution of this Licence. The adjudication fee and the stamp duty and registration fee (if any) on this Licence and its counterpart shall be borne by the parties hereto in equal shares.

12. <u>Entire Agreement</u> 

This Licence constitutes the entire agreement between the Licensor and the Licensee and no variation, amendment or modification of this Licence shall have effect unless it is in writing and signed by a duly authorised representative of each party.

13. <u>No Waiver</u> 

No relaxation forbearance delay or indulgence by either party in enforcing any of the terms and conditions of this Licence and the granting of time by either party to the other shall prejudice affect or restrict the rights and powers of that party hereunder nor shall any waiver by either party of any breach hereof operates as a waiver of or in relation to any subsequent or any continuing breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Governing Law</u> 

This Licence shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region and each party hereby submits to the non-exclusive jurisdiction of the courts of the Hong Kong Special Administrative Region as regards any claims or matter arising under this Licence.

15. <u>Confidentiality</u> 

The Licensee agrees and undertakes with the Licensor that it will hold the information contained in this Licence in strict confidence and will not disclose, copy, reproduce or distribute any of it for any purpose or to any person (except to the Licensee's professional advisers or if required by law) or otherwise without the prior written consent of the Licensor (which may be withheld in the Licensor's absolute discretion). The Licensee agrees and undertakes with the Licensor that it will not register this Licensee at any registry (land or otherwise) in Hong Kong.

**IN WITNESS** whereof the parties hereto have executed this Licence the day and year first above written.

**<u>THE SCHEDULE</u>**

<u>Part 1</u>

Commencement Date: 28 August 2025

<u>Part 2</u>

Licence Period: commencing from the Commencement Date and expiring on 27 November 2025

<u>Part 3</u>

Licence Fee: HK$1.00

Service Charges: HK$19,616.00 per calendar month.

Rates: as demanded by the Government from time to time.

<u>Part 4</u>

The Premises: All Those Rooms 1604-5 on the 16th Floor of the Building.

<u>Part 5</u>

Office only.

**EXECUTION**

IN WITNESS whereof the parties hereto have executed this Licence on the date first above written.

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| |
|:---|
| SIGNED by<br>of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Licensor, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: |
| SIGNED by |
| for and on behalf of the Licensee in the presence of: |

---

## Exhibit 4.10

**Exhibit 4.10**

Dated the 2<sup>nd</sup> day of September 2025

**PIONEER TIME INVESTMENT LIMITED**

**(RECEIVERS AND MANAGERS APPOINTED)**

AND

**LUDA TECHNOLOGY GROUP LIMITED**

**(Business Registration No.73994197)**

TENANCY AGREEMENT

(OFFICE)

Premises Rooms 1604-5 on the 16th Floor of YF Life Centre, No. 25 Jaffe Road and No.38 Gloucester Road, Wanchai, Hong Kong

Term One (1) year and nine (9) months fixed term

Commencing the 28th day of November 2025

Expiring the 27th day of August 2027

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| | |
|:---|:---|
| Rent | HK.$102,400.00 per month |

---

PARTIES THIS AGREEMENT made the 2<sup>nd</sup> day of September Two Thousand and Twenty-Five <br>BETWEEN

(1) **PIONEER TIME INVESTMENT LIMITED (RECEIVERS AND MANAGERS APPOINTED),** a company incorporated in the British Virgin Islands, whose
principal place of business in Hong Kong is situated at 17<sup>th</sup> Floor, One Island East, Taikoo Place, 18 Westlands Road, Quarry
Bay, Hong Kong (hereinafter called "the Landlord" which expression shall where the context so admits include the person for
the time being entitled to the reversion immediately expectant on the term hereby created) of the one part; and

(2) **LUDA TECHNOLOGY GROUP LIMITED,** a company incorporated in Cayman Islands, whose principal
place of business in Hong Kong is situated at Unit H **,** 13th Floor, Kaiser Estate Phase 2, 47-53 Man Yue Street, Hunghom, Kowloon,
Hong Kong (Business Registration No.73994197) (hereinafter called "the Tenant") of the other part.

WITNESSETH as follows :-

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| | |
|:---|:---|
| DEMISE PARCELS | 1. In consideration of the rent and the Tenant's covenants hereinafter reserved and contained the Landlord hereby demises unto the Tenant ALL THAT portion of the building erected on or on part of ALL THAT piece or parcel of ground situate at Victoria, Hong Kong more particularly described in Part I of the First Schedule hereto now known as YF LIFE CENTRE, No.25 Jaffe Road and No. 38 Gloucester Road, Wanchai, Hong Kong (hereinafter called "the Building") which said portion consists of the area more particularly described in Part II of the First Schedule hereto (hereinafter called "the Premises") |
| ANCILLARY RIGHTS | TOGETHER with the use in common with the Landlord and others having the like right of the common entrances, staircases, landings, lavatories and passages of the Building and of the lifts and central air-cooling and/or heating services as provided by the Landlord (whenever the same shall be operating) so far as the same are necessary to the enjoyment of the Premises. EXCEPT AND RESERVED unto the Landlord and all persons authorised by the Landlord or otherwise entitled thereto:- |

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(i) the right of free and uninterrupted passage and running of water, soil, gas, drainage, electricity and all other services or supplies
through such sewers, watercourses, conduits, pipes, wires, cables and ducts as are now or
may hereafter be in, on or under the Premises and serving or capable of serving the Building or any adjoining or neighbouring
property together with the right to enter upon the Premises to inspect repair or maintain any such sewers, watercourses, conduits,
wires, cables and ducts;

(ii) the exclusive right to install or affix to any part of the
Building such flues, pipes, conduits, chimneys, aerials, plant, machinery and other apparatus, signs, placards, posters and other advertising
structures whatsoever (whether illuminated or not) as the Landlord shall think fit together with the right to repair maintain service
remove or replace the same;

(iii) the right to erect or alter or consent to the erection or
alteration of any building for the time being on any adjoining or neighbouring property notwithstanding that such erection or alteration
may diminish the access of light and air enjoyed by the Premises and the right to deal with any such property as it may think fit;

(iv) the right and liberty to enter upon the Premises in the circumstances
in which the covenants by the Tenant contained in these presents permit such entry;

(v) the right to subjacent and lateral support from the Premises
for the remainder of the Building; and

(vi) all easements quasi-easements privileges and rights whatsoever
now enjoyed by any adjoining or neighbouring property in under over or in respect of the Premises as if such adjoining and neighbouring
property and the Premises had at all times heretofore been in separate ownership and occupation and such matters had been acquired by
prescription or formal grant.

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| | |
|:---|:---|
| HABENDUM TERM | TO HOLD the Premises unto the Tenant for the term specified in the Second Schedule hereto determinable as hereinafter provided PAYING THEREFOR the rent(s) specified in the second column of Part I of the Third Schedule hereto for the period specified in the corresponding entry in the first column of Part I of the Third Schedule hereto. The rent(s) payable hereunder is(are) exclusive of rates and shall be paid in advance without any deduction or set off on the 1st day of each and every successive calendar month the first of such payments of rent to be made on the signing of this Agreement. |

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Without prejudice to any other remedy available to the Landlord if and so often as any rent reserved pursuant to the terms and provisions of this Agreement (whether formally demanded or not) or any other money due from the Tenant under the terms and provisions of this Agreement shall be unpaid after becoming due and payable the Tenant shall also pay on demand by way of rent interest on such unpaid rent and other moneys from the due date until payment at the rate of three (3) per cent per annum above the rate from time to time quoted by The Hongkong and Shanghai Banking Corporation Limited as its prime rate.

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| | |
|:---|:---|
| SERVICE CHARGES | 2. The Tenant shall also pay to the Landlord by way of further or additional payments for the provision by the Landlord of the maintenance and management of the Building the sums specified in and calculated in accordance with Part II of the Third Schedule hereto (hereinafter collectively called "the Service Charges") such sums to be paid monthly in advance throughout the term and on the days and in the manner as the payment of rent hereinbefore mentioned (which shall be subject to increase by the Landlord as provided in Clause 3) the first of such payments to be made on the signing of this Agreement. |

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| | |
|:---|:---|
| INCREASE IN SERVICE CHARGES | 3. The parties hereto agree that the Service Charges shall be subject to increase at any time during the continuance of the term hereby created upon the Landlord giving to the Tenant one (1) calendar month's notice in writing of such increase and of the consequent revision to the budget referred to in Part II of the Third Schedule hereto and upon the expiration of the said period of one (I) month the Service Charges shall be increased by the amount specified in the Landlord's notice. There shall be no restriction on the number of occasions upon which the Landlord may call for an increase in the Service Charges. |

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| | |
|:---|:---|
| LANDLORD'S FIXTURES <br> AND FITTINGS | 4. The Landlord shall provide such fixtures and fittings (being and forming part of the Landlord's fixtures and fittings) for the Premises as are described in the Fourth Schedule hereto. The Tenant shall not be entitled to demand the provision of any other fixtures and fittings from the Landlord. |

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TENANT'S COVENANTS 5. THE TENANT HEREBY COVENANTS WITH THE LANDLORD as follows, namely:-

TO PAY RENT, ETC. (a) To pay the rent and Service Charges hereby reserved in Hong Kong Currency in the manner herein stipulated.

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| | | |
|:---|:---|:---|
| TO PAY RATES, TAXES ETC. | (b) | To pay rates charged on the Premises as assessed by the Government quarterly in advance which shall be or be deemed to be payable and due on the first day of the months of January, April, July and October provided that the first payment thereof shall be paid on the commencement of the tenancy and in the event of the Premises not having been assessed to rates by the Government to pay quarterly in advance such sum (not exceeding such percentage as shall from time to time be determined by the Legislative Council in accordance with Section 18 of the Rating & Valuation Ordinance as the percentage of the rateable value on which rates shall be computed on the rent for the corresponding quarter) as shall be required by the Landlord as a deposit by way of security for the due payment of rates subject to adjustment on actual rating assessment being received from the Government and also to pay and discharge all taxes, assessments, duties, charges, impositions and outgoings whatsoever now or hereafter to be imposed or charged on the Premises or upon the owner or occupier in respect thereof by the Government of Hong Kong or other lawful authority (Government Rent and Property Tax alone excepted). |

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| | | |
|:---|:---|:---|
| METHODS OF PAYMENT | (c) | To pay the rent rates Service Charges and any other periodic charges mentioned herein by way of cheque or cashier order issued by a licensed bank in Hong Kong. |

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| | | |
|:---|:---|:---|
| TO PAY FOR UTILITIES | (d) | To pay and discharge all deposits and charges in respect of electricity, gas, water and telephones as may be shown by the separate meter or meters installed upon the Premises or by accounts rendered to the Tenant. |

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| | | |
|:---|:---|:---|
| TO PAY FOR CLEANSING AND CLEARING OF DRAINS | (e) | To pay on demand to the Landlord the cost incurred by the Landlord in cleansing and clearing any drains choked or stopped up owing to careless use by the Tenant or its employees customers invitees or licensees. |

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| TO FIT OUT | (f) | To fit out the Premises at the Tenant's expense in accordance with such proposals, fitting-out plans and specifications as shall have been first submitted to and approved in writing by the Landlord (provided that the Landlord may impose such conditions and/or request for further information as it deems necessary in its sole discretion for giving such consent, and the Tenant shall provide requested information and/or evidence to the satisfaction of the Landlord forthwith and in any event within seven (7) days from such request) in a good and proper workmanlike fashion and in all respects in a style and manner appropriate to a first class office building and so to maintain the same throughout the said term in good repair and condition to the satisfaction of the Landlord. The Tenant will not cause or permit to be made any variation to the approved fitting out plans and specifications or to the interior design or layout of the Premises without the previous approval in writing of the Landlord and in the event of such approval being requested it shall be a condition precedent to the granting thereof that the Tenant shall pay to the Landlord on demand (i) any fees and/or costs incurred by the Landlord in obtaining the approval of its architect and/or specialist consultants; (ii) the cost to the Landlord of all consequential alterations to the standard interior design and layout of the Premises and the standard fixtures and fittings therein and thereon and an administration fee of 15% of such cost. For the avoidance of doubt, the Tenant shall not commence any fitting works prior to obtaining the Landlord's written approval. |

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| FITTING OUT AND ALTERATIONS(i) | At the Tenant's expense to fit out the Premises and to effect any alterations or additions for which the consent of the Landlord under Clause 5(q) hereof has been obtained in accordance with such proposals, plans and specifications as shall have been first submitted to and approved in writing by the Landlord in a good and proper workmanlike fashion and in all respects in a style and manner appropriate to a first class office building and so to maintain the same throughout the said term in good repair and condition to the satisfaction of the Landlord. The Tenant will not cause or permit to be made any variation to the approved plans and specifications or to the interior design or layout of the Premises without the previous approval in writing of the Landlord and it shall be a condition precedent to the granting of any approval under this Clause that the Tenant shall reimburse to the Landlord any fees and/or costs charged to the Landlord for the approval of its architect and/or specialist consultants. The Tenant shall comply with all applicable law for and shall be solely responsible for obtaining all necessary approval and consent from all relevant Government Authority and utility companies required for all work performed by or on behalf of the Tenant on the Premises. |
| (ii) | At the Tenant's expense to employ only the Landlord's nominated contractors for all work involving alterations to the structure of the Building or the standard air-conditioning, mechanical or electrical systems or fire services installation (including sprinklers) and to pay to the Landlord on demand a Consultancy and Administration fee of 15% of the cost of any such alteration work for any services provided or deemed necessary by the Landlord in respect thereof. |
| (iii) | The tenant will be required to pay the alteration costs (inclusive of the consultancy and administrative fee) according to the following payment terms:- |

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<u>For Quotation/Budget Estimates above HK$50,000</u>

(a) To deposit with the Landlord 50% of the estimated costs of
the proposed alteration work prior to the Landlord's nominated contractors commencing the actual work;

(b) To pay the Landlord a second deposit of 30% of the estimated
costs within fourteen (14) days after commencing the actual work;

(c) To pay the Landlord a further deposit of 15% of the estimated
costs within twenty eight (28) days after commencing the actual work; and

(d) The remaining balance of the total costs together with variations
(if any) will be payable to the Landlord within seven (7) days upon the Tenant receives the advice of final contract sum after the completion
of the alteration works.

<u>For Quotation/Budget Estimates of HK$50,000 or <u>below:-</u></u>

(a) To deposit with the Landlord 100% of the estimated costs of the proposed alteration
work prior to the Landlord's nominated contractors commencing the actual work; and

(b) Variations (if any) will be payable to the Landlord within seven (7) days upon the
Tenant receives the advice of final contract sum after the completion of the alteration works.

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|:---|:---|:---|
| TO KEEP IN REPAIR | (g) | To keep all interior of the Premises including the flooring and interior plaster or other finishing material or rendering to walls and all ceilings and the Landlord's fixtures and fittings therein and all additions thereto including all doors windows electrical installations and wiring and fire alarm and fire fighting installations in good clean substantial and proper repair and condition and properly preserved and painted as may be appropriate when from time to time appropriate or required or whenever required by the relevant Government Authority and to maintain the same at the expense of the Tenant Provided that the Tenant shall not be obliged to repair or reinstate the interior of the Premises and the Landlord's fixtures and fittings therein where the same have been destroyed or damaged by an Insured Risk (as hereinafter defined) save in the event that the insurance moneys in respect thereof are irrecoverable in whole or in part due to some act or default on the part of the Tenant. The Tenant particularly agrees:- |

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| WINDOW GLASS | (i) | to reimburse to the Landlord the cost of replacing all broken and damaged window glass irrespective of the cause of such breakage or damage caused by a design or structural defect; |

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| ELECTRICAL WIRING | (ii) | to repair or replace, if so required by the appropriate Supply Company, Statutory Undertaker or Authority as the case may be under the terms of any Electricity Supply Ordinance for the time being in force or any Orders in Council or Regulations made thereunder, all the electrical wiring installations and fitting within the Premises and the wiring from the Tenant's meter or meters to and within the same; |

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| INTERIOR DEFECTS | (iii) | to be wholly responsible for any damage or injury caused to any person whomsoever or property whatsoever directly or indirectly through the defective or damaged condition of any part of the interior of the Premises and to make good the same by payment or otherwise and to indemnify the Landlord against all costs claims demands actions liabilities and legal proceedings whatsoever made upon the Landlord by any person in respect thereof; and |

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|:---|:---|:---|
| DRAINS, PIPES CABLES, ETC. | (iv) | insofar as the same may not be part of the interior of the Premises to keep in good clean substantial and proper repair and condition all drains, soil and other pipes, cables, wires, ducts, mains and apparatus associated therewith and any equipment and fittings ancillary thereto which belong to form part of or solely serve the Premises and to indemnify the Landlord against all costs, claims, demands, actions, liabilities, and legal proceedings whatsoever made upon the Landlord by any person in respect of any breach of this covenant. |

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| TO YIELD UP | (h) | (i) | To yield up the Premises quietly at the expiration or sooner determination of the term in good clean substantial and proper repair and condition (damage or destruction due to any causes mentioned in Clause 7(b) hereof excepted) AND thereupon to surrender to the Landlord all keys leading to all parts of the Premises and to remove at the Tenant's sole expense all fixtures, fittings, additions, partitions, floor coverings, erections, and alterations whether the same were made or installed by the Tenant or otherwise and whether during the term hereof or at any time prior thereto upon or in the Premises and to reinstate restore and make good any damage caused by such removal or re-instatement Provided always that the Tenant's obligations relating to removal or reinstatement under this Clause may be modified or varied by the Landlord at its sole and absolute discretion from time to time notifying the Tenant in writing that the Landlord proposes without payment of any compensation to retain all or any of the said fixtures, fittings, additions, partitions, floor coverings, erections and alterations in the nature of the Landlord's fixtures and fittings which the Tenant is otherwise liable hereunder to remove but subject to this proviso, the Tenant shall re-instate restore and make good the Premises or any part thereof requiring to be reinstated restored or made good and in the event of the Tenant failing so to do the Tenant shall on demand forthwith pay to the Landlord all the cost and expenses of such re-instatement restoration or making good. |

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| ACCESS TO PROSPECTIVE TENANTS | (ii) | For the period of three (3) months immediately prior to the expiration or sooner determination of the term the Tenant shall permit all persons having written authority from the Landlord or the Landlord's agents to enter and view the Premises and every part thereof at all reasonable times upon prior reasonable notice. |

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| TO PROTECT INTERIOR | (i) | To take all reasonable precautions to protect the interior of the Premises from damage threatened by an approaching storm gale or typhoon. |

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| WATER APPARATUS | (j) | To keep at the expense of the Tenant the lavatories and water apparatus when used exclusively by the Tenant and its employees customers invitees or licensees in good clean substantial and proper repair and condition at all times during the term to the satisfaction of the Landlord and in accordance with the Regulations of the Public Health or other Government Authority concerned. |

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TO PERMIT LANDLORD TO ENTER AND VIEW (k) (i) To permit the Landlord and its agents with or without workmen or others and with or without appliances at all times to enter the Premises to view the condition thereof and to take Inventories of the Landlord's fixtures and fittings therein;

(ii) Within the space of one (1) calendar month from the time
of receipt of notice requiring the Tenant so to do to make good all defects and wants of repair then found which are the liability of
the Tenant; and

(iii) To permit the Landlord and its agents with or without workmen
or others and with or without appliances at all times to enter upon the mechanical/air-conditioning plant room as indicated on the plan
attached via the Premises.

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|:---|:---|:---|:---|
| TO PERMIT ENTRY | (1) | (i) | To permit the duly authorised agents or servants of the Landlord and any other persons duly authorised by the Landlord at any time to enter the Premises (and by force if necessary) for the purposes of security, safety and/or fire fighting, inspecting the condition of the Premises, ensuring compliance with all legislation, regulations and/or carrying out routine and essential or emergency repairs or alterations or additions to or maintenance or renewal of the Building and the Landlord's services and fixtures and fittings within the Building and any other services or fixtures which may be supplied or provided to or installed in the Building by third parties including, without limitation to the generality of the foregoing, telephone and other communication services and fixtures and fittings installed in connection therewith, and of making good on behalf of the Tenant and at the Tenant's expense any defects or effecting any repairs which the Tenant has failed to do under the terms of this Agreement. |

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(ii) Without prejudice to the generality of clause 5(1)(i), the
Tenant acknowledges that the Landlord and all others authorised by the Landlord may inspect the Tenant's use of the Premises, and/or survey and
take records (whether by way of photographs or measurements), and/or enter and remain on the Premises for a reasonable period of time
as may be necessary for the Landlord and all others authorised by the Landlord to carry out the inspection and/or survey with or without
workmen, appliances, and materials. The Tenant agrees to use all reasonable efforts to cooperate with the Landlord in this regard.

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| USER | (m) | Not to use the Premises for any purpose other than such as are specified in the Fifth Schedule hereto and only to the extent permitted by the Government Grant, the Occupation Permit of the Building, and the Deed of Mutual Covenant of the Building (if any). |

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Notwithstanding anything herein contained, the Landlord and the Tenant hereby further agree that if at any time during the continuance of this tenancy any notice shall be served on the Landlord or the Tenant by any Government Authority or relevant authority or the building manager prohibiting or objecting to the Tenant's use of the Premises (whether the use as specified in the Fifth Schedule or otherwise), as being unauthorised illegal or not in compliance with the Government Grant, Deed of Mutual Covenant (if any) and/or Occupation Permit of the Building, then the Tenant shall forthwith cease carrying on such user and if the Tenant shall fail to rectify or cease to carry on such use within fourteen (14) days after the Landlord's demand, the Landlord shall have the right to terminate this Agreement by giving to the Tenant not less than one (1) month's prior written notice, and on the expiry of the said notice the Tenant shall quit and deliver up vacant possession of the Premises to the Landlord in the manner as provided under this Agreement and this Agreement shall thereupon determine and the deposits paid by the Tenant to the Landlord hereunder shall be absolutely forfeited without prejudice to the right of the Landlord to claim against the Tenant for any accrued antecedent rights and claims by the Landlord against the Tenant, and the Tenant shall, if so required by the Landlord, execute a surrender agreement in respect of the Premises in such form as prepared by the Landlord's solicitors at the Tenant's legal costs and disbursements.

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| NOT TO MISUSE | (n) | Not to permit or suffer any part of the Premises to be used for the purpose of gambling or for any illegal, immoral or improper purposes or so as to cause nuisance, annoyance, inconvenience damage or danger to the occupiers of adjacent premises or other premises in the neighbourhood. |

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| NOT TO STORE GOOD | (o) | (i) | Not without the previous consent in writing of the Landlord to use the Premises or any part thereof for the storage of goods or merchandise other than in normal quantities consistent with the nature of the Tenant's trade or business nor to keep or store or cause or permit to be kept or stored any dangerous goods within the meaning of the Dangerous Goods Ordinance or any enactment replacing the same and the Regulations applicable thereto or any modification thereof and in so far as such Ordinance or its Schedules or Regulations may be altered this Clause shall have reference to any alteration thereof. |

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(ii) Not without the previous consent in writing of the Landlord
to keep store use bring into or suffer to be kept stored used brought into the Premises or the Building or any part thereof any arms
or ammunition (as defined in the Arms and Ammunition Ordinance) PROVIDED ALWAYS that it shall be within the absolute discretion of the
Landlord to grant or withhold such consent and it shall be a condition precedent to any such consent that the Tenant shall produce evidence
of compliance with the said Ordinance or any statutory modification or reenactment thereof for the time being in force and Provided Also
that at all times the Tenant shall indemnify the Landlord from and against all actions proceedings demands liability costs claims and
expenses in respect of any loss, damage to person or property, injury or death suffered by any person or body as a result of any such
arms or ammunition being kept stored used brought into or suffered to be kept stored used or brought into the Premises or the Building
by the Tenant its licensees or invitees and whether or not any consent thereto has been granted by the Landlord.

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| NOT TO COMMIT NUISANCE, ETC. | (p) | Not to make produce or suffer or permit to be made or produced any noise (including but not limited to music or sound produced by broadcasting from television radio and any apparatus equipment or instrument capable of creating producing or reproducing music or sound) or vibration or other acts or things in or on the Premises which is/are or may be a nuisance or annoyance to the Landlord or to the tenants or occupiers of adjacent or neighbouring premises unless authorised by the Landlord on specific occasions. |

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| NOT TO MAKE ALTERATIONS, ETC. | (q) | Not to make or permit to be made any alterations in or additions to the Premises or to the electrical and communications wiring and other installations or other Landlord's fixtures and fittings or to install any internal partitions plant equipment apparatus or machinery therein (other than usual office equipment) without having first obtained the written licence and consent of the Landlord therefor or cut, maim, or injure or suffer to be cut, maimed or injured any doors, windows, walls, structural members or other fabric thereof. |

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| NOT TO EXCEED FLOOR LOADING | (r) | Not without the previous written consent of the Landlord to install or permit or suffer to be installed any equipment apparatus partitions machinery or any other object of whatsoever nature whether fixed or free-standing which imposes a weight on any part of the flooring of the Premises in excess of 4Kn/m.sq. (or 80 pounds per square foot). The Landlord shall be entitled to prescribe the maximum weight and permitted locations of safes and other heavy equipment and to require the same to stand on supports of such dimensions and material to distribute the weight as the Landlord may deem necessary. |

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| NOT TO ALTER LOCKS, BOLTS, <br> LOADING | (s) | Not without the prior consent in writing of the Landlord to install additional locks bolts or other fittings to the entrance doors of the Premises or in any way to cut or alter the same. |

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| TO COMPLY WITH ORDINANCE ETC. AND GOVERNMENT LEASE | (t) | To obey comply with and indemnify the Landlord against any breach of the Government Grant, all ordinances, regulations, bye-laws, rules, demands, orders, notices, directions and requirements of any Government Authority or other competent authority relating to the Premises or any part thereof, the conduct and carrying on of the Tenant's activities on the Premises or any other act, deed, matter or thing done, permitted, suffered or omitted therein or thereon by the Tenant or any employee, agent or licensee of the Tenant. |

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| NOT TO ASSIGN, PART WITH POSSESSION ETC. | (u) | Not to transfer assign underlet license share or otherwise part with the possession of the Premises or any part thereof either by way of sub-letting, lending, sharing, or other means whereby any person or persons not a party to this Agreement obtains the use or possession of the Premises or any part thereof for all or any part of the term hereby granted and irrespective of whether any rental or other consideration is given for such use or possession and in the event of any purported transfer, assignment, underletting, licensing, sharing or parting with the possession of the Premises (whether for monetary consideration or not) the Landlord shall be entitled to terminate this Agreement and the Tenant shall forthwith thereupon surrender vacant possession of the Premises to the Landlord without prejudice howsoever to the rights of either party in respect of any antecedent breach of any of the covenants terms and conditions contained herein Provided that the Tenant shall have the right to permit its holding company and any subsidiary of its holding company to occupy any part or parts of the Premises as Licensee. The lease created hereby shall be personal to the Tenant named in this Agreement. Without limiting the generality of the foregoing, the following acts and events shall, unless approved in writing by the Landlord, be deemed to be in breaches of this Clause |

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(i) In the case of the Tenant being a partnership, the taking
in of one or more new partner whether on the death or retirement of an existing partner of otherwise.

(ii) In the case of the Tenant being an individual (including
a sole surviving partner of a partnership tenant), the death, insanity or other disability of that individual to the intent that no right
to use, possess, occupy or enjoy the Premises or any part thereof shall vest in the executors, administrators, personal representatives,
next of kin, trustee or committee of such an individual.

(iii) In the case of the Tenant being a corporation, the take-over,
reconstruction, amalgamation, merger, voluntary liquidation or change in the person or persons in whom the majority of its voting shares
are vested or who otherwise has/have effective control thereof.

(iv) The giving by the Tenant of a power of attorney or similar
authority whereby the donee of the power obtains the right to use, possess, occupy or enjoy the Premises or any part thereof or does
in fact use, possess, occupy or enjoy the same.

(v) The change of the business name of the Tenant.

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| FOOD RESTRICTION | (v) | Not to allow the delivery of food to the Premises except by means of the service lifts or the preparation or consumption of food on the Premises other than the preparation and consumption of light meals or refreshments for consumption by the Tenant's employees or guests provided that such light meals or refreshments shall not be consumed within sight of customers and/or the public. The Tenant shall ensure that all wet garbage and refuse will be disposed of by arrangement with and in containers specified by the management of the Building. |

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| OVERNIGHT OPERATIONS GUARDS, ETC. | (w) | Not to permit or suffer any person or persons to remain in the Premises or the Building overnight without the Landlord's prior permission in writing. Such permission shall only be given to enable the Tenant to operate its business or to post watchmen to guard the contents of the Premises which shall not be used as sleeping quarters or as domestic premises within the meaning of the Landlord and Tenant (Consolidation) Ordinance or any other enactment or modification thereof for the time being in force. |

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| NOT TO BLOCK ENTRANCES, STAIRCASES, ETC. | (x) | Not to place or leave in the entrance or any of the lifts, staircases, passages, lobbies, landings or other common areas of the Building any boxes, furniture, chattels, refuse or rubbish or otherwise encumber the same. In addition to any other remedy available to the Landlord hereunder or at Law, in the event of the Tenant being in breach of this Clause the Landlord, its servants or agents may without prior notice to the Tenant treat any item whatsoever so placed or left as abandoned and at the Tenant's expense (payable on demand) dispose of the same in whatever manner it shall in its absolute discretion decide and the Tenant hereby specifically authorises the Landlord so to do. |

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| NOT TO ERECT SIGNS | (y) | Not to erect exhibit or display within or on the exterior of the Premises or the Building any writing sign aerial flagpole or other device whether illuminated or not unless the same and the proposed location thereof shall have previously been approved in writing by the Landlord. |

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| NOT TO VITIATE INSURANCES | (z) | Not to do or permit to be done any act or thing whereby the policy or policies of insurance on the Premises against damage by fire or against claims by third parties for the time being subsisting may become void or voidable or whereby the rate of premium or premia thereon may be increased, and (if so required) to repay to the Landlord on demand all sums paid by the Landlord by way of increased premium or premia thereon and all expenses incurred by the Landlord in and about any renewal of such policy or policies rendered necessary by a breach of this Clause. |

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| RESTRICTION ON DELIVERIES | (aa) | Not to take delivery of furniture equipment fittings or bulky items in and out of the Building outside the hours specified in the Sixth Schedule hereto and under no circumstances to use passenger lifts for goods delivery purposes at any time. In the event of the Tenant requiring delivery outside the hours so specified, the Tenant will be liable for payment on demand of any additional cost to the Landlord, including the payment for overtime to any necessary supervisory staff. |

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| INDEMNITY BY TENANT | (ab) | To indemnify and keep the Landlord fully indemnified from and against all actions proceedings demands costs expenses liabilities and claims whatsoever by the tenants and occupiers of any other parts of the Building and any third party in respect of any act or liability caused by or arising from the act, neglect or default (irrespective of whether wilful or not) of the Tenant or any invitee or licensee of the Tenant or any workmen servants or persons who are suffered or permitted by the Tenant to be in the Premises or any part thereof. |
| EXCLUSION OF LANDBLORD'S <br> LIABILITY | (ac) | Not to hold the Landlord liable in any way to the Tenant or to any person whomsoever in respect of any injury damage or loss of business or other liability whatsoever which may be suffered by the Tenant or by any other person or any property howsoever caused and in particular, but without limitation caused by or through or in any way owing to:- |

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(i) any interruption of any of the services hereinbefore mentioned
by reason of necessary repair or maintenance of any installations or apparatus or damage thereto or destruction thereof by fire water
act of God or other cause beyond the Landlord's control or by reason of mechanical electrical or other defect or breakdown or other inclement
conditions or unavoidable shortage of fuel materials water or labour or any cause whatsoever beyond the Landlord's control; or

(ii) the act neglect or default of the tenants and occupiers of
any other parts of the Building and their employees agents licensees and invitees.

(ad) Not to hold the Landlord liable in any way to the Tenant
or to any person whomsoever in respect of any injury damage or loss of business whatsoever which may be suffered by the Tenant or by
any other person or any property howsoever caused and in particular, but without limitation, caused by or through or in any way owing
to:-

(i) any defect in the supply of electricity or from any surge
reduction variation interruption or termination in the supply of electrical power, or

(ii) any typhoon landslide subsidence of the ground escape of
fire leakage of water or electric current from the water pipes or electric wiring cables or ducts situate in upon or in any way connected
with the Building or any part thereof or dropping or falling of any article object or material whatsoever including cigarette ends, glass
or tiles, the escape of water, fire or electricity or vibrations from any floor office or premises forming part of the building or in
the neighbourhood, or

(iii) the defective or damaged condition of the Premises or the
Landlord's fixtures therein or any part thereof;

provided that nothing in this Clause 5(ad) contained shall exclude or restrict any liability of the Landlord for death or personal injury resulting from the negligence of the Landlord or its servants or agents.

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| OBSERVANCE OF TERMS OF DEED OF MUTUAL COVENANT | (ae) | Not to do anything which would amount to a breach or non-observance of the terms, conditions, covenants and restrictions contained or referred to in the Government Grant under which the Premises are held or any Deed of Mutual Covenant relating to the Building and/or the Premises and to indemnify the Landlord against any such breach or non-observance. |

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6. THE LANDLORD HEREBY COVENANTS WITH THE TENANT as follows
:-

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|:---|:---|:---|
| QUIET POSSESSION | (a) | To permit the Tenant (duly paying the rent Service Charges rates and other outgoings and charges hereinbefore referred to and observing and performing the covenants herein contained) to have quiet possession and enjoyment of the Premises during the said term without any interruption (except as herein provided) by the Landlord or anyone lawfully claiming under or through or in trust for the Landlord. |

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(b) Subject to the payment by the Tenant of the rent Service
Charges rates and other outgoings and charges hereinbefore referred to and observing and performing the covenants herein contained and
as regards paragraph (ii) below subject also to Clause 5(ac) and paragraph (i) below:-

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| TO REPAIR ROOF, MAIN WALLS, ETC. | (i) | To amend and repair such defects (not attributable to the act of the Tenant or its invitees licensees servants or agents) to the roof main electricity supply cables main drains and water pipes main walls and exterior window frames of the Building and the escalators lifts and central air-cooling and heating plant therein as the Landlord shall discover or as the Tenant or other authorised person or Authority shall by notice in writing bring to the attention of the Landlord and to maintain the same in a proper state of repair and condition PROVIDED that the Landlord shall be liable neither to pay compensation to the Tenant in respect of any period during which due to circumstances beyond the control of the Landlord the proper operation of the said escalators lifts central air-cooling and heating plant or any of them shall be interrupted as the result of mechanical failure or need for repair or overhaul nor to grant any abatement of rent or Service Charges in respect of such interruption and PROVIDED further that the Landlord shall be responsible for costs of work of a structural nature. |

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(ii) To provide and maintain for the Premises :-

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| TO SUPPLY AIR-CONDITIONING | (a) | a central air-conditioning service during the hours and on the days specified in the Seventh Schedule hereto PROVIDED that the electric power for any fan-coil air-cooling and circulating units installed within or exclusively for the use of the Premises shall be connected to the Tenant's electricity supply meter and the Tenant shall pay direct to the supply authority or undertaker for the electric power consumed thereby; and |

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|:---|:---|:---|
| TO PROVIDE CLEANING SERVICES | (b) | general cleaning services to the interior of the Premises between the hours and on the days specified in the Eighth Schedule hereto subject to the terms of the cleaning contract entered into between the Landlord and such cleaning contractor as shall be employed by the Landlord. No other cleaning contractors shall be permitted to service the Premises. |

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| INSURANCES, ETC. | (iii) | To keep the Building insured (subject to such exclusions and limitations as are imposed by the Insurers and subject to the necessary insurance cover being obtainable from an insurance company of good repute) against loss or damage by fire lightning explosion storm tempest flood earthquake bursting or overflowing of water tanks apparatus and pipes impact aircraft and articles dropped therefrom riot civil commotion labour disturbances and malicious damage and such other risks as may be determined by the Landlord (each of which risks being referred to in this Agreement as "an Insured Risk") with an insurance company of good repute in such full reinstatement value as the Landlord shall determine including such Architects' Engineers' and Surveyors' fees as the Landlord may determine and other incidental expenses provided always that the Landlord shall not be obliged to insure any fixtures and fittings which may be installed by the Tenant and which may become Landlord's fixtures and fittings. |

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TO PAY GOVERNMENT RENT, ETC. (c) To pay the Government Rent and Property Tax in respect of the Premises.

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| APPLICATION OF MONEYS RECEIVED FROM INSURANCE | (d) | To apply all moneys received by virtue of any insurance effected by the Landlord under the provisions of Clause 6(b)(iii) hereof but not further or otherwise in or towards the repairing, rebuilding or replacement of the Premises whether or not in the same form provided that if any competent authority shall refuse permission for or otherwise prevent any rebuilding or replacement or if owners of other premises in the Building shall prevent rebuilding or replacement all such insurance moneys (so far as unapplied as aforesaid) shall be retained by the Landlord and the Tenant shall be entitled within one month of such refusal or prevention subject to there having been no breach of its obligations hereunder forthwith to terminate this Agreement by serving written notice on the Landlord. |

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FURTHER PROVISIONS 7. IT IS HEREBY EXPRESSLY PROVIDED AND AGREED as follows :-

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|:---|:---|:---|
| RE-ENTRY | (a)(i) | If the rent reserved hereby the Service Charges or rates or other outgoings or charges hereinbefore referred to, or any part thereof be unpaid (whether formally demanded or not) for the space of eight (8) days next after any of the days on which the same ought to have been paid or in the case of the breach non-observance or non-performance of any of the covenants, restrictions, stipulations and conditions herein contained and on the part of the Tenant to be observed or performed or if the Tenant shall become bankrupt or go into liquidation (except for the purpose of amalgamation or reconstruction of a solvent company) or if the Tenant shall enter into composition or arrangement with its creditors or shall suffer any distress or execution to be levied on the Tenant's goods or chattels then in any such cases, it shall be lawful for the Landlord at any time thereafter to re-enter into and upon the Premises or any part thereof in the name of the whole and thereupon these presents shall absolutely determine and the deposits paid by the Tenant to the Landlord shall be absolutely forfeited to the Landlord as and for liquidated damages and not as a penalty but without prejudice to any right of action of the Landlord in respect of any breach non-observance or non-performance by the Tenant of the said covenants restrictions stipulations and conditions. All costs and expenses of and incidental to any demand for rent or any other sum payable under these presents or actions or distraint for the recovery of the same shall be paid by the Tenant on a full indemnity basis and shall be recoverable from the Tenant as a debt. |
|  | (ii) | A written notice served by the Landlord on the Tenant in manner hereinafter mentioned to the effect that the Landlord thereby exercises the power of re-entry and/or forfeiture herein contained shall be a full and sufficient exercise of such power without physical entry on the part of the Landlord and notwithstanding any statutory or common law provision to the contrary. |

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|:---|:---|:---|:---|
| ABATEMENT OF RENT AND SERVICE CHARGES | (b) | (i) | If the Premises or any part thereof are rendered unusable or inaccessible by an Insured Risk the rent reserved hereby and Service Charges or a part thereof proportionate to the extent to which the Premises shall have been so rendered unusable or inaccessible shall abate and cease to be payable until the same shall have been again rendered fit for use and accessible PROVIDED that there shall be no cessation of rent if any Insurance Policy effected by the Landlord shall have been rendered void or voidable in whole or in part by the act or default of the Tenant or any person deriving title under the Tenant or any of the servants agents invitees or licensees of the Tenant. |
|  |  | (ii) | Should the Premises be resumed by the Hong Kong Government for town planning or other purposes during the continuance of the term hereby created the Tenant shall vacate the Premises on the date or time notified by the Government and waive all his right and privilege to any claim or demand for damages or compensation which may be afforded to him by any Ordinance in force at that time. |

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|:---|:---|:---|
| RENAMING OF BUILDING, ETC. | (c) | The Landlord shall at any time and from time to time during the term hereby granted be entitled to change the name of the Building or the complex at present called "YF LIFE CENTRE" of which the building forms part or any part or parts thereof on giving not less than three (3) months' prior written notice to the Tenant to that effect and in respect thereof the Landlord shall not be liable in damages to the Tenant or be made a party to any other proceedings or for costs or expenses of whatsoever nature incurred by the Tenant as a result of such change. |

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|:---|:---|:---|
| SALE OR DEMOLITION | (d)(i) | If the Landlord shall at any time enter into a contract for the sale of the Premises or the Building or any part thereof (including sale of shares of such company / companies holding the Premises or the Building or any part thereof (whether directly or indirectly)) or shall resolve to demolish, re-build or refurbish the Premises or the Building or any part thereof (which intention shall be sufficiently evidenced by a copy of the Resolution of its Board of Directors certified by its Secretary to be a true and correct copy) then in such event the Landlord shall be entitled to give not less than six (6) months' notice in writing to expire at any time to terminate this Agreement without any compensation and immediately upon the expiration of such notice this Agreement shall terminate but without prejudice to the rights and remedies of either party against the other in respect of any antecedent claim or breach of any of the covenants restrictions stipulations or conditions herein contained. "Demolish" and/or "rebuild" for the purposes of this Clause shall mean the demolition and/or rebuilding of the whole of the Building or any part or parts (but not necessarily a major part) thereof whether or not including any main walls exterior walls or roof of the Premises and whether or not any part thereof is to be re-built or reconstructed in the same or any other manner. "Refurbish" may or may not include demolition of the Building or any part thereof. |
|  | (ii) | It is also agreed and declared notwithstanding any other provision herein and notwithstanding any law to the contrary the Tenant's optional right(s)(if any) shall extinguish and determine upon the service of the said notice of termination and the Tenant shall not be entitled to any claim against the Landlord for any damages or compensation or any relief against such early determination of optional right(s). |

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|:---|:---|
| ALLOCATION OF NAME SLAT(S)(e) | The Tenant shall be allotted one slat on the Main Directory Board on the 16th Floor and one slat on the 16th Floor for the display of the name of the Tenant only, the initial cost of such slat(s) together with the lettering thereon being paid by the Landlord. |
| ADDITIONAL A.C. SERVICE (f) | If the Tenant shall require air-conditioning services to be supplied to the Premises outside the hours specified in the Seventh Schedule hereto, the same shall whenever possible be provided by the Landlord on the Tenant giving to the Landlord advance notice of the Tenant's requirement on the Tenant paying to the Landlord on demand such amount as shall be sufficient to cover the operational and electrical consumption costs (such costs as computed by the Landlord to be conclusive, errors and omissions excepted) involved in running the main air-conditioning plant during such extended hours. |
| LANDLORD'S WAIVER OF BREACHES (g) | The acceptance of rent or Service Charges by the Landlord shall not be deemed to operate as a waiver by the Landlord of any right to proceed against the Tenant in respect of a breach by the Tenant of any of the Tenant's covenants restrictions stipulations and conditions herein contained. |
| SECURITY DEPOSIT (h) | Upon the execution of these presents the Tenant shall pay to the Landlord the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY (HK$366,048.00) equivalent to three (3) months' current rent plus three (3) months' current Service Charges as deposit for securing the due payment of the rent, Service Charges and any other moneys payable by the Tenant and to secure the performance and observance of the said covenants, restrictions, stipulations and conditions. At the expiration or sooner determination of the term hereby created if the Tenant shall have paid all rent, Service Charges and other moneys payable hereunder and if there shall be no breach of any of the said covenants, restrictions, stipulations and conditions on the Tenant's part to be observed and performed the Landlord will repay to the Tenant within thirty (30) days after the Tenant shall have surrendered to the Landlord vacant possession of the Premises the said sum without any interest thereon but if there shall be any money due to the Landlord, the Landlord may apply such deposit towards payment of such sums due, and if there shall be any breach of any of the said covenants, restrictions, stipulations and conditions on the part of the Tenant the Landlord shall pay or apply the said deposit or such part thereof as shall be required towards remedying such breach insofar as this may be possible without prejudice to any of the Landlord's rights or remedies hereunder provided and the Tenant hereby agrees that in the event of there being any increase in rent agreed determined or provided for under this Agreement and/or any increase in Service Charges under the provisions of Clause 3 hereof then and in every such case the Tenant shall pay to the Landlord as further deposit (to be held by the Landlord under the same terms and conditions as in this Clause) a sum equal to the difference between the deposit above-mentioned and three (3) months' rent as shall have been agreed determined or provided for hereunder plus three (3) months' Service Charges as increased (as the case may be) such sum to be paid to the Landlord with the payment of increased rent and/or Service Charges next following any such increase. |

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|:---|:---|:---|:---|
| INTERPRETATION | (i) | (i) | The expression "the Tenant" shall (where the context permits) mean and include the party or parties specifically named and its or their successors in title and permitted assigns. |
|  |  | (ii) | In this Agreement unless the context requires otherwise words importing the masculine feminine or neuter gender shall include the others of them and words importing the singular number shall include the plural and vice versa. |

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|:---|:---|
| MARGINAL NOTES(j) | The marginal headings of the Clauses of this Agreement are for reference only and it is hereby declared that these headings shall not be deemed a part of this Agreement. |
| COSTS, STAMP DUTIES (k) | The Stamp Duty and Land Registry registration fee (if any) on this Agreement and its counterpart shall be borne by the Landlord and the Tenant in equal shares and each party hereto shall pay its own legal costs (if any) incidental to the preparation and completion of this Agreement and its counterpart. However, a tenancy agreement preparation cost of HK.$800.00 shall be paid by the Tenant to the Landlord for the preparation of this Agreement upon signing of this Agreement by the Tenant. |

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| | | |
|:---|:---|:---|
| SERVICE OF NOTICES | (l) | Any notice and/or court documents required to be served on the Tenant shall be sufficiently served if delivered to or despatched by registered post to or left at the Premises or at the registered office or last known address in Hong Kong of the Tenant or such other change of address in Hong Kong the Tenant has the obligation to notify the Landlord from time to time under this clause and any notice required to be served on the Landlord shall be sufficiently served if delivered to or despatched by registered post to or left at the registered office of the Landlord in Hong Kong or any other address which the Landlord may notify to the Tenant from time to time. A notice sent by registered post shall be deemed to be given at the time when in due course of post it would be delivered at the address to which it is sent. |
| EXCLUSION OF WARRANTIES | (m) | The Landlord does not represent or warrant that the Premises are suitable for the use or purposes to which the Tenant proposes to put them and the Tenant shall satisfy itself or shall be deemed to have satisfied itself that they are suitable for the purpose for which they are to be used and the Tenant hereby agrees that it will at its own expense apply for any requisite licence or licences permit or permits from all Government or Public Authorities in respect of the carrying on of the Tenant's business therein and shall execute and comply with all ordinances, regulations, bye-laws, rules, demands, orders, notices, directions and requirements made by all competent Government or Public Authorities in connection with the conduct of such business by the Tenant in the Premises AND the Tenant hereby further agrees to indemnify the Landlord in respect of any breach by the Tenant of this Clause. |

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(n) For the purpose of Part III of the Landlord and Tenant (Consolidation)
Ordinance (Cap.7) and for the purpose of this Agreement the rent in respect of the Premises shall be deemed to be in arrear if not paid
in advance at the time stipulated by paragraph (a) (i) hereof.

(o) For the purpose of the Occupiers Liability Ordinance (Cap.
314) the Tenant shall be deemed for all intents and purposes the occupiers of the Premises.

(p) No condoning, excusing or waiving by the Landlord of any
default, breach or non-observance or non-performance, by the Tenant at any time or times of any of the Tenant's obligations herein contained
shall operate as a waiver of the Landlord's rights hereunder in respect of any continuing or subsequent default, breach or non-observance
or non-performance or so as to defeat or affect in any way the rights and remedies of the Landlord hereunder in respect of any such continuing
or subsequent default or breach and no waiver by the Landlord shall be inferred from or implied by anything done or omitted by the Landlord
unless expressed in writing and signed by the Landlord. Any consent given by the Landlord shall operate as a consent only for the particular
matter to which it relates and in no way shall be considered as a waiver or release of any of the provisions hereof nor shall it be construed
as dispensing with the necessity of obtaining the specific written consent of the Landlord in the future, unless expressly so provided.

8. The Tenant hereby expressly admits and declares that no premium
fine construction money or key money has been or will be paid to the Landlord by the Tenant for the creation of this Agreement.

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| | | |
|:---|:---|:---|
| EXCLUSION OF REPRESENTATIONS AND RIGHTS | 9.(i) | These presents set out the full agreement between the parties hereto. No other warranties or representations have been made or given relating to the Landlord, the Tenant, the Building, or the Premises or if any warranty or representation has been made the same is hereby waived. |
|  | (ii) | Nothing herein contained shall confer on the Tenant any right, interest, privilege, easement or appurtenance whatsoever mentioned or referred to in Section 16(1) of the Conveyancing and Property Ordinance 1984 save those expressly set out herein.  |

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| | | |
|:---|:---|:---|
| SPECIAL AGREEMENTS PECULIAR TO <br> THIS LETTING | 10. | The Parties hereto hereby agree that the terms, or conditions or matters set out in the Ninth Schedule (Special Conditions) hereto (if any) shall apply to this Agreement and shall be incorporated as an integral part of this Agreement. |
|  | 11. | For the avoidance of any doubt and notwithstanding any contrary provision contained herein, no term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Ordinance (Chapter 623 of the Laws of Hong Kong) by a person who is not a party to this Agreement. |
|  | 12. | Any offer, proposal, representation, warranty or the like in respect of any matter relating to this Agreement or the transaction contemplated therein which the Landlord and any Landlord's Agent may give or make subsequent to the execution to this Agreement and any conversation, negotiation and discussion or the like in respect of any matter relating to this Agreement or the transaction contemplated therein between the Landlord or any Landlord's Agent and the Tenant or the Guarantor subsequent to the execution to this Agreement shall not have any effect until the issuance of a relevant written confirmation of the Landlord and shall be subject to that confirmation. Notwithstanding the foregoing, this Agreement may be amended, supplemented or modified only by a written instrument duly executed by each party hereto. |
| GOVERNING LAW | 13. | This Agreement is governed by and construed in accordance with the Laws of the Hong Kong Special Administrative Region. The parties hereby submit to the non-exclusive jurisdiction of the courts of the Hong Kong Special Administrative Region. |

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**THE FIRST SCHEDULE ABOVE REFERRED TO**

**(Clause 1)**

**PART I**

**THE GROUND**

INLAND LOT NO. 3287 AND INLAND LOT NO. 6936

**PART II**

**THE PREMISES**

Rooms 1604-5 on the 16th Floor of the Building (for the purposes of identification only as shown coloured pink on the plan annexed hereto).

**THE SECOND SCHEDULE ABOVE REFERRED TO**

**(Clause 1)**

**THE TERM**

One (1) year and nine (9) months fixed term commencing on the 28th day of November 2025 and expiring on the 27th day of August 2027 (both days inclusive)

**THE THIRD SCHEDULE ABOVE REFERRED TO**

**(Clause 1)**

**Part I**

**THE RENT**

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| | |
|:---|:---|
| Period of Time | Rent payable (in Hong Kong Dollars per month) exclusive of Rates and Service Charges |
| From the 28th day of November 2025 |  |
|  | HK$102,400.00 per month |
| To the 27th day of August 2027 |  |

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**(Clause 2)**

**PART II**

**SERVICE CHARGES**

l. The maintenance and management charges payable by the Tenant
in respect of the Premises shall be such proportion of the total budgeted expenses in respect of the management (other than certain administration
charges) and maintenance of the Building and may be determined from time to time by the Landlord on an alternative basis which said alternative
basis shall take account of all parts of the Building for which rates are payable and which at the sole discretion of the Landlord shall
be deemed to be a fair and equitable proportion.

2. The management and maintenance costs to be included in the
said budget shall include all costs determined by the Landlord to be necessary or convenient in order to manage and maintain the Premises
and the Building as a high class commercial building but excluding certain administration charges and cost of work of a structural or
rebuilding nature. Without limiting the generality of the foregoing such costs shall include:

(i) All sums (other than the Government Rent and premium) payable
under the Government Grant under which the land described in the First Schedule hereto is held.

(ii) The cost of the maintenance and repair of the Building and
all plant equipment and machinery therein or provided therefor.

(iii) That portion of the remuneration of the Landlord which relates
to the provision of the service referred to herein.

(iv) All sums payable by the Landlord for the cost of insurance
of the Building and the cost of insurance pursuant to the Landlord's covenants contained in Clauses 6(b)(iii) and 6(d).

(v) The cost of employing all necessary persons whether as servants,
agents or advisors to provide the service requisite for the proper management and maintenance of the Building and the administration
therefor together with the cost of providing all equipment, accommodation, medical expenses, insurance cover, uniform, clothing and materials
reasonably necessary for such purposes.

(vi) Any rent or other sum payable for the use of any building
or premises for management or administrative offices or the accommodation of any staff or other person employed by the Landlord or engaged
solely in connection with the management and maintenance of the Building, or, in the event that such building or premises are owned by
the Landlord, an amount equal to the market rent in respect of
such building or premises.

(vii) The cost of purchasing or hiring all necessary plant and
equipment including road vehicles and the cost of providing a sinking fund or other fund or arrangement for the renewal thereof.

(viii) The cost of fuel or oil incurred in connection with the operation
of the plant, equipment, machinery and vehicles provided for or for the benefit of the Building and occupiers thereof.

(ix) The cost of appropriate lighting for all common areas and external flood lighting.

(x) Legal and accounting fees and costs.

(xi) A sum for contingencies.

(xii) The cost of electricity, water and other similar charges of or in connection with the Building as a whole
and not in respect of the use of or consumption by any individual tenant thereof.

(xiii) The cost of refuse disposal.

(xiv) The cost of the supply of salt and fresh water to all taps and toilets within the Building.

(xv) The cost of cleansing the common areas both within and outside the Building and (where applicable) the
offices and other occupied units therein.

(xvi) The provision of security normal air-conditioning and office cleaning services for the Premises and the
Building including the maintenance, repair and, as necessary, the replacement of the systems installed therefor.

(xvii) The cost of providing, operating, maintaining, servicing and replacing as necessary a computer or other
automated system to monitor and control management security and other services and facilities for the Building.

3. The Landlord shall as soon as possible before the commencement
of each financial year produce a budget in respect of the forthcoming year.

4. The Tenant shall on the first (1st) day of each calendar
month pay to the Landlord a sum representing one-twelfth of the maintenance and management charges payable by the Tenant in respect of
each current financial year.

5. The Landlord shall increase the Service Charges under the
terms of Clause 3 of this Agreement and determine the revised amount payable by the Tenant.

6. Unless and until varied in accordance with the provisions of Clause 3 hereof, the Service Charges shall be the sum of HK$19,616.00 per
calendar month.

**THE FOURTH SCHEDULE ABOVE REFERRED TO**

**(Clause 4)**

**FIXTURES AND FITTINGS**

**SUPPLIED BY THE LANDLORD**

A detailed list of the Landlord's fixtures and fittings shall be set out in the handover form issued by the Landlord to the Tenant regarding the handing over of the Premises shall form part of this Agreement.

**THE FIFTH SCHEDULE ABOVE REFERRED TO**

**(Clause 5(m))**

**USER**

To use the Premises as office premises only and for no other purposes whatsoever.

**THE SIXTH SCHEDULE ABOVE REFERRED TO**

**(Clause 5(aa))**

**BULKY DELIVERIES**

Monday to Friday (inclusive) From 9:00 a.m. to 5:00 p.m.

Saturday From 9:00 a.m. to 1:00 p.m.

**THE SEVENTH SCHEDULE ABOVE REFERRED TO**

**(Clause 6(b)(ii)(a))**

**AIR-CONDITIONING OPERATING HOURS**

Monday to Friday (inclusive) From 8:00 a.m. to 6:00 p.m.

Saturday From 8:00 a.m. to 2:00 p.m.

except public and statutory holidays

**THE EIGHTH SCHEDULE ABOVE REFERRED TO**

**(Clause 6(b)(ii)(b))**

**CLEANING SERVICE HOURS**

Monday to Saturday (inclusive) From 7:00 a.m. to 7:00 p.m.

except public and statutory holidays

**THE NINTH SCHEDULE ABOVE REFERRED TO**

**(Clause 10)**

**SPECIAL CONDITIONS**

1. It is hereby agreed that if the Tenant shall wish to take
a further term of Two (2) years from the expiration of the term hereby granted and shall from the Sixth (6th) to Seventh (7th) months
before the expiration of the term give to the Landlord written notice to that effect and shall have paid the rent hereby reserved and
reasonably performed and observed the terms and conditions on its part herein contained up to the expiration of the term hereby granted
then the Landlord is bound to and shall let the Premises to the Tenant a further term of Two (2) years (hereinafter called "the
Further Term") from such expiration at a new monthly rent (The "New Monthly Rent") exclusive of rates and Service Charges
determined as hereinafter specified and subject to the same terms and conditions as are herein contained save and except this Clause
(2) and the provision for Rent Free Period.

The New Monthly Rent to be paid for the Further Term shall be the prevailing market rent for similar type of office premises in the Wanchai District of Hong Kong determined as follows and the following terms shall apply:-

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) by agreement between the parties hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) failing agreement as in (i) above not more than six months
nor less than three months before the expiration of the term hereby granted then by an independent professional valuer or firm of professional
valuers ("valuers") to be jointly appointed by the parties hereto before the expiration of the term hereby granted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) failing such a joint appointment before the expiration of
the term hereby granted then by a valuer to be appointed on the application of either party by the President (or in his absence, a Vice-president)
for the time being of the Hong Kong Institute of Surveyors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) In the event that the rent for the Further Term has not been
determined as hereinbefore provided before the expiration of the term hereby granted the rent payable immediately prior to the expiration
thereof (disregarding any abatement of rent which may be in effect under Clause 7(b) hereof) shall continue to be paid until the rent
has been so determined but shall be adjusted retrospectively to the date of the commencement of the Further Term and the rent having
been so determined shall be paid and accounted for accordingly within 21 days of such determination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the valuer shall act as an expert and not as an arbitrator
and shall be required to determine the sum which in his opinion represents the prevailing market rent for the Premises as if the same
were being let with vacant possession on the prevailing market for a term equal to the Further Term without reference to any other adjustment
of rent during the said term but otherwise having regard to all issues which in the sole opinion of the valuer appear relevant subject
to sub-clause (vi) immediately following;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) the valuer shall determine the prevailing market rent disregarding

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any effect on rent of the fact that the Tenant may have been
in occupation of the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any goodwill attached to the Premises by reason of its use
by the Tenant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any effect on rent of any authorised improvement addition
alteration or other work made or carried out by the Tenant at its own expense otherwise than under any obligation to the Landlord whether
under this Agreement or otherwise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) any abatement of rent under Clause 7(b) hereof but on the
following assumptions (if not facts):-

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) that all the terms and conditions herein contained have been
fully observed and performed at all times;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) that on the commencement date of the Further Term the Premises
are fit for immediate occupation and use that no addition alteration or other work has been made or carried out by the Tenant or any
subtenant during the term hereby granted which has diminished the rental value of the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) that in the event that the Premises have been destroyed or
damaged they had not been so destroyed or damaged.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the cost and expenses of the valuer shall be borne by the
Landlord and the Tenant in equal shares

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The decision of the valuer shall be final and binding upon
both parties and shall determine the New Monthly Rent for the Further Term as if it had been expressly provided for and stated herein.

2. Subject to strict compliance of Clause 5(f) of this Agreement, it is hereby agreed
and confirmed that the Tenant shall at their own costs carry out the following partitioning works:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to erect a partitioning wall in the area shown on the plan
annexed to this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to modify and install the fire services & sprinkler system
and power supply system serving both the Premises and Units 1606-7 (the "Adjacent Units") to ensure (a) full compliance with
all applicable laws and regulations and (b) the power supply to the Adjacent Units remains fully functional and uninterrupted.

3. Notwithstanding anything to the contrary in this Agreement,
the Tenant shall, at the expiration or sooner determination of the Term, quietly yield up the Premises in a "as-is where-is"
condition and hand over the same together with all fixtures fittings and additions, partitions, floor coverings, erections, and alterations
(if any) whether the same were made or installed by the Tenant or otherwise and whether during the term hereof or at any time prior thereto
upon or in the Premises in good, clean and substantial repair and condition.

4. (i) Without prejudice to Clause 5(u) hereof, the Landlord agrees that the Tenant may, subject to the Tenant's due compliance and performance
of the terms of this Agreement, grant a licence to FT Foundation Capital Fund, an Exempt Company incorporated in the Cayman Islands,
whose registered office is maintained by Hameys Fiduciary (Cayman) Limited of 4th Floor, Harbour, 103 South Church Street, P.O. Box
10240, Grand Cayman, KYl-1002, Cayman Islands (Cayman Islands Registration No.321568) (the "Occupant") to share the use of
the Premises as office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Tenant shall obtain the prior written approval of the
Landlord before signing any licence agreement or document for the sharing of use of the Premises pursuant to sub-clause (i) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Tenant shall ensure the Occupant's observance of the
covenants, terms and conditions of this Agreement and without prejudice to the rights of the Landlord, whether under this Agreement or
otherwise, the Tenant is primarily liable for any acts and omission of the Occupant, its respective employees, servants, representatives,
agents, visitors and occupiers at or in relation to the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Notwithstanding anything herein contained to the contrary,
the Landlord agrees to arrange for one (1) additional slat(s) for the Occupant on the Main Directory Board on the Ground Floor for the
display of the name of the Occupant, the initial cost of such additional slat(s) together with the lettering thereon being paid by the
Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Tenant shall provide the Landlord the particulars and personal identification OR supporting corporate documents (as the case may be)
of the Occupant and such other information as reasonably requested by the Landlord for its approval, which approval shall not be unreasonably
withheld. Except for the Occupant, the Tenant is prohibited from granting any licence to or otherwise sharing the Premises to any person
or entity in contravention of Clause 5(u) and Clause 4 of this Ninth Schedule. The Tenant shall inform the Landlord forthwith if it is
aware that the Occupant would cease in occupation of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Tenant acknowledges and confirms that the licence agreement
or sharing use arrangements with the Occupant shall not in any aspect be construed to be a tenancy or an agreement for tenancy or creating
any landlord and tenant relationship or conferring and right of tenancy or any protection of tenancy whether by agreement or at law or
in equity. At the expiry or sooner determination of the term of tenancy under this Agreement, the Occupant's right to use the Premises
shall determine forthwith, and the Tenant shall procure that the Occupant shall forthwith vacate the Premises without any claim or demand
from the Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) For the avoidance of doubt, an agreement or arrangement made
pursuant to Clause 3 of this Ninth Schedule shall not be treated as a breach or non-compliance with Clause 5(u) of this Agreement.

IN WITNESS whereof this Agreement has been executed by the parties hereto the day and year first above written.

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|:---|:---|
| SIGNED by | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: |  |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: |  |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: |  |

---

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| | |
|:---|:---|
| SIGNED by | &nbsp;&nbsp;) |
| for and on behalf of the Tenant | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
| In the presence of :- | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
| Signature: ____________________________ | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
| Name: ______________________________ | &nbsp;&nbsp;) |

---

---

| |
|:---|
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SIXTY SIX THOUSAND AND FORTY EIGHT ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |

---

## Exhibit 4.11

**Exhibit 4.11**

**THIS LICENCE** is made the 12<sup>th</sup> day of November 2025

**BETWEEN**

(I) **PIONEER TIME INVESTMENT LIMITED (RECEIVERS AND MANAGERS APPOINTED),** a
 company incorporated in the British Virgin Islands, whose principal place of business in
 Hong Kong is situated at 17th Floor, One Island East, Taikoo Place, 18 Westlands Road, Quarry
 Bay, Hong Kong (hereinafter called the **Licensor** which expression shall
 where the context so admits include the person for the time being entitled to the reversion
 immediately expectant on the term hereby created) of the one part; and

(2) **LUDA DEVELOPMENT LIMITED** whose registered office is
situate aat Unit H, 13th Floor, Kaiser Estate, Phase 2, 47-53 Man Yue Street, Hunghom, Kowloon, Hong Kong (Business Registration No.
34336774) (hereinafter called the **Licensee)** of the other part.

**WHEREAS**

(A) Immediately before this Licence, the Licensor (as landlord)
and the Licensee (as tenant) have entered into a tenancy agreement in respect of the Premises for a term of one (1) year and ten (10)
months commencing on <u>7 January 2026</u> (the **Tenancy Agreement)** and subject
to such other terms and conditions therein contained.

(B) To facilitate the Licensee's fitting-out works at the Premises,
the Licensor has agreed to grant and the Licensee has agreed to take a licence of the Premises for a term of two (2) months in the manners
hereinafter appearing.

**IT IS AGREED** as follows:

1. <u>Interpretation</u> 

In this Licence, unless the context otherwise requires or expressly provides, the following words shall have the following meanings respectively:

**Commencement Date** means the date of commencement of the licence herein created as set out in Part 1 of the Schedule hereto;

**Building** means YF LIFE CENTR, No. 25 Jaffe Road and No. 38 Gloucester Road, Wanchai, Hong Kong;

**Deed of Mutual Covenant** means the Deed of Mutual Covenant (if any);

**Government** means the Government of the Hong Kong Special Administrative Region;

**Licence Fee** means the monthly licence fee (if any) as set out in Part 3 of the Schedule hereto payable by the Licensee to the Licensor in accordance with Clause 4 hereof exclusive of service charges and rates;

**Licence Period** means the licence period set out in Part 2 of the Schedule hereto;

**Service Charges** means the monthly management charges in respect of the Premises as set out in Part 3 of the Schedule;

**Manager** means the incorporated owners of the Building or the Manager of the Building from time to time appointed to manage the Building under the Deed of Mutual Covenant (if any); and

**Premises** means the licensed area as described in Part 4 of the Schedule hereto.

2. <u>The Licence</u> 

The Licensor shall subject to the payment of the Licence Fee (if any) and other payments in accordance with this Licence make available to the Licensee during the Licence Period the non-exclusive right to use the Premises Together with the right to use (in common with the Licensor and all others having the like right and subject to the Licensor's right to restrict such use) the entrances staircases landings passages pipes conduits risers ducts channels lifts and toilets in the Building in so far as the same are necessary for the proper use and enjoyment of the Premises.

3. <u>Licence Period</u> 

The Licence created under this Licence shall be for the Licence Period.

4. <u>Licence Fee etc.</u> 

4.1 The Licensee shall pay to the Licensor the Licence Fee (if
any) and Service Charges upon signing of this Licence.

4.2 The Licensee shall pay and discharge all rates imposed by
the Government on the Premises for the Licence period upon demand from the Licensor.

4.3 The Licensee shall punctually pay and discharge all deposits
and charges in respect of the water, gas, electricity and other utilities consumed on the Premises.

5. <u>The Licensee's Obligations</u> 

The Licensee hereby agrees with the Licensor as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to submit for the Licensor's approval the design, layout and
draft plans of the Premises (such approval shall not be unreasonably withheld or delayed) and shall maintain the Premises in a good and
clean condition (fair wear and tear, inherent and structural defects excepted) from time to time throughout the Licence Period to the
reasonable satisfaction of the Licensor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to observe obey and comply with such House Rules (if any)
as may from time to time be made in accordance with the Deed of Mutual Covenant of the Building (if any);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to be responsible to the Licensor for the acts neglect omissions
and default of all workmen, contractors, servants, employees, agents and invitees of the Licensee with regard to the exercise of the
rights of the Licensee under this Licence and anything done or omitted in connection therewith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) to indemnify and keep the Licensor indemnified against all
claims, demands, actions and proceedings brought by any person, firm or company against the Licensor arising out of or in connection
with this Licence and against all loss, damages, costs or expenses paid or incurred by the Licensor as a result thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) not to cause or permit or suffer or permit to be produced
on or in the Premises any sound or noise or vibration (including sound produced by broadcasting from television, radio or any apparatus
or instrument capable of producing or reproducing music or sound or vibration) or other acts or things in or on the Premises which is
or are or may be or become a nuisance or annoyance to any other tenants or occupier of the Building or any user or customer of the same
or to the Licensor or which in the reasonable opinion of the Licensor may prejudicially affect the Premises or any other parts of the
Building or any adjoining or adjacent premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) not to place or leave or suffer or to permit to be placed
or left any boxes, furniture, articles or rubbish at the entrances of or on any part of the staircases, passages or landings or other
parts of the Building used in common with other tenants or occupiers thereof or otherwise encumber the same. Without prejudice to any
other remedy it may have under this Licence, the Licensor or any of its servants or agents may without any prior notice to the Licensee
remove any such obstruction and dispose of the same as it may in its absolute discretion think fit without incurring any liability therefor
to the Licensee or any other person whomsoever and the Licensee shall pay to the Licensor forthwith on demand all costs and expenses
incurred in connection with such removal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) not to do or permit or suffer to be done any act, deed, matter
or thing whatsoever which amounts to a breach of any rule of law or legislation in Hong Kong or any of the terms, conditions and covenants
under which the Building is held from the Government or of the Deed of Mutual Covenant of the Building (if any) and the Licensee shall
keep the Licensor fully indemnified against any such breach;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) not to use the Premises or any part thereof for any purpose
other than as set forth in Part 5 of the Schedule hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) not to commence operation of its business unless and until
all approval licence permit and consent required by any appropriate Government authorities and departments in connection with the Licensee's
use and occupation of the Premises are obtained. The Licensee shall provide copies (certified as true by a director of the Licensee)
of the relevant licence and approval for the Licensor's record;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) not to make any erection, installation of equipment and accessories
and other installations, fixture or addition whatsoever on or to the Premises without obtaining the Licensor's prior written approval
(such approval shall not be unreasonably withheld or delayed) and if such prior written approval is given, such installations shall in
all aspects comply with all relevant laws, regulations, practice directions and guidelines;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) not to use the Premises as sleeping quarters or as domestic
premises within the meaning of any Ordinance for the time being in force;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) not to use the Premises for the manufacture of goods or merchandise
or for the storage of goods or merchandise other than goods or merchandise reasonably required in connection with the Licensee's business
carried on therein nor to keep or store or cause or permit or suffer to be kept or stored any extra hazardous or dangerous goods within
the meaning of Dangerous Goods Ordinance and the regulations thereunder or any statutory modification or re-enactment thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) not to use or cause permit or suffer to be used any part of
the Premises for gambling or for any illegal immoral or improper purpose or in anyway so as to cause nuisance inconvenience or damage or danger
to the Licensor or the tenants or occupiers of the Building or to users and customers of the same; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) to perform and observe all its obligations under the Tenancy
Agreement (except for payment ofrent) as if they had been repeated in this Licence.

6. <u>Termination</u> 

6.1 Notwithstanding any provisions in this Licence, the Licence
created under this Licence shall be terminated upon the Licensee committing breach of the terms of this Licence and failing to rectify
such breach within seven (7) days from the date of receipt of the Licensor's written demand for want ofrectification and it shall be
lawful for the Licensor (as landlord) to terminate the Tenancy Agreement immediately by giving a notice of termination after the expiry
of the 7-day period to the Licensee and thereupon this Licence and the Tenancy Agreement shall absolutely be determined and the deposit
payable under the Tenancy Agreement shall be absolutely and fully forfeited to the Licensor (as landlord) under the Tenancy Agreement
without prejudice to any right of action of the Licensor to claim against the Licensee all rent payable for the unexpired Term of the
tenancy had the Tenancy Agreement not been terminated under this Clause, which, for the avoidance of doubt, the Licensee acknowledges
that such payment is liquidated damages and not penalty.

6.2 The termination of this Licence for whatever reason shall
be without prejudice to any right of action of the Licensor in respect of any outstanding breach or non-observance or non-performance
of any of the agreements, stipulations, terms and conditions contained in this Licence and on the Licensee's part to be observed and
performed.

6.3 Upon expiration or sooner termination of the Licence created
under this Licence and unless the Tenancy Agreement shall continue to be effective and valid, the Licensee shall deliver the Premises
to the Licensor in bare-shell and good condition reasonably satisfactory to the Licensor.

6.4 Notwithstanding anything herein contained to the contrary,
the Licensee acknowledges and understands that the grant of this Licence is conditional upon the validity and subsistence of the Tenancy
Agreement by the Licensee. The Licensee acknowledges and agrees that this Licence shall become automatically null and void upon rescission
or cancellation of the Tenancy Agreement.

7. <u>Licence not a tenancv</u> 

7.1 It is hereby agreed and declared by the parties hereto that
this Licence is not intended to confer and will not confer exclusive possession of the Premises upon the Licensee nor to create legal
relationship of landlord and the tenant between the parties.

7.1 This Licence shall not be assigned, transferred, mortgaged,
pledged or charged to or in favour of any third party.

7.2 The Licensee shall not do or permit or suffer to be done any
act, deed, matter or thing whereby any person or persons not a party to this Licence obtains any right under this Licence.

8. <u>Exclusions</u> 

It is hereby further agreed that the Licensor shall not be liable or responsible for

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any damage caused to any personal property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the loss or theft of any article or thing on or left within
the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any injury or damage to the Licensee or to its contractors, servants, employees, agents or invitees or to its or their property caused
by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any defects, breakdown or malfunction or want of repair in or to any area of the Building or any facilities of the Building;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any act neglect omission or default of the Licensor or of the contractors, servants, employees, agents or licensees of either of them;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) fire, flooding, the overflow or leakage of water or other calamities beyond the control of the Licensor

Unless the same is/are caused by the gross negligence and wilful neglect of the Licensor or its agent and the Licensee shall fully indemnify the Licensor against all claims actions and proceedings by third parties in respect of such damage loss or injuries caused by any act neglect omission or default of the Licensee or its contractors, servants, employees and agents Provided that nothing in this Clause shall be construed as imposing on the Licensor any duty to insure against any of the said liabilities.

9. <u>No Warranty</u> 

The Licensor hereby expressly declares that the Licensor does not warrant or guarantee that the Premises are fit for any particular kind of use or business or for the use or business to be carried out by the Licensee and the Licensee shall be responsible for the application of all necessary licences required for the operation of the kind of use or business or trade to be carried out by the Licensee at the Premises from all relevant bodies and/or Government departments and the Licensor shall not be in any way responsible for the non-issuance of any licences for whatever reasons.

10. <u>Notices</u> 

Any notice required to be given by one party to the other shall be sufficiently served on such other party by sending the same by prepaid post to or by facsimile or left at the last known address of such party in Hong Kong and shall be deemed to have been served (in the case of a notice sent by post) 1 day after the posting of the same and (in the case of a notice by facsimile) upon completion of transmission with full transmission report thereof and (in the case of a notice left at the address aforesaid) on the date of delivery of the same to such address.

11. <u>Stamp Dutv and Costs</u> 

Each party shall bear its own costs in relation to the preparation approval completion and execution of this Licence. The adjudication fee and the stamp duty and registration fee (if any) on this Licence and its counterpart shall be borne by the parties hereto in equal shares.

12. <u>Entire Agreement</u> 

This Licence constitutes the entire agreement between the Licensor and the Licensee and no variation, amendment or modification of this Licence shall have effect unless it is in writing and signed by a duly authorised representative of each party.

13. <u>No Waiver</u> 

No relaxation forbearance delay or indulgence by either party in enforcing any of the terms and conditions of this Licence and the granting of time by either party to the other shall prejudice affect or restrict the rights and powers of that party hereunder nor shall any waiver by either party of any breach hereof operates as a waiver of or in relation to any subsequent or any continuing breach.

14. <u>Governing Law</u> 

This Licence shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region and each party hereby submits to the non-exclusive jurisdiction of the courts of the Hong Kong Special Administrative Region as regards any claims or matter arising under this Licence.

15. <u>Confidentiality</u> 

The Licensee agrees and undertakes with the Licensor that it will hold the information contained in this Licence in strict confidence and will not disclose, copy, reproduce or distribute any of it for any purpose or to any person (except to the Licensee's professional advisers or if required by law) or otherwise without the prior written consent of the Licensor (which may be withheld in the Licensor's absolute discretion). The Licensee agrees and undertakes with the Licensor that it will not register this Licensee at any registry (land or otherwise) in Hong Kong.

**IN WITNESS** whereof the parties hereto have executed this Licence the day and year first above written.

**<u>THE SCHEDULE</u>**

<u>Part 1</u>

Commencement Date: 7 November 2025

<u>Part 2</u>

Licence Period: commencing from the Commencement Date and expiring on 6 January 2026

<u>Part 3</u>

Licence Fee: HK$1.00

Service Charges: HK$19,622.13 per calendar month.

Rates: as demanded by the Government from time to time.

<u>Part 4</u>

The Premises: All Those Rooms 1606-7 on the 16th Floor of the Building.

<u>Part 5</u>

Office only.

**EXECUTION**

IN WITNESS whereof the parties hereto have executed this Licence on the date first above written.

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| |
|:---|
| SIGNED by<br>of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Licensor, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: |
| SIGNED by |
| for and on behalf of the Licensee in the presence of: |

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## Exhibit 4.12

**Exhibit 4.12**

Dated the 12<sup>th</sup> day of November 2025

**PIONEER TIME INVESTMENT LIMITED**

**(RECEIVERS AND MANAGERS APPOINTED)**

AND

**LUDA DEVELOPMENT LIMITED**

**(Business Registration No. 34336774)**

TENANCY AGREEMENT

(OFFICE)

Premises Rooms 1606-7 on the 16th Floor of YF Life Centre No. 25 Jaffe Road and No.38 Gloucester Road, Wanchai, Hong Kong

Term One (1) year and ten (10) months fixed term

Commencing the 7th day of January 2026

Expiring the 6th day of November 2027

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| | |
|:---|:---|
| Rent | HK.$104,032.50 per month |

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PARTIES THIS AGREEMENT made the 12<sup>th</sup> day of November Two Thousand and Twenty-Five <br>BETWEEN

(1) **PIONEER TIME INVESTMENT LIMITED (RECEIVERS AND MANAGERS APPOINTED),** a company incorporated in the British Virgin Islands, whose principal place of business in Hong Kong is situated at 17<sup>th</sup> Floor, One Island East, Taikoo Place, 18 Westlands Road, Quarry Bay, Hong Kong (hereinafter called "the Landlord" which expression shall where the context so admits include the person for the time being entitled to the reversion immediately expectant on the term hereby created) of the one part;and

(2) **LUDA DEVELOPMENT LIMITED** whose registered office is situate at Unit H, 13th Floor, Kaiser Estate, Phase 2, 47-53 Man Yue Street, Hunghom, Kowloon, Hong Kong (Business Registration No.34336774) (hereinafter called "the Tenant") of the other part.

WITNESSETH as follows :-

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| | | |
|:---|:---|:---|
| DEMISE PARCELS<br>| 1. | In consideration of the rent and the Tenant's covenants hereinafter reserved and contained the Landlord hereby demises unto the Tenant ALL THAT portion of the building erected on or on part of ALL THAT piece or parcel of ground situate at Victoria, Hong Kong more particularly described in Part I of the First Schedule hereto now known as YF LIFE CENTRE, No.25 Jaffe Road and No. 38 Gloucester Road, Wanchai, Hong Kong (hereinafter called "the Building") which said portion consists of the area more particularly described in Part II of the First Schedule hereto (hereinafter called "the Premises") |
| ANCILLARY RIGHTS |  | TOGETHER with the use in common with the Landlord and others having the like right of the common entrances, staircases, landings, lavatories and passages of the Building and of the lifts and central air-cooling and/or heating services as provided by the Landlord (whenever the same shall be operating) so far as the same are necessary to the enjoyment of the Premises. EXCEPT AND RESERVED unto the Landlord and all persons authorised by the Landlord or otherwise entitled thereto:- |

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(i) the right of free and uninterrupted passage and running of water, soil, gas, drainage, electricity and all other services or supplies
through such sewers, watercourses, conduits, pipes, wires, cables and ducts as are now or
may hereafter be in, on or under the Premises and serving or capable of serving the Building or any adjoining or neighbouring
property together with the right to enter upon the Premises to inspect repair or maintain any such sewers, watercourses, conduits,
wires, cables and ducts;

(ii) the exclusive right to install or affix to any part of the
Building such flues, pipes, conduits, chimneys, aerials, plant, machinery and other apparatus, signs, placards, posters and other advertising
structures whatsoever (whether illuminated or not) as the Landlord shall think fit together with the right to repair maintain service
remove or replace the same;

(iii) the right to erect or alter or consent to the erection or
alteration of any building for the time being on any adjoining or neighbouring property notwithstanding that such erection or alteration
may diminish the access of light and air enjoyed by the Premises and the right to deal with any such property as it may think fit;

(iv) the right and liberty to enter upon the Premises in the circumstances
in which the covenants by the Tenant contained in these presents permit such entry;

(v) the right to subjacent and lateral support from the Premises
for the remainder of the Building; and

(vi) all easements quasi-easements privileges and rights whatsoever
now enjoyed by any adjoining or neighbouring property in under over or in respect of the Premises as if such adjoining and neighbouring
property and the Premises had at all times heretofore been in separate ownership and occupation and such matters had been acquired by
prescription or formal grant.

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| | |
|:---|:---|
| HABENDUM TERM | TO HOLD the Premises unto the Tenant for the term specified in the Second Schedule hereto determinable as hereinafter provided PAYING THEREFOR the rent(s) specified in the second column of Part I of the Third Schedule hereto for the period specified in the corresponding entry in the first column of Part I of the Third Schedule hereto. The rent(s) payable hereunder is(are) exclusive of rates and shall be paid in advance without any deduction or set off on the 1st day of each and every successive calendar month the first of such payments of rent to be made on the signing of this Agreement. |

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Without prejudice to any other remedy available to the Landlord if and so often as any rent reserved pursuant to the terms and provisions of this Agreement (whether formally demanded or not) or any other money due from the Tenant under the terms and provisions of this Agreement shall be unpaid after becoming due and payable the Tenant shall also pay on demand by way of rent interest on such unpaid rent and other moneys from the due date until payment at the rate of three (3) per cent per annum above the rate from time to time quoted by The Hongkong and Shanghai Banking Corporation Limited as its prime rate.

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| | |
|:---|:---|
| SERVICE CHARGES | 2. The Tenant shall also pay to the Landlord by way of further or additional payments for the provision by the Landlord of the maintenance and management of the Building the sums specified in and calculated in accordance with Part II of the Third Schedule hereto (hereinafter collectively called "the Service Charges") such sums to be paid monthly in advance throughout the term and on the days and in the manner as the payment of rent hereinbefore mentioned (which shall be subject to increase by the Landlord as provided in Clause 3) the first of such payments to be made on the signing of this Agreement. |

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| | |
|:---|:---|
| INCREASE IN SERVICE CHARGES | 3. The parties hereto agree that the Service Charges shall be subject to increase at any time during the continuance of the term hereby created upon the Landlord giving to the Tenant one (I) calendar month's notice in writing of such increase and of the consequent revision to the budget referred to in Part II of the Third Schedule hereto and upon the expiration of the said period of one (1) month the Service Charges shall be increased by the amount specified in the Landlord's notice. There shall be no restriction on the number of occasions upon which the Landlord may call for an increase in the Service Charges. |

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| | |
|:---|:---|
| LANDLORD'S FIXTURES AND<br> FITTINGS | 4. The Landlord shall provide such fixtures and fittings (being and forming part of the Landlord's fixtures and fittings) for the Premises as are described in the Fourth Schedule hereto. The Tenant shall not be entitled to demand the provision of any other fixtures and fittings from the Landlord. |

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TENANT'S COVENANTS 5. THE TENANT HEREBY COVENANTS WITH THE LANDLORD as follows, namely :-

TO PAY RENT, ETC. (a) To pay the rent and Service Charges hereby reserved in Hong Kong Currency in the manner herein stipulated.

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| | | |
|:---|:---|:---|
| TO PAY RATES, TAXES ETC. | (b) | To pay rates charged on the Premises as assessed by the Government quarterly in advance which shall be or be deemed to be payable and due on the first day of the months of January, April, July and October provided that the first payment thereof shall be paid on the commencement of the tenancy and in the event of the Premises not having been assessed to rates by the Government to pay quarterly in advance such sum (not exceeding such percentage as shall from time to time be determined by the Legislative Council in accordance with Section 18 of the Rating & Valuation Ordinance as the percentage of the rateable value on which rates shall be computed on the rent for the corresponding quarter) as shall be required by the Landlord as a deposit by way of security for the due payment of rates subject to adjustment on actual rating assessment being received from the Government and also to pay and discharge all taxes, assessments, duties, charges, impositions and outgoings whatsoever now or hereafter to be imposed or charged on the Premises or upon the owner or occupier in respect thereof by the Government of Hong Kong or other lawful authority (Government Rent and Property Tax alone excepted). |

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| | | |
|:---|:---|:---|
| METHODS OF PAYMENT | (c) | To pay the rent rates Service Charges and any other periodic charges mentioned herein by way of cheque or cashier order issued by a licensed bank in Hong Kong. |

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| | | |
|:---|:---|:---|
| TO PAY FOR UTILITIES | (d) | To pay and discharge all deposits and charges in respect of electricity, gas, water and telephones as may be shown by the separate meter or meters installed upon the Premises or by accounts rendered to the Tenant. |

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|:---|:---|:---|
| TO PAY FOR CLEANSING AND CLEARING OF DRAINS | (e) | To pay on demand to the Landlord the cost incurred by the Landlord in cleansing and clearing any drains choked or stopped up owing to careless use by the Tenant or its employees customers invitees or licensees. |

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|:---|:---|:---|
| TO FIT OUT | (f) | To fit out the Premises at the Tenant's expense in accordance with such proposals, fitting-out plans and specifications as shall have been first submitted to and approved in writing by the Landlord (provided that the Landlord may impose such conditions and/or request for further information as it deems necessary in its sole discretion for giving such consent, and the Tenant shall provide requested information and/or evidence to the satisfaction of the Landlord forthwith and in any event within seven (7) days from such request) in a good and proper workmanlike fashion and in all respects in a style and manner appropriate to a first class office building and so to maintain the same throughout the said term in good repair and condition to the satisfaction of the Landlord. The Tenant will not cause or permit to be made any variation to the approved fitting out plans and specifications or to the interior design or layout of the Premises without the previous approval in writing of the Landlord and in the event of such approval being requested it shall be a condition precedent to the granting thereof that the Tenant shall pay to the Landlord on demand (i) any fees and/or costs incurred by the Landlord in obtaining the approval of its architect and/or specialist consultants; (ii) the cost to the Landlord of all consequential alterations to the standard interior design and layout of the Premises and the standard fixtures and fittings therein and thereon and an administration fee of 15% of such cost. For the avoidance of doubt, the Tenant shall not commence any fitting works prior to obtaining the Landlord's written approval. |

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|:---|:---|
| FITTING OUT AND ALTERATIONS(i) | At the Tenant's expense to fit out the Premises and to effect any alterations or additions for which the consent of the Landlord under Clause 5(q) hereof has been obtained in accordance with such proposals, plans and specifications as shall have been first submitted to and approved in writing by the Landlord in a good and proper workmanlike fashion and in all respects in a style and manner appropriate to a first class office building and so to maintain the same throughout the said term in good repair and condition to the satisfaction of the Landlord. The Tenant will not cause or permit to be made any variation to the approved plans and specifications or to the interior design or layout of the Premises without the previous approval in writing of the Landlord and it shall be a condition precedent to the granting of any approval under this Clause that the Tenant shall reimburse to the Landlord any fees and/or costs charged to the Landlord for the approval of its architect and/or specialist consultants. The Tenant shall comply with all applicable law for and shall be solely responsible for obtaining all necessary approval and consent from all relevant Government Authority and utility companies required for all work performed by or on behalf of the Tenant on the Premises. |
| (ii) | At the Tenant's expense to employ only the Landlord's nominated contractors for all work involving alterations to the structure of the Building or the standard air-conditioning, mechanical or electrical systems or fire services installation (including sprinklers) and to pay to the Landlord on demand a Consultancy and Administration fee of 15% of the cost of any such alteration work for any services provided or deemed necessary by the Landlord in respect thereof. |

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(iii) The
tenant will be required to pay the alteration costs (inclusive of the consultancy and administrative fee) according to the following payment
terms:-

<u>For Quotation/Budget Estimates above HK.$50,000</u>

(a) To deposit with the Landlord 50% of the estimated costs of
the proposed alteration work prior to the Landlord's nominated contractors commencing the actual work;

(b) To pay the Landlord a second deposit of 30% of the estimated
costs within fourteen (14) days after commencing the actual work;

(c) To pay the Landlord a further deposit of 15% of the estimated
costs within twenty eight (28) days after commencing the actual work; and

(d) The remaining balance of the total costs together with variations
(if any) will be payable to the Landlord within seven (7) days upon the Tenant receives the advice of final contract sum after the completion
of the alteration works.

<u>For Quotation/Budget Estimates of HK.$50.000 or <u>below:-</u></u>

(a) To deposit with the Landlord 100% of the estimated costs of the proposed alteration
work prior to the Landlord's nominated contractors commencing the actual work; and

(b) Variations (if any) will be payable to the Landlord within seven (7) days upon the
Tenant receives the advice of final contract sum after the completion of the alteration works.

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|:---|:---|:---|
| TO KEEP IN REPAIR | (g) | To keep all interior of the Premises including the flooring and interior plaster or other finishing material or rendering to walls and all ceilings and the Landlord's fixtures and fittings therein and all additions thereto including all doors windows electrical installations and wiring and fire alarm and fire fighting installations in good clean substantial and proper repair and condition and properly preserved and painted as may be appropriate when from time to time appropriate or required or whenever required by the relevant Government Authority and to maintain the same at the expense of the Tenant Provided that the Tenant shall not be obliged to repair or reinstate the interior of the Premises and the Landlord's fixtures and fittings therein where the same have been destroyed or damaged by an Insured Risk (as hereinafter defined) save in the event that the insurance moneys in respect thereof are irrecoverable in whole or in part due to some act or default on the part of the Tenant. The Tenant particularly agrees:- |

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|:---|:---|:---|
| WINDOW GLASS | (i) | to reimburse to the Landlord the cost of replacing all broken and damaged window glass irrespective of the cause of such breakage or damage caused by a design or structural defect; |

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|:---|:---|:---|
| ELECTRICAL WIRING | (ii) | to repair or replace, if so required by the appropriate Supply Company, Statutory Undertaker or Authority as the case may be under the terms of any Electricity Supply Ordinance for the time being in force or any Orders in Council or Regulations made thereunder, all the electrical wiring installations and fitting within the Premises and the wiring from the Tenant's meter or meters to and within the same; |

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|:---|:---|:---|
| INTERIOR DEFECTS | (iii) | to be wholly responsible for any damage or injury caused to any person whomsoever or property whatsoever directly or indirectly through the defective or damaged condition of any part of the interior of the Premises and to make good the same by payment or otherwise and to indemnify the Landlord against all costs claims demands actions liabilities and legal proceedings whatsoever made upon the Landlord by any person in respect thereof; and |

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|:---|:---|:---|
| DRAINS, PIPES CABLES, ETC. | (iv) | insofar as the same may not be part of the interior of the Premises to keep in good clean substantial and proper repair and condition all drains, soil and other pipes, cables, wires, ducts, mains and apparatus associated therewith and any equipment and fittings ancillary thereto which belong to form part of or solely serve the Premises and to indemnify the Landlord against all costs, claims, demands, actions, liabilities, and legal proceedings whatsoever made upon the Landlord by any person in respect of any breach of this covenant. |

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|:---|:---|:---|:---|
| TO YIELD UP | (h) | (i) | To yield up the Premises quietly at the expiration or sooner determination of the term in good clean substantial and proper repair and condition (damage or destruction due to any causes mentioned in Clause 7(b) hereof excepted) AND thereupon to surrender to the Landlord all keys leading to all parts of the Premises and to remove at the Tenant's sole expense all fixtures, fittings, additions, partitions, floor coverings, erections, and alterations whether the same were made or installed by the Tenant or otherwise and whether during the term hereof or at any time prior thereto upon or in the Premises and to reinstate restore and make good any damage caused by such removal or re-instatement Provided always that the Tenant's obligations relating to removal or reinstatement under this Clause may be modified or varied by the Landlord at its sole and absolute discretion from time to time notifying the Tenant in writing that the Landlord proposes without payment of any compensation to retain all or any of the said fixtures, fittings, additions, partitions, floor coverings, erections and alterations in the nature of the Landlord's fixtures and fittings which the Tenant is otherwise liable hereunder to remove but subject to this proviso, the Tenant shall re-instate restore and make good the Premises or any part thereof requiring to be reinstated restored or made good and in the event of the Tenant failing so to do the Tenant shall on demand forthwith pay to the Landlord all the cost and expenses of such re-instatement restoration or making good. |

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|:---|:---|:---|
| ACCESS TO PROSPECTIVE TENANTS | (ii) | For the period of three (3) months immediately prior to the expiration or sooner determination of the term the Tenant shall permit all persons having written authority from the Landlord or the Landlord's agents to enter and view the Premises and every part thereof at all reasonable times upon prior reasonable notice. |

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|:---|:---|:---|
| TO PROTECT INTERIOR | (i) | To take all reasonable precautions to protect the interior of the Premises from damage threatened by an approaching storm gale or typhoon. |

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|:---|:---|:---|
| WATER APPARATUS | (j) | To keep at the expense of the Tenant the lavatories and water apparatus when used exclusively by the Tenant and its employees customers invitees or licensees in good clean substantial and proper repair and condition at all times during the term to the satisfaction of the Landlord and in accordance with the Regulations of the Public Health or other Government Authority concerned. |

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TO PERMIT LANDLORD TO ENTER AND VIEW (k) (i) To permit the Landlord and its agents with or without workmen or others and with or without appliances at all times to enter the Premises to view the condition thereof and to take Inventories of the Landlord's fixtures and fittings therein;

(ii) Within the space of one (1) calendar month from the time
of receipt of notice requiring the Tenant so to do to make good all defects and wants of repair then found which are the liability of
the Tenant; and

(iii) To permit the Landlord and its agents with or without workmen
or others and with or without appliances at all times to enter upon the mechanical/air-conditioning plant room as indicated on the plan
attached via the Premises.

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|:---|:---|:---|:---|
| TO PERMIT ENTRY | (1) | (i) | To permit the duly authorised agents or servants of the Landlord and any other persons duly authorised by the Landlord at any time to enter the Premises (and by force if necessary) for the purposes of security, safety and/or fire fighting, inspecting the condition of the Premises, ensuring compliance with all legislation, regulations and/or carrying out routine and essential or emergency repairs or alterations or additions to or maintenance or renewal of the Building and the Landlord's services and fixtures and fittings within the Building and any other services or fixtures which may be supplied or provided to or installed in the Building by third parties including, without limitation to the generality of the foregoing, telephone and other communication services and fixtures and fittings installed in connection therewith, and of making good on behalf of the Tenant and at the Tenant's expense any defects or effecting any repairs which the Tenant has failed to do under the terms of this Agreement |

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(ii) Without prejudice to the generality of clause 5(1)(i), the
Tenant acknowledges that the Landlord and all others authorised by the Landlord may inspect the Tenant's use of the Premises, and/or survey and
take records (whether by way of photographs or measurements), and/or enter and remain on the Premises for a reasonable period of time
as may be necessary for the Landlord and all others authorised by the Landlord to carry out the inspection and/or survey with or without
workmen, appliances, and materials. The Tenant agrees to use all reasonable efforts to cooperate with the Landlord in this regard.

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|:---|:---|:---|
| USER | (m) | Not to use the Premises for any purpose other than such as are specified in the Fifth Schedule hereto and only to the extent permitted by the Government Grant, the Occupation Permit of the Building, and the Deed of Mutual Covenant of the Building (if any). |

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Notwithstanding anything herein contained, the Landlord and the Tenant hereby further agree that if at any time during the continuance of this tenancy any notice shall be served on the Landlord or the Tenant by any Government Authority or relevant authority or the building manager prohibiting or objecting to the Tenant's use of the Premises (whether the use as specified in the Fifth Schedule or otherwise), as being unauthorised illegal or not in compliance with the Government Grant, Deed of Mutual Covenant (if any) and/or Occupation Permit of the Building, then the Tenant shall forthwith cease carrying on such user and if the Tenant shall fail to rectify or cease to carry on such use within fourteen (14) days after the Landlord's demand, the Landlord shall have the right to terminate this Agreement by giving to the Tenant not less than one (1) month's prior written notice, and on the expiry of the said notice the Tenant shall quit and deliver up vacant possession of the Premises to the Landlord in the manner as provided under this Agreement and this Agreement shall thereupon determine and the deposits paid by the Tenant to the Landlord hereunder shall be absolutely forfeited without prejudice to the right of the Landlord to claim against the Tenant for any accrued antecedent rights and claims by the Landlord against the Tenant, and the Tenant shall, if so required by the Landlord, execute a surrender agreement in respect of the Premises in such form as prepared by the Landlord's solicitors at the Tenant's legal costs and disbursements.

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|:---|:---|:---|
| NOT TO MISUSE | (n) | Not to permit or suffer any part of the Premises to be used for the purpose of gambling or for any illegal, immoral or improper purposes or so as to cause nuisance, annoyance, inconvenience damage or danger to the occupiers of adjacent premises or other premises in the neighbourhood. |

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|:---|:---|:---|:---|
| NOT TO STORE GOOD | (o) | (i) | Not without the previous consent in writing of the Landlord to use the Premises or any part thereof for the storage of goods or merchandise other than in normal quantities consistent with the nature of the Tenant's trade or business nor to keep or store or cause or permit to be kept or stored any dangerous goods within the meaning of the Dangerous Goods Ordinance or any enactment replacing the same and the Regulations applicable thereto or any modification thereof and in so far as such Ordinance or its Schedules or Regulations may be altered this Clause shall have reference to any alteration thereof. |

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(ii) Not without the previous consent in writing of the Landlord
to keep store use bring into or suffer to be kept stored used brought into the Premises or the Building or any part thereof any arms
or ammunition (as defined in the Arms and Ammunition Ordinance) PROVIDED ALWAYS that it shall be within the absolute discretion of the
Landlord to grant or withhold such consent and it shall be a condition precedent to any such consent that the Tenant shall produce evidence
of compliance with the said Ordinance or any statutory modification or reenactment thereof for the time being in force and Provided Also
that at all times the Tenant shall indemnify the Landlord from and against all actions proceedings demands liability costs claims and
expenses in respect of any loss, damage to person or property, injury or death suffered by any person or body as a result of any such
arms or ammunition being kept stored used brought into or suffered to be kept stored used or brought into the Premises or the Building
by the Tenant its licensees or invitees and whether or not any consent thereto has been granted by the Landlord.

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| NOT TO COMMIT NUISANCE, ETC. | (p) | Not to make produce or suffer or permit to be made or produced any noise (including but not limited to music or sound produced by broadcasting from television radio and any apparatus equipment or instrument capable of creating producing or reproducing music or sound) or vibration or other acts or things in or on the Premises which is/are or may be a nuisance or annoyance to the Landlord or to the tenants or occupiers of adjacent or neighbouring premises unless authorised by the Landlord on specific occasions. |

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|:---|:---|:---|
| NOT TO MAKE ALTERATIONS, ETC. | (q) | Not to make or permit to be made any alterations in or additions to the Premises or to the electrical and communications wiring and other installations or other Landlord's fixtures and fittings or to install any internal partitions plant equipment apparatus or machinery therein (other than usual office equipment) without having first obtained the written licence and consent of the Landlord therefor or cut, maim, or injure or suffer to be cut, maimed or injured any doors, windows, walls, structural members or other fabric thereof. |

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| NOT TO EXCEED FLOOR LOADING | (r) | Not without the previous written consent of the Landlord to install or permit or suffer to be installed any equipment apparatus partitions machinery or any other object of whatsoever nature whether fixed or free-standing which imposes a weight on any part of the flooring of the Premises in excess of 4Kn/m.sq. (or 80 pounds per square foot). The Landlord shall be entitled to prescribe the maximum weight and permitted locations of safes and other heavy equipment and to require the same to stand on supports of such dimensions and material to distribute the weight as the Landlord may deem necessary. |

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| NOT TO ALTER LOCKS, BOLTS, LOADING | (s) | Not without the prior consent in writing of the Landlord to install additional locks bolts or other fittings to the entrance doors of the Premises or in any way to cut or alter the same. |

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| TO COMPLY WITH ORDINANCE ETC. AND GOVERNMENT LEASE | (t) | To obey comply with and indemnify the Landlord against any breach of the Government Grant, all ordinances, regulations, bye-laws, rules, demands, orders, notices, directions and requirements of any Government Authority or other competent authority relating to the Premises or any part thereof, the conduct and carrying on of the Tenant's activities on the Premises or any other act, deed, matter or thing done, permitted, suffered or omitted therein or thereon by the Tenant or any employee, agent or licensee of the Tenant. |

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|:---|:---|:---|
| NOT TO ASSIGN, PART WITH POSSESSION ETC. | (u) | Not to transfer assign underlet license share or otherwise part with the possession of the Premises or any part thereof either by way of sub-letting, lending, sharing, or other means whereby any person or persons not a party to this Agreement obtains the use or possession of the Premises or any part thereof for all or any part of the term hereby granted and irrespective of whether any rental or other consideration is given for such use or possession and in the event of any purported transfer, assignment, underletting, licensing, sharing or parting with the possession of the Premises (whether for monetary consideration or not) the Landlord shall be entitled to terminate this Agreement and the Tenant shall forthwith thereupon surrender vacant possession of the Premises to the Landlord without prejudice howsoever to the rights of either party in respect of any antecedent breach of any of the covenants terms and conditions contained herein Provided that the Tenant shall have the right to permit its holding company and any subsidiary of its holding company to occupy any part or parts of the Premises as Licensee. The lease created hereby shall be personal to the Tenant named in this Agreement. Without limiting the generality of the foregoing, the following acts and events shall, unless approved in writing by the Landlord, be deemed to be in breaches of this Clause |

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(i) In the case of the Tenant being a partnership, the taking
in of one or more new partner whether on the death or retirement of an existing partner of otherwise.

(ii) In the case of the Tenant being an individual (including
a sole surviving partner of a partnership tenant), the death, insanity or other disability of that individual to the intent that no right
to use, possess, occupy or enjoy the Premises or any part thereof shall vest in the executors, administrators, personal representatives,
next of kin, trustee or committee of such an individual.

(iii) In the case of the Tenant being a corporation, the take-over,
reconstruction, amalgamation, merger, voluntary liquidation or change in the person or persons in whom the majority of its voting shares
are vested or who otherwise has/have effective control thereof.

(iv) The giving by the Tenant of a power of attorney or similar
authority whereby the donee of the power obtains the right to use, possess, occupy or enjoy the Premises or any part thereof or does
in fact use, possess, occupy or enjoy the same.

(v) The change of the business name of the Tenant.

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| FOOD RESTRICTION | (v) | Not to allow the delivery of food to the Premises except by means of the service lifts or the preparation or consumption of food on the Premises other than the preparation and consumption of light meals or refreshments for consumption by the Tenant's employees or guests provided that such light meals or refreshments shall not be consumed within sight of customers and/or the public. The Tenant shall ensure that all wet garbage and refuse will be disposed of by arrangement with and in containers specified by the management of the Building. |

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|:---|:---|:---|
| OVERNIGHT OPERATIONS GUARDS, ETC. | (w) | Not to permit or suffer any person or persons to remain in the Premises or the Building overnight without the Landlord's prior permission in writing. Such permission shall only be given to enable the Tenant to operate its business or to post watchmen to guard the contents of the Premises which shall not be used as sleeping quarters or as domestic premises within the meaning of the Landlord and Tenant (Consolidation) Ordinance or any other enactment or modification thereof for the time being in force. |

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| NOT TO BLOCK ENTRANCES, STAIRCASES, ETC. | (x) | Not to place or leave in the entrance or any of the lifts, staircases, passages, lobbies, landings or other common areas of the Building any boxes, furniture, chattels, refuse or rubbish or otherwise encumber the same. In addition to any other remedy available to the Landlord hereunder or at Law, in the event of the Tenant being in breach of this Clause the Landlord, its servants or agents may without prior notice to the Tenant treat any item whatsoever so placed or left as abandoned and at the Tenant's expense (payable on demand) dispose of the same in whatever manner it shall in its absolute discretion decide and the Tenant hereby specifically authorises the Landlord so to do. |

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| NOT TO ERECT SIGNS | (y) | Not to erect exhibit or display within or on the exterior of the Premises or the Building any writing sign aerial flagpole or other device whether illuminated or not unless the same and the proposed location thereof shall have previously been approved in writing by the Landlord. |

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| NOT TO VITIATE INSURANCES | (z) | Not to do or permit to be done any act or thing whereby the policy or policies of insurance on the Premises against damage by fire or against claims by third parties for the time being subsisting may become void or voidable or whereby the rate of premium or premia thereon may be increased, and (if so required) to repay to the Landlord on demand all sums paid by the Landlord by way of increased premium or premia thereon and all expenses incurred by the Landlord in and about any renewal of such policy or policies rendered necessary by a breach of this Clause. |

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| RESTRICTION ON DELIVERIES | (aa) | Not to take delivery of furniture equipment fittings or bulky items in and out of the Building outside the hours specified in the Sixth Schedule hereto and under no circumstances to use passenger lifts for goods delivery purposes at any time. In the event of the Tenant requiring delivery outside the hours so specified, the Tenant will be liable for payment on demand of any additional cost to the Landlord, including the payment for overtime to any necessary supervisory staff. |

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|:---|:---|:---|
| INDEMNITY BY TENANT | (ab) | To indemnify and keep the Landlord fully indemnified from and against all actions proceedings demands costs expenses liabilities and claims whatsoever by the tenants and occupiers of any other parts of the Building and any third party in respect of any act or liability caused by or arising from the act, neglect or default (irrespective of whether wilful or not) of the Tenant or any invitee or licensee of the Tenant or any workmen servants or persons who are suffered or permitted by the Tenant to be in the Premises or any part thereof. |
| EXCLUSION OF LANDLORD'S LIABILITY | (ac) | Not to hold the Landlord liable in any way to the Tenant or to any person whomsoever in respect of any injury damage or loss of business or other liability whatsoever which may be suffered by the Tenant or by any other person or any property howsoever caused and in particular, but without limitation caused by or through or in any way owing to :- |

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(i) any interruption of any of the services hereinbefore mentioned
by reason of necessary repair or maintenance of any installations or apparatus or damage thereto or destruction thereof by fire water
act of God or other cause beyond the Landlord's control or by reason of mechanical electrical or other defect or breakdown or other inclement
conditions or unavoidable shortage of fuel materials water or labour or any cause whatsoever beyond the Landlord's control; or

(ii) the act neglect or default of the tenants and occupiers of
any other parts of the Building and their employees agents licensees and invitees.

(ad) Not to hold the Landlord liable in any way to the Tenant
or to any person whomsoever in respect of any injury damage or loss of business whatsoever which may be suffered by the Tenant or by
any other person or any property howsoever caused and in particular, but without limitation, caused by or through or in any way owing
to:-

(i) any defect in the supply of electricity or from any surge
reduction variation interruption or termination in the supply of electrical power, or

(ii) any typhoon landslide subsidence of the ground escape of
fire leakage of water or electric current from the water pipes or electric wiring cables or ducts situate in upon or in any way connected
with the Building or any part thereof or dropping or falling of any article object or material whatsoever including cigarette ends, glass
or tiles, the escape of water, fire or electricity or vibrations from any floor office or premises forming part of the building or in
the neighbourhood, or

(iii) the defective or damaged condition of the Premises or the
Landlord's fixtures therein or any part thereof;

provided that nothing in this Clause 5(ad) contained shall exclude or restrict any liability of the Landlord for death or personal injury resulting from the negligence of the Landlord or its servants or agents.

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|:---|:---|:---|
| OBSERVANCE OF TERMS OF DEED OF MUTUAL COVENANT | (ae) | Not to do anything which would amount to a breach or non-observance of the terms, conditions, covenants and restrictions contained or referred to in the Government Grant under which the Premises are held or any Deed of Mutual Covenant relating to the Building and/or the Premises and to indemnify the Landlord against any such breach or non-observance. |

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6. THE LANDLORD HEREBY COVENANTS WITH THE TENANT as follows
:-

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|:---|:---|:---|
| QUIET POSSESSION | (a) | To permit the Tenant (duly paying the rent Service Charges rates and other outgoings and charges hereinbefore referred to and observing and performing the covenants herein contained) to have quiet possession and enjoyment of the Premises during the said term without any interruption (except as herein provided) by the Landlord or anyone lawfully claiming under or through or in trust for the Landlord. |

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(b) Subject to the payment by the Tenant of the rent Service
Charges rates and other outgoings and charges hereinbefore referred to and observing and performing the covenants herein contained and
as regards paragraph (ii) below subject also to Clause 5(ac) and paragraph (i) below:-

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|:---|:---|:---|
| TO REPAIR ROOF, MAIN WALLS, ETC. | (i) | To amend and repair such defects (not attributable to the act of the Tenant or its invitees licensees servants or agents) to the roof main electricity supply cables main drains and water pipes main walls and exterior window frames of the Building and the escalators lifts and central air-cooling and heating plant therein as the Landlord shall discover or as the Tenant or other authorised person or Authority shall by notice in writing bring to the attention of the Landlord and to maintain the same m a proper state of repa1r and condition PROVIDED that the Landlord shall be liable neither to pay compensation to the Tenant in respect of any period during which due to circumstances beyond the control of the Landlord the proper operation of the said escalators lifts central air-cooling and heating plant or any of them shall be interrupted as the result of mechanical failure or need for repair or overhaul nor to grant any abatement of rent or Service Charges in respect of such interruption and PROVIDED further that the Landlord shall be responsible for costs of work of a structural nature. |

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(ii) To provide and maintain for the Premises :-

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|:---|:---|:---|
| TO SUPPLY AIR-CONDITIONING | (a) | a central air-conditioning service during the hours and on the days specified in the Seventh Schedule hereto PROVIDED that the electric power for any fan-coil air-cooling and circulating units installed within or exclusively for the use of the Premises shall be connected to the Tenant's electricity supply meter and the Tenant shall pay direct to the supply authority or undertaker for the electric power consumed thereby; and |

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|:---|:---|:---|
| TO PROVIDE CLEANING SERVICES | (b) | general cleaning services to the interior of the Premises between the hours and on the days specified in the Eighth Schedule hereto subject to the terms of the cleaning contract entered into between the Landlord and such cleaning contractor as shall be employed by the Landlord. No other cleaning contractors shall be permitted to service the Premises. |

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|:---|:---|:---|
| INSURANCES, ETC. | (iii) | To keep the Building insured (subject to such exclusions and limitations as are imposed by the Insurers and subject to the necessary insurance cover being obtainable from an insurance company of good repute) against loss or damage by fire lightning explosion storm tempest flood earthquake bursting or overflowing of water tanks apparatus and pipes impact aircraft and articles dropped therefrom riot civil commotion labour disturbances and malicious damage and such other risks as may be determined by the Landlord (each of which risks being referred to in this Agreement as "an Insured Risk") with an insurance company of good repute in such full reinstatement value as the Landlord shall determine including such Architects' Engineers' and Surveyors' fees as the Landlord may determine and other incidental expenses provided always that the Landlord shall not be obliged to insure any fixtures and fittings which may be installed by the Tenant and which may become Landlord's fixtures and fittings. |

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TO PAY GOVERNMENT RENT, ETC. (c) To pay the Government Rent and Property Tax in respect of the Premises.

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|:---|:---|:---|
| APPLICATION OF MONEYS RECEIVED FROM INSURANCE | (d) | To apply all moneys received by virtue of any insurance effected by the Landlord under the provisions of Clause 6(b)(iii) hereof but not further or otherwise in or towards the repairing, rebuilding or replacement of the Premises whether or not in the same form provided that if any competent authority shall refuse permission for or otherwise prevent any rebuilding or replacement or if owners of other premises in the Building shall prevent rebuilding or replacement all such insurance moneys (so far as unapplied as aforesaid) shall be retained by the Landlord and the Tenant shall be entitled within one month of such refusal or prevention subject to there having been no breach of its obligations hereunder forthwith to terminate this Agreement by serving written notice on the Landlord. |

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FURTHER PROVISIONS 7. IT IS HEREBY EXPRESSLY PROVIDED AND AGREED as follows :-

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|:---|:---|:---|
| RE-ENTRY | (a)(i) | If the rent reserved hereby the Service Charges or rates or other outgoings or charges hereinbefore referred to, or any part thereof be unpaid (whether formally demanded or not) for the space of eight (8) days next after any of the days on which the same ought to have been paid or in the case of the breach non-observance or non-performance of any of the covenants, restrictions, stipulations and conditions herein contained and on the part of the Tenant to be observed or performed or if the Tenant shall become bankrupt or go into liquidation (except for the purpose of amalgamation or reconstruction of a solvent company) or if the Tenant shall enter into composition or arrangement with its creditors or shall suffer any distress or execution to be levied on the Tenant's goods or chattels then in any such cases, it shall be lawful for the Landlord at any time thereafter to re-enter into and upon the Premises or any part thereof in the name of the whole and thereupon these presents shall absolutely determine and the deposits paid by the Tenant to the Landlord shall be absolutely forfeited to the Landlord as and for liquidated damages and not as a penalty but without prejudice to any right of action of the Landlord in respect of any breach non-observance or non-performance by the Tenant of the said covenants restrictions stipulations and conditions. All costs and expenses of and incidental to any demand for rent or any other sum payable under these presents or actions or distraint for the recovery of the same shall be paid by the Tenant on a full indemnity basis and shall be recoverable from the Tenant as a debt. |
|  | (ii) | A written notice served by the Landlord on the Tenant in manner hereinafter mentioned to the effect that the Landlord thereby exercises the power of re-entry and/or forfeiture herein contained shall be a full and sufficient exercise of such power without physical entry on the part of the Landlord and notwithstanding any statutory or common law provision to the contrary. |

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|:---|:---|:---|:---|
| ABATEMENT OF RENT AND SERVICE CHARGES | (b) | (i) | If the Premises or any part thereof are rendered unusable or inaccessible by an Insured Risk the rent reserved hereby and Service Charges or a part thereof proportionate to the extent to which the Premises shall have been so rendered unusable or inaccessible shall abate and cease to be payable until the same shall have been again rendered fit for use and accessible PROVIDED that there shall be no cessation of rent if any Insurance Policy effected by the Landlord shall have been rendered void or voidable in whole or in part by the act or default of the Tenant or any person deriving title under the Tenant or any of the servants agents invitees or licensees of the Tenant. |
|  |  | (ii) | Should the Premises be resumed by the Hong Kong Government for town planning or other purposes during the continuance of the term hereby created the Tenant shall vacate the Premises on the date or time notified by the Government and waive all his right and privilege to any claim or demand for damages or compensation which may be afforded to him by any Ordinance in force at that time. |

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|:---|:---|:---|
| RENAMING OF BUILDING, ETC. | (c) | The Landlord shall at any time and from time to time during the term hereby granted be entitled to change the name of the Building or the complex at present called "YF LIFE CENTRE" of which the building forms part or any part or parts thereof on giving not less than three (3) months' prior written notice to the Tenant to that effect and in respect thereof the Landlord shall not be liable in damages to the Tenant or be made a party to any other proceedings or for costs or expenses of whatsoever nature incurred by the Tenant as a result of such change. |

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|:---|:---|:---|
| SALE OR DEMOLITION | (d)(i) | If the Landlord shall at any time enter into a contract for the sale of the Premises or the Building or any part thereof (including sale of shares of such company / companies holding the Premises or the Building or any part thereof (whether directly or indirectly)) or shall resolve to demolish, re-build or refurbish the Premises or the Building or any part thereof (which intention shall be sufficiently evidenced by a copy of the Resolution of its Board of Directors certified by its Secretary to be a true and correct copy) then in such event the Landlord shall be entitled to give not less than six (6) months' notice in writing to expire at any time to terminate this Agreement without any compensation and immediately upon the expiration of such notice this Agreement shall terminate but without prejudice to the rights and remedies of either party against the other in respect of any antecedent claim or breach of any of the covenants restrictions stipulations or conditions herein contained. "Demolish" and/or "rebuild" for the purposes of this Clause shall mean the demolition and/or rebuilding of the whole of the Building or any part or parts (but not necessarily a major part) thereof whether or not including any main walls exterior walls or roof of the Premises and whether or not any part thereof is to be re-built or reconstructed in the same or any other manner. "Refurbish" may or may not include demolition of the Building or any part thereof. |
|  | (ii) | It is also agreed and declared notwithstanding any other provision herein and notwithstanding any law to the contrary the Tenant's optional right(s)(if any) shall extinguish and determine upon the service of the said notice of termination and the Tenant shall not be entitled to any claim against the Landlord for any damages or compensation or any relief against such early determination of optional right(s). |

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|:---|:---|
| ALLOCATION OF NAME SLAT(S)(e) | The Tenant shall be allotted one slat on the Main Directory Board on the 16th Floor and one slat on the 16th Floor for the display of the name of the Tenant only, the initial cost of such slat(s) together with the lettering thereon being paid by the Landlord. |
| ADDITIONAL A.C. SERVICE (f) | If the Tenant shall require air-conditioning services to be supplied to the Premises outside the hours specified in the Seventh Schedule hereto, the same shall whenever possible be provided by the Landlord on the Tenant giving to the Landlord advance notice of the Tenant's requirement on the Tenant paying to the Landlord on demand such amount as shall be sufficient to cover the operational and electrical consumption costs (such costs as computed by the Landlord to be conclusive, errors and omissions excepted) involved in running the main air-conditioning plant during such extended hours. |
| LANDLORD'S WAIVER OF BREACHES (g) | The acceptance of rent or Service Charges by the Landlord shall not be deemed to operate as a waiver by the Landlord of any right to proceed against the Tenant in respect of a breach by the Tenant of any of the Tenant's covenants restrictions stipulations and conditions herein contained. |
| SECURITY DEPOSIT (h) | Upon the execution of these presents the Tenant shall pay to the Landlord the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY (HK.$370,963.89) equivalent to three (3) months' current rent plus three (3) months' current Service Charges as deposit for securing the due payment of the rent, Service Charges and any other moneys payable by the Tenant and to secure the performance and observance of the said covenants, restrictions, stipulations and conditions. At the expiration or sooner determination of the term hereby created if the Tenant shall have paid all rent, Service Charges and other moneys payable hereunder and if there shall be no breach of any of the said covenants, restrictions, stipulations and conditions on the Tenant's part to be observed and performed the Landlord will repay to the Tenant within thirty (30) days after the Tenant shall have surrendered to the Landlord vacant possession of the Premises the said sum without any interest thereon but if there shall be any money due to the Landlord, the Landlord may apply such deposit towards payment of such sums due, and if there shall be any breach of any of the said covenants, restrictions, stipulations and conditions on the part of the Tenant the Landlord shall pay or apply the said deposit or such part thereof as shall be required towards remedying such breach insofar as this may be possible without prejudice to any of the Landlord's rights or remedies hereunder provided and the Tenant hereby agrees that in the event of there being any increase in rent agreed determined or provided for under this Agreement and/or any increase in Service Charges under the provisions of Clause 3 hereof then and in every such case the Tenant shall pay to the Landlord as further deposit (to be held by the Landlord under the same terms and conditions as in this Clause) a sum equal to the difference between the deposit above-mentioned and three (3) months' rent as shall have been agreed determined or provided for hereunder plus three (3) months' Service Charges as increased (as the case may be) such sum to be paid to the Landlord with the payment of increased rent and/or Service Charges next following any such increase. |

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| | | | |
|:---|:---|:---|:---|
| INTERPRETATION | (i) | (i) | The expression "the Tenant" shall (where the context permits) mean and include the party or parties specifically named and its or their successors in title and permitted assigns. |
|  |  | (ii) | In this Agreement unless the context requires otherwise words importing the masculine feminine or neuter gender shall include the others of them and words importing the singular number shall include the plural and vice versa. |

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| | |
|:---|:---|
| MARGINAL NOTES(j) | The marginal headings of the Clauses of this Agreement are for reference only and it is hereby declared that these headings shall not be deemed a part of this Agreement. |
| COSTS, STAMP DUTIES (k) | The Stamp Duty and Land Registry registration fee (if any) on this Agreement and its counterpart shall be borne by the Landlord and the Tenant in equal shares and each party hereto shall pay its own legal costs (if any) incidental to the preparation and completion of this Agreement and its counterpart. However, a tenancy agreement preparation cost of HK.$800.00 shall be paid by the Tenant to the Landlord for the preparation of this Agreement upon signing of this Agreement by the Tenant. |

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| | | |
|:---|:---|:---|
| SERVICE OF NOTICES | (l) | Any notice and/or court documents required to be served on the Tenant shall be sufficiently served if delivered to or despatched by registered post to or left at the Premises or at the registered office or last known address in Hong Kong of the Tenant or such other change of address in Hong Kong the Tenant has the obligation to notify the Landlord from time to time under this clause and any notice required to be served on the Landlord shall be sufficiently served if delivered to or despatched by registered post to or left at the registered office of the Landlord in Hong Kong or any other address which the Landlord may notify to the Tenant from time to time. A notice sent by registered post shall be deemed to be given at the time when in due course of post it would be delivered at the address to which it is sent. |
| EXCLUSION OF WARRANTIES | (m) | The Landlord does not represent or warrant that the Premises are suitable for the use or purposes to which the Tenant proposes to put them and the Tenant shall satisfy itself or shall be deemed to have satisfied itself that they are suitable for the purpose for which they are to be used and the Tenant hereby agrees that it will at its own expense apply for any requisite licence or licences permit or permits from all Government or Public Authorities in respect of the carrying on of the Tenant's business therein and shall execute and comply with all ordinances, regulations, bye-laws, rules, demands, orders, notices, directions and requirements made by all competent Government or Public Authorities in connection with the conduct of such business by the Tenant in the Premises AND the Tenant hereby further agrees to indemnify the Landlord in respect of any breach by the Tenant of this Clause. |

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(n) For the purpose of Part III of the Landlord and Tenant (Consolidation)
Ordinance (Cap.7) and for the purpose of this Agreement the rent in respect of the Premises shall be deemed to be in arrear if not paid
in advance at the time stipulated by paragraph (a) (i) hereof.

(o) For the purpose of the Occupiers Liability Ordinance (Cap.
314) the Tenant shall be deemed for all intents and purposes the occupiers of the Premises.

(p) No condoning, excusing or waiving by the Landlord of any
default, breach or non-observance or non-performance, by the Tenant at any time or times of any of the Tenant's obligations herein contained
shall operate as a waiver of the Landlord's rights hereunder in respect of any continuing or subsequent default, breach or non-observance
or non-performance or so as to defeat or affect in any way the rights and remedies of the Landlord hereunder in respect of any such continuing
or subsequent default or breach and no waiver by the Landlord shall be inferred from or implied by anything done or omitted by the Landlord
unless expressed in writing and signed by the Landlord. Any consent given by the Landlord shall operate as a consent only for the particular
matter to which it relates and in no way shall be considered as a waiver or release of any of the provisions hereof nor shall it be construed
as dispensing with the necessity of obtaining the specific written consent of the Landlord in the future, unless expressly so provided.

8. The Tenant hereby expressly admits and declares that no premium
fine construction money or key money has been or will be paid to the Landlord by the Tenant for the creation of this Agreement.

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| | | |
|:---|:---|:---|
| EXCLUSION OF REPRESENTATIONS AND RIGHTS | 9.(i) | These presents set out the full agreement between the parties hereto. No other warranties or representations have been made or given relating to the Landlord, the Tenant, the Building, or the Premises or if any warranty or representation has been made the same is hereby waived. |
|  | (ii) | Nothing herein contained shall confer on the Tenant any right, interest, privilege, easement or appurtenance whatsoever mentioned or referred to in Section 16(1) of the Conveyancing and Property Ordinance 1984 save those expressly set out herein.  |

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| | | |
|:---|:---|:---|
| SPECIAL AGREEMENTS PECULIAR<br> TO THIS LETTING | 10. | The Parties hereto hereby agree that the terms, or conditions or matters set out in the Ninth Schedule (Special Conditions) hereto (if any) shall apply to this Agreement and shall be incorporated as an integral part of this Agreement. |
|  | 11. | For the avoidance of any doubt and notwithstanding any contrary provision contained herein, no term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Ordinance (Chapter 623 of the Laws of Hong Kong) by a person who is not a party to this Agreement. |
|  | 12. | Any offer, proposal, representation, warranty or the like in respect of any matter relating to this Agreement or the transaction contemplated therein which the Landlord and any Landlord's Agent may give or make subsequent to the execution to this Agreement and any conversation, negotiation and discussion or the like in respect of any matter relating to this Agreement or the transaction contemplated therein between the Landlord or any Landlord's Agent and the Tenant or the Guarantor subsequent to the execution to this Agreement shall not have any effect until the issuance of a relevant written confirmation of the Landlord and shall be subject to that confirmation. Notwithstanding the foregoing, this Agreement may be amended, supplemented or modified only by a written instrument duly executed by each party hereto. |
| GOVERNING LAW | 13. | This Agreement is governed by and construed in accordance with the Laws of the Hong Kong Special Administrative Region. The parties hereby submit to the non-exclusive jurisdiction of the courts of the Hong Kong Special Administrative Region. |

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**THE FIRST SCHEDULE ABOVE REFERRED TO**

**(Clause 1)**

**PART I**

**THE GROUND**

INLAND LOT NO. 3287 AND INLAND LOT NO. 6936

**PART II**

**THE PREMISES**

Rooms 1606-7 on the 16th Floor of the Building (for the purposes of identification only as shown coloured pink on the plan annexed hereto).

**THE SECOND SCHEDULE ABOVE REFERRED TO**

**(Clause 1)**

**THE TERM**

One (1) year and ten (10) months fixed term commencing on the 7th day of January 2026 and expiring on the 6th day of November 2027 (both days inclusive)

**THE THIRD SCHEDULE ABOVE REFERRED TO**

**(Clause 1)**

**Part I**

**THE RENT**

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| | |
|:---|:---|
| Period of Time | Rent payable (in Hong Kong Dollars per month) exclusive of Rates and Service Charges |
| From the 7th day of January 2026 |  |
|  | HK$104,032.50 per month |
| To the 6th day November of 2027 |  |

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**(Clause 2)**

**PART II**

**SERVICE CHARGES**

l. The maintenance and management charges payable by the Tenant
in respect of the Premises shall be such proportion of the total budgeted expenses in respect of the management (other than certain administration
charges) and maintenance of the Building and may be determined from time to time by the Landlord on an alternative basis which said alternative
basis shall take account of all parts of the Building for which rates are payable and which at the sole discretion of the Landlord shall
be deemed to be a fair and equitable proportion.

2. The management and maintenance costs to be included in the
said budget shall include all costs determined by the Landlord to be necessary or convenient in order to manage and maintain the Premises
and the Building as a high class commercial building but excluding certain administration charges and cost of work of a structural or
rebuilding nature. Without limiting the generality of the foregoing such costs shall include:

(i) All sums (other than the Government Rent and premium) payable
under the Government Grant under which the land described in the First Schedule hereto is held.

(ii) The cost of the maintenance and repair of the Building and
all plant equipment and machinery therein or provided therefor.

(iii) That portion of the remuneration of the Landlord which relates
to the provision of the service referred to herein.

(iv) All sums payable by the Landlord for the cost of insurance
of the Building and the cost of insurance pursuant to the Landlord's covenants contained in Clauses 6(b)(iii) and 6(d).

(v) The cost of employing all necessary persons whether as servants,
agents or advisors to provide the service requisite for the proper management and maintenance of the Building and the administration
therefor together with the cost of providing all equipment, accommodation, medical expenses, insurance cover, uniform, clothing and materials
reasonably necessary for such purposes.

(vi) Any rent or other sum payable for the use of any building
or premises for management or administrative offices or the accommodation of any staff or other person employed by the Landlord or engaged
solely in connection with the management and maintenance of the Building, or, in the event that such building or premises are owned by
the Landlord, an amount equal to the market rent in respect of
such building or premises.

(vii) The cost of purchasing or hiring all necessary plant and
equipment including road vehicles and the cost of providing a sinking fund or other fund or arrangement for the renewal thereof.

(viii) The cost of fuel or oil incurred in connection with the operation
of the plant, equipment, machinery and vehicles provided for or for the benefit of the Building and occupiers thereof.

(ix) The cost of appropriate lighting for all common areas and external flood lighting.

(x) Legal and accounting fees and costs.

(xi) A sum for contingencies.

(xii) The cost of electricity, water and other similar charges of or in connection with the Building as a whole
and not in respect of the use of or consumption by any individual tenant thereof.

(xiii) The cost of refuse disposal.

(xiv) The cost of the supply of salt and fresh water to all taps and toilets within the Building.

(xv) The cost of cleansing the common areas both within and outside the Building and (where applicable) the
offices and other occupied units therein.

(xvi) The provision of security normal air-conditioning and office cleaning services for the Premises and the
Building including the maintenance, repair and, as necessary, the replacement of the systems installed therefor.

(xvii) The cost of providing, operating, maintaining, servicing and replacing as necessary a computer or other
automated system to monitor and control management security and other services and facilities for the Building.

3. The Landlord shall as soon as possible before the commencement
of each financial year produce a budget in respect of the forthcoming year.

4. The Tenant shall on the first (1st) day of each calendar
month pay to the Landlord a sum representing one-twelfth of the maintenance and management charges payable by the Tenant in respect of
each current financial year.

5. The Landlord shall increase the Service Charges under the
terms of Clause 3 of this Agreement and determine the revised amount payable by the Tenant.

6. Unless and until varied in accordance with the provisions
of Clause 3 hereof, the Service Charges shall be the sum ofHK$19,622.13 per calendar month.

**THE FOURTH SCHEDULE ABOVE REFERRED TO**

**(Clause 4)**

**FIXTURES AND FITTINGS**

**SUPPLIED BY THE LANDLORD**

A detailed list of the Landlord's fixtures and fittings shall be set out in the handover form issued by the Landlord to the Tenant regarding the handing over of the Premises shall form part of this Agreement.

**THE FIFTH SCHEDULE ABOVE REFERRED TO**

**(Clause 5(m))**

**USER**

To use the Premises as office premises only and for no other purposes whatsoever.

**THE SIXTH SCHEDULE ABOVE REFERRED TO**

**(Clause 5(aa))**

**BULKY DELIVERIES**

Monday to Friday (inclusive) From 9:00 a.m. to 5:00 p.m.

Saturday From 9:00 a.m. to 1:00 p.m.

**THE SEVENTH SCHEDULE ABOVE REFERRED TO**

**(Clause 6(b)(ii)(a))**

**AIR-CONDITIONING OPERATING HOURS**

Monday to Friday (inclusive) From 8:00 a.m. to 6:00 p.m.

Saturday From 8:00 a.m. to 2:00 p.m.

except public and statutory holidays

**THE EIGHTH SCHEDULE ABOVE REFERRED TO**

**(Clause 6(b)(ii)(b))**

**CLEANING SERVICE HOURS**

Monday to Saturday (inclusive): From 7:00 a.m. to 7:00 p.m.

except public and statutory holidays

**THE NINTH SCHEDULE ABOVE REFERRED TO**

**(Clause 10)**

**SPECIAL CONDITIONS**

1. It is hereby agreed that if the Tenant shall wish to take
a further term of Two (2) years from the expiration of the term hereby granted and shall from the Sixth (6th) to Seventh (7th) months
before the expiration of the term give to the Landlord written notice to that effect and shall have paid the rent hereby reserved and
reasonably performed and observed the terms and conditions on its part herein contained up to the expiration of the term hereby granted
then the Landlord is bound to and shall let the Premises to the Tenant a further term of Two (2) years (hereinafter called "the
Further Term") from such expiration at a new monthly rent (The "New Monthly Rent") exclusive of rates and Service Charges
determined as hereinafter specified and subject to the same terms and conditions as are herein contained save and except this Clause
(2) and the provision for Rent Free Period.

The New Monthly Rent to be paid for the Further Term shall be the prevailing market rent for similar type of office premises in the Wanchai District of Hong Kong determined as follows and the following terms shall apply:-

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) by agreement between the parties hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) failing agreement as in (i) above not more than six months
nor less than three months before the expiration of the term hereby granted then by an independent professional valuer or firm of professional
valuers ("valuers") to be jointly appointed by the parties hereto before the expiration of the term hereby granted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) failing such a joint appointment before the expiration of
the term hereby granted then by a valuer to be appointed on the application of either party by the President (or in his absence, a Vice-president)
for the time being of the Hong Kong Institute of Surveyors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) fu the event that the rent for the Further Term has not been
determined as hereinbefore provided before the expiration of the term hereby granted the rent payable immediately prior to the expiration
thereof (disregarding any abatement of rent which may be in effect under Clause 7(b) hereof) shall continue to be paid until the rent
has been so determined but shall be adjusted retrospectively to the date of the commencement of the Further Term and the rent having
been so determined shall be paid and accounted for accordingly within 21 days of such determination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the valuer shall act as an expert and not as an arbitrator
and shall be required to determine the sum which in his opinion represents the prevailing market rent for the Premises as if the same
were being let with vacant possession on the prevailing market for a term equal to the Further Term without reference to any other adjustment
of rent during the said term but otherwise having regard to all issues which in the sole opinion of the valuer appear relevant subject
to sub-clause (vi) immediately following;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) the valuer shall determine the prevailing market rent disregarding

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any effect on rent of the fact that the Tenant may have been
in occupation of the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any goodwill attached to the Premises by reason of its use
by the Tenant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any effect on rent of any authorised improvement addition
alteration or other work made or carried out by the Tenant at its own expense otherwise than under any obligation to the Landlord whether
under this Agreement or otherwise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) any abatement of rent under Clause 7(b) hereof but on the
following assumptions (if not facts):-

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) that all the terms and conditions herein contained have been
fully observed and performed at all times;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) that on the commencement date of the Further Term the Premises
are fit for immediate occupation and use that no addition alteration or other work has been made or carried out by the Tenant or any
subtenant during the term hereby granted which has diminished the rental value of the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) that in the event that the Premises have been destroyed or
damaged they had not been so destroyed or damaged.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the cost and expenses of the valuer shall be borne by the
Landlord and the Tenant in equal shares

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The decision of the valuer shall be final and binding upon
both parties and shall determine the New Monthly Rent for the Further Term as if it had been expressly provided for and stated herein.

2. Notwithstanding anything to the contrary in this Agreement,
the Tenant shall, at the expiration or sooner determination of the Term, quietly yield up the Premises in a "as-is where-is"
condition and hand over the same together with all fixtures fittings and additions, partitions, floor coverings, erections, and alterations
(if any) whether the same were made or installed by the Tenant or otherwise and whether during the term hereof or at any time prior thereto
upon or in the Premises in good, clean and substantial repair and condition.

3. (i) Without prejudice to Clause S(u) hereof, the Landlord agrees that the Tenant may, subject to the Tenant's due compliance and performance
of the terms of this Agreement, grant a licence to FT Foundation Capital Fund, an Exempt Company incorporated in the Cayman Islands,
whose registered office is maintained by Harneys Fiduciary (Cayman) Limited of 4th Floor, Harbour, 103 South Church Street, P.O. Box
10240, Grand Cayman, KYl-1002, Cayman Islands (Cayman Islands Registration No.321568) (the "Occupant") to share the use of
the Premises as office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Tenant shall obtain the prior written approval of the
Landlord before signing any licence agreement or document for the sharing of use of the Premises pursuant to sub-clause (i) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Tenant shall ensure the Occupant's observance of the
covenants, terms and conditions of this Agreement and without prejudice to the rights of the Landlord, whether under this Agreement or
otherwise, the Tenant is primarily liable for any acts and omission of the Occupant, its respective employees, servants, representatives,
agents, visitors and occupiers at or in relation to the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Notwithstanding anything herein contained to the contrary,
the Landlord agrees to arrange for one (1) additional slat(s) for the Occupant on the Main Directory Board on the Ground Floor for the
display of the name of the Occupant, the initial cost of such additional slat(s) together with the lettering thereon being paid by the
Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Tenant shall provide the Landlord the particulars and
personal identification OR supporting corporate documents (as the case may be) of the Occupant and such other information as reasonably
requested by the Landlord for its approval, which approval shall not be unreasonably withheld. Except for the Occupant, the Tenant is
prohibited from granting any licence to or otherwise sharing the Premises to any person or entity in contravention of Clause 5(u) and Clause 3 of this Ninth Schedule.
The Tenant shall inform the Landlord forthwith if it is aware that the Occupant would cease in occupation of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Tenant acknowledges and confirms that the licence agreement
or sharing use arrangements with the Occupant shall not in any aspect be construed to be a tenancy or an agreement for tenancy or creating
any landlord and tenant relationship or conferring and right of tenancy or any protection of tenancy whether by agreement or at law or
in equity. At the expiry or sooner determination of the term of tenancy under this Agreement, the Occupant's right to use the Premises
shall determine forthwith, and the Tenant shall procure that the Occupant shall forthwith vacate the Premises without any claim or demand
from the Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) For the avoidance of doubt, an agreement or arrangement made
pursuant to Clause 3 of this Ninth Schedule shall not be treated as a breach or non-compliance with Clause 5(u) of this Agreement.

IN WITNESS whereof this Agreement has been executed by the parties hereto the day and year first above written.

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| | |
|:---|:---|
| SIGNED by | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: | &nbsp;&nbsp;) |
| of Alvarez & Marsal Asia Limited in her capacity as one of the joint and several receivers and managers for and on behalf of the Landlord, PIONEER TIME INVESTMENT LIMITED (Receivers and Managers Appointed) and as its agent without personal liability in the presence of: |  |

---

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| | |
|:---|:---|
| SIGNED by | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
| for and on behalf of the Tenant | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
| In the presence of :- | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
| Signature: ____________________________ | &nbsp;&nbsp;) |
|  | &nbsp;&nbsp;) |
| Name: ______________________________ | &nbsp;&nbsp;) |

---

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| |
|:---|
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |
| RECEIVED on the day and year first above written the sum of HONG KONG DOLLARS THREE HUNDRED SEVENTY THOUSAND NINE HUNDRED SIXTY THREE AND CENTS EIGHTY NINE ONLY being the deposit hereinbefore expressed to be payable by the Tenant to the Landlord. |

---

## Exhibit 12.1

**Exhibit 12.1**

**Certification by the Principal Executive Officer**

**Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

I, Ma Biu, certify that:

1. I have reviewed this annual report on Form 20-F of Luda Technology Group Limited (the "Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: May 15, 2026 | Date: May 15, 2026 |
| By: | /s/ *Ma Biu* |
| Name: | Ma Biu |
| Title: | Chief Executive Officer |

---

## Exhibit 12.2

**Exhibit 12.2**

**Certification by the Principal Financial Officer**

**Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

I, Yung Chi Man, certify that:

1. I have reviewed this annual report on Form 20-F of Luda Technology Group Limited (the "Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: May 15, 2026 | Date: May 15, 2026 |
| By: | /s/ *Yung Chi Man* |
| Name: | Yung Chi Man |
| Title: | Chief Financial Officer |

---

## Exhibit 13.1

**Exhibit 13.1**

**Certification by the Principal Executive Officer**

**Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

In connection with the Annual Report of Luda Technology Group Limited (the "Company") on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ma Biu, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: May 15, 2026 | Date: May 15, 2026 |
| By: | /s/ *Ma Biu* |
| Name: | Ma Biu |
| Title: | Chief Executive Officer |

---

## Exhibit 13.2

**Exhibit 13.2**

**Certification by the Principal Financial Officer**

**Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

In connection with the Annual Report of Luda Technology Group Limited (the "Company") on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Yung Chi Man, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2026

---

| | |
|:---|:---|
| By: | /s/ *Yung Chi Man* |
| Name: | Yung Chi Man |
| Title: | Chief Financial Officer |

---