# EDGAR Filing Document

**Accession Number:** 0001546383
**File Stem:** 0001213900-26-057231
**Filing Date:** 2026-5
**Character Count:** 718652
**Document Hash:** 9320817eeadd26baad20485401071ae2
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-057231.hdr.sgml**: 20260515

**ACCESSION NUMBER**: 0001213900-26-057231

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 162

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260515

**DATE AS OF CHANGE**: 20260515

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** JX Luxventure Group Inc.
- **CENTRAL INDEX KEY:** 0001546383
- **STANDARD INDUSTRIAL CLASSIFICATION:** WHOLESALE-DURABLE GOODS [5000]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 000000000
- **STATE OF INCORPORATION:** 1T
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-35715
- **FILM NUMBER:** 26983028

**BUSINESS ADDRESS:**
- **STREET 1:** BIN HAI DA DAO NO. 270, LANG QIN WAN GUO
- **STREET 2:** JI DU JIA CUN ZONG HE LOU, XIU YING DIST
- **CITY:** HAIKOU CITY, HAINAN PROVINCE
- **STATE:** F4
- **ZIP:** 570100
- **BUSINESS PHONE:** (86) 595 8889 6198

**MAIL ADDRESS:**
- **STREET 1:** BIN HAI DA DAO NO. 270, LANG QIN WAN GUO
- **STREET 2:** JI DU JIA CUN ZONG HE LOU, XIU YING DIST
- **CITY:** HAIKOU CITY, HAINAN PROVINCE
- **STATE:** F4
- **ZIP:** 570100

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** JX Luxventure Ltd
- **DATE OF NAME CHANGE:** 20211006

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** KBS Fashion Group Ltd
- **DATE OF NAME CHANGE:** 20141103

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Aquasition Corp.
- **DATE OF NAME CHANGE:** 20120403

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

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 20-F**

**(Mark One)**

**☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(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: **<u>001-35715</u>**

**JX Luxventure group inc.**

(Exact Name of Registrant as Specified in Its Charter)

**<u>Not Applicable</u>**

(Translation of Registrant's Name Into English)

**<u>Republic of the Marshall Islands</u>**

(Jurisdiction of Incorporation or Organization)

**Bin Hai Da Dao No. 270**

**Lang Qin Wan Guo Ji Du Jia Cun Zong He Lou**

**Xiu Ying District**

**Haikou City, Hainan Province 570100**

**People's Republic of China**

(Address of Principal Executive Offices)

**Ms. Sun Lei, Chief Executive Officer**

**Bin Hai Da Dao No. 270**

**Lang Qin Wan Guo Ji Du Jia Cun Zong He Lou**

**Xiu Ying District**

**Haikou City, Hainan Province 570100**

**People's Republic of China**

**Tel: + (86) 595 8889 6198**

**Fax: (86) 595 8850 5328**

(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** |
| Common Stock, $0.0001 par value | JXG | NASDAQ Capital Market |

---

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 (December 31, 2025) 1,426,522.

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 ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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. ☐

&nbsp;&nbsp;&nbsp;&nbsp;† 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. Not Applicable

**Annual Report on Form 20-F**

**Year Ended December 31, 2025**

**<u>**TABLE OF CONTENTS**</u>**

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | **Page** |
| **[PART I](#a_001)** |  |  | 1 |
| **ITEM 1.** | **[IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#a_002)** | **[IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#a_002)** | 1 |
|  | **A.** | **[Directors and Senior Management](#a_003)** | 1 |
|  | **B.** | **[Advisors](#a_004)** | 1 |
|  | **C.** | **[Auditors](#a_005)** | 1 |
| **ITEM 2.** | **[OFFER STATISTICS AND EXPECTED TIMETABLE](#a_006)** | **[OFFER STATISTICS AND EXPECTED TIMETABLE](#a_006)** | 1 |
|  | **A.** | **[Offer Statistics](#a_007)** | 1 |
|  | **B.** | **[Method and Expected Timetable](#a_008)** | 1 |
| **ITEM 3.** | **[KEY INFORMATION](#a_009)** | **[KEY INFORMATION](#a_009)** | 1 |
|  | **A.** | **[Reserved](#a_010)** | 7 |
|  | **B.** | **[Capitalization and Indebtedness](#a_011)** | 7 |
|  | **C.** | **[Reasons for the Offer and Use of Proceeds](#a_012)** | 7 |
|  | **D.** | **[Risk Factors](#a_013)** | 7 |
| **ITEM 4.** | **[INFORMATION ON THE COMPANY](#a_014)** | **[INFORMATION ON THE COMPANY](#a_014)** | 42 |
|  | **A.** | **[History and Development of the Company](#a_015)** | 42 |
|  | **B.** | **[Business Overview](#a_016)** | 49 |
|  | **C.** | **[Organizational Structure](#a_017)** | 73 |
|  | **D.** | [**Property, Plants and Equipment**](#a_018) | 73 |
| **ITEM 4A.** | [**UNRESOLVED STAFF COMMENTS**](#a_019) | [**UNRESOLVED STAFF COMMENTS**](#a_019) | 73 |
| **ITEM 5.** | [**OPERATING AND FINANCIAL REVIEW AND PROSPECTS**](#a_020) | [**OPERATING AND FINANCIAL REVIEW AND PROSPECTS**](#a_020) | 73 |
|  | **A.** | [**Operating Results**](#a_021) | 73 |
|  | **B.** | [**Liquidity and Capital Resources**](#a_022) | 77 |
|  | **C.** | [**Research and Development, Patents and Licenses, Etc.**](#a_023) | 81 |
|  | **D.** | [**Trend Information**](#a_024) | 81 |
|  | **E.** | [**Off Balance Sheet Arrangements**](#a_025) | 81 |
|  | **F.** | [**Tabular Disclosure of Contractual Obligations**](#a_026) | 81 |
|  | **G.** | [**Safe Harbor**](#a_027) | 90 |
| **ITEM 6.** | [**DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**](#a_028) | [**DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**](#a_028) | 90 |
|  | **A.** | [**Directors and Senior Management**](#a_029) | 90 |
|  | **B.** | [**Compensation**](#b_001) | 91 |
|  | **C.** | [**Board Practices**](#a_030) | 93 |
|  | **D.** | [**Employees**](#a_031) | 94 |
|  | **E.** | [**Share Ownership**](#a_032) | 95 |
| **ITEM 7.** | [**MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**](#a_033) | [**MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**](#a_033) | 96 |
|  | **A.** | [**Major Shareholders**](#a_034) | 96 |
|  | **B.** | [**Related Party Transactions**](#a_035) | 96 |
|  | **C.** | [**Interests of Experts and Counsel**](#a_036) | 97 |

---

i

---

| | | | |
|:---|:---|:---|:---|
|  | | | **Page** |
| **ITEM 8.** | [**FINANCIAL INFORMATION**](#a_037) | [**FINANCIAL INFORMATION**](#a_037) | 97 |
|  | **A.** | [**Consolidated Statements and Other Financial Information**](#a_038) | 97 |
|  | **B.** | [**Significant Changes**](#a_039) | 98 |
| **ITEM 9.** | [**THE OFFER AND LISTING**](#a_040) | [**THE OFFER AND LISTING**](#a_040) | 98 |
|  | **A.** | [**Offer and Listing Details**](#a_041) | 98 |
|  | **B.** | [**Plan of Distribution**](#a_042) | 99 |
|  | **C.** | [**Markets**](#a_043) | 99 |
|  | **D.** | [**Selling Shareholders**](#a_044) | 99 |
|  | **E.** | [**Dilution**](#a_045) | 99 |
|  | **F.** | [**Expenses of the Issue**](#a_046) | 99 |
| **ITEM 10.** | [**ADDITIONAL INFORMATION**](#a_047) | [**ADDITIONAL INFORMATION**](#a_047) | 99 |
|  | **A.** | [**Share Capital**](#a_048) | 99 |
|  | **B.** | [**Memorandum and Articles of Association**](#a_049) | 99 |
|  | **C.** | [**Material Contracts**](#a_050) | 105 |
|  | **D.** | [**Exchange Controls**](#a_051) | 105 |
|  | **E.** | [**Taxation**](#a_052) | 107 |
|  | **F.** | [**Dividends and Paying Agents**](#a_053) | 112 |
|  | **G.** | [**Statement by Experts**](#a_054) | 112 |
|  | **H.** | [**Documents on Display**](#a_055) | 112 |
|  | **I.** | [**Subsidiary Information**](#a_056) | 112 |
| **ITEM 11.** | [**QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**](#a_057) | [**QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**](#a_057) | 113 |
| **ITEM 12.** | [**DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES**](#a_058) | [**DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES**](#a_058) | 113 |
|  | **A.** | [**Debt Securities**](#a_059) | 113 |
|  | **B.** | [**Warrants and Rights**](#a_060) | 113 |
|  | **C.** | [**Other Securities**](#a_061) | 113 |
|  | **D.** | [**American Depositary Shares**](#a_062) | 113 |
| [**PART II**](#a_063) |  |  | 114 |
| **ITEM 13.** | [**DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES**](#a_064) | [**DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES**](#a_064) | 114 |
| **ITEM 14.** | [**MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**](#a_065) | [**MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**](#a_065) | 114 |
| **ITEM 15.** | [**CONTROLS AND PROCEDURES**](#a_066) | [**CONTROLS AND PROCEDURES**](#a_066) | 114 |
|  | **A.** | [**Disclosure Controls and Procedures**](#a_067) | 114 |
|  | **B.** | [**Management's Annual Report on Internal Control Over Financial Reporting**](#a_068) | 114 |
|  | **C.** | [**Attestation Report of the Registered Public Accounting Firm**](#a_069) | 115 |
|  | **D.** | [**Changes in Internal Controls over Financial Reporting**](#a_070) | 115 |

---

ii

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| **ITEM 16.** | [**\[RESERVED\]**](#a_071) | 115 |
| **ITEM 16A.** | [**AUDIT COMMITTEE FINANCIAL EXPERT**](#a_072) | 115 |
| **ITEM 16B.** | [**CODE OF ETHICS**](#a_073) | 115 |
| **ITEM 16C.** | [**PRINCIPAL ACCOUNTANT FEES AND SERVICES**](#a_074) | 116 |
| **ITEM 16D.** | [**EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES**](#a_075) | 116 |
| **ITEM 16E.** | [**PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS**](#a_076) | 116 |
| **ITEM 16F.** | [**CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT**](#a_077) | 116 |
| **ITEM 16G.** | [**CORPORATE GOVERNANCE**](#a_078) | 117 |
| **ITEM 16H.** | [**MINE SAFETY DISCLOSURE**](#a_079) | 117 |
| **ITEM 16I.** | [**DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**](#a_080) | 117 |
| **ITEM 16J.** | [**INSIDER TRADING POLICIES**](#a_081) | 117 |
| **ITEM 16K.** | [**CYBERSECURITY**](#a_082) | 118 |
| [**PART III**](#a_083) |  | 120 |
| **ITEM 17.** | [**FINANCIAL STATEMENTS**](#a_084) | 120 |
| **ITEM 18.** | [**FINANCIAL STATEMENTS**](#a_085) | 120 |
| **ITEM 19.** | [**EXHIBITS**](#a_086) | 120 |

---

iii

**INTRODUCTORY NOTES**

**Use of Certain Defined Terms**

Except as otherwise indicated by the context and for the purposes of this annual report only, references in this report to:

● "JX Luxventure," "we," "us," "our" and the "Company" are to JX Luxventure Group Inc., a company organized in the Republic of the Marshall Islands;

● "BVI" are to the British Virgin Islands;

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

● "PRC" and "China" are to the People's Republic of China, including Hong Kong and Macau, and excluding, for the purposes of this Annual Report only, Taiwan;

● "SEC" are to the Securities and Exchange Commission;

● "Exchange Act" are to the Securities Exchange Act of 1934, as amended;

● "Securities Act" are to the Securities Act of 1933, as amended;

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

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

● "Flower Crown" are to Flower Crown Holding, our direct wholly-owned subsidiary organized in Cayman Islands;

● "Flower Crown HK" are to Flower Crown (China) Holding Group Co., Limited, a direct wholly-owned subsidiary of Flower Crown and our indirect wholly-owned subsidiary, organized in Hong Kong;

● "JX Shenzhen" are to Jin Xuan (Shenzhen) International Trade Co., Ltd., a direct wholly-owned subsidiary of Flower Crown HK and our indirect wholly owned subsidiary, organized in PRC;

● "Shenzhen Siquanrun" are to Shenzhen Siquanrun Technology Co. Ltd, a direct wholly owned subsidiary of Flower Crown HK and our indirect wholly owned subsidiary, organized in PRC;

● "JX Hainan" are to Jin Xuan (Hainan) Holding Co., Ltd, a direct wholly owned subsidiary of Flower Crown HK and our indirect wholly owned subsidiary, organized in PRC;

● "Billion Place HK" are to Billion Place Limited (Hong Kong) Co., Limited, a holding company incorporated in Hong Kong, another direct wholly-owned subsidiary of Flower Crown and our indirect wholly-owned subsidiary; organized in PRC;

● "Baofu Technology" are to Baofu (Zhuhai) Technology Co., Ltd., a direct wholly-owned subsidiary of Billion Place HK and our indirect wholly-owned subsidiary, organized in PRC;

● "Hainan Travel" are to Hainan Si Quan Run Hang International Travel Agency Co., Ltd., a direct wholly-owned subsidiary of Baofu Technology and our indirect wholly-owned subsidiary, organized in PRC;

iv

● "Jin Xuan Luxury Tourism" or "JX Luxury Tourism" are to Jin Xuan Luxury Tourism (Hainan) Digital Technology Co., Ltd, a direct wholly owned subsidiary of JX Hainan and our indirect wholly-owned subsidiary, organized in PRC;

● "Hefei Travel" are to Hefei Si Quan Run Hang International travel agency Co., Ltd., a direct wholly-owned subsidiary of Baofu Technology, and our indirect wholly-owned subsidiary, organized the PRC on May 31, 2024,; and

● "Tianjin Baoliting" are to Tianjin Baoliting Intelligence Technology Co., Ltd, incorporated in the PRC on August 11, 2023 and acquired by JX Luxury Tourism on April 15, 2024.

**Cautionary Note Regarding Forward-Looking Statements**

In addition to historical information, this annual report on Form 20-F (the "Annual Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We use words such as "believe," "expect," "anticipate," "project," "target," "plan," "optimistic," "intend," "aim," "will" or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; and any statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Potential risks and uncertainties include, among other things, the possibility that we may not be able to maintain or increase our net revenues and profits due to our failure to execute our business expansion plan, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, uncertainties related to China's legal system and economic, political and social events in China, a general economic downturn, a downturn in the securities markets, and other risks and uncertainties which are generally set forth under Item 3 "*Key information—D. Risk Factors" and elsewhere in this Annual Report.*

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

**On November 18, 2025, the Company effected a one-for-fifteen (1-for-15) reverse stock split of the Company's issued and outstanding shares common stock, $0.0001 par value per share (the "Common Stock"). Previously, on December 27, 2024, the Company effected a one-for-four (1-for-4) reverse stock split of its Common Stock, and on April 26, 2023 and on February 9, 2017, the Company effected a one-for-ten (1-for-10) and a one-for-fifteen (1-for-15) reverse stock split, respectively, of its shares of Common Stock. Unless specified otherwise, and except as provided in the financial statements and footnotes thereto, all references in this Annual Report to share and per share data have been adjusted, including historical data which has been retroactively adjusted, to give effect to all of the above-referenced reverse stock splits (the "Reverse Stock Splits").**

v

**PART I**

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

**A. Directors and Senior Management**

Not applicable.

**B. Advisors**

Not applicable.

**C. Auditors**

Not applicable.

**ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE**

**A. Offer Statistics**

Not applicable.

**B. Method and Expected Timetable**

Not applicable.

**ITEM 3. KEY INFORMATION**

Our Holding Corporate Structure

We are not an operating company in China, but a Marshall Islands holding company that conducts almost all of our operations through our subsidiaries based in China and Hong Kong. Holders of shares of our Common Stock do not own equity securities of our subsidiaries that have substantive business operations in China, but instead are holders of equity securities of a Marshall Islands holding company. Such a structure involves unique risks to investors holding shares of our Common Stock. Although we own and control our PRC operating subsidiaries, investors holding shares of our Common Stock may never hold equity interests directly in our PRC operating subsidiaries. Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and its Implementation Regulations and how they may impact the viability of our current corporate structure, corporate governance, business operations and financial results. Chinese regulatory authorities could disallow this holding company structure, which would likely result in a material change in our operations and/or a material change in the value of our securities, including that it could cause the value of our securities to significantly decline or become worthless.

The following diagram illustrates our corporate structure and our subsidiaries as of the date of the Annual Report:

![](ea028961001_img1.jpg)

For a detailed description of the risks associated with our corporate structure, please see *"Summary of Risk Factors" –* beginning on page 7 and "*Risk Factors* – *Risks Related to Our Corporate Structure*" on page 22 of this Annual Report for more information.

<u>Our Business Operations in China</u>

We face various legal and operational risks and uncertainties related to being based in and having most of our operations in China. Changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties and may change quickly with little advance notice. The PRC government has significant authority and may exercise significant oversight and discretion over our ability, as offshore holding company that has most of the operations in China, to conduct our business, accept foreign investments or list on an U.S. or other foreign exchanges, and may intervene in or influence our operations at any time.

For example, we face risks associated with regulatory approvals of offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. Such risks could result in a material change in our operations and/or the value of our shares of Common Stock and could significantly limit or completely hinder our ability to offer or continue to offer shares of our Common Stock and/or other securities to investors and cause the value of such securities to significantly decline or be worthless.

Recent statements by the Chinese government have indicated its intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless. Changes in China's economic, political or social conditions, or government policies could materially and adversely affect our business, financial condition, and results of operations. For a detailed description of risks related to doing business in China, see *"Summary of Risk Factors"* beginning on page 7 and "*Risk Factors* – *Risks Related to Doing Business in China*" beginning on page 24 for more information.

<u>Holding Foreign Companies Accountable Act</u>

The Holding Foreign Companies Accountable Act ("HFCAA") enacted in December 2020, together with a recent joint statement by the United States Securities and Exchange Commission ("SEC") and the Public Company Accounting Oversight Board "(PCAOB") call for additional stringent criteria to be applied to emerging market companies by assessing the qualification of non-U.S. auditors who are not inspected by the PCAOB. Under the HFCAA, the SEC is required to identify public companies that have retained a registered public accounting firm to issue an audit report where the firm has a branch or office that: (1) is located in a foreign jurisdiction, and PCAOB") has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction. Under the HFCAA, our securities may be prohibited from trading on The Nasdaq Market LLC ("Nasdaq") or other U.S. stock exchanges if our auditor is not subject to inspection by the PCAOB for three consecutive years, and this ultimately could result in our Ordinary Shares being delisted from trading on any U.S. stock exchange. On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act ("AHFCAA") was enacted, as part of the omnibus spending bill which amended the HFCAA, reducing the time period under the HFCAA to two consecutive years instead of three consecutive years.

Pursuant to the HFCAA, the PCAOB issued a Determination Report on December 16, 2021 (the "2021 Determination Report") which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China because of a position taken by one or more authorities in mainland China. On August 26, 2022, the China Securities Regulatory Commission ("CSRC"), the Ministry of Finance of China, and the PCAOB signed a protocol governing inspections and investigations of audit firms based in China and Hong Kong. On December 15, 2022, the PCAOB issued a new Determination Report (the "2022 Determination Report") which: (1) vacated the 2021 Determination Report and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. Although the 2022 Determination Report reversed the conclusion of the 2021 Determination Report with respect to PCAOB's ability to conduct inspections and investigations completely of the registered public accounting firms headquartered in mainland China and Hong Kong, the 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination.

The audit report included in this Annual Report for the year ended December 31, 2025 was issued by Onestop Assurance PAC ("Onestop"), a Singapore-based independent public accounting firm that is registered with the PCAOB. Onestop is <u>not</u> headquartered in mainland China and was <u>not</u> subject to the 2021 Determination Report. We have no intention of dismissing Onestop in the future or of engaging any auditor not subject to regular inspection by the PCAOB.

<u>The Company's Cash Flows and Summary Of Applicable Regulations</u>

As of the date of this Annual Report, the structure of cash flows within the entities in our corporate organization, and the applicable regulations, are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;1. Our
corporate structure is a direct holding structure, that is, the overseas entity listed in the U.S., JX Luxventure Group Inc. incorporated
in Marshall Islands, currently has no material operations on its own. It wholly owns Flower Crown Holding, a Cayman Islands company,
also a holding company, which wholly owns Flower Crown (China) Holding Group Co., Limited, a limited company incorporated in Hong Kong
("Flower Crown HK"), which, in turn, wholly owns all of the share capital of the following three PRC subsidiaries (i) JX
Hainan, and its PRC operating entities; (ii) Shenzhen Siquanrun, and (iii) JX Shenzhen. Following the reorganization of the Company's
corporate structure in 2023, resulting in incorporation of new entities, Flower Crown Holding also owns Billion Place Limited (Hong Kong)
Co., Limited ("Billion Place HK"), a limited company incorporated in Hong Kong and its wholly-owned subsidiaries. See "*Summary of Risk Factors*" beginning on page 7 and "*Risk Factors — Risks Related to our Corporate Structure* "
on page 22 for more information **.** 

&nbsp;&nbsp;&nbsp;&nbsp;2. As
of the date of this Annual Report, the Company has not established or maintained any cash management policies that dictate the purpose,
amount, and procedure of fund transfers among the Company, our subsidiaries, or investors. As of the date of this Annual Report, there
have been no cash and asset transfers between the holding company and its PRC subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;3. Within
our direct holding structure, the cross-border transfer of funds within our corporate group is conducted in compliance with the laws
and regulations of the PRC. To date, none of our subsidiaries have made any dividends or distributions to JX Luxventure and we have not
made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business,
and we do not anticipate that any cash dividends will be paid to shareholders in the foreseeable future. If any PRC subsidiaries determine
to distribute dividends, they will transfer the dividends to JX Hainan, or Baofu Technology, as applicable, in accordance with
the laws and regulations of the PRC, and then JX Hainan or Baofu Technology, as applicable, will transfer the dividends to JX Luxventure,
and the dividends will be distributed from JX Luxventure to all shareholders respectively in proportion to the shares they hold, regardless
of whether the shareholders are U.S. investors or investors in other countries.

&nbsp;&nbsp;&nbsp;&nbsp;4. Under
Marshall Islands law, the Company may pay dividends on its shares out of either profit or share premium amounts, provided that in no
circumstance may a dividend be paid if such payment would result in the Company being unable to pay its debts as they become due in the
ordinary course of business. If we decide to pay dividends in the future, as a holding company, we will depend on receiving dividends
from our PRC subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. As a holding company, we may rely on dividends
 and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements. The ability of our PRC subsidiaries
 to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our PRC operating subsidiaries to pay
 dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting
 standards and regulations. Should our PRC subsidiaries incur debt on their own in the future, the instruments governing that debt may
 restrict the ability to pay dividends or make other payments. To the extent our cash in the business is in the PRC/Hong Kong or PRC/Hong
 Kong subsidiaries, the funds or assets may not be available to fund operations distribute dividends to our investors, or for other use
 outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries
 by the PRC government to transfer cash or assets. Any limitation on the ability of our PRC subsidiaries to distribute dividends to us
 may restrict our ability to satisfy our liquidity requirements. In addition, each of our PRC subsidiaries, as
 a Foreign Invested Enterprise, or FIE, are required to set aside at least 10% of its after-tax profits each year, if any, to fund a common
 reserve, which may stop drawing its after-tax profits if the aggregate balance of the common reserve has already accounted for over 50%
 of its registered capital. These reserves are not distributable as cash dividends. For more details regarding our cash flows, see "*Regulations Relating to Foreign Exchange and Dividend Distribution"* beginning on page 68 and our consolidated financial statements beginning
 on page F-1 of this Annual Report for more information **.** The PRC government may continue to strengthen
 its capital controls which would subject dividends distribution from our PRC subsidiaries to the Company to heightened scrutiny. The PRC
 government imposes controls on the convertibility of Renminbi ("RMB" or "Renminbi," the official currency of the
 PRC) into foreign currencies and, in certain cases, the remittance of currency out of China. The PRC government also imposes control on
 the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Under existing PRC foreign exchange regulations,
 payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions,
 can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange ("SAFE") in the
 PRC, as long as certain procedural requirements are met. Approval from appropriate government authorities is required if RMB is converted
 into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose
 restrictions on access to foreign currencies for current account transactions and, if this occurs in the future, we may not be able to
 pay dividends in foreign currencies (i.e., U.S. dollars) to our shareholders and we may experience difficulties in completing the administrative
 procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Therefore, we may experience
 difficulties in completing the processes necessary to obtain and remit foreign currency for the payment of any dividends. For more details, see "*Risk Factors—Risks Related to Doing Business in China –We may rely on dividends paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business"* on page 23 *.* In addition, the Enterprise Income Tax Law and
 its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies
 to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and the governments of
 other countries or regions where the non-PRC resident enterprises are tax resident. Pursuant to the tax agreement between Mainland China
 and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to
 a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%. However, if the relevant tax authorities determine that our transactions
 or arrangements are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable
 withholding tax in the future. Accordingly, there is no assurance that the reduced 5% withholding rate will apply to dividends received
 by our Hong Kong subsidiary from our PRC subsidiaries. This withholding tax will reduce the amount of dividends we may receive from our
 PRC subsidiaries.

<u>PRC Government Permissions and Approvals</u>

We relied on the opinion of our PRC counsel, Beijing Dacheng Law Offices LLP (Haikou) in concluding that we and our PRC subsidiaries have obtained all necessary licenses and approvals required for our operations in China, including business licenses and VAT licenses for internet data center services, internet access services, domestic internet protocol virtual private network services, content delivery network services and information services. To date, we have not been denied any such licenses and permits.

However, we cannot assure you that we will always be able to successfully obtain, update or renew all the licenses or permits required for our business in a timely manner or that these licenses or permits are sufficient to conduct all of our present or future business operations.

We are aware that the Chinese authorities recently 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 variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.

We are also subject to the risks of uncertainty of any future actions of the PRC government in this regard including the risk that we inadvertently conclude that the permission or approvals discussed here are not required, that applicable laws, regulations or interpretations change such that we are required to obtain approvals in the future, or that the PRC government could disallow our holding company structure, which would likely result in a material change in our operations, including our ability to continue our existing holding company structure, carry on our current business, accept foreign investments, and continue to offer securities to our investors. These adverse actions could cause the value of our shares of common stock to significantly decline or become worthless.

If we (i) do not receive or maintain required permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we could be subject to fines, legal sanctions or an order to suspend or business operations, which may materially and adversely affect our business, financial condition and results of operations.

On February 17, 2023, the China Securities Regulatory Commission (the "CSRC") promulgated the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the "Overseas Listing Trial Measures") and relevant five guidelines, which became effective on March 31, 2023. According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer securities or list in overseas markets, either directly or indirectly, are required to fulfill the filing procedure with the CSRC. At a press conference held for these new regulations, officials from the CSRC clarified that the domestic companies that have already been listed overseas before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers, or the Existing Issuers. Existing Issuers are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC when subsequent matters such as refinancing are involved.

As an Existing Issuer under the Overseas Listing Trial Measures, we were not required to complete the filing procedures with the CSRC for a securities offering conducted before March 31, 2023, but would be required to complete the filing procedures with the CSRC in connection with a new securities offering. Given that the Overseas Listing Trial Measures were recently promulgated, however, there remain substantial uncertainties as to their interpretation, application, and enforcement. We cannot guarantee that new rules or regulations promulgated in the future will not impose any additional requirement on us or otherwise tighten the PRC domestic regulations on companies indirectly listed overseas.

We may be subject to penalties and sanctions imposed by the PRC regulatory agencies, including the CSRC, if we fail to comply with such rules and regulations, which would likely adversely affect the ability of our securities to be listed on the U.S. exchange, which would likely cause the value of our securities to significantly decline or become worthless. To the extent that we are subject to any CSRC approval, filing, other governmental authorization or requirements, whether in connection with future securities offerings or otherwise, we cannot assure you that we could obtain such approval, complete such filing, or meet other requirements in a timely manner or at all. If we fail to obtain such approval if and when needed or complete such filings or meet other requirements in a timely manner, the Chinese regulatory authorities 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 securities offerings into China, force a delisting of our ordinary shares, or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our securities.

The Cybersecurity Review Measures provide that an online platform operator, which possesses personal information of at least one million users, must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries. Because we currently do not possess more than one million users' personal information, we do not believe that we are or will be subject to the cybersecurity review by the CAC. In addition, to date, we have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have we received any inquiry, notice, or sanction related to cybersecurity review under the Cybersecurity Review Measures.

**A. [Reserved]**

**B. Capitalization and Indebtedness**

Not applicable.

**C. Reasons for the Offer and Use of Proceeds**

Not applicable.

**D. Risk Factors**

*An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this annual report, before making an investment decision.* 

 

*In addition to the other information included in this annual report, including the matters addressed in the section of the annual report entitled "Cautionary Note Regarding Forward-Looking Statements" and in our financial statements and the related notes, you should consider carefully the risks described below. The risks and uncertainties described below are not the only risks and uncertainties we may face. Additional risks and uncertainties not presently known to us, or that we currently consider immaterial could also negatively affect our business, financial condition, results of operations, prospects, profits and stock prices. If any of the risks described below actually occur, our business, financial condition, results of operations, prospects, profits and stock prices could be materially adversely affected.*

 

*If we encounter any of the risks described above or if we are otherwise unable to establish or successfully operate online shops or additional production capacity, we may be unable to grow our business and revenues, reduce our operating costs, maintain our competitiveness or improve our profitability and, consequently, our business, financial condition, results of operations and prospects will be adversely affected.*

**Summary of Risk Factors**

Below please find a summary of the principal risks we face related to our corporate structure and operation and doing business in China.

<u>Risks Related to Our Corporate Structure</u>:

● We previously carried out our business operations through the VIE contractual arrangements. If the PRC government determines that these contractual arrangements did not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. *See "Risks Related to our Corporate Structure - We previously carried out our business operations through the VIE contractual arrangements. If the PRC government determines that these contractual arrangements did not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations" on page 22 for more information.* 

● Our current corporate structure and business operations may be affected by the Foreign Investment Law. *See - "Risks Related to our Corporate Structure – Our current corporate structure and business operations may be affected by the Foreign Investment Law*" on page 22 for more information.

● We may rely on dividends and other distributions of equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have. Any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business. To the extent funds or assets in the business are in the PRC or are held by a PRC entity, the funds or assets may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of our company or the operating entities by the PRC government to transfer cash or assets outside the PRC. See *"Risks Related to our Corporate Structure – We may rely on dividends paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business*" on page 23 for more information.

● Holders of our securities may face difficulties in protecting their interests because we are incorporated under the Republic of the Marshall Islands law. *See **"** Risks Related to our Corporate Structure – Holders of our securities may face difficulties in protecting their interests because we are incorporated under the Republic of the Marshall Islands law"* on page 23 for more information.

<u>Risks Relating to Doing Business in China:</u>

● Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations. *See "Risks Related to Doing Business in China - Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations"* on page 24 for more information  *.*** 

● Changes in international trade policies, trade disputes, barriers to trade, the emergence of a trade war and/or other disruptions to international commerce could harm the global economy and may dampen growth in China, our principal place of business. A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition  *.*** See *"Risks Related to Doing Business in China - Changes in international trade policies, trade disputes, barriers to trade, the emergence of a trade war and/or other disruptions to international commerce could harm the global economy, may dampen growth in China, our principal place of business, and could adversely affect our business operations through our PRC subsidiaries, customers, suppliers, and other business partners"* on page 24 for more information.

● Our financial performance could be materially and adversely affected by rising costs associated with inflation and the imposition of U.S. tariffs on imports from China. *See "Risks Related to Doing Business in China - Our financial performance could be materially and adversely affected by rising costs associated with inflation and the imposition of U.S. tariffs on imports from China"* on page 25 for more information *.* 

● The Chinese government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our securities, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless. *See "Risks Related to Doing Business in China - The Chinese government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our securities, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless"* on page 25 for more information.

● Recent statements by the Chinese government have indicated its intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless. See "*Risks Related to Doing Business in China - Recent statements by the Chinese government have indicated its intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless*" on page 26 for more information

● Risks related to a future determination that the PCAOB is unable to inspect or investigate our auditor completely could result in a material adverse change in our operations and the value of our Common Stock. *See "Risks related to a future determination that the PCAOB is unable to inspect or investigate our auditor completely could result in a material adverse change in our operations and the value of our Common Stock **"*** on page 28 for more information.

● Uncertainties with respect to the PRC legal system, including that the rules and regulations in China can change quickly with little advance notice, and the interpretation and enforcement of PRC laws and regulations, could limit the legal protections available to you and us. Se *e "Risks Related to Doing Business in China - Uncertainties with respect to the PRC legal system, including that the rules and regulations in China can change quickly with little advance notice, and the interpretation and enforcement of PRC laws and regulations, could limit the legal protections available to you and us"* on page 26 for more information *.* 

 

● We face challenges from the evolving PRC regulatory environment regarding cybersecurity, information security, privacy and data protection, and user attitude toward data privacy and protection. Any actual or alleged failure to comply with these and related laws and regulations regarding cybersecurity, information security, data privacy, and protection could materially and adversely affect our business and results of operations. *See "Risks Related to Doing Business in China - We face challenges from the evolving PRC regulatory environment regarding cybersecurity, information security, privacy and data protection, and user attitude toward data privacy and protection. Any actual or alleged failure to comply with these and related laws and regulations regarding cybersecurity, information security, data privacy, and protection could materially and adversely affect our business and results of operations"* on page 27 for more information.

● PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of future securities offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business. *See "Risks Related to Doing Business in China - PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of future securities offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business"* on page 30 for more information.

● Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment. *See "Risks Related to Doing Business in China - Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment"* on page 30 for more information.

● Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment. *See "Risks Related to Doing Business in China - Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment"* on page 31 for more information.

● Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions **.** *See "Risks Related to Doing Business in China - Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions"* on page 31 for more information.

● Increases in labor costs and enforcement of stricter labor laws and regulations in China and our additional payments of statutory employee benefits may adversely affect our business and profitability. Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation. *See "Risks Related to Doing Business in China - Increases in labor costs and enforcement of stricter labor laws and regulations in China and our additional payments of statutory employee benefits may adversely affect our business and profitability. Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation"* on page 33 for more information.

● Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees' salaries as required by PRC regulations may subject us to penalties. *See "Risks Related to Doing Business in China - Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees' salaries as required by PRC regulations may subject us to penalties"* on page 33 for more information.

● Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions. *See "Risks Related to Doing Business in China - Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions"* on page 33 for more information.

● If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders. *See "Risks Related to Doing Business in China - If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders"* on page 34 for more information.

● We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies. *See "Risks Related to Doing Business in China - We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies"* on page 35 for more information.

● You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management. U.S. regulatory bodies also may be limited in their ability to conduct investigations or inspections of our operations in China. *See "Risks Related to Doing Business in China - You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management. U.S. regulatory bodies also may be limited in their ability to conduct investigations or inspections of our operations in China"* on page 35 for more information.

● We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse effect on our business *. See "Risks Related to Doing Business in China -We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse effect on our business"* on page 36 for more information.

● If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price and reputation, and could result in a loss of your investment in our stock, especially if such matter cannot be addressed and resolved favorably. *See "Risks Related to Doing Business in China - If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price and reputation, and could result in a loss of your investment in our stock, especially if such matter cannot be addressed and resolved favorably"* on page 36 for more information.

● The disclosures in our reports and other filings with the SEC and our other public pronouncements will not be subject to the scrutiny of any regulatory bodies in the PRC. Accordingly, our public disclosure should be reviewed in light of the fact that no governmental agency that is in China where all of our operations and business are located have conducted any due diligence on our operations or reviewed or cleared any of our disclosure. *See "Risks Related to Doing Business in China -The disclosures in our reports and other filings with the SEC and our other public pronouncements will not be subject to the scrutiny of any regulatory bodies in the PRC. Accordingly, our public disclosure should be reviewed in light of the fact that no governmental agency that is in China where all of our operations and business are located have conducted any due diligence on our operations or reviewed or cleared any of our disclosure"* on page 36 for more information.

 

 

**RISKS RELATED TO OUR BUSINESS**

***Risks Related to our Cross-Border Merchandise and Tourism Industries***

 

***Our industry is highly competitive and we may not be able to compete successfully against current and future competitors. If we are unable to compete effectively, we may lose customers and our financial results may be negatively affected.***

We face intense competition in the cross-border merchandise and tourism industries in China. We expect greater competition in the future from existing players and new market entrants. Some of our current and future competitors may have greater brand recognition and financial and other resources than we do, which may make it more difficult for us to maintain or gain market share.

If we are not able to effectively compete against current or future competitors, our business, financial condition and results of operations could suffer. Increased competition may result in higher pricing pressure, reducing our ability to charge competitive prices for our products and services and decreased market share, any of which could materially and negatively affect our business, financial condition and results of operation.

 ****

***If we fail to effectively manage our growth, our business, financial condition and operating results could be harmed.***

As we continue to expand our cross-border merchandise and tourism business, our continued growth could strain our existing resources, and we could experience ongoing challenges, including:

● managing our operational, administrative and financial capabilities and other resources;

● managing our brand portfolio, including further expanding our products and services;

● expanding marketing channels and deepening end customer outreaches;

● staying abreast of the evolving industry demands and market developments and catering to end users' changing tastes of our business customers;

● developing and applying technologies necessary to support our expanded operations;

● effectively managing our supply chain;

● responding to changes in the regulatory environment;

● exploring new market opportunities; and

● addressing other challenges resulting from our expansion.

All efforts to address the potential challenges on our way to expansion require significant managerial, financial and human resources. We cannot assure you that we will be able to effectively or timely address operating difficulties and challenges to keep up with our growth. If we are unable to successfully address these difficulties, risks and uncertainties, our business, financial conditions and results of operations could be materially and adversely affected.

 ****

 ****

***Our business depends on the continued success of our growing brand portfolio and if we fail to maintain and expand our brand portfolio or maintain and enhance our brand recognition, our business, results of operations and prospects may be harmed.***

We mainly depend on our brand portfolio to scale our business, attract and retain our business customers. Our Luxventure portfolio, which covers cross border merchandise and tourism products, seamlessly connected various brands from our suppliers. Although we have devoted significant resources to and incurred large amount of expenses on sourcing, maintaining, promoting and expanding our brands, we cannot assure you that these efforts will be successful. In addition, maintaining and enhancing the recognition of our brands are also key to our success, which could be affected by various factors, including the effectiveness of our brand marketing strategy, publicity about our business, quality of products offered under the brands as well as preference of consumers, certain of which are beyond our control. Any failure to maintain and expand our brand portfolio or maintain and enhance our brand recognition could have a material and adverse effect on our business, results of operations and prospects.

***Negative publicity about our brands, our business model or our products may materially and adversely affect our reputation, our business and the trading price of our shares, regardless of its accuracy. We may also be adversely affected by negative publicity concerning us and our business, shareholders, affiliates, directors, officers, employees, agents, other business partners and the industry in which we operate, regardless of its accuracy.***

Regardless of its accuracy, negative publicity about our business model or our products may arise and appear on the internet and other media from time to time, and negative publicity of more serious natures may arise in the future.

In addition, our business model may be alleged to be involved in misconduct, improper activities, rumors, scandals or illegal activities from time to time related to a variety of matters, such as misleading advertising practice. These allegations, even if factually incorrect or based on isolated events, would result in negative publicity of our business, and may further have an adverse effect on our brand and reputation.

Our brands and brands of our suppliers may also be subject to negative publicity for various reasons, such as complaints about the quality of the products, customer services or other public relation incidents of us, which may adversely affect our reputation, brand loyalty and consequently affect the operation of our business. Any such negative publicity, regardless of its veracity, could result in the expenditure of funds and management time and may have a material and adverse effect on our reputation, our business and the trading price of our shares.

Moreover, negative publicity concerning us and our business, shareholders, affiliates, directors, officers, employees, agents, other business partners and the industry in which we operate can harm our brand and reputation, regardless of its accuracy. Negative publicity concerning these parties could be related to a wide variety of matters, including, but are not limited to:

● alleged misconduct or other improper activities committed by our directors, officers, employees, agents and other business partners;

● false or malicious allegations or rumors about us or our directors, shareholders, affiliates, officers, employees and other business partners;

● complaints from our business customers about our products and services;

● employment-related claims relating to employment discrimination, working hours violation, tax, wage or pension matters;

● governmental and regulatory investigations, penalties or claims resulting from misconduct of our business partners,

● or our failure to comply with applicable laws and regulations;

● negative publicity and claims asserted against our brand partners, especially any product quality issues of our

● brand partners' products; and

● negative publicity of the industry in which we operate, including, but not limited to, bankruptcy and cessation of business operations of any of our major competitors.

 ****

 ****

***If we fail to anticipate and respond to changing business customer preferences and shifts in market trends in a timely manner, our business and operating results could be harmed.***

Our success largely depends on our ability to consistently gauge business customers' tastes and market trends, provide a balanced assortment of merchandise and source brands that satisfies business customer demands in a timely manner. Our failure to anticipate, identify or react appropriately and timely to changes in business customer preferences, tastes and market trends or economic conditions could lead to, among other things, missed opportunities, excess inventory or inventory shortages, markdowns and write-offs, all of which could negatively impact our profitability. In addition, failure to respond to changing business customer preferences and trends in brand could negatively impact our brand image with our business customers and result in diminished brand loyalty, and thus harm the prospects of our business.

***We had a concentration of major customers during the year ended December 31, 2025 and if our existing major customers cease to engage our services, we may be unable to find new customers with similar attributable revenue within a reasonable time or at all.***

 ****

The percentage of our revenue attributable to our largest customer, Hefei Liantuo Tianji E-commence Corporation Ltd., an online airline tickets agency company, amounted to $16,111,304, or 19.7%, for the year ended December 31, 2025,$21,003,414, or 42%, for the year ended December 31, 2024 and $23,621,588, or 74%, for the year ended December 31, 2023. We depend on this customer and several other major customers, including three major customers, for each of which our revenue amounted to more than 20% in the fiscal year ended December 31, 2025. Because of the competitive nature of our business operations, the contractual arrangements with these major customers are based on short-term projects which may be terminated at will by each party. If our existing major customers cease to engage our services, we may be unable to find new customers with similar attributable revenue within a reasonable time or at all.

***Our product supply chain is essential to our business and is subject to risks associated with demand forecasting, timely supplying and warehousing, as well as maintaining relationships with our suppliers.***

We largely depend on our supply chain management capabilities to minimize our inventory risks, maintain our short turnaround time and improve our operational efficiency. However, our demand forecast may not be accurate, which could result in inventory write-offs or inventory shortages. Even if we can make accurate demand forecasts, our product supply chain may not be able to meet our demand on a timely basis due to unexpected reasons. In addition, warehouses that we operate may not have sufficient capacity to process orders efficiently.

Our product supply chain is also largely dependent on our relationship with our product suppliers. We cannot assure you that our current product suppliers will continue to sell products or provide services to us on commercially acceptable terms, or at all, after the current term of the agreement expires. If our suppliers cease to transact with us on favorable payment terms or deliver production in a timely manner as agreed under the contract terms, our operations may be materially and adversely affected.

Although we believe our supply chain has the capacity to support our current operation, we cannot guarantee our supply chain will be adequate to support our expanded business in the future. Thus, if we fail to manage our supply chain in line with our business expansion, our business, prospects, financial condition and results of operations may suffer.

***If we fail to develop, upgrade and apply our technologies to support and expand our business, our business may be materially and adversely affected.***

We rely on our technology infrastructure and operating systems to carry out the key aspects of our business, including identifying market trends in brands, selecting and partnering with quality brand partners, forecasting business customers' demands, supporting our product supply chain, enabling effective marketing and distribution, and refining business customer services. Although we did not experience any material failure or breakdown of our operating systems in the past, we cannot guarantee that such risks are always under control. In addition, computer viruses, security breaches and information theft may lead to delays or errors in transaction processing, inability to fulfill purchase orders or loss of data. Any interruptions of our operating platform, whether caused by computer viruses, hacking or other security breaches, and errors encountered during platform upgrades or other issues resulting in unavailability, or slowdown of our information technologies may, individually or collectively, materially and adversely affect our business and results of operations.

***Cross-border merchandise and tourism business are subject to rapid technological changes and innovations. Our technologies may become obsolete or insufficient.***

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The nature of our business is subject to rapid technological changes, and we may have difficulties in following and adapting to technological changes in the industry in a timely and cost-effective manner, which could impact every key aspect of our business. New technologies developed and introduced by our competitors could render our products and services less attractive or obsolete, thus materially affecting our business and prospects. In addition, our substantial investments in technology may not produce expected results. If we fail to continue to develop, innovate and utilize our technologies or if our competitors develop or apply more advanced technologies, our business, financial condition and results of operations could be materially and adversely affected.

***We conduct our business through online third party platforms operated by our business customers. The material disruption of those platforms or any adverse changes on our cooperation with them could harm our business and operation.***

We use third party platforms operated by our business customers to promote and sell our products. Our growth is subject to aforesaid third party platforms' traffic growth, account using terms and conditions and regulations, among other factors. If these platforms' traffic fails to grow in the future, our growth may slow down as well. If we breach the using terms of such platforms, the platform operators may decide at any time to curtail or inhibit our ability to use such platforms. Meanwhile, these platforms may increase their fees or make changes to their respective business models, using terms, policies or systems, and those changes could impair or restrict our ability sell products. In addition, these platforms may be interrupted by regulatory restrictions, cease operations unexpectedly due to a number of events, or even shut down due to their operating problems. Any of the above factors could affect our ability to maintain profitability or have a material adverse effect on our business, financial condition or results of operations.

***Order cancelation as well as merchandise return and exchange policies may adversely affect our business and the results of operations.***

We allow our business customers to cancel orders within a fixed amount of time after the payment and to return products, subject to our return policy. Our order cancelation rate and product return rate may fluctuate or even increase in the future due to various factors, many of which are beyond our control. In addition, as we diversify our marketing efforts and expand to more sales channels, our order cancelation rate and product return rate may further increase. Moreover, our products might be damaged during transit from time to time, especially during international transportation, which increases the return rate and harms our brands as well. If the rate of order cancelation or product returns increases significantly, our inventory turnovers and cash flow could be adversely affected, and thus harm our financial condition and operating results.

Moreover, we may be required by law to adopt new or amend existing return and exchange policies from time to time. In addition to regulatory requirements, we may also modify our return policies from time to time, which may result in customers' dissatisfaction or an increase in order cancelation or product returns rates.

***We rely on third-party product suppliers, manufacturers, logistics service providers and other vendors to serve our business customers. If they fail to provide products or services that are consistent with our standards or applicable regulatory requirements, we may have to find alternative vendors, and our reputation and operation could suffer.***

We do not own or operate any manufacturing facilities. Instead, we rely on third-party manufacturers and third-party product suppliers to supply all of the products offered on third party platform operated by our business customers. We enter into framework procurement contracts with different third-party product suppliers and manufacturers. The capacities of our third-party product suppliers and manufacturers are subject to orders placed by their other clients, which may include our competitors. If our demands increase significantly, or our existing suppliers run out of their capacity, we may not be able to find additional or alternative suppliers in a timely manner. We also cannot guarantee that we will have superior bargaining power over third-party product suppliers and manufacturers for our newly launched products. In addition, quality control issues, such as the use of unqualified materials, may exist in certain third-party product suppliers and could cause consumer dissatisfaction and as a result, harm our business.

We rely on third-party logistics service providers to deliver products to our customers. Any delay, damages, loss and inappropriate actions taken by logistics service providers might cause customer complaints. Although we may claim compensation from third-party logistics service providers in some cases, our business, financial condition and results of operations could suffer as well.

***We procure inventory based on our forecast on business customer demands, and if we are unable to manage our inventory effectively, our operating results could be adversely affected.***

Our scale and business model requires us to manage a large volume of inventory effectively. Our forecast on demands may significantly differ from actual demands. Demands may be affected by seasonality, new product launches, rapid changes in product cycles and pricing, product defects, promotions, changes in business consumer spending patterns, changes in business consumer tastes with respect to our products and other factors, and our business consumers may not purchase products in the quantities that we expect. We may not be able to return unsold products to our suppliers unless the products are defective or otherwise agreed with our suppliers.

On the other hand, if we underestimate demand and thus run short of inventory, our growth may be adversely affected due to lower sales volume and unsatisfied shopping experiences.

Furthermore, if we fail to negotiate favorable credit terms with third-party suppliers and manufacturers, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory values, and significant inventory write- downs or write-offs. In case that we are required to lower sale prices in order to reduce inventory level or to pay higher prices to our suppliers, our profit margins might be negatively affected. Any of the above may materially and adversely affect our business, financial condition and operating results.

***If we fail to obtain requisite approvals or licenses or fail to comply with other regulatory requirements applicable to our operations, we may be subject to administrative penalties and our business and operating results could be adversely affected.***

Our business is subject to general business regulations governing cross-border and tourism industries. We are also subject to supervision and regulation by the State Administration for Market Regulation of the PRC and other relevant PRC government authorities and/or their relevant local counterparts. While we currently hold all licenses and permits required for our operations, we may be required to renew these licenses and permits upon their expiration or obtain new licenses or permits in the future as a result of our business expansion, changes of our operations, changes in laws and regulations applicable to us, or changes of interpretation from relevant authorities on such laws and regulations.

After consulting our PRC legal counsel, Beijing Dacheng Law Offices LLP (Haikou), we believe we and our PRC subsidiaries have obtained all necessary licenses and approvals required for our operations in China, including business licenses and VAT licenses for internet data center services, internet access services, domestic internet protocol virtual private network services, content delivery network services and information services.

However, any failure, or perceived failure, by us to comply with any of these requirements could result in damage to our reputation, a loss in business, and proceedings or actions against us which could be costly and disrupt our overall operations. We may also be contractually liable to indemnify and hold harmless third parties from the costs or consequences of noncompliance with any such laws or regulations. Any of these events may have a material and adverse effect on our business, financial condition and results of operations.

***Our results of operations may fluctuate due to the seasonality of our business and other events, which could cause our stock price to decline.***

We have experienced, and expect to continuously experience, seasonal fluctuations in our results of operations, due to seasonal changes in sales volume, as well as seasonality in our advertising services. ****In addition, the business hours of our logistics and fulfillment service will be impacted by the holidays. Moreover, our results of operations may fluctuate due to changes in production cycle and launch of new styles or events.

***Our product suppliers, manufacturers, independent contractors or commercial partners may engage in misconduct or other improper activities, including unfair competition and noncompliance with laws and regulations, which may adversely affect our business and results of operations.***

We are exposed to the risk that our product suppliers, manufacturers, independent contractors or commercial partners may engage in misconduct. Misconduct by these parties could include intentional, reckless or negligent conduct or improper sales, marketing and business arrangements, in particular, arrangements that may constitute unfair competition. It is not always possible for us to identify and deter misconduct by our product suppliers, independent contractors or commercial partners, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown, unmanaged risks and losses, or in protecting us from negative publicity, governmental investigations, actions or lawsuits stemming from such misconducts. No matter whether we can succeed in dealing with negative publicity or defending against investigations or actions, we could incur substantial costs and divert the attention of management, which could adversely affect our ability to operate our business and our results of operations.

***If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements or preferences, our products and solutions may become less competitive.***

We believe that our technology solution provides solutions for cross-border operations management and is innovative and reliable tool for businesses engaged in international commerce. However, we face uncertainties over the size and rate at which this market will grow, as well as whether our solutions and products will be widely adopted. Moreover, the technology solution industry is subject to rapid technological change, evolving industry standards, changing regulations, as well as changing customer needs, requirements and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis. If we are unable to develop new solutions and products that satisfy our existing customers and provide enhancements and new features for our existing products that keep pace with rapid technological and industry change, our business, results of operations and financial condition could be adversely affected. If new technologies emerge that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely impact our ability to compete effectively.

***If we suffer failure or disruption in our information systems, our ability to effectively manage our business operations could be adversely affected.***

We use information systems to obtain, process, analyze and manage data crucial to our business. We use these systems to, among other things, monitor the daily operations of our business, maintain operating and financial data, manage our distribution network as well as manage our research and development activities, production operations and quality control systems. Any system damage or failure that interrupts data input, retrieval or transmission or increases service time could disrupt our normal operations. In particular, our operations could be disrupted if such damage or failure includes any security breach caused by hacking or cybersecurity incidents, involves efforts to gain unauthorized access to our information or systems, or causes intentional malfunctions, loss or corruption of data, software or hardware, the intentional or inadvertent transmission of computer viruses and similar events or third-party actions. We cannot assure you that we will be able to effectively handle a failure of our information systems, or that we will be able to restore our operational capacity in a timely manner to avoid disruption to our business. The occurrence of any of these events could adversely affect our ability to effectively manage our business operations and negatively impact our reputation.

Data loss, security incidents and other attacks on our platform, products or solutions, or our global network infrastructure could lead to significant costs and disruptions that could harm our business, financial results, and reputation.

Our technology solution model is dependent on providing our customers with secure, reliable and high-quality services. Maintaining the security and availability of our infrastructure, systems, platform, network, and the security of information and data we hold is a critical issue for us and our customers. Attacks on our customers and our own network may be frequent and may happen in a variety of forms, including infrastructure attacks, botnets, malicious file attacks, cross-site scripting, credential abuse, ransomware, viruses, worms, and malicious software programs. Malicious actors can attempt to fraudulently induce employees or suppliers to disclose sensitive information through spamming, phishing, or other tactics. In addition, unauthorized parties may attempt to gain physical access to our facilities in order to infiltrate our information systems. Since our customers share our multi-tenant architecture, material attacks on any one of our customers could have a negative effect on other customers. These attacks may also significantly increase the bandwidth used on our platform and strain our network. If attacks like these were to occur in the future and if we do not have the systems and processes in place to respond to them, our business could be harmed. In addition to Company-owned systems, we also store confidential and proprietary information through cloud-based services hosted by third parties, over which we have limited control over security protocols. In recent years, cyber-attacks have increased in size, sophistication, and complexity, increasing exposure for our customers and us. We may become an attractive target for attacks on our infrastructure intended to destabilize, overwhelm, or shut down our platform. The costs incurred by us to avoid or alleviate cyber or other security problems and vulnerabilities will be significant. To address the increasing risks of cyber-attacks as outlined, we utilize advanced security features provided by our cloud partners, including encryption, intrusion detection, and continuous monitoring, to safeguard sensitive information and prevent unauthorized access.

Our cybersecurity team, supervised by our management, enforces strict access controls, such as multi-factor authentication (MFA) and role-based permissions, while conducting regular vulnerability scans, penetration testing, and audits to identify and remediate potential weaknesses. We also established comprehensive employee training programs which promote awareness of phishing and other threats, reducing human error risks, and we maintain a well-defined incident response plan to swiftly contain, investigate, and resolve any security incidents, ensuring minimal disruption to our platform and services.

However, our efforts to address these problems and vulnerabilities may not be sufficient and successful. Any significant breach of our security measures could:

● lead to the dissemination of proprietary information or sensitive, personal, or confidential data about us, our employees, or our customers—including personally identifiable information of individuals involved with our customers and their end-users;

● lead to interruptions or degradation of performance in our platform, products and solutions;

● threaten our ability to provide our customers with access to our platform, products and solutions, and negatively affect our abilities to retain existing customers;

● generate negative publicity about us;

● result in litigation and increased legal liability or fines; or

● lead to governmental inquiry or oversight.

To date, we have not experienced any material incidents related to the security of our products. However, strategic customers may require specific security controls, and we may incur additional costs to comply with such customer-specific requirements.

The occurrence of any of these events could harm our business or damage our brand and reputation, lead to customer credits, loss of customers, higher expenses, and possibly impede our present and future success in retaining and attracting new customers. Security incidents or attacks on our infrastructure would be damaging to our reputation and could harm our business.

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***Our use of licensed third-party or open-source software could negatively affect our ability to provide consistent online experiences.***

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We use software licensed from third parties. Any interruptions that result from the unavailability of the software licensed from third parties may affect the quality of our services. We may also encounter problems when software licensed from third parties is upgraded, and undetected programming errors could adversely affect the performance of the software we use to provide our services. We have implemented the following policies to regulate the use and incorporation of open-source software into our products and platform to help ensure that our use of open-source software is compliant with the required standards, to minimize legal and operational risks:

● <u>Open-Source Software Approval Process</u>: All OSS intended for use in our products or platform must be reviewed and approved by a designated compliance team. This process includes evaluating the OSS license to ensure compatibility with our business model and existing obligations, documenting the software's purpose, and verifying that it does not impose restrictive requirements, such as mandatory source code disclosure.

● <u>License Compliance Tracking:</u> We maintain a centralized inventory of all OSS components used in our systems, including their versions, licenses, and associated obligations. Developers are required to log each OSS component in a software bill of materials (SBOM) and ensure that license terms, such as attribution notices or copyleft provisions, are adhered to in our codebase and distributions.

● <u>Code Review and Scanning Policy:</u> All codes, including OSS, must undergo automated scanning using tools to detect unlicensed or non-compliant OSS components before integration. Regular code reviews ensure that OSS is used in accordance with its license terms and that any modifications or derivative works comply with applicable requirements.

● <u>Developer Training and Guidelines:</u> Employees and contractors receive mandatory training on OSS licensing and compliance. Clear guidelines prohibit the use of high-risk licenses without explicit approval and outline procedures for incorporating OSS, such as including proper license notices in our products and ensuring no proprietary code is inadvertently mixed with copyleft-licensed OSS.

● <u>Third-Party Contribution Policy:</u> Developers are prohibited from contributing to external OSS projects on behalf of the company without prior approval. Any contributions must align with our licensing policies, and we ensure that contributions do not inadvertently incorporate our proprietary code into OSS projects under incompatible licenses.

However, we cannot be certain that open-source software in our products or platform was incorporated in a manner inconsistent with such policies. If we or our employees fail to comply with open source licenses, we may be subject to certain requirements, including requirements that we offer our products that incorporate the open source software for no cost, that we make available source code for modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or derivative works under the terms of applicable open source licenses. If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from generating revenues from customers using products that contained the open source software and required to comply with onerous conditions or restrictions on these products. In addition, we use open-source software in the applications we have developed to operate our business and will use open source software in the future. We could be required to seek licenses from third parties in order to continue using the open source software we are permitted to use currently, in which case licenses may not be available on terms that are acceptable to us, or at all. Our inability to use third-party software could result in disruptions to our business, or delays in the development of future offerings or difficulties in enhancing our operating platforms, which could materially and adversely affect our business and results of operations.

Moreover, we use third-party technology and systems in a variety of technical and operational aspects of our business, including encryption and authentication technology, employee email, content delivery to customers, back-office support, among others. Similar security risks exist with respect to such third-parties. As a result, we are subject to the risk that cyber-attacks on our business partners and third-party suppliers may adversely affect our business even if an attack or breach does not directly impact our systems. It is also possible that security breaches sustained by our competitors could result in negative publicity for our entire industry that indirectly harms our reputation and diminishes demand for our platform.

***Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our products and solutions, and could adversely affect our business, results of operations and financial condition.***

The future success of our business depends upon the continued use of the internet as a primary medium for commerce, communications and business applications. Chinese or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the internet as a commercial medium. Changes in these laws or regulations could require us to modify our products and platform in order to comply with these changes. In addition, government agencies or private organizations have imposed and may impose additional taxes, fees or other charges for accessing the internet or commerce conducted via the internet. These laws or charges could limit the growth of internet-related commerce or communications generally, or result in reductions in the demand for internet-based products and services such as our products and platform. In addition, the use of the internet as a business tool could be adversely affected due to delays in the development or adoption of new standards and protocols to handle increased demands of internet activity, security, reliability, cost, ease-of-use, accessibility and quality of service. The performance of the internet and its acceptance as a business tool has been adversely affected by "viruses," "worms," and similar malicious programs. If the use of the internet is reduced as a result of these or other issues, then demand for our products could decline, which could adversely affect our business, results of operations and financial condition.

Moreover, our business depends on the performance, reliability and security of the telecommunications and internet infrastructure in China and other countries in which we operate or locate our assets. Substantially all access to the internet in China is maintained through certain telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology, or the MIIT. In addition, the national networks in China are connected to the internet through qualified international gateways, which are the only channels through which a domestic user can connect to the internet outside of China. We may face similar or other limitations in other countries in which we operate or locate our assets. We may not have access to alternative networks in the event of disruptions, failures or other problems with the internet infrastructure in China or elsewhere. In addition, the internet infrastructure in the countries in which we operate may not support the demands associated with continued growth in Internet usage. We also have no control over the costs of the services provided by the telecommunications operators. If the prices that we pay for telecommunications and internet services rise significantly, our margins could be adversely affected.

**<u>Other Risks Related to Our Business</u>**

***If we cannot successfully protect our intellectual property and exclusive rights, our brand and business would suffer.***

We rely on a combination of trademark, patent, copyright, domain name and trade secret protection laws in China and other jurisdictions, as well as confidentiality procedures and contractual provisions, to protect our intellectual property rights and other exclusive rights. We also enter into agreements containing confidentiality obligations with our employees and any third parties who may access our proprietary technology and information, and we rigorously control access to our proprietary technology and information.

Nevertheless, we cannot guarantee that we can successfully protect our intellectual property and exclusive rights from unauthorized usage by third parties or breach of confidentiality obligations by our counterparties. Furthermore, a third party may take advantage of the "first-to-file" trademark registration system in China to register our brands in bad faith, which will cause us to incur additional costs for legal actions. Moreover, confidentiality obligations may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights and exclusive rights or to enforce our contractual rights in China or elsewhere.

In addition, policing any unauthorized use of our intellectual property and exclusive rights is difficult, time-consuming and costly. The precautionary steps we have taken to protect our rights may be inadequate. In the event that we resort to litigation to enforce our intellectual property rights and exclusive rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation or that we would be able to halt any unauthorized use of our intellectual property and exclusive rights. In addition, our trade secrets may be leaked to, or be independently discovered by, our competitors. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

***Pandemics and epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks could disrupt our delivery and operations, which could materially and adversely affect our business, financial condition, and results of operations.***

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Global pandemics, epidemics in China or elsewhere in the world, other widespread health epidemics or fear of spread of contagious diseases, such as Ebola virus disease (EVD), coronavirus disease 2019 (COVID-19), Middle East respiratory syndrome (MERS), severe acute respiratory syndrome (SARS), H1N1 flu, H7N9 flu, and avian flu, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could disrupt our business operations, reduce or restrict our supply of products and services, incur significant costs to protect our employees and facilities, or result in regional or global economic distress, which may materially and adversely affect our business, financial condition, and results of operations. Actual or threatened war, terrorist activities, political unrest, civil strife, and other geopolitical uncertainty could have a similar adverse effect on our business, financial condition, and results of operations. Any one or more of these events may impede our production and delivery efforts and adversely affect our sales results, or even for a prolonged period of time, which could materially and adversely affect our business, financial condition, and results of operations.

The COVID-19 pandemic adversely affected many businesses in China, including the Company's business, supply chain and workforce availability across the world, leading to substantial declines in business activities that have negatively impacted and may continue to negatively impact our business, financial condition and results of operations. The global spread of COVID-19 also affected our sales. This growth in revenue, especially revenues from our tourism business, has been adversely impacted by COVID-19 pandemic at various times during 2021-2022 because of government-enforced lockdowns.

If a future outbreak occurs, the government may take similar actions which would adversely impact our business. In addition, the broader macro-economic implications the pandemic, including reduced levels of economic growth and possibly a global recession, likely still exist and will likely impact our future results of operations.

Our business is also vulnerable to natural disasters, such as snowstorms, earthquakes, fires or floods, and other calamities, such as wars, acts of terrorism, environmental accidents, power shortages or communication interruptions. The occurrence of such a disaster or a prolonged outbreak of an epidemic illness or other adverse public health developments in China or elsewhere in the world could materially disrupt our business and operations. We cannot assure you that we are adequately protected from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks, or similar events. Any of the foregoing events may give rise to interruptions, damage to our property, delays in production, breakdowns, system failures, or internet failures, which could adversely affect our business, financial condition, and results of operations. Our operations could be disrupted if any of our employees or employees of our business partners were suspected of having any contagious disease, since this could require us or our business partners to quarantine some or all of such employees or disinfect the facilities used for our operations. Our operations could also be severely disrupted if our buyers, sellers or other participants were affected by such natural disasters, health epidemics or other outbreaks. In addition, our revenues and profitability could be materially reduced to the extent that a natural disaster, health epidemic or other outbreak harms the global or PRC economy in general and our industry as a whole.

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***We may be accused of infringing intellectual property or proprietary rights of third parties.***

We cannot assure you that our content, product design, our offerings or our technologies do not or will not infringe upon copyrights or other intellectual property rights (including, but not limited to, trademarks, patents and know-how) held by third parties. Nor can we assure you that our use of software or any other intellectual properties in business and operation will not be alleged by any third party as infringement resulting from lack of licenses. If any third-party infringement claims are brought against us, we may be forced to divert management's time and other resources from our business and operations to defend against these claims. We may also be prohibited from using such intellectual property or relevant content. As a result, we may incur licensing or usage fees, develop alternatives of our own, or even need to pay damages, legal fees and other costs. Even if such assertions against us are unsuccessful, they may cause us to lose existing and future business and incur reputational harm and substantial legal fees. As a result, our reputation may be harmed and our business and financial performance may be materially and adversely affected.

We have adopted policies and procedures to prohibit our members, employees and business partners from infringing upon third-party copyright or other intellectual property rights. ****However, we cannot assure you that they will not, against our policies, use third-party copyrighted materials or intellectual property without proper authorization, and therefore result in disputes. In addition, we may incur liability for unauthorized duplication or distribution of materials used in our online store and during our services. Although we have set up rules and procedures to enable copyright owners to provide us with notice of alleged infringement, given the volume of content we offer, we may not be able to identify and remove all potentially infringing content that may exist, and thus we may encounter intellectual property claims against us.

***The success of our business depends on the continuing efforts of our senior management and other key personnel. If we fail to retain, attract and train such personnel, our business may be materially and adversely affected.***

The success of our business depends significantly on our senior management. In particular, we rely on the expertise, experience and vision of Ms. Sun Lei, our Chief Executive Officer, Interim Chief Financial Officer, co-Chairwoman and director. If she becomes unable or unwilling to continue to contribute her services to us, we may not be able to replace them easily, or at all. As a result, our business may be severely disrupted, and our financial condition and results of operations may be materially and adversely affected.

Additionally, our future success also depends on our ability to attract, recruit and train a large number of qualified employees and retain existing key employees. Competition for discovering and signing talents in cross-border merchandise and tourism industries in China is intense, and the availability of suitable and qualified candidates in China is limited. In order to compete for talents, we may need to offer higher compensation, better trainings, more attractive career opportunities and other benefits to our employees, which may be costly and burdensome. There can be no assurance that we will be able to retain a qualified workforce necessary to support our future growth. Furthermore, our ability to train and integrate new employees into our operations may not meet the demands of our growing business. Any of the above issues related to our workforce may materially and adversely affect our operations and future growth.

***We may be subject to claims, disputes, litigation, allegations, complaints and investigations and other legal and administrative proceedings from time to time arising out of our operations, some of which may be caused by activities of our customers or the content of their websites and other internet properties, and our reputation and operations may be adversely affected.***

We have not been subject to any material allegations or complaints in the past, but we may be involved in legal and other disputes in the ordinary courses of our business. We and our management may be subject to claims, disputes, lawsuits, investigations and other legal and administrative proceedings incidental to the conduct of our business from time to time. We have not been subject to and are currently not party to any legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings and those involving any third party, which may have, or have had in the recent past, material adverse effects on our financial position or profitability. Any claims against us or our management, with or without merit, could be time-consuming and costly to defend or litigate, divert our management's attention and resources or harm our brand equity.

Through our network, we provide a wide variety of products that enable our customers to exchange information, conduct business, and engage in various online activities both domestically and internationally. Our customers may use our platform and products in violation of applicable law or in violation of our terms of service or the customer's own policies. The existing laws relating to the liability of providers of online products and services for activities of their users are highly unsettled and in flux both within China and internationally. We may be subject to lawsuits and/or liability arising from the conduct of our customers from time to time. Additionally, the conduct of our customers may subject us to regulatory enforcement actions and/or liability. We may be a defendant in a number of lawsuits both in China and abroad, alleging copyright infringement based on content that is made available through our customers' websites. There can be no assurance that we will not face litigation or regulatory enforcement actions in the future or that we will prevail in any litigation we may face. An adverse decision in one or more of these lawsuits or enforcement action could materially and adversely affect our business, results of operations, and financial condition.

Claims arising out of actual or alleged violations of law, breach of contract or torts could be asserted against us by customers, business partners, suppliers, competitors, employees or governmental entities in investigations and legal proceedings. These claims could be asserted under a variety of laws, including but not limited to the intellectual property laws, labor and employment laws, securities laws, tort laws, contract laws, property laws, and employee benefit laws. If a lawsuit or governmental proceeding against us is successful, we may be required to pay substantial damages or fines. We might also be involved in governmental investigations of our business operation in the future. Any claims against us, with or without merit, could be time-consuming and costly to defend or litigate, divert our management's attention and resources or harm our brand equity. If a lawsuit or governmental proceeding against us is successful, we may be required to pay substantial damages or fines. We may also lose, or be limited in, the rights to offer some of our content, products and services or be required to make changes to our content offerings or business model. As a result, the scope of our content, product and service offerings could be reduced, which could adversely affect our ability to attract new business customers, harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

***Imposition of trade barriers and taxes may reduce our ability to do business internationally, and the resulting loss of revenue could harm our profitability.***

We may experience barriers to conducting business in the form of delayed customs clearances, customs duties and tariffs. In addition, we may be subject to repatriation taxes levied upon the exchange of income from local currency into foreign currency, substantial taxes on profits, revenues, assets and payroll, as well as value-added tax. The markets in which we plan to operate may impose onerous and unpredictable duties, tariffs and taxes on our business and products, and there can be no assurance that this will not reduce the level of sales that we achieve in such markets, which would reduce our revenues and profits.

***We may expand our business through acquisitions, investments or strategic alliances in the future, but we might not be able to successfully pursue synergy from acquisitions or to achieve the benefits we expect from recent and future investments, strategic alliances and acquisitions.***

We may form strategic alliances or make strategic investments and acquisitions from time to time to complement and enhance our existing business. We may experience difficulties in integrating our operations with the newly invested or acquired businesses, implementing our strategies or achieving expected levels of revenues, profitability, productivity or other benefits. Moreover, if the businesses we acquire or invest in or our strategic alliances or partnerships do not subsequently generate the anticipated financial performance or if any goodwill impairment test triggering event occurs, we may need to revalue or write down the value of goodwill and other intangible assets in connection with such transactions, which would harm our business, financial condition and results of operations.

In addition, we may not be able to identify appropriate strategic investment or alliance targets when it is necessary or desirable to make such acquisition or investment to remain competitive or to expand our business. Even if we identify an appropriate target, we may not be able to negotiate the terms of the transaction successfully. In the event that we do not have control over the companies in which we only have minority stake, we cannot ensure that these companies will at all times comply with applicable laws and regulations in their business operations.

***The expansion of our business may place significant strain on our personnel, management, financial systems and operational infrastructure and may impede our ability to meet any increased demand for our products. Any failure by us or our business partners to comply with product safety, labor, tax or other laws, or to provide safe conditions for our or their workers may damage our reputation and brand and harm our business.***

Our products are subject to regulation by various governmental authorities in China. Such products could be subject to potential recalls and other remedial actions in the future. Product safety, labeling and licensing concerns, including consumer disclosure and warning regarding chemical exposure, may result in recall or suspended offering of products, which in turn could result in a material adverse effect on our operating results.

To accommodate the Company's growth, we will need to implement a variety of new and upgraded operational and financial systems, procedures, and controls, including improvements to our accounting and other internal management systems, by dedicating additional resources to our reporting and accounting function and improvements to our record keeping and contract tracking system. We will also need to recruit more personnel and train and manage our growing employee base. Furthermore, we will need to maintain and expand relationships with our current and future customers, suppliers, distributors and other third parties, and there is no guarantee that we will succeed.

We procure products from a variety of third-party suppliers, manufacturers and other business partners. If they fail to comply with applicable laws and regulations, we may also face or get involved in litigations, which could increase our legal costs. In addition, other misconduct of our business partners such as failure to provide safe and humane working conditions could harm our reputation and business as well.

***The estimates of market opportunity and forecasts of market growth in this Annual Report may prove to be inaccurate. Even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.***

Market opportunity estimates and growth forecasts, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of our addressable market size are subject to change over time, and there is no assurance that any target business customers covered by our market opportunity estimates will purchase our products at all or generate any particular level of revenue for us. Any expansion in our market depends on a number of factors, including the cost, performance, competition and perceived value associated with our products and services. Even if the market in which we compete meets the size estimates and growth forecasted, our business could fail to grow at similar rates, if at all, due to various factors, including failure to execute our growth plan, ineffective management over operations and adverse impact from negative publicity. Accordingly, the forecasts of market growth should not be taken as indicators of our future growth.

***We may be unable to establish and maintain an effective system of internal control over financial reporting, and, as a result, we may be unable to accurately report our financial results or prevent fraud.***

We are subject to reporting obligations under the U.S. securities law. The SEC as required by Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404"), adopted rules requiring every public company to include a management report on such company's internal control over financial reporting in its annual report, which must also contain management's assessment of the effectiveness of the company's internal control over financial reporting. In addition, the independent registered public accounting firm auditing the financial statements of a company that is not a non-accelerated filer, emerging growth company or smaller reporting company under Rule 12b-2 of the Exchange Act must also attest to the operating effectiveness of the company's internal controls.

Failure to achieve and maintain an effective internal control environment could result in our inability to accurately report our financial results, prevent or detect fraud or provide timely and reliable financial and other information pursuant to the reporting obligations we have as a public company, which could have a material adverse effect on our business, financial condition and results of operations. Further, it could cause our investors to lose confidence in the information we report, which could adversely affect our stock price.

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***We may incur liabilities that are not covered by insurance.***

While we seek to maintain appropriate levels of insurance, not all claims are insurable and we may experience major incidents of nature that are not covered by insurance. We provide social security insurance including pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund plans through a PRC government-mandated benefit contribution plan for our employees. We do not carry any key-man life insurance, product liability, Directors and Officers Insurance and professional liability insurance. Even if we purchase these kinds of insurance, the insurance may not fully protect us from the financial impact of defending against product liability or professional liability claims. We have not purchased any property insurance or business interruption insurance. We have determined that the costs of insuring for related risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical. We consider our insurance coverage to be sufficient for our business operations in China. We maintain an amount of insurance protection that we believe is adequate, but there can be no assurance that such insurance will continue to be available on acceptable terms or that our insurance coverage will be sufficient or effective under all circumstances and against all liabilities to which we may be subject. If we were to incur substantial losses or liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, our results of operations could be materially and adversely affected. We could, for example, be subject to substantial claims for damages upon the occurrence of several events within one calendar year. In addition, our insurance costs may increase over time in response to any negative development in our claims history or due to material price increases in the insurance market in general.

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***Leakage or misappropriation of know-how, confidential information and trade secrets from unauthorized copying, use or disclosure could have an adverse impact on our reputation and operations.***

During the course of providing our services, we may have access to and be entrusted with information that is confidential in nature, such as information that relates to our customers' systems, operations, raw data or affairs. While we have adopted measures to protect confidentiality of our customers' information, including our internal control manual and the nondisclosure arrangements with our employees, there is no assurance that the steps taken by us will successfully prevent any leakage or misappropriation of confidential information of our customers. Any leakage or misappropriation of confidential information of our customers could expose us to complaints or claims, which may materially and adversely affect our reputation and business operations. In addition, we seek to protect our know-how, confidential information and trade secrets, in part, by entering into non-disclosure and confidentiality agreements or other means to such effect, with parties who have access to them, such as our employees. Despite these efforts, any of these parties may breach such agreements, intentionally or unintentionally and disclose our proprietary information and we may not be aware of or able to obtain adequate remedies for such breaches. The unauthorized disclosure and/or misappropriation of trade secrets is difficult to detect and/or to prove. As such, it is difficult, expensive and time-consuming to establish trade secret misappropriation claims, with no guarantee of success or adequate remedies. Such disclosures could also lead to a loss of trade secret protection, which could materially and adversely affect our business, competitive position, financial conditions and results of operations.

**Risks Related to Our Corporate Structure**

***We previously carried out our business operations through the VIE contractual arrangements. If the PRC government determines that these contractual arrangements did not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.***

Prior to December 13, 2021, we carried our business operations through contractual relationships using a variable interest structure ("VIE"). As of December 13, 2021, we reorganized our corporate subsidiary structure in the PRC under Flower Crown Holding ("FLH"). As a result of the FLH's China subsidiaries restructuring, we terminated the original VIE contractual agreements and we are no longer operate those entities through a VIE structure. As part of the restructuring, due to the restriction of foreign ownership by the relevant laws and regulations of the People's Republic of China, namely Provisions on Administration of Foreign Invested Telecommunications Enterprise (外商投资电信企业管理规定), we divested FCEC under a Shares Transfer Agreement with a third party. FCEC represented less than 5% of our total revenues.

However, even though we terminated the original VIE contractual agreements, there are still substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules in respect of our previous use of the variable interest entity structure; accordingly, the PRC regulatory authorities may impose severe penalties retroactively. If we were subject to severe penalties retroactively, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations and failures, including:

● discontinuing or placing restrictions or onerous conditions on our operations;

● imposing fines, confiscating the income from our PRC subsidiaries, or imposing other requirements with which we or our PRC entities may not be able to comply;

● restricting or prohibiting our use of the proceeds from a U.S. public offering to finance our business and operations in China.

Any of these actions could cause significant disruption to our business operations and severely damage our reputation, which would in turn materially and adversely affect our business, financial condition and results of operations.

***Our current corporate structure and business operations may be affected by the Foreign Investment Law.***

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On March 15, 2019, the National People's Congress approved the Foreign Investment Law, which came into effect on January 1, 2020. Along with the Foreign Investment Law, the Implementing Rules of Foreign Investment Law promulgated by the State Council and the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Foreign Investment Law promulgated by the Supreme People's Court became effective on January 1, 2020. Since the Foreign Investment Law and its current implementation and interpretation rules are relatively new, uncertainties still exist in relation to their further application and improvement.

The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either "restricted" or "prohibited" from foreign investment in a "negative list". It is unclear whether the "negative list" to be published pursuant to the Foreign Investment Law will differ from the current Special Administrative Measures for Market Access of Foreign Investment (Negative List) (2021 Version). The Foreign Investment Law provides that foreign-invested entities operating in "restricted" industries will require market entry clearance and other approvals from relevant PRC government authorities. As of the date hereto, the current business activities of our PRC subsidiaries are not within the "negative list", and foreign investors are allowed to hold 100% equity interests of our PRC subsidiaries under the Foreign Investment Law. We have no plans at the present to substantially change our PRC subsidiaries' business activities in the future. However, it's uncertain whether we will engage in business activities that are in the "negative list", as the "negative list" may be amended from time to time.

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***We may rely on dividends paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business. To the extent funds or assets in the business are in the PRC or are held by a PRC entity, the funds or assets may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of our company or the operating entities by the PRC government to transfer cash or assets outside the PRC.***

Under our current corporate structure, we rely principally on dividends and other distributions of equity from our PRC subsidiaries for our cash requirements, including for services of any debt we may incur. We have no direct business operations other than the ownership of our subsidiaries. While we have no current intention of paying dividends, should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depend upon the receipts of dividends or other payments from our operating subsidiaries, other holdings, and investments.

The PRC rules and regulations impose restrictions and limitations on transfer of cash on foreign exchange, our ability to transfer cash between entities, across borders and to U.S. investors, and our ability to distribute earnings from our subsidiaries to the Company and holders of the common stock of the Company. Our PRC subsidiaries' ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries, as a Foreign Invested Enterprise, or FIE, are required to draw 10% of its after-tax profits each year, if any, to fund a common reserve, which may stop drawing its after-tax profits if the aggregate balance of the common reserve has already accounted for over 50 percent of its registered capital. These reserves are not distributable as cash dividends. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.

Currently, our subsidiaries in China are the only sources of revenues or investment holdings for the payment of dividends. If they do not accumulate sufficient profits under Chinese accounting standards and regulations to satisfy certain reserve funds as required by the Chinese accounting standards, we will be unable to pay any dividends. Any limitation on the ability of our PRC subsidiaries to distribute dividends or other payments to their respective shareholders could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends or otherwise fund and conduct our business. To the extent cash or assets in the business is in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of you and your subsidiaries by the PRC government to transfer cash or assets.

After-tax profits/losses with respect to the payment of dividends from accumulated profits and the annual appropriation of after-tax profits as calculated pursuant to the Chinese accounting standards and regulations do not result in significant differences as compared to after-tax earnings as presented in our financial statements. However, there are certain differences between PRC accounting standards and regulations and IFRS, arising from different treatment of items such as amortization of intangible assets and change in fair value of contingent consideration rising from business combinations.

***Holders of our securities may face difficulties in protecting their interests because we are incorporated under the Republic of the Marshall Islands law.***

We are a company incorporated under the laws of the Marshall Islands. Holders of shares of our common stock do not own equity securities of our subsidiaries that have substantive business operations in China, but instead are holders of equity securities of a Marshall Islands holding company. Such a structure involves unique risks to investors holding shares of our common stock. Although we own and control our PRC operating subsidiaries, investors holding shares of our common stock may never hold equity interests directly in our operating entities. Chinese regulatory authorities could disallow this holding company structure, which would likely result in a material change in our operations and/or a material change in the value of our securities, including that it could cause the value of our securities to significantly decline or become worthless. In addition, almost all of our assets are located outside the United States, and majority of our directors and officers, and their assets, are located outside of the United States. As a result, investors may have difficulty serving legal process within the United States upon us or any of these persons. Investors may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in U.S. courts against us or these persons in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws. They may also have difficulty bringing an original action in the appropriate court of the Marshall Islands to enforce liabilities against us or any person based upon the U.S. federal securities laws.

**RISKS RELATED TO DOING BUSINESS IN CHINA** 

***Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations.***

Substantially all of our assets and operations are located in the PRC. Accordingly, our business, financial condition, results of operations, and prospects may be influenced to a significant degree by political, economic and social conditions in the PRC generally. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese 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 the PRC is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over the PRC's economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. The PRC government also 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.

Although the Chinese economy has grown steadily in the past decade, the growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing down in recent years and may materially decline in the future. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the People's Bank of China and financial authorities of some of the world's leading economies, including the United States and China. Any adverse changes in economic conditions in the PRC, in the policies of the Chinese government or in the laws and regulations in the PRC could have a material adverse effect on the overall economic growth of the PRC. Such developments could adversely affect our business and operating results, lead to a reduction in demand for our services and adversely affect our competitive position. The Chinese 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. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in the PRC, which may adversely affect our business and operating results.

***Changes in international trade policies, trade disputes, barriers to trade, the emergence of a trade war and/or other disruptions to international commerce could harm the global economy and may dampen growth in China, our principal place of business. A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition.***

The global macroeconomic environment is facing challenges. Although our business operations do not include selling products outside of China, political uncertainty surrounding international trade disputes, particularly the ongoing tension between the U.S. and China, could damage consumer confidence and decision-making, leading to a material adverse effect on our business. Trade relations between China and other nations, particularly the United States, remain uncertain with potential implications for regulatory policies, tariffs, and business operations. The United States recently increased tariffs on goods imported from China and other regions, as well as the potential for additional protectionist measures, may impact our PRC subsidiaries' business and operations. China imposed its tariffs on good imported from the United States. It remains unclear what additional actions, if any, will be taken by the United States or other governments with respect to international trade agreements, the imposition of tariffs on goods imported into the United States, tax policy related to international commerce, or other trade matters. We are closely monitoring potential changes in international trade policy and assessing the potential impact of these and other trade policy changes on our business operations and financial performance. In addition, political instability and military hostilities, including current conflicts in the Middle East and Eastern Europe impact global energy markets, which may affect our business. These economic conditions in China respond to both global economic trends and domestic policy changes. Any severe or prolonged economic slowdown, either globally or within China, could materially impact our business performance, operational results, and financial condition. could lead to significant disruptions in the global economy. The uncertain nature, magnitude and duration and the full economic effect of these events cannot be estimated, but this may impact businesses across the globe both in the short term and the long term with rising commodity prices and demand, rising interest costs to counter inflationary conditions and loss in value of currencies.

Such uncertainty may also limit the access of our PRC subsidiaries to new business opportunities, negatively impacting our PRC subsidiaries' operations. The current and potential future actions by the U.S. or the PRC that affect trade relations could contribute to global economic instability, which may harm our PRC subsidiaries' business or financial performance. There have also been concerns on the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes. 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. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial condition. Any severe or prolonged slowdown in the global or PRC economy may materially and adversely affect our business, results of operations and financial condition.

***Our financial performance could be materially and adversely affected by rising costs associated with inflation and the imposition of U.S. tariffs on imports from China.***

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Our business is susceptible to the effects of inflation, which can lead to higher costs of our operations. If the overall price level in the economy increases, our operating expenses are expected to increase as well, potentially impacting on our profitability, particularly in the airline reselling business.

Furthermore, recent trade policies enacted by the U.S. have imposed tariffs on a range of goods imported from China. These tariffs directly increase the cost of our products upon entry into the United States, leading to a rise in our cost of goods sold. This increased cost may necessitate us raising prices for our U.S. customers, which could negatively impact the competitiveness of our products compared to those manufactured domestically in the U.S. or imported from countries not subject to these tariffs.

The future of these tariff policies and their wider impact on inflation are uncertain. The duration and scope of these measures, as well as potential responses from other countries, could significantly influence our business. We cannot predict the ultimate consequences of these developments, and there is no assurance that we will be able to fully absorb or mitigate the negative financial impacts resulting from increased costs driven by both general inflation and these tariffs. We engage in cross border merchandise and tourism business and conduct substantially all of our operations in China; therefore, any deterioration of the PRC economy, decrease in disposable income and fear of a recession may lead to reductions of customers' demand and their spending on fashion products with us.

***The Chinese government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our securities, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.***

As a company that conducts substantially of its business operations in China, we are subject to the laws and regulations of the PRC, which can be complex and evolve rapidly, and to risks associated with complying with these laws and regulations. The PRC government has the power to exercise significant oversight and discretion over the conduct of our business, and the regulations to which we are subject may change rapidly and with little notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

● Delay or impede our development,

● Result in negative publicity or increase our operating costs,

● Require significant management time and attention, and

● Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices.

The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected, and 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 be worthless.

***Recent statements by the Chinese government have indicated its intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless***.

Recent statements by the Chinese government have indicated its intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China based issuers. PRC has recently promulgated new rules that require companies collecting or holding large amounts of data to undergo a cybersecurity review prior to listing in foreign countries, a move that will significantly tighten oversight over China-based internet giants. The Measures for Cybersecurity Review (2021 version) was promulgated on December 28, 2021 and became effective on February 15, 2022. These measures specify that any "online platform operators" controlling the personal information of more than one million users which seek to list on a foreign stock exchange are subject to prior cybersecurity review.

Our business belongs to the cross-border merchandise and tourism industry in China, which does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. We relied on the opinion of our PRC counsel, Beijing Dacheng Law Offices LLP (Haikou) in concluding that we are not subject to the review or prior approval of the CAC or the CSRC. Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC could significantly limit or completely hinder 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.

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***Uncertainties with respect to the PRC legal system, including that the rules and regulations in China can change quickly with little advance notice, and the interpretation and enforcement of PRC laws and regulations, could limit the legal protections available to you and us.***

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Our operating subsidiaries are incorporated under and governed by the laws of the PRC. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters generally. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in the PRC. However, the PRC has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in the PRC. 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, these 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 a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until some time after the violation. In addition, any administrative and court proceedings in the PRC may be protracted, resulting in substantial costs and diversion of resources and management attention.

Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. In addition, 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 other foreign investors, including you. In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention.

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***We face challenges from the evolving PRC regulatory environment regarding cybersecurity, information security, privacy and data protection, and user attitude toward data privacy and protection. Any actual or alleged failure to comply with these and related laws and regulations regarding cybersecurity, information security, data privacy, and protection could materially and adversely affect our business and results of operations.***

Recently, the Chinese government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China. This included, among other actions, the adoption of new measures to extend the scope of cybersecurity reviews, and the expansion of efforts in anti-monopoly enforcement. Because these statements and regulatory actions are new, it is highly uncertain (a) how soon legislative or administrative regulation-making bodies in China will respond to them, (b) what existing or new laws or regulations will be modified or promulgated, if any, or (c) what impact such modified or new laws and regulations will have on the Company's daily business operations or our ability to accept foreign investments and continue listing our Common Stock on an U.S. securities exchange.

On August 20, 2021, the Standing Committee of the National People's Congress of China promulgated the Personal Information Protection Law of the People's Republic of China, effective from November 1, 2021. The Personal Information Protection Law requires, among others, that (i) the processing of personal information should have a clear and reasonable purpose which should be directly related to the processing purpose, in a method that has the least impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope necessary to achieve the processing purpose to avoid the excessive collection of personal information. Different types of personal information and personal information processing will be subject to various rules on consent, transfer, and security. Entities handling personal information shall bear responsibility for their personal information handling activities, and adopt necessary measures to safeguard the security of the personal information they handle. Otherwise, the entities handling personal information could be ordered to correct, or suspend or terminate the provision of services, and face confiscation of illegal income, fines or other penalties.

In the meantime, the PRC regulatory authorities have also enhanced the supervision and regulation on cross-border data transfer. On July 7, 2022, the CAC promulgated the Security Assessment Measures for Cross-border Data Transfers with effect from September 1, 2022. These measures require the data processor providing data overseas and falling under any of the following circumstances apply for the security assessment of cross-border data transfer by the national cybersecurity authority through its local counterpart: (i) where the data processor intends to provide important data overseas; (ii) where the critical information infrastructure operator and any data processor who has processed personal information of more than 1,000,000 people intend to provide personal information overseas; (iii) where any data processor who has provided personal information of 100,000 people or sensitive personal information of 10,000 people to overseas recipients accumulatively since January 1 of the last year intends to provide personal information overseas; and (iv) other circumstances where the security assessment of data cross-border transfer is required as prescribed by the CAC.

Given that the above mentioned newly promulgated laws, regulations and policies were recently promulgated or issued, or have not yet been formally promulgated or taken effect (as applicable), their enactment, interpretation, application and enforcement are subject to substantial uncertainties. As the definitions for terms such as network platform operator and national security are broad, and the government will likely retain significant discretion as to the interpretation and enforcement of the Cybersecurity Review Measures and any implementation rules, we may be subject to related rules. We cannot preclude the possibility that the Cybersecurity Review Measures will subject us to the cybersecurity review by the CAC in relation to our operations or require us to adjust our business practices, in which case our business, financial condition and prospects may be materially and negatively affected. We have incurred, and will continue to incur, significant expenses in an effort to comply with cybersecurity, privacy, data protection and information security related laws, regulations, standards and protocols, especially as a result of such newly promulgated laws and regulations. As of the date of this Annual Report, we have not been involved in any investigations, nor have we received any inquiry, notice, warning, or sanction by the CAC or related PRC governmental authorities as a result of violation of any currently effective PRC laws or regulations with respect to personal information or data requirements issued by the CAC up to date. However, as uncertainties remain regarding the interpretation and implementation of these laws and regulations, despite our efforts to comply with applicable laws, regulations and policies relating to cybersecurity, privacy, data protection and information security, we cannot assure you that our practices, offerings, services will meet all of the requirements imposed on us by such laws, regulations or policies. Any failure or perceived failure to comply with applicable laws, regulations or policies may result in inquiries or other proceedings being instituted against, or other lawsuits, decisions or sanctions being imposed on us by governmental authorities, users, consumers or other parties, including but not limited to warnings, fines, directions for rectifications, suspension of the related business and termination of our applications, as well as in negative publicity on us and damage to our reputation, any of which could have a material adverse effect on our business, results of operations, financial condition and prospects. The above-mentioned newly promulgated laws, regulations, policies or relevant drafts may result in the publication of new laws, regulations and policies to which we may be subject, though the timing, scope and applicability of such laws or regulations are currently unclear. Any such laws, regulations or policies could negatively impact on our business, results of operations and financial condition, which creates the risk that any such actions 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 be worthless.

***Regulation and censorship of information disseminated over the internet in China may adversely affect our business and reputation and subject us to liability for information displayed on our website.***

The PRC government has adopted regulations governing internet access and the distribution of news and other information over the internet. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet content that, among other things, violates PRC laws and regulations, impairs the national dignity of China, or is reactionary, obscene, superstitious, fraudulent or defamatory. Failure to comply with these requirements may result in the revocation of licenses to provide internet content and other licenses, and the closure of the concerned websites. The website operator may also be held liable for such censored information displayed on or linked to the websites. If our self-owned online store or content is found to be in violation of any such requirements, we may be penalized by relevant authorities, and our operations or reputation could be adversely affected.

***Risks related to a future determination that the PCAOB is unable to inspect or investigate our auditor completely could result in a material adverse change in our operations and the value of our Common Stock.***

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The recent joint statement by the SEC and the Public Company Accounting Oversight Board (the "PCAOB"), rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act and related regulations, all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing on Nasdaq Capital Market or future offerings of our securities in the U.S. and could result in a material adverse change in our operations and the value of our Common Stock, significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause such securities to significantly decline in value or become worthless**.** 

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a "Restrictive Market," (ii) adopt a new requirement relating to the qualification of management or the board of directors for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company's auditor. On October 4, 2021, the SEC approved Nasdaq's revised proposal for the rule changes.

On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act ("HFCAA"), and on December 18, 2020, the HFCAA was signed into law. On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. The HFCAA, among other things, directs the SEC to prohibit trading on U.S. stock exchanges and in the U.S. over-the-counter markets the securities of foreign-based companies if their financial statements are audited by accounting firms that the PCAOB determines it has been unable to inspect or investigate completely for a period of two consecutive audit years ("Non-Inspection Years"), because of a position taken by the authorities in a foreign jurisdiction in which the accounting firms are based (each accounting firm so determined by the PCAOB, a "PCAOB-Identified Firm").

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the board of directors of a company 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 rules implementing the submission and disclosure requirements in the HFCAA. Pursuant to the HFCAA, the PCOAB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People's Republic of China, because a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. In addition the PCOAB's report identified the specific registered public accounting firms which are subject to these determinations. Our registered public accounting firm, Onestop Assurance PAC ("Onestop") is a Singapore-based independent public accounting firm; it is <u>not</u> headquartered in mainland China or Hong Kong and was <u>not</u> identified in this report as a firm subject to the PCAOB's determination.

On August 26, 2022, the CSRC, MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong, 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 fact sheet with respect to the Protocol disclosed by the SEC, 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 determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB may consider the need to issue a new determination.

On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the "AHFCAA"), and on December 29, 2022, the Consolidated Appropriations Act 2023 was signed into law, which contained, among other things, an identical provision to the AHFCAA, which reduces the number of consecutive non- inspection years required for triggering the prohibitions under the HFCAA from three years to two.

Our auditor, Onestop, is a Singapore-based independent public accounting firm that is registered with the PCAOB and can be inspected by the PCAOB and is subject to laws pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The PCAOB currently has access to inspect the working papers of our auditor. We have no intention of dismissing Onestop in the future or of engaging any auditor not subject to regular inspection by the PCAOB. However, the recent developments would add uncertainties to our offering and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us since we are an emerging growth company and substantial all of our operations are conducting in China. Furthermore, the HFCAA and related laws, which now require 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, may result in the delisting of our Company or the prohibition of trading in our securities in the future if the PCAOB is unable to inspect our accounting firm at such future time. Delisting may cause a significant decrease in or a total loss of the value of our securities. Although a shareholder's ownership of our Company may not decrease directly from delisting, the ownership may become worth much less, or, in some cases, lose its entire value.

***PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary' ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.***

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local branch of SAFE. If any PRC shareholder of such SPV fails to make the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiary in China. On February 13, 2015, the SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

Some of our shareholders that we are aware of are subject to SAFE regulations, but we may not be aware of the identities of all of our beneficial owners who are PRC residents. We do not have control over our beneficial owners and there can be no assurance that all of our PRC-resident beneficial owners will comply with SAFE Circular 37 and subsequent implementation rules, and there is no assurance that the registration under SAFE Circular 37 and any amendment will be completed in a timely manner, or will be completed at all. Any failure or inability by such shareholders to comply with SAFE regulations may subject us to fines or legal sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiary's ability to distribute dividends to, or obtain foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

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***PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of future securities offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.***

Any transfer of cash to our PRC subsidiaries, 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. According to the relevant PRC regulations on foreign-invested enterprises, or FIEs, in China, capital contributions to our PRC subsidiaries are subject to the approval of or filing with the Ministry of Commerce, or MOFCOM or its local branches and registration with a local bank authorized by the State Administration of Foreign Exchange, or SAFE. In addition, (i) a foreign loan of less one year duration procured by our PRC subsidiaries is required to be registered with SAFE or its local branches and (ii) a foreign loan of one year duration or more procured by our PRC subsidiaries is required to be applied to the NDRC in advance for undergoing recordation registration formalities. Any medium or long-term loan to be provided by us to our PRC operating subsidiaries, must be registered with the NDRC and the SAFE or its local branches. We may not be able to complete such registrations 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 securities 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, or 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 Renminbi 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, or 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 Renminbi 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 Renminbi 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 Renminbi shall not be provided as loans to its non-affiliated entities. As this circular is relatively new, there remains uncertainty as to its interpretation and application and any other future foreign exchange related rules. 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 future securities offerings to fund our PRC operating subsidiary, to invest in or acquire any other PRC companies through our PRC subsidiaries, which may adversely affect our business, financial condition and results of operations. On October 23, 2019, SAFE promulgated the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or SAFE Circular 28, which permits non-investment FIEs to use their capital funds to make equity investments in China, with genuine investment projects and in compliance with effective foreign investment restrictions and other applicable laws. However, uncertainties still exist in relation to its interpretation and implementation.

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

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. It is difficult to predict how long such appreciation of RMB against the U.S. dollar may last and when and how the relationship between the RMB and the U.S. dollar may change again. All of our revenues and substantially all of our costs are denominated in Renminbi. We rely on dividends paid by our operating subsidiaries in China for our cash needs. Any significant revaluation of Renminbi may materially and adversely affect our results of operations and financial position reported in Renminbi when translated into U.S. dollars, and the value of, and any dividends payable on, the common stock in U.S. dollars. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our Common Stock or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount.

**Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.**

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China may be used to pay dividends to our company. However, approval from or registration with appropriate government authorities is required, in principle, where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of the Common stock.

**Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions.**

Among other things, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors ("M&A Rules") and Anti-Monopoly Law of the People's Republic of China promulgated by the Standing Committee of the NPC which became effective in 2008 ("Anti-Monopoly Law"), established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. Such regulation requires, among other things, that State Administration for Market Regulation (SAMR) be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions of the State Council on the Standard for Declaration of Concentration of Business Operators, issued by the State Council in 2008, are triggered. Moreover, the Anti-Monopoly Law requires that transactions which involve the national security, the examination on the national security shall also be conducted according to the relevant provisions of the State. In addition, PRC Measures for the Security Review of Foreign Investment which became effective in January 2021 require acquisitions by foreign investors of PRC companies engaged in military-related or certain other industries that are crucial to national security be subject to security review before consummation of any such acquisition. We may pursue potential strategic acquisitions that are complementary to our business and operations.

Complying with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC ability of subsidiaries to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents' Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local branch of SAFE. If any PRC shareholder of such SPV fails to make the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiary in China. On February 13, 2015, the SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

Some of our shareholders that we are aware of are subject to SAFE regulations, and we expect all of these shareholders will have completed all necessary registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37. We cannot assure you, however, that all of these shareholders may continue to make required filings or updates in a timely manner, or at all. We can provide no assurance that we are or will in the future continue to be informed of identities of all PRC residents holding direct or indirect interest in our company. Any failure or inability by such shareholders to comply with SAFE regulations may subject us to fines or legal sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiaries' ability to distribute dividends to, or obtain foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

As of the date of this disclosure, The PRC residents have applied for foreign exchange registration under the SAFE Circular 37 and other related rules. Although they are in the process of making foreign exchange registration, they may still face with the above said possible fines in accordance with the PRC Laws.

***Increases in labor costs and enforcement of stricter labor laws and regulations in China and our additional payments of statutory employee benefits may adversely affect our business and profitability. Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation.***

The average wage in China has increased in recent years and is expected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to our customers, our profitability and results of operations may be materially and adversely affected. In addition, we e have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and childbearing insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law, or the Labor Contract Law, that became effective in January 2008 and its implementing rules that became effective in September 2008 and 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, which could adversely affect our business and results of operations. We believe our current practice complies with the Labor Contract Law and its amendments. However, the relevant governmental authorities may take a different view and impose fines on us.

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. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation to our employees and our business, financial condition and results of operations could be materially and adversely affected.

**Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees' salaries as required by PRC regulations may subject us to penalties.**

Companies operating in China are required to participate in various government-mandated employee benefit contribution plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time at locations where we operate our businesses. The requirement of employee benefit contribution plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. Companies operating in China are also required to withhold individual income tax on employees' salaries based on the actual salary of each employee upon payment. We may be subject to late fees and fines in relation to the underpaid employee benefits and under-withheld individual income tax, our financial condition and results of operations may be adversely affected.

**Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.**

Pursuant to the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, promulgated by SAFE in 2012, or SAFE Notices No. 7, PRC citizens and non-PRC citizens who reside in China for a continuous period of no less than one year who participate in any stock incentive plan of an overseas publicly listed company offered to the director, supervisor, senior management and other employees of, and any individual who has labor relationship with its domestic affiliated entities are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our directors, executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of no less than one year and who have been granted stock options became subject to these regulations when our company became an overseas listed company upon the completion of our recent initial public offering. Failure to complete the SAFE registrations for our employee incentive plans after our listing may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries and limit our PRC subsidiaries' ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law.

In addition, the State Administration of Taxation, or SAT, has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, our employees working in China who exercise stock options or are granted restricted shares will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee stock options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options or are granted with restricted shares. If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities.

***If we are classified as a PRC resident enterprise for PRC 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 State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, 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 the PRC; (ii) decisions relating to the enterprise's financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

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. In addition, non-resident enterprise shareholders (including the common stockholders) may be subject to PRC tax on gains realized on the sale or other disposition of the common stock, 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 (including the common stockholders) and any gain realized on the transfer of the common stock 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 common stock.

**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 taxed if our company is transferor in such transactions and may be subject to withholding obligations if our company is transferee in such transactions, under SAT Bulletin 7 and/or SAT Bulletin 37. For transfer of shares in our company by investors who are non-PRC resident enterprises, our PRC subsidiaries 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.

***You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management. U.S. regulatory bodies also may be limited in their ability to conduct investigations or inspections of our operations in China.***

We conduct substantially all of our operations in China, and substantially all of our assets are located in China In addition, most of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside the United States. The PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the Marshall Islands and many other countries and regions. Therefore, recognition and enforcement in the PRC of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible. As a result, it may be difficult for you to effect service of process within the United States upon these persons.

It may also be difficult for you to enforce in U.S. courts judgments on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located outside of the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts. Courts in China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of foreign judgments with the United States. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles of PRC law or national sovereignty, security, or the public interest. So, it is uncertain whether a PRC court would enforce a judgment rendered by a court in the United States.

Any disclosure of documents or information located in China by foreign agencies may be subject to jurisdiction constraints and must comply with China's state secrecy laws, which broadly define the scope of "state secrets" to include matters involving economic interests and technologies. There is no guarantee that requests from U.S. federal or state regulators or agencies to investigate or inspect our operations will be honored by us, by entities who provide services to us or with whom we associate, without violating PRC legal requirements, especially as those entities are located in China. Furthermore, under the current PRC laws, an on-site inspection of our facilities by any of these regulators may be limited or prohibited.

***We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse effect on our business.***

We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. We have operations, agreements with third parties, and make most of our sales in China. The PRC also strictly prohibits bribery of government officials. Our activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants, sales agents, or distributors of our Company, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents, or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the U.S. government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

***If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price and reputation, and could result in a loss of your investment in our stock, especially if such matter cannot be addressed and resolved favorably.***

In the past few years, U.S. publicly traded companies that have substantially all of their operations in China, particularly companies like us have been the subject of intense scrutiny, criticism, and negative publicity by investors, financial commentators, and regulatory agencies, such as the SEC. Much of the scrutiny, criticism, and negative publicity has centered around financial and accounting irregularities and mistakes, lack of effective internal controls over financial accounting, inadequate corporate governance policies or lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism, and negative publicity, the publicly traded stocks of many U.S. listed Chinese companies have sharply decreased in value and, in some cases, have become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions, and are conducting internal and external investigations into the allegations. It is not clear the effect of this sector-wide scrutiny, criticism, and negative publicity will have on our Company, our business, and our stock price. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations defending our Company. This situation will be costly, time consuming, and distract our management from growing our company.

***The disclosures in our reports and other filings with the SEC and our other public pronouncements will not be subject to the scrutiny of any regulatory bodies in the PRC. Accordingly, our public disclosure should be reviewed in light of the fact that no governmental agency that is in China where all of our operations and business are located have conducted any due diligence on our operations or reviewed or cleared any of our disclosure.***

Unlike public reporting companies whose operations are located primarily in the United States, however, all of our operations are located in China. Since substantially all of our operations and business takes place in China, it may be more difficult for the Staff of the SEC to overcome the geographic and cultural obstacles that are present when reviewing our disclosure. These same obstacles are not present for similar companies whose operations or business take place entirely or primarily in the United States. Furthermore, our SEC reports and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review of the CSRC, a PRC regulator that is tasked with oversight of the capital markets in China. Accordingly, you should review our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done any due diligence on our company and with the understanding that none of our SEC reports, other filings or any of our other public pronouncements has been reviewed or otherwise been scrutinized by any local regulator.

**RISKS RELATED TO OUR SECURITIES**

***Nasdaq imposes listing standards on our Common Stock, including recent amendments to Nasdaq Listing Rules, that may be difficult to fulfill, thereby leading to a potential delisting of our Common Stock.***

Our Common Stock is traded and listed on the Nasdaq Capital Market under the symbol "JXG." We are required to comply with all continued listing requirements, including among other things, a minimum bid price of $1.00 per share of Common Stock (the "Minimum Bid Price Requirement"), minimum shareholder' equity. certain major corporate transactions, the composition of our Board of Directors and committees thereof. The failure to meet these Nasdaq Capital Market continued listing requirements may result in delisting of our Common Stock from the Nasdaq Capital Market, which could adversely affect the liquidity and market price thereof.

In the past, the closing price of our Common Stock felt below the Minimum Bid Price Requirement several times, and in order to maintain compliance with the Minimum Bid Price Requirement the Company effected reverse stock splits within the last two (2) years, including (i) the most recent one-for-fifteen (1-for-15) reverse stock split, effected on November 18, 2025 and (ii) one-for-four (1-for-4) reverse stock split, effected on December 27, 2024. Prior to that, we also effected a 1-for-10 reverse stock split on April 26, 2023; however because we failed to regain compliance with the Minimum Bid Price Requirement by April 24, 2023 (the deadline provided by Nasdaq Staff), we needed to request a hearing. On May 23, 2023, Nasdaq Staff notified the Company that it regained compliance with the Minimum Bid Requirement and that the Company is in compliance with all applicable listing standards and that its stock will continue to be listed and traded on Nasdaq.

However, we cannot ensure you that we will be able to meet all requirements for continued listing on the Nasdaq Capital Market in the future. If we fail to maintain these Nasdaq listing requirements, our Common Stock will be delisted. If our Common Stock is no longer listed on The Nasdaq Capital Market, our shares would likely trade on the over-the-counter market. If our shares were to trade on the over-the-counter market, selling our shares could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and security analysts' coverage of us may be reduced. In addition, in the event our shares are delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in our shares, further limiting the liquidity of our shares. These factors could result in lower prices and larger spreads in the bid and ask prices for our shares. Such delisting from the Nasdaq Capital Market and continued or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing, and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions.

***If we need to effectuate another reverse stock split, the trading price of our Common Stock may not meet the Minimum Bid Price Requirement.***

If we do effect a reverse stock split in response to, or in order to prevent, a future delisting notice, if received, there can be no assurance that the market price per new share of our common stock after the reverse stock split will remain unchanged or increase in proportion to the reduction in the number of old shares of our common stock outstanding before the reverse stock split. Other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock and there can be no assurance that a reverse stock split, if completed, will result in the intended benefits, that the market price of our common stock will increase in proportion to the reduction in the number of shares of our common stock outstanding before the reverse stock split or that the market price of our common stock will not decrease in the future. If the market price of our common stock does not increase the price per share of our common stock above the Minimum Bid Price Requirement or if the market price of our common stock does not remain above Nasdaq's minimum bid price threshold of $1.00 per share, our common stock may still be delisted from Nasdaq.

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***Considering recent amendments to Nasdaq Listing rules, if a reverse stock split to regain compliance with the Minimum Bid Price Requirement would result in non-compliance with other Nasdaq Listing Rules, Nasdaq will not accept it and our Common Stock could be delisted.***

Nasdaq recently amended several of its listing rules related to reverse stock splits, implementing stricter requirements on companies to maintain continued listing. Should we effect another reverse stock split in order to regain compliance with the Minimum Bid Price Requirement, we need to ensure that it would not result in noncompliance with other continued Nasdaq requirements. Otherwise, the Company will not be in compliance with the Minimum Bid Price Requirement and a secondary noncompliance and Nasdaq may start the delisting process. This listing rule may significantly reduce our ability to determine a maximum ratio of a reverse stock split that would enable us to increase the price per share of our common stock while complying with other continued listing requirements. We cannot ensure you that our future reverse stock split, if needed, would result in compliance with all other Nasdaq Listing Rules. If we are unable to cure noncompliance with other continued listing requirements, our common stock may be delisted from Nasdaq; however, during the hearing process, the delisting will be stayed.

Even if we are able to regain compliance with the Minimum Bid Price Requirement, the liquidity of the shares of our common stock may be materially and adversely affected by any such reverse stock split given the reduced number of shares of common stock that will be outstanding following the reverse stock split, especially if the market price of our common stock does not increase as a result of the reverse stock split.

Following any reverse stock split, the resulting market price of our common stock may not attract new investors and may not satisfy the investing requirements of those investors. Although we believe a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that the reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our common stock may not necessarily improve.

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***Since we effectuated a reverse stock split within the past year, should the trading price of our Common Stock fall again below the Minimum Bid Price Requirement, we will not be eligible to receive any compliance period and may be issued a delisting decision.***

Nasdaq recently amended its listing rules related to excessive reverse stock splits, which further limited the number of times companies can conduct reverse stock splits to regain compliance with the Minimum Bid Price Requirement.

Under these rules, if a company has effectuated one or more reverse stock splits with a cumulative ratio of 1-for-250 within a two-year period or a reverse stock split at any split ratio within the prior one year and thereafter falls out of compliance with the Minimum Bid Price Requirement, it will not be eligible for any compliance period to address a bid price deficiency, but instead will be issued a delisting decision.

We effectuated a 1-for-15 reverse stock split on November 18, 2025 and another 1-for 4 reverse stock split on December 27, 2024 to prevent a potential non-compliance with the Minimum Bid Price Requirements. If our Common Stock fails below the Minimum Bid Price Requirement within one year from effecting the last reverse stock split, we will not be eligible to receive a compliance period.

***If our Common Stock is delisted from Nasdaq, we may become subject to the trading complications experienced by "Penny Stocks" in the over-the-counter market.***

Delisting from Nasdaq may cause our shares of Common Stock to become the SEC's "penny stock" rules. The SEC generally defines a penny stock as an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. One such exemption is to be listed on Nasdaq. The market price of our Common Stock is currently higher than $1.00 per share. However, because the daily trading volume in our Common Stock is very low, significant price movement can be caused by the trading in a relatively small number of shares. Therefore, were we to be delisted from Nasdaq Capital Market, our Common Stock may become subject to the SEC's "penny stock" rules. These rules require, among other things, that any broker engaging in a purchase or sale of our securities provide its customers with: (i) a risk disclosure document, (ii) disclosure of market quotations, if any, (iii) disclosure of the compensation of the broker and its salespersons in the transaction and (iv) monthly account statements showing the market values of our securities held in the customer's accounts. A broker would be required to provide the bid and offer quotations and compensation information before effecting the transaction. This information must be contained on the customer's confirmation. Generally, brokers are less willing to effect transactions in penny stocks due to these additional delivery requirements. These requirements may make it more difficult for shareholders to purchase or sell our shares. Because the broker, not us, prepares this information, we would not be able to assure that such information is accurate, complete or current.

***The market price of our Common Stock may be volatile or may decline regardless of our operating performance based on numerous factors, many of which are beyond our control.***

There are numerous additional factors, many of which are beyond our control, that may cause the market price of our Common Stock to fluctuate significantly. These factors include:

● our earnings releases, actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investors;

● the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet these estimates or the expectations of investors;

● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; speculation about our business in the press or the investment community;

● significant developments relating to our relationships with our customers or suppliers;

● customer demand for our products;

● investor perceptions of our industry in general and our company in particular;

● the operating and stock performance of comparable companies;

● general economic conditions and trends;

● major catastrophic events;

● announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures;

● changes in accounting standards, policies, guidance, interpretation or principles;

● loss of external funding sources;

● sales of our shares, including sales by our directors, officers or significant shareholders; and

● additions or departures of key personnel.

Securities class action litigation is often instituted against companies following periods of volatility in their share price. This type of litigation could result in substantial costs to us and divert our management's attention and resources. Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to operating performance of particular companies. For example, in July 2008, the securities markets in the United States, China and other jurisdictions experienced the largest decline in share prices since September 2001. These market fluctuations may adversely affect the price of our shares and other interests in our company at a time when you want to sell your interest in us.

***If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our Common Stock, the price of our Common Stock and trading volume could decline.***

The trading market for our Common Stock may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of our Common Stock would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Common Stock and the trading volume to decline.

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***We do not intend to pay dividends for the foreseeable future.***

For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and do not anticipate paying any cash dividends on our shares. Accordingly, investors must be prepared to rely on sales of their shares after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our shares. Any determination to pay dividends in the future will be made at the discretion of our Board, and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable laws, and other factors the Board deems relevant.

***We have granted, and may continue to grant, stock-based awards to Key Employees and Consultants, which will increase our share-based compensation and may have an adverse effect on our results of operations.***

In order to compete for talents, we may need to offer higher compensation to our key employees and consultants, including granting awards under our current equity incentive plan, which may include the grant of shares of restricted common stocks. We have adopted various equity incentive plans, starting from the 2018 Equity Incentive Plan, the 2022 Plan, the New 2022 EIP, as amended, and the 2026 Plan. In addition, we granted a performance-based stock awards to our Chief Executive Officer, Chief Financial Officer, co-chairwoman and director. We believe the granting of stock-based awards is important to our ability to attract and retain key personnel and employees, and we will continue to grant share-based awards in the future. As a result, our expenses associated with share-based compensation will increase, which may have an adverse effect on our results of operations.

We provided stock-based compensation to our key employees and directors for the fiscal year ended December 31, 2025. The issuance of such shares resulted in a deduction in our profit although there is no cash paid out. However, such deduction in profit makes our financial performance looks less attractive to the investors and cause difficulties to raise sufficient capital to support our business.

***We are a "foreign private issuer" and have disclosure obligations that are different than those of U.S. domestic reporting companies. Therefore, you should not expect to receive the same information about us as a U.S. domestic reporting company may provide. Furthermore, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq corporate governance listing standards; these practices may afford less protection to stockholders than they would enjoy if we complied fully with the Nasdaq corporate governance listing standards.***

We are a foreign private issuer. As a result, we are not subject to certain of the requirements imposed upon U.S. domestic issuers by the SEC. For example, we are not required by the SEC or the federal securities laws to issue quarterly reports or file proxy statements with the SEC. We are also required to file our annual report on Form 20-F with the SEC within four months of our fiscal year end. We are also not required to disclose certain detailed information regarding executive compensation that is required from U.S. domestic issuers. Further, our directors and executive officers are not required to report equity holdings under Section 16 of the Securities Act. As a foreign private issuer, we are also exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. We are, however, still subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5. Since many of the disclosure obligations required of us as a foreign private issuer are different than those required by U.S. domestic reporting companies, our shareholders should not expect to receive all of the same types of information about us and at the same time as information is received from, or provided by, U.S. domestic reporting companies. We are liable for violations of the rules and regulations of the SEC, which do apply to us as a foreign private issuer. Violations of these rules could affect our business, results of operations, and financial condition.

As a foreign private issuer, we are also permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to domestic U.S. issuers. This may afford less protection to holders of our securities.

We are exempted from certain corporate governance requirements of the Nasdaq Stock Market by virtue of being a foreign private issuer. As a foreign private issuer, we are permitted, and we elected to follow the governance practices of our home country, the Republic of the Marshall Islands in lieu of certain corporate governance requirements of Nasdaq. As result, the standards applicable to us are considerably different than the standards applied to domestic U.S. issuers. For instance, we are not required to:

● have a compensation committee and a nominating committee to be comprised solely of "independent directors; and

● hold an annual meeting of shareholders no later than one year after the end of the Company's fiscal year-end.

As a result, you may not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements.

***Future sales or perceived sales of our shares of Common Stock could depress our stock price.***

As of the date of this Annual Report, we have 9,276,831 shares of Common Stock outstanding. Many of these shares were either recently registered in the registration statements on Form S-8 pursuant to our equity incentive plans or will become eligible for sale in the public market, subject to limitations imposed by Rule 144 under the Securities Act. If the holders of these shares were to attempt to sell a substantial amount of their holdings at once, the market price of our Common Stock could decline. Moreover, the perceived risk of this potential dilution could cause shareholders to attempt to sell their shares and investors to short the Common Stock, a practice in which an investor sells shares that he or she does not own at prevailing market prices, hoping to purchase shares later at a lower price to cover the sale. As each of these events would cause the number of shares of our Common Stock being offered for sale to increase, the market price of our Common Stock would likely further decline. All of these events could combine to make it very difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

***Provisions of our articles of incorporation may impede a takeover or make it more difficult for shareholders to change the direction or management of the Company, which could reduce shareholders' opportunity to influence management of the Company.***

Our Amended and Restated Articles of Incorporation, as amended (the "Restated Articles") permit our Board to issue up to five million shares of preferred stock with a par value of $0.0001 (the "Preferred Stock") from time to time, with such rights and preferences as they consider appropriate. These terms may include voting rights including the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion rights and redemption rights provisions. The issuance of any preferred stock could reduce the value of our Common Stock. In addition, specific rights granted to future holders of preferred stock, including voting rights and conversion rights, could be used to restrict our ability to merge with, or sell assets to, a third party. As of the date of this Annual Report, the Company has created and designated the following series of Preferred Stock: (i) Series A Convertible Preferred Stock: (ii) Series B Participating Preferred Stock; (iii) Series C Convertible Preferred Stock; (iv) Series D Convertible Preferred Stock, (v) Series E Convertible Preferred Stock, and (vi) Series F Convertible Preferred Stock.

Sun Lei, our Chief Executive Officer, Interim Financial Officer, co-chairwoman and director, holds, 1,240,000 shares of Series A Convertible Preferred Stock, convertible into 2,067 shares of Common Stock, 150,000 shares of Series C Convertible Preferred Stock that are convertible into 1,250 shares of our Common Stock and 80,000 shares of Series D Preferred Stock, convertible into 1,733 shares of Common Stock. At the date of this Annua Report, all shares of Series E and F Convertible Preferred Stock were converted into shares of Common stock, and no Series E Convertible Preferred Stock and no Series F Convertible Preferred Stock are outstanding.

The ability of the Board to issue shares of Preferred Stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change-in-control, which in turn could prevent shareholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of shares of our Common Stock.

**ITEM 4. INFORMATION ON THE COMPANY**

**A. History and Development of the Company**

We are a Republic of the Marshall Islands company incorporated under the Marshall Islands Business Corporations Act ("BDA") on January 26, 2012. We were originally organized under the name "Acquisition Corp." for the purpose of acquiring through a merger, capital stock exchange, asset acquisition, stock purchase, or similar acquisition transaction, one or more operating businesses or assets.

The address of the Company's principal executive office is Bin Hai Da Dao No. 270, Lang Qin Wan Guo Ji Du Jia Cun Zong He Lou, Xiu Ying District, Haikou City, Hainan Province 570100, People's Republic of China.

On March 24, 2014, we entered into a share exchange agreement and plan of liquidation (the "Exchange Agreement"), as amended on June 21, 2014, with KBS International Holding Inc., ("KBS International"), Hongri International Holdings Limited ("Hongri International"), a then wholly owned subsidiary of KBS International and Cheung So Wa and Chan Sun Keung, each an individual and shareholder of KBS International. At the closing of the transactions contemplated in the Exchange Agreement, occurred on August 1, 2014, we acquired 100% of the issued and outstanding equity interest in Hongri International from KBS International. Pursuant to the Exchange Agreement, KBS International was liquidated and dissolved in August 2014 and the shares of Common Stock of the Company were distributed to each shareholder of KBS International according to their respective ownership of KBS International.

On October 31, 2014, we amended our Articles of Incorporation to change our name to KBS Fashion Group Limited.

On February 3, 2017, the Company effected a one-for-fifteen (1-for-15) reverse stock split of the Company's issued and outstanding Common Stock. Our Common Stock began trading on Nasdaq on a split-adjusted basis when the market opened on February 9, 2017.

On December 9, 2020, we entered into a Share Exchange Agreement with Flower Crown Holding, a corporation organized under the laws of the Cayman Islands (the "Flower Crown"), and the shareholders of Flower Crown (each a "FC Shareholder" and collectively the "FC Shareholders"), to acquire all the issued and outstanding ordinary shares of Flower Crown in exchange for the issuance to the FC Shareholders an aggregate of 6,478 shares of our Common Stock (the "Share Exchange"). The Share Exchange transaction was closed on December 21, 2020 and since the closing of the Share Exchange, Flower Crown became our wholly-owned subsidiary.

Flower Crown is a holding company incorporated on August 7, 2020 in Cayman Islands, directly owns 100% share capital in Flower Crown (China) Holding Group Co., Limited, a limited company incorporated in Hong Kong on May 24, 2018 ("Flower Crown HK").

Concurrently with the closing of the Share Exchange Agreement on December 9, 2020, we entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with Ms. Sun Lei, our Chief Executive Officer and a director of the Company, which closed on December 21, 2020. Pursuant to the Stock Purchase Agreement, the shares issued to Ms. Lei were held in escrow for the two years by an escrow agent to secure her obligations under the Stock Purchase Agreement and were released in every 6 months, pursuant to a vesting schedule set forth in the Stock Purchase Agreement. On December 21, 2022, all shares that were held in escrow were released under this Stock Purchase Agreement.

On June 21, 2021, the Company further amended its Restated Articles by filing the Articles of Amendment with the Registrar of the Corporation, to permit holders of a majority of the total voting power of the outstanding capital stock to take any action that is required or permitted to be taken at a meeting of the shareholders, by written consent.

On October 4, 2021, the Company changed its name from "KBS Fashion Group Limited" to "JX Luxventure Limited" by filing another Articles of Amendment to the Restated Articles with the Registrar of the Corporation.

Effective December 13, 2021, we reorganized our corporate subsidiary structure in the PRC under Flower Crown Holding ("FLH"). On December 21, 2021, we closed a Share Exchange Agreement with FLH, which operated its China subsidiaries, Jin Xuan Luxury Tourism (Hainan) Digital Technology Co., Ltd. ("JX Hainan Digital"), Beijing Heyang International Travel Service Co., Ltd. ("Heyang Travel") and Flower Crown (Hainan) Cross-Border E-Commerce Co., Ltd. ("FCEC") through a variable interest structure ("VIE"). As a result of the FLH's China subsidiaries restructuring, we terminated the original VIE contractual agreements and we no longer operate those entities through a VIE structure and became the indirect sole shareholder of JX Hainan and Heyang Travel. As part of the restructuring, due to the restriction of foreign ownership by the relevant laws and regulations of the People's Republic of China, namely Provisions on Administration of Foreign Invested Telecommunications Enterprise (外商投资电信企业管理规定), we divested FCEC under a Shares Transfer Agreement with a third party. FCEC represented less than 5% of our total revenues. The reorganization was approved by the unanimous consent of our Board of Directors and the affirmative vote of the holders of approximately 60.4% of our total issued and outstanding capital stock.

Following the reorganization, we had the following corporate structure between December 13, 2021 and October 19, 2022:

![](ea028961001_img2.jpg)

On April 25, 2022, the Company filed the Certificates of Designation with the Registrar of Corporations under the Company's former name, KBS Fashion Group Limited (except for the Certificate of Designation of Series D Preferred), and on April 27, 2022, the Company filed with the Registrar of Corporations the First Amended and Restated Certificate of Designation of Series A Preferred, the Amended and Restated Certificate of Designation of Series B Participating, the Amended and Restated Certificate of Designation of Series C Preferred, and the Amended and Restated Certificate of Designation of Series D Preferred, reflecting the Company's name "JX Luxventure Limited" and restating all provisions set forth in the Certificates of Designation of Preferred Stock.

On May 10, 2022, the Company filed the Second Amended and Restated Certificate of Designation of Series A Preferred, which amended the timing of the conversion of Series A Preferred into Common Stock and restated all other provisions set forth in the First Amended and Restated Certificate of Designation of Series A Preferred.

On June 22, 2022, the Board authorized a share repurchase program of up to US$5,000,000 of the Company's common stock from time to time during a 12-month period by Mr. Lei, our Chief Executive Officer of Company (the "Share Repurchase Program"). Pursuant to the Repurchase Program, Mrs. Lei acquired in private negotiated transactions 2,533shares of Common Stock, at the total purchase price of $1,780,000; 1,240,000 shares of Series A Convertible Preferred Stock, convertible into 2,067 shares of Common Stock at the total purchase price of $1,240,000; and 80,000 shares of Series D Convertible Preferred Stock, convertible into 1,733 shares of Common Stock at the purchase price of $2,080,000.

On July 12, 2022, the Company entered into a new Employment Agreement with Sun Lei (the "2022 Employment Agreement") for a one (1) year term, pursuant to which Sun Lei received compensation of USD1.00 but no stock compensation. The 2022 Employment Agreement has expired, and the Company did not enter into a new employment agreement with Sun Lei in 2023 and in 2024.

On October 26, 2022, the Board, acting by unanimous consent, in accordance with applicable provisions of the Marshall Island Business Corporations Act ("BCA") and the Company's Bylaws, terminated the 2022 Plan and adopted a new 2022 Equity Incentive Plan (the "New 2022 EIP"), replacing the 2022 Plan, effective immediately. On the same date, the holders of 75% of the total issued and outstanding capital stock of the Company entitled to vote therein, acting by written consent, approved and authorized the terms and provisions of the New 2022 EIP, in accordance with the applicable provisions of the BCA and the Company's Bylaws.

The New 2022 Plan provided for a maximum of 66,667 shares authorized for issuance, subject to adjustments in the event of certain reorganizations, mergers, combinations, recapitalizations, share splits, share dividends, or other similar events which change the number or kind of shares outstanding. All shares of Common Stock authorized for issuance under the New 2022 Plan were issued by December 2022.

On October 19, 2022, the Company entered into a stock purchase agreement (the "Stock Purchase Agreement") with Shenzhen Zhongjiyingfeng Investment Co., Ltd. (the "Purchaser"), pursuant to which on the same date it closed the transaction (the "Closing") Company's sold 20,000 shares of common stock of Hongri International, constituting all of the issued and outstanding capital stock of Hongri International, to the Purchaser, in consideration for $10,000,000 (the "Purchase Price").

At the Closing, the Purchaser issued to the Company a 5% promissory note in the principal amount of $10,000,000, in payment of the Purchase Price (the "Note"), payable in four installments, on the following dates and in the following amounts: (a) $1,000,000, together with an accrued interest, is payable on or before November 19, 2022; (b) $2,000,000, together with an accrued interest, is payable on or before April 19, 2023; (c) $3,000,000, together with an accrued interest, is payable on or before April 19, 2024, and (d) the remaining $4,000,000, together with an accrued interest, is payable on or before October 19, 2024. As further inducement of the Company to enter into the Stock Purchase Agreement and to sell the Shares to the Purchaser on the terms of the Stock Purchase Agreement, on the Closing, the Purchaser and the Company entered into and executed a Pledge and Security Agreement (the "Pledge Agreement"), pursuant to which the Purchaser, as the Borrower under the Note, granted the Company a first priority security interest in the Shares of Hongri.

On April 15, 2024, Jinxuan (Hainan) Digital Technology Co., Ltd, the Company's indirect wholly-owned subsidiary, acquired 100% share capital of Tianjin Baoliting Intelligent Technology Co., Ltd., a subsidiary of the Purchaser, in consideration of the remaining $7, 0000,000 due by the Purchaser to the Company under the Note. As a result of the sale of Hongri International, the Company disposed its menswear business segment, and Hongri International and all its wholly-owned subsidiaries are no longer subsidiaries of the Company.

Following the Closing of Hongri, the Company's corporate structure changed as follows:

![](ea028961001_img3.jpg)

On April 26, 2023, the Company effected the 1-for-10 reverse stock split of its Common Stock. On May 23, 2023, Nasdaq Staff notified the Company that the Company regained compliance with the Minimum Bid Requirement and that the hearing previously scheduled for May 25, 2023 (the hearing was related to regaining compliance with the Minimum Bid Requirement) has been canceled. The letter from Nasdaq also stated that the Company is in compliance with all applicable listing standards and that its stock will continue to be listed and traded on Nasdaq.

On August 23, 2024, the Company issued a negotiable, transferrable, due on demand, promissory note, without an interest (the "2024 Original Note"), in the principal amount of $3,000,000 (the "Principal Amount") to Huidan Li, the Co-Chairman of the board of directors of the Company, in consideration of the continuous advances of funds to the Company by the Co-Chairman for a period of over two (2) years.

On August 26, 2024, the Company entered into the Note Transfer and Assignment Agreement (the "Assignment Agreement") with the Mr. Li and eight (8) investors (the "Assignees" or the "Holders"), pursuant to which on the same date Mr. Li sold, transferred, and assigned the 2024 Original Note and, collectively, all of his rights, title and interest in, to and under the 2024 Original Note to the Assignees, with each Assignee being assigned all of the Original Noteholder's rights, title and interest in, and to the principal amount of $375,000 (the "Assignment"), and the Company recognized each Assignee as the owner of the Assignment, and issued to each Assignee a new promissory note in the principal amount of $375,000 (the "New Note") on the same terms as the 2024 Original Note.

On August 26, 2024, the Company and the Holders entered into a debt exchange agreement (the "2024 Exchange Agreement"), pursuant to which, on September 26, 2024, at the closing, the Company issued to Holders, collectively, an aggregate of 1,000,000 shares (each Holder was issued 125,000 shares) of newly-designated Series E Convertible Preferred Stock (the "Series E Stock"), in exchange of cancellation of $375,000, representing each Holder's portion of the Company's total indebtedness to the Holders under the New Notes. The shares of Series E Stock were issued pursuant to the terms of the Certificate of Designation of Series E Stock, filed by the Company on September 23, 2024 with the Registrar of the Corporation under the BCA, establishing the Series E Stock.

The Certificate of Designation of Series E Stock features a stated value of $3.00 per share, the conversion rate of 1 for 2.5 (reflecting the 1-for-4 post reverse split ratio), no additional consideration by the Holder for the conversion of Series E Shares into the shares of the Company's common stock and provided the schedule of conversion, such as, (i) up to 30% of the Series E Shares issued to each Holder may be converted by such Holder at any time from the date of the issuance; (ii) up to additional 30% of the Series E Shares counted on the date of the issuance may be converted by such Holder at any time after 90 days from the date of the issuance; (iii) up to 40% of the Series E Shares counted on the date of the issuance may be converted by such Holder after six (6) months from the date of the issuance. Pursuant to the Certificate of Designation of Series E Stock, on April 3, 2025, the Company required holders to convert all Series E Shares that remained outstanding on or after March 14, 2025 into shares of common stock. As a result, as of the date of this Annual Report, all of 1,000,000 Series E Shares were converted into 166,667 shares of Common Stock, and the Company does not have any outstanding shares of Series E Preferred Stock.

On December 20, 2024, the Company changed its trading symbol from "JXJT" to "JXG."

On December 27, 2024 the Company filed the Amendment with the Registrar or Deputy Registrar of Corporations in the Marshall Islands, implementing the 1-for-4 reverse stock split and the change of the Company's name to "JX Luxventure Group Inc." The Company began trading under its new name and on a post-reverse stock split basis on January 8, 2025.

On February 17, 2025, the Company issued a new promissory note (the "2025 Original Note") to Mr. Li in the principal amount of $3,500,000, in consideration of funds advanced by Mr. Li to the Company. On April 21, 2025, Mr. Li transferred and assigned to six (6) investors (the "Assignees") an aggregate of $1,380,000, representing a portion of the principal amount under the 2025 Original Note (the "Total Assigned Debt"), with each Assignee to be assigned a portion of the Total Assigned Debt equal to $230,000 (the "Assignment"), in consideration of the purchase price of $230,000 from each Assignee. Upon Mr. Li's assignment of the Total Assigned Debt to Assignees, the Company issued to Mr. Li a new promissory note in principal amount of $2,120,000, representing the total remaining outstanding amount due to Mr. Li under the 2025 Original Note, on the terms of the 2025 Original Note. The Company also issued promissory notes to each Assignee in the principal amount of $230,000 (the "Investor Note"), recognizing each Assignee as the legal holder of the Assignment and the noteholder of the Investor Note. The terms of the Investor Note are the same as the terms of the 2025 Original Note issued by the Company to Mr. Li.

On April 22, 2025, the Assignees entered into a debt exchange agreement with the Company (the "2025 Exchange Agreement"), pursuant to which, the Assignees agreed to cancel an aggregate of $1,380,000, the total amount of the Company's indebtedness (each Assignee to cancel $230,000 under the promissory note issued to such Assignee) in exchange for the issuance of 69,000 shares (each Assignee was issued 11,500 shares) of a new series of the Company's preferred stock, designated as Series F Convertible Preferred Stock (the "Series F Preferred Stock"), pursuant to the terms and subject to conditions set forth in the 2025 Exchange Agreement.

On May 23, 2025, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock (the "Certificate of Designation of Series F Stock") with the Registrar of the Corporation under the Marshall Island Business Corporations Act, establishing the Series F Stock.

Series F Shares feature a stated value of $20.00 per share and are convertible into shares of the Company's Common Stock at the conversion rate of 1 for 100 (prior to the 1-for-15 reverse stock split), without payment or any additional consideration by the holder thereof. The conversion is subject to the following schedule: (i) up to 2,000 of the Series F Shares issued to each holder may be converted by such holder at any time from the date of the issuance; (ii) up to additional 2,500 of the Series F Shares may be converted by such Holder at any time after 90 days from the date of the issuance; (iii) up to 3,000 of Series F Shares counted on the date of the issuance may be converted by such Holder after six (6) months from the date of the issuance; and (iv) the remaining 4,000 of the Series F Shares may be converted by such holder after nine (9) months from the date of the issuance. If any Series F Shares remain outstanding on or after one (1) year from the date of the issuance, the Company will have the right, but not the obligations, to require the holders of such Series F Shares to convert them into the number of fully paid and non-assessable shares of common stock.

On May 29, 2025, at the closing of the Exchange Agreement, the Company issued to the Holders an aggregate of 69,000 shares of Series F Stock in cancellation of the Total Amount Due (each Holder received 11,550 shares of Series F Stock) in cancellation of $230,000 principal amount under the Note issued to each Holder). As of the date of this Annual Report, all of the 69,000 shares of Series F Stock were converted into shares of Common Stock, and there are no outstanding shares of Series F Stock.

**Recent Developments**

On May 7, 2025, the Company amended the New 2022 EIP by Amendment #1 to, among other things, (i) change the name of the plan from "JX Luxventure Limited New 2022 Equity Incentive Plan" to "JX Luxventure Group Inc. New 2022 Equity Incentive Plan", to reflect the current name of the Company; (ii) increase the maximum number of shares authorized under the New 2022 EIP to 1,666,667 shares of Common Stock, and (ii) eliminate limitation on the maximum number of shares to be issued under the New 2022 EIP to any individual participant in any one fiscal year of the Company. On August 1, 2025, the Company further amended the New 2022 EIP by Amendment #2, which reduced the maximum number of shares of Common Stock authorized for issuance under the New 2022 EIP from 1,666,667 to 666,667 shares of Common Stock. Amendment #2 was approved by the unanimous written consent of the Board and by written consent of the holders of 52% of the total issued and outstanding capital stock of the Company.

On July 14, 2025, the Company and Sun Lei, the Company's Chief Executive Officer, entered into the Debt Exchange Agreement, pursuant to which on the same date, the Company issued 33,337 shares of Common Stock to Ms. lei in exchange for cancellation of $510,000, representing a portion of the total outstanding amount due owed by the Company to Ms. Lei.

On September 3, 2025, the Company and Sun Lei entered into another debt exchange agreement (the "Debt Exchange Agreement"), pursuant to which on September 25, 2025, at the closing of the Debt Exchange Agreement, Company issued her an aggregate of 2,352,941 shares of Common Stock at the purchase price of $0.85 per share in exchange for her cancellation of $2,000,000, representing a portion of the total outstanding amount of her loans to the Company.

On December 16, 2025, the Company and Sun Lei entered into another debt exchange agreement (the "Debt Exchange Agreement"), pursuant to which the Company on January 2, 2026, at the closing of the Debt Exchange Agreement, the Company issued to Ms. Lei an aggregate of 300,000 shares of Common Stock in exchange of her cancellation of $1,470,000, representing a portion of the total outstanding amount of her loans to the Company.

On March 6, 2026, the Company and Mr. Li, the Co-Chairman of the Board, entered into the Debt Exchange Agreement, pursuant to which on March 26, 2026, the Company issued to Mr. Li 650,307 shares of Common Stock, at the price of $3.23 per share, in exchange for Mr. Li's cancellation of $2,120,000, the outstanding amount under the promissory note, dated April 21, 2025.

On March 26, 2026, the Company and Ms. Lei entered into a new debt exchange agreement, pursuant to which on April 10, 2026, the Company issued to Ms. Lei 2,100,000 shares of Common Stock, at the price of $2.986 per share, in exchange for her cancellation of $6,270,600, representing a portion of the total outstanding amount due by the Company to Ms. Lei.

On January 3, 2026, the Company issued an aggregate of 140,000 shares of its common stock (the "Bonus Shares") to the four members of the Board, including the Co-Chairman, Huidan Li, and the three independent directors, Baojun Zhu, Mu Ruifeng and Jin Yan. Each such director received 35,000 shares of Common Stock as compensation for such director's services for the fiscal year ended 2025.

On April 13, 2026, the Company entered into a share exchange agreement (the "Share Exchange Agreement") with Dazzly Investment, Inc., a privately held corporation organized under the laws of the Marshall Island ("Dazzly" or "Seller"), and all shareholders of the Seller (the "Seller Shareholders"). Subject to the closing conditions set forth in the Share Exchange Agreement, the Company will acquire from the Seller Shareholders an aggregate of 3,500 shares of capital stock of Dazzly (the "Purchased Shares"), constituting 10% of the total outstanding capital stock of the Seller, on the pro-rata basis, where each Seller Shareholder irrevocably agreed to sell and assign to the Company 10% of the Purchased Shares held by such Seller Shareholder in exchange for an aggregate of 2,783,046 shares (the "Exchange Shares") of the Company's Common Stock on a pro rata basis.

Dazzly, through Lang Hui Trade Limited ("Lang Hui"), a Hong Kong company and its wholly-owned subsidiary, is a business-to-business (B2B) pharmaceutical distributor and wholesaler in the Hong Kong pharmaceutical supply chain. It acts as an intermediary between pharmaceutical manufacturers (local and international) and downstream buyers. The key elements of its day-to-day mode of operations include: (a) sourcing and procurement; (b) import, export and local distribution; and (c) sales and supply process.

The closing of the Share Exchange Agreement will occur upon satisfaction of certain conditions, including, among other things: (a) the accuracy of the parties' respective representations and warranties in the Share Exchange Agreement, subject to specified materiality qualifications; (b) compliance by the parties with their respective pre-closing obligations in the Share Exchange Agreement in all material respects; and (c) submission by the Company of the Listing of Additional Shares notification to the Nasdaq Capital Market at least 15 calendar days before the issuance of the Exchange Shares.

The terms of the Share Exchange Agreement and the Exchange Shares were approved by the Seller Shareholders, the board of directors of each Dazzly and the Company, and the holders of a majority of capital stock of the Company, as being fair and in the best interests of the Company and its shareholders.

*Current Corporate Structure.*

Since August 2023, the Company has been further changing its corporate structure, resulting in the sale of 100% ownership of Heyang Travel and incorporation of new entities, without changing the core of its business operations.

On October 8, 2023, the Company sold 100% ownership in Beijing Heyang International Travel Services Co., Ltd, a PRC subsidiary of JX Luxury Tourism, and its indirect PRC operating subsidiary, to a non-related third party for RMB1.

On August 3, 2023, Flower Crown acquired 100% share capital of Billion Place Limited (Hong Kong) Co., Limited ("Billion Place HK"), a limited company incorporated in Hong Kong on March 13, 2023. This Hong Kong holding company became a wholly-owned subsidiary of Flower Crown and our indirect wholly-owned subsidiary.

On March 7, 2024, Baofu (Zhuhai) Technology Co., Ltd. ("Baofu Technology") was incorporated, under the PRC laws. This entity became a direct wholly-owned subsidiary of Billion Place HK and is engaged in Technology Solution for Tourism Cross-Border Operations business segment.

On August 6, 2025, JX Luxury Tourism sold its entire 51.0% equity interest in Hefei Aitong Culture Tourism Development Co., Ltd., a company incorporated in the PRC on December 27, 2023, to the entity's minority shareholder. The transaction was consummated for nominal consideration.

Jin Xuan (Shenzhen) International Trade Co., Ltd. ("JX Shenzhen") was incorporated on Feb 6, 2024 under PRC laws. It became a wholly-owned subsidiary of Flower Crown HK and is engaged in Cross-border Merchandise business segment.

Shenzhen Siquanrun Technology Co., Ltd was incorporated under the PRC laws on September 9, 2024. On September 10, 2025 it became a wholly owned subsidiary of Flower Crown HK and is engaged in software development and technology support services.

Hainan Si Quan Run Hang International travel agency Co., Ltd. ("Hainan Travel") was incorporated under PRC laws on August 9, 2023. On March 7, 2024, Hainan Travel became an indirect wholly-owned subsidiary of Billion Place HK when Baofu Technology was acquired by Billion Place HK. It is engaged in Airline Tickets and Tourism Services business segment.

On April 15, 2024, JX Hainan acquired 100% share capital of Tianjin Baoliting Intelligence Technology Co., Ltd ("Baoliting"), a company incorporated under PRC laws on August 11, 2023 It became a wholly-owned subsidiary of and is engaged in software development and technology support services.

On May 31, 2024, Hefei Si Quan Run Hang International travel agency Co., Ltd. ("Hefei Travel") was incorporated under PRC laws wholly-owned subsidiary of Baofu Technology. It is engaged in Airline Tickets and Tourism Services business segment.

The Securities and Exchange Commission, or SEC, maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

See "*Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Capital Expenditures*" for a discussion of our capital expenditures. Our web site address is http:// www.jxluxventure.com/en/. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report.

The following diagram illustrates our corporate structure and our subsidiaries as of the date of the Annual Report:

![](ea028961001_img4.jpg)

**B. Business Overview**

We are a holding company incorporated in Marshall Islands that conducts substantially all of its business operations in China. Following the sale of our wholly-owned subsidiary, Hongri International and its wholly-owned subsidiaries, through which the Company previously operated its menswear business, we divested our menswear business and have consistently focused our business operations on the tourism sector and supplying related products, including technology solutions, to business partners in China, both online and offline.

We believe that the significant growth and success of our business operations since 2020 can be attributed to the high quality of our employees, our ability to offer our business clients high-end travel products full range of services related to luxury tourism and supplemental services to reduce their total cost of procurement and ensuring that our clients receive the high-quality professional assistance they need.

We operate in the following operating segments of business:

1) Airline tickets and tourism services.

2) Software Solution for Tourism Cross-border operation and

3) Tourism Cross-border Merchandise. The focus on our technology solution has enabled us to achieve significant growth since 2020 by facilitating tourism cross-border commerce and offering services in tourism and airline tickets.

In 2024, the Company expanded its business operations in cross-border merchandize segment, and during 2025, it continues focusing on wholesale trade sector and specializing in duty-free and cross-border consumer goods. We also continue providing integrated solutions in wholesale trade, including logistics, supply chain management, and technology solutions to support the efficient distribution of tourism-related products.

***<u>Our Mission</u>***

Our mission is to provide outstanding value to our clients and to enhance their satisfaction. We believe that we have and will maintain a competitive edge in the evolving travel industry that will help us to remain at the forefront of the evolving travel industry. based on our reliability, our dedication to deliver professional high-quality value that contributes to the success and growth of our clients and our comprehensive approach to procurement, package design, and distribution of our products and services.

***<u>Our Strategy</u>***

To achieve this goal, we implement the following strategy:

● <u>Strategic Partnerships</u>: We continuously seek new opportunities to forge mutually beneficial partnerships with airlines and other stakeholders in the travel industry, further enhancing our service offerings.

● <u>Technology Advancements</u>: Our investment in cutting-edge software solutions enables us to streamline processes, optimize pricing, and ultimately deliver superior travel experiences to our clients' end-users.

● <u>Customer Support</u>: We prioritize providing high-quality customer support, ensuring that our business clients receive the assistance they need to address any challenges that may arise during their partnership with us.

● <u>Market Analysis</u>: Our team of experts constantly monitors market trends and industry developments, allowing us to adapt and innovate our offerings to meet the evolving needs of our clients.

Since December 2021, our subsidiaries engaged in the following transactions related to cross-border merchandise, the software solution for tourism cross-border operations, and travel services and products with our business clients and partners:

On December 30, 2021, Flower Crown (China) Holding Group Co., Limited. ("Flower Crown"), entered into a Global Shopping E-Commerce Open Platform Store Service Agreement (the "E-Commerce Service Agreement") with Global Premium Buy (Macau) Limited ("GPBL"). Pursuant to the E-Commerce Service Agreement, Flower Crown has opened online stores on GPBL's platform and engages in product sharing on content platforms operated by GPBL's affiliates, which include "Tik Tok", "Dou Yin", "Xigua" and "Tik Tok Volcano Edition".

On December 27, 2021, JX Luxventure (Hainan) Digital Technology Co., Ltd. closed a Real Estate Transaction Contract with a non-affiliate, acquiring a piece of commercial real estate of 240 square meters for cross-border operations for the amount of USD $2,338,464 based upon the appraisal report.

On February 9, 2022, JX Luxury Tourism a subsidiary of the Company, entered into and executed a Memorandum of Japanese High-end Life Style Services Strategic Cooperation Agreement (the "Cooperation Agreement") with Xin Hua Fund Co., Ltd. ("XHFC"). Pursuant to the Cooperation Agreement, JX Luxury Tourism and XHFC will cooperate to bring high-end Japanese medical treatment, rehabilitation treatment, precision physical examination, anti-aging beauty and other related services to the China market.

On March 10, 2022, JX Luxury Tourism entered into and executed a Strategic Cooperation Framework Agreement on Cross-border Supply Chain of Duty Free Merchandize (the "Agreement") with Aikayun Technology (Hainan) Co., Ltd. ("Aikayun"). Pursuant to the Agreement, JX Luxury Tourism will have the exclusive right to distribute cross-border products from Japan in the Hainan Island in the amount of up to RMB1,000,000,000.

On March 21, 2022, JX Luxury Tourism, entered into and executed a Framework Agreement on Strategic Cooperation (the "Agreement") with Chongqing E-Pet Technology Co., Ltd. ("Chongqing E-Pet"), one of the major operators of online cross-border pet-food shopping platform in China. Pursuant to the Agreement, Chongqing E-Pet will purchase from JX Luxury Tourism cross-border pet foods in the amount up to USD60,000,000 to be distributed on the platforms operated by Chongqing E-Pet.

On March 31, 2022, JX Luxury Tourism entered into and executed a Framework Agreement on Strategic Cooperation (the "Agreement") with Ragdoll International Trading Co., Ltd. ("Ragdoll"), an E-commerce platform operator. Pursuant to the Agreement, Ragdoll will purchase from JX Luxury Tourism cross-border pet foods in the amount of up to USD30,000,000 to be distributed on the platforms operated by Ragdoll.

On June 1, 2022, JX Luxury Tourism entered into and executed a Technology Consulting Agreement (the "Agreement") with Tianjin City Wei Ka Technology Co., Ltd. ("Tianjin Wei Ka"). Pursuant to the Agreement, JX Luxury Tourism will provide technology consulting services to Tianjin Wei Ka by delivering a solution for a non-fungible token (NFT)-based virtual human host to be used on live stream platforms.

On June 17, 2022, JX Luxury Tourism entered into and executed a Framework Agreement on Strategic Cooperation (the "Agreement") with Hainan Douxing Cultural Media Co., Ltd. ("Hainan Douxing"), one of the major live stream content providers with over 30 A list live streamers and reaches over 30,000,000 followers in China. Pursuant to the Agreement, Hainan Douxing will sell JX Luxury Tourism cross-border merchandise, including cosmetics and skincare products, in the amount up to USD30,000,000 on the live-stream E-commerce shows hosted by Hainan Douxing.

On July 26, 2022, Jin Xuan (Hainan) Holding Co., Ltd. ("JX Hainan"), entered into and executed a Cooperation Agreement (the "Agreement") with Kaiwo International Trading Co. Ltd. ("Kaiwo"). Pursuant to the Agreement, Kaiwo will sell high-end foreign luxury automobiles supplied by JX Hainan in the amount of up to USD50,000,000.

On October 3, 2022, Flower Crown (China) Holding Group Co., Ltd. ("JXFC") entered into and executed a Strategic Cooperation Agreement (the "Agreement") with Hainan Hang Seng Zhongli Commercial Holding Co., Ltd. ("HS Zhongli"), a leading distributor of pet products in China, for the sale, marketing and distribution of JXFC's pet food products by HS Zhongli. The Agreement provides that the target annual sales amount of JXFC's pet food products is $20,000,000 and if HS Zhongli achieves this targeted annual sales amount, the Agreement will be automatically renewed for an additional year.

On July 17, 2023, JX Luxury Tourism entered into and executed Technology Development and Promotion Commission Contract (the "Technology Development Agreement") with Tianjin Baixing Pharmaceutical Wholesale Co., Ltd. The Technology Development Agreement provides for the development of a medical ERP management platform, which will utilize a Chatgpt-type technology.

On July 1, 2024, Jin Xuan (Hainan) Holding Co., Ltd. ("JX Hainan") entered into and executed a Cooperation Agreement (the "Agreement") with Tianjin Zhongsheng United Automobile Trading Co., Ltd. ("Tianjin Auto Trading"). Pursuant to the terms of the Agreement, Tianjin Auto Trading is required to sell high-end foreign luxury automobiles supplied by JX Hainan in the amount not less than USD100,000,000.

On July 17, 2025, JX Hainan. entered into and executed the 2025 Strategic Cooperation Framework Agreement (the "Agreement") with Qingxiang (Hainan) Cross-Border E-Commerce Co., Ltd., which provides for the in-depth market development, customer relationship maintenance, and technical service cooperation between the parties in the cross-border duty-free supply chain and related fields.

On September 22, 2025, JX Hainan entered into a System Equipment Sales and System Research and Development Exclusive Project Service Agreement (the "Agreement") with Beijing Shuhangtong Information Technology Co., Ltd ("BSITC"), pursuant to which BSITC commits to purchasing from JX Hainan customized AI intelligent cross-border pharmacy equipment, ERP comprehensive management systems, and SBBC store distribution systems, along with associated secondary development, specialized technical research, and three-year maintenance services, for up to approximately $5,000,000 in value.

***<u>Competition</u>*:**

We face intense competition in the cross-border merchandise and tourism industries from large suppliers and wholesalers of a broad range of services, including tourism and travel-related products. These companies maintain or develop self-distribution systems for their businesses and have greater brand recognition and financial and other resources than we do, which may make it more difficult for us to maintain or gain market share. We also face intense competition from mass merchandisers and rapidly growing alternative retail channels, such as Internet-based retailers that offer a broad range of products and services and home delivery services. Among our competitors are FASTENAL (NYSE:FAST), SYSCO (NYSE:SYY) and United Natural Foods (NASDAQ: UNFI).

The primary competitive factors in the tourism services and cross-border merchandise business include price, service level, product quality, variety, convenience, and consistency of service, availability and other value-added services. Competitive strategies vary based on many factors, such as the competitor's format, strengths, weaknesses, pricing, and sales focus.

***<u>Our Revenue Model Business Segments</u>***

*<u>Airline Tickets and Tourism Services</u>*

We are a well-known supplier of airline tickets, catering to the needs of our esteemed business customers. Our tourism products provide luxury travel experience packages, designed exclusively for online platforms operated by our distinguished business clients. Our current roster of prominent partners includes industry frontrunners such as 51book.com. We have successfully forged agreements with 37 airline operators within China, encompassing a significant portion of the market.

We provide more compelling, bundled travel experience packages that cater to a diverse range of our business customer needs, among which are travel packages that are designed exclusively for online platforms operated by our distinguished business clients, to ensure seamless integration with their online platforms and streamlined distribution to their end-users.

Our comprehensive process for curating these luxury travel packages includes the following key steps:

● <u>Tailored Travel Packages</u>: We carefully design travel packages that cater to diverse consumer interests and preferences, ensuring our clients can offer unique, memorable experiences to their end-users.

● <u>Strategic Partnerships</u>: We forge strong relationships with airlines and other travel industry stakeholders, enabling us to secure competitive pricing for our clients.

● <u>Cutting-Edge Technology</u>: Our software solution streamlines the booking and management processes for our clients, enhancing the overall travel experience for their end-users.

● <u>Procurement of Luxury Assets</u>: We carefully select and procure non-refundable time allocations from our exclusive network of luxury service providers, including top-tier automobile and yacht companies.

● <u>Package Design and Curation</u>: Our team of experienced professionals thoughtfully combines these luxury assets to create unique, all-encompassing luxury experiences tailored to the diverse preferences and expectations of our clients' end-users.

● <u>Supply and Distribution</u>: We efficiently supply these high-end travel products to our business clients, ensuring seamless integration with their online platforms and streamlined distribution to their end-users.

In our commitment to maintaining strong relationships with our business clients and partners, we assume all risks associated with the non-refundable nature of our purchases, making it easier for our business clients to offer luxury experiences to their end-user customers. That process evidences our dedication to the success of our business clients and ensures seamless customer experience for their end-users. For example, if end-users of our business clients fail to complete a purchase or request a return, we are fully committed to providing a full refund of the purchase price and assuming all risks associated with this return.

*<u>Technology Solution for Tourism Cross-Border Operations:</u>*

Our software solution for tourism cross-border operations management is a comprehensive, innovative, and reliable tool for businesses engaged in international commerce. By combining advanced features with a client-centric revenue model, we can foster long-lasting relationships with our business partners while positioning ourselves as a software solution provider uniquely tailored for tourism cross-border operations management, designed to provide businesses with a robust, user-friendly, and efficient platform for managing their international commerce activities. The software solution streamlines product monitoring and distribution processes and offers a range of features and capabilities that enhance overall operational efficiency.

Our software solution comprises two primary components:

1) the Sourcing Solution which empowers us to accurately forecast market trends and offer competitive pricing to our business clients; and

2) Business Solution which provides small to medium-sized business partners with a comprehensive platform to streamline merchandise operations and enhance customer engagement.

Our Business Solution has been recognized by the Hainan Province's Cross-border Merchandise Association (CMA) as the standard solutions for its members, thus further solidifying its status as a reliable and innovative solution for businesses engaged in tourism cross-border commerce. Our current largest client is Hainan Province's Cross-border Merchandise Association, a testament to the software's efficacy and value in the marketplace.

Our Software Solution provides the following benefits:

● <u>Real-Time Inventory Management</u>: Our software solution allows merchants to track product inventory levels in real-time, enabling them to make informed decisions regarding procurement and distribution, ultimately minimizing stockouts and excess inventory.

● <u>Order Processing and Fulfillment</u>: The software solution facilitates seamless order processing and fulfillment, ensuring timely delivery of products to customers and enhancing customer satisfaction.

● <u>Compliance and Regulatory Support</u>: Our software solution is equipped with tools to help businesses navigate complex cross-border regulatory requirements, ensuring compliance with various international trade laws and regulations.

● <u>Data Analytics and Reporting</u>: The software solution provides advanced data analytics and reporting capabilities, empowering merchants with valuable insights into their cross-border operations. These insights can be used to identify areas for improvement, optimize processes, and drive overall business growth.

● <u>Scalability and Flexibility</u>: Our software solution is designed to scale alongside businesses as they grow, allowing them to easily expand their cross-border operations without being hindered by software limitations.

Our revenue model is strategically structured to promote widespread adoption of our software and encourage long-term customer commitment. The first year of use is offered free of charge, allowing clients to fully experience the benefits of our platform without incurring upfront costs. Following this trial period, clients transition to a licensing payment model, which generates a steady, recurring revenue stream for our company while providing ongoing support, updates, and enhancements for our clients.

*<u>Tourism Cross-border merchandise</u>*

The Company is a supplier of a broad range of high-quality tourism cross-border merchandise to business clients that operate online and offline platforms, while simultaneously leveraging cutting-edge technology to optimize operations and support their ongoing success. The Company specializes in sourcing unique, high-quality Flower Crown Products from a diverse network of international and domestic third-party suppliers. We have adopted a strategic approach to managing tourism cross-border merchandise, ensuring that our business customers have access to a diverse range of high-quality products. By adopting advanced solutions such as AI-based analysis and state-of-the-art warehouse management software, we can create a more efficient supply chain, mitigate risks associated with excess inventory, and ultimately ensure our clients' sustained growth in the competitive market.

Our current top two business customers are: Hefei Liantuo Tianji E-commerce Co., Ltd. and Hainan Sanhai Gold International Trade Group,

Our diverse product portfolios encompass

1) health care products;

2) personal care products;

3) cosmetics;

4) maternal and child products;

5) pet-related products;

6) universal cuisine,

7) universal household products and

8) Pre-owned Electric Cars.

Our comprehensive process involves procuring items from reputable third-party suppliers, storing them securely in our warehouse facilities, and then efficiently distributing these products to our valued business clients. We implement the same approach to our customers as the approach purchases made from third-party manufacturers are non-refundable, which means that we assume all risks associated with the tourism cross-border merchandise we acquire. We believe that we have a niche in this area of cross-border merchandise, which is based on our significant experience in meticulously curating and offering customized high-end luxury products and services to our clients that encompass various offerings, such as exclusive access to our extensive network of luxury automobiles and yachts.

<u>Our Competitive Strengths and Growth Strategy</u>

The key aspects of our cross-border Products Supply strategy include:

● <u>Rigorous Supplier Selection</u>: We prioritize building relationships with reputable suppliers that consistently deliver high-quality products.

● <u>Extensive Product Offerings</u>: Our diverse product range is designed to cater to the varying needs and preferences of our clients' end-users.

● <u>Competitive Pricing</u>: Our focus on maintaining cost-effective supply chains enables us to provide our clients with attractive pricing structures, ensuring their success in the market.

To maintain our competitive edge in the rapidly evolving market, we have implemented several advanced technologies and innovative strategies, including:

*<u>AI-Based Analysis Program</u>:* This cutting-edge system identifies emerging trends in tourism cross-border merchandise, enabling us to stay ahead of the curve and ensure our business customers have access to the latest, most sought-after products available in the market. By leveraging artificial intelligence, we can make more informed decisions about which products to source and supply, ultimately driving the success of our clients.

*<u>State-of-the-Art Warehouse Management Software</u>*: Our custom-developed warehouse management system allows our business customers to monitor real-time inventory levels, streamlining the supply chain process and ensuring optimal efficiency. This advanced software solution not only enhances transparency but also fosters trust and collaboration between our company and our clients.

*<u>Innovative Excess Inventory Management</u>:* Our unique approach to addressing the challenge of surplus inventory involves a dynamic warehouse management system that facilitates the sharing of unsold merchandise among our business clients. If a client is unable to sell the full amount of tourism cross-border merchandise supplied by us during a single live stream event, as an example, our system enables other customers to view the unsold items and place orders accordingly. This strategic use of technology significantly reduces the risks associated with excess inventory, resulting in a more efficient and streamlined supply chain for all parties involved.

***Description of Property***

*<u>Properties We Lease</u>*

We currently lease additional spaces as indicated below:

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|:---|:---|:---|:---|:---|:---|:---|
| **Lessor/Rental Cost<br> per month** | **Lessee** | **Location** | **Area<br> (Square<br> Meter)** | **Annual Rent** | **Term** | **Use** |
| Li Jinping | Jin Xuan<br> Luxury<br> Tourism | Building 5, Entrance 1, Room 101, Baofu 9th Courtyard Project, Intersection of Weijin <br> South Road and Suijiang <br> Road, Xiqing District,<br> Tianjin | 336 | $0 | June 29, 2022 to June 30 2027 | Office |

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***Business Employees***

As of the date of this Annual Report, the Company and its subsidiaries have a total of 127 employees, including 95 full-time employees and 32 part-time employees. We do not have independent contractors.

We believe our employees' compensation packages are competitive and we have created a merit-based work environment that encourages initiative. As a result, we have generally been able to attract and retain qualified personnel and maintain a stable core management team.

As required by regulations in China, we participate in various employee social security plans that are organized by local governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance. Pursuant to PRC regulations, we are required to contribute specific percentage of salaries, bonuses, and allowances (up to a maximum amount, specified by local governmental regulations) to the employee benefit plan. As of the date of this Annual Report, we have made adequate social insurance and housing fund contributions for all employees as required by PRC regulations.

We enter into standard labor agreements with our full-time employees with standard confidentiality and non-compete provisions. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes, which may have, or have had in the recent past, material adverse effects on our financial position or profitability.

***Intellectual Property***

Our business is dependent on a combination of trademarks, domain names, trade names, trade secrets and other proprietary rights in order to protect our intellectual property rights. Upon acquisition of Flower Crown, we have applied for several trademarks, all of which are pending approval by the Trademark Office of China National Intellectual Property Administration ("Trademark Office"). Set forth below is a detailed description of our trademarks:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Country** | **Trademark** | **Trademark<br> No.** | **Trademark<br> Name** | **Trademark<br> Application Date** | **Trademark<br> Classes** | **Trademark<br> Owner** | **Trademark Term** | **Trademark<br> Status** |
| China | ![](ea028961001_img5.jpg) | 51872718 | Bu Fan Xing<br> Jing | 12/04/2020 | 35 | Beijing<br> Heyang | 10 years | Approved |
| China |  | 50933195 |  | 11/03/2020 | 35 | Flower<br> Crown<br> (Hainan) | 10 years | Approved |
| China | ![](ea028961001_img7.jpg) | 50941310 | Quanqiu<br> Yixianghui | 11/03/2020 | 35 | Flower<br> Crown<br> (Hainan) | 10 years | Approved |
| China | ![](ea028961001_img8.jpg) | 49572627 | Jinxuan Pinlv | 09/08/2020 | 41 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| China | ![](ea028961001_img8.jpg) | 49572624 | Jinxuan Pinlv | 09/08/2020 | 43 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| China | ![](ea028961001_img9.jpg) | 49567840 |  | 09/08/2020 | 35 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| China | ![](ea028961001_img10.jpg) | 49580237 | LUXVENTFURE | 09/08/2020 | 43 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| China | ![](ea028961001_img9.jpg) | 49563070 |  | 09/08/2020 | 41 | Jinxuan<br> Luxury<br> Tourism |  | Approved |
| China | ![](ea028961001_img10.jpg) | 49592112 | LUXVENTFURE | 09/08/2020 | 41 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| China | ![](ea028961001_img9.jpg) | 49563061 |  | 09/08/2020 | 43.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| China | ![](ea028961001_img10.jpg) | 49563090 | LUXVENTFURE | 09/08/2020 | 35.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| China | ![](ea028961001_img8.jpg) | 49572631 | Jinxuan Pinlv | 09/08/2020 | 39.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| China | ![](ea028961001_img8.jpg) | 49583228 | Jinxuan Pinlv | 09/08/2020 | 35.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| China | ![](ea028961001_img9.jpg) | 49593405 |  | 09/08/2020 | 39.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| China | ![](ea028961001_img10.jpg) | 49580225 | LUXVENTURE | 09/08/2020 | 39.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Hong Kong | ![](ea028961001_img9.jpg) | 305384304 |  | 09/08/2020 |  |  | 10 years | Approved |
| Hong Kong | ![](ea028961001_img8.jpg) | 305384313 | Jinxuan Pinlv | 09/08/2020 |  |  | 10 years | Approved |
| Hong Kong | ![](ea028961001_img10.jpg) | 305384322 | LUXVENTURE | 09/08/2020 |  |  | 10 years | Approved |
| Macao | ![](ea028961001_img10.jpg) | N/173434(304) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img8.jpg) | N/173435(975) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img8.jpg) | N/173436(747) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img9.jpg) | N/173437(132) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img10.jpg) | N/173438(333) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Macao | ![](ea028961001_img8.jpg) | N/173439(206) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img10.jpg) | N/173440(834) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img10.jpg) | N/173441(540) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img8.jpg) | N/173442(418) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img8.jpg) | N/173443(343) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img9.jpg) | N/173444(867) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Macao | ![](ea028961001_img10.jpg) | N/173445(578) |  | 09/18/2020 |  | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img8.jpg) | 109063176 | Jinxuan Pinlv | 09/10/2020 | 35.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img8.jpg) | 109063175 | Jinxuan Pinlv | 09/10/2020 | 39.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img8.jpg) | 109063173 | Jinxuan Pinlv | 09/10/2020 | 43.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img10.jpg) | 109063186 | LUXVENTURE | 09/10/2020 | 41.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img9.jpg) | 109063178 |  | 09/10/2020 | 41.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img9.jpg) | 109063177 |  | 09/10/2020 | 43.0 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Taiwan | ![](ea028961001_img9.jpg) | 109063183 |  | 09/10/2020 | 39 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img9.jpg) | 109063184 |  | 09/10/2020 | 35 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img10.jpg) | 109063187 | LUXVENTURE | 09/10/2020 | 39 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img10.jpg) | 109063188 | LUXVENTURE | 09/10/2020 | 35 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img8.jpg) | 109063174 | Jinxuan Pinlv | 09/10/2020 | 41 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |
| Taiwan | ![](ea028961001_img10.jpg) | 109063185 | LUXVENTURE | 09/10/2020 | 43 | Jinxuan<br> Luxury<br> Tourism | 10 years | Approved |

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***Insurance***

We do not have any business liability, interruption or litigation insurance coverage for our operations in China. Insurance companies in China offer limited business insurance products. While business interruption insurance is available to a limited extent in China, we have determined that the risks of interruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Therefore, we are subject to business and product liability exposure. See "Risk Factors—Risks Related to Our Business—We have limited insurance coverage in China and may not be able to recover insurance proceeds if we experience uninsured losses."

**RegulationS**

This section sets forth a summary of the most significant rules and regulations that affect our business activities in the PRC.

**REGULATIONS RELATING TO FOREIGN INVESTMENT**

The establishment, operation and management of companies in China are mainly governed by the PRC Company Law, as most recently amended in 2018, which applies to both domestic companies and foreign-invested companies. Prior to January 1, 2020, the fundamental laws governing the foreign-invested enterprises were the Sino-foreign Equity Joint Venture Enterprise Law of the PRC, 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 regulations. On March 15, 2019, the National People's Congress of the PRC approved the Foreign Investment Law of the PRC, which came into effect on January 1, 2020 and replaced the Sino-foreign Equity Joint Venture Enterprise Law of the PRC, the Sino-foreign Cooperative Joint Venture Enterprise Law of the PRC and the Wholly Foreign-invested Enterprise Law of the PRC. Pursuant to the Foreign Investment Law, "foreign investment" refers to investment activities conducted by foreign investors (including foreign natural persons, foreign enterprises or other foreign organizations) directly or indirectly in the PRC, which include any of the following circumstances: (i) foreign investors setting up foreign-invested enterprises in the PRC solely or jointly with other investors, (ii) foreign investors obtaining shares, equity interests, property portions or other similar rights and interests of enterprises within the PRC, (iii) foreign investors investing in new projects in the PRC solely or jointly with other investors, and (ⅳ) investment in other methods as specified in laws, administrative regulations, or as stipulated by the State Council.

On December 26, 2019, the State Council promulgated the Implementing Regulations of the Foreign Investment Law of the PRC (the "Implementing Rules"), with effect from January 1, 2020 to ensure the effective implementation of the Foreign Investment Law. The Implementing Rules provide that foreign-invested enterprises that invest in the PRC shall be governed by the Foreign Investment Law and the Implementing Rules.

The Foreign Investment Law and the Implementing Rules stipulate that the PRC implements a system of pre-entry national treatment plus negative list for the administration of foreign investment. "Pre-entry national treatment" means the treatment given to foreign investors and their investment at the market accessing stage being not less favorable than that given to domestic investors and their investment. "Negative list" means the special administrative measures stipulated by the State for foreign investment's access to specific areas. Foreign investors should not invest in any area where foreign investment is prohibited as set out in the negative list; foreign investors shall meet the conditions prescribed in the negative list before investing in any area where foreign investment is restricted. Thus, the PRC grants national treatment to foreign investment outside the negative list. The currently effective negative list is published by the National Development and Reform Commission and the Ministry of Commerce on December 27, 2021, which became effective on January 1, 2022 (the "2021 Negative List").

Except for the regulations on market entry, the Foreign Investment Law and the Implementing Rules undertake to protect the investment, incomes and other legitimate rights and interests of foreign investors in China. The Foreign Investment Law and the Implementing Rules allow foreign investors' profits, capital gains, intellectual property royalties and other gains to be freely remitted outward in accordance with the law. It also contains provisions aiming to promote foreign investment, including that the State's policies supporting enterprise development are equally applicable to foreign-invested enterprises in accordance with the law.

In terms of foreign-invested enterprises established according to the Sino-foreign Equity Joint Venture Enterprise Law of the PRC, the Sino-foreign Cooperative Joint Venture Enterprise Law of the PRC or the Wholly Foreign-invested Enterprise Law of the PRC before the implementation of the Foreign Investment Law, the Foreign Investment Law provides that they may maintain their original organization forms within five years after the implementation of the Foreign Investment Law.

Pursuant to the Foreign Investment Law and the Implementing Rules, and the Information Reporting Measures for Foreign Investment jointly promulgated by the Ministry of Commerce and the State Administration for Market Regulation, which took effect on January 1, 2020, a foreign investment information reporting system shall be established and foreign investors or foreign-invested enterprises shall report investment information to competent commerce departments of the government through the enterprise registration system and the enterprise credit information publicity system, and the administration for market regulation shall forward the above investment information to the competent commerce departments in a timely manner. In addition, the Ministry of Commerce shall set up a foreign investment information reporting system to receive and handle the investment information and inter-departmentally shared information forwarded by the administration for market regulation in a timely manner. The foreign investors or foreign-invested enterprises shall report the investment information by submitting reports including initial reports, change reports, deregistration reports and annual reports.

**REGULATIONS RELATING TO OVERSEAS LISTING**

On August 8, 2006, six PRC regulatory agencies, including the China Securities Regulatory Commission (the "CSRC"), promulgated the Rules on the Merger and Acquisition of Domestic Enterprises by Foreign Investors (the "M&A Rules"), which took effect on September 6, 2006 and was amended on June 22, 2009. The M&A Rules, among other things, requires offshore special purpose vehicles formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC domestic enterprises or individuals to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle's securities on an overseas stock exchange. In September 2006, the CSRC published on its official website procedures regarding its approval of overseas listings by special purpose vehicles.

On July 6, 2021, the State Council and General Office of the CPC Central Committee issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law. The opinions emphasize 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.

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic companies (the "Overseas Listing Trial Measures") and relevant five guidelines, which will become effective on March 31, 2023. The Overseas Listing Trial Measures will comprehensively improve and reform the existing regulatory regime for overseas securities offering and listing of PRC domestic companies by adopting a filing-based regulatory regime. According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either directly or indirectly, are required to fulfill the filing procedure with the CSRC and report relevant information.

The Overseas Listing Trial Measures provide that if the issuer meets both of the following criteria, the overseas securities offering and listing conducted by such issuer will be deemed as an indirect overseas offering and listing by PRC domestic companies: (i) more than 50% of any of the issuer's operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer's business activities are conducted in mainland China, or its main place(s) of business are located in mainland China, or the majority of senior management staff in charge of its business operations and management are PRC citizens or have their usual place(s) of residence located in mainland China. Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted. The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC on material events, such as change of control, having been investigated or penalized by overseas securities regulatory authorities or other competent authorities, converting the listing status or listing board, or voluntary or forced delisting of the issuer(s) which have completed overseas offerings and listings.

In addition, the Overseas Listing Trial Measures provide that an overseas listing or offering is explicitly prohibited under any of the following circumstances: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) the domestic company intending to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof; or (v) there are material ownership disputes over equity held by the domestic company's controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.

At a press conference held for these new regulations, officials from the CSRC clarified that the domestic companies that have already been listed overseas before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers, or the Existing Issuers. Existing Issuers are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC when subsequent matters such as refinancing are involved. Furthermore, according to the officials from the CSRC, domestic companies that have obtained approval from overseas regulatory authorities or securities exchanges (for example, a contemplated offering and/or listing on the U.S. stock exchange has been declared effective) for their indirect overseas offering and listing prior to the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) but have not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023. Those who complete their overseas offering and listing within such six months are deemed as Existing Issuers. Within such six-month transition period, however, if such domestic companies need to reapply for offering and listing procedures to the overseas regulatory authority or securities exchanges, or if they fail to complete their indirect overseas issuance and listing, such domestic companies shall complete the filling procedures with the CSRC.

According to the Overseas Listing Trail Measures, where a PRC domestic company fails to fulfill filing procedure in respect of its overseas offering and listing, the CSRC may order rectification, issue warnings to such PRC domestic company, and impose a fine ranging from RMB1,000,000 to RMB10,000,000. Also the directly responsible person-in-charge and other directly responsible persons of such PRC domestic company may be warned and imposed a fine up to RMB 5,000,000, and the controlling shareholders and the actual controllers of such PRC domestic company that organize or instruct the aforementioned violations shall be imposed a fine up to RMB10,000,000. Further, if the PRC domestic company that is not an Existing Issuer fails to fulfill the required filing procedure, such an issuer may ultimately be forced to delist its securities that have already been listed. In addition, since the Overseas Listing Trial Measures and relevant guidelines were newly promulgated, their interpretation, application and enforcement remain unclear. Any failure of us to fully comply with the Overseas Listing Trail Measures may significantly limit or completely hinder our ability to offer or continue to offer our securities, hinder our ability to remain listed on Nasdaq or any other U.S. securities exchange, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause shares of our Common Stock to significantly decline in value or become worthless.

On February 24, 2023, the CSRC, the Ministry of Finance, the National Administration of State Secrets Protection and the National Archives Administration jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Confidentiality and Archives Provisions, which will take effective from March 31, 2023. The Confidentiality and Archives Provisions specify that during the overseas issuance of securities and listing activities of domestic enterprises, domestic enterprises and securities companies and securities service institutions that provide relevant securities services shall, by strictly abiding by the relevant laws and regulations of the PRC and the requirements therein, establish sound confidentiality and archives management systems, take necessary measures to implement confidentiality and archives management responsibilities, and shall not leak national secrets, work secrets of governmental agencies and undermine national and public interests. Work manuscripts generated in the PRC by securities companies and securities service institutions that provide relevant securities services for overseas issuance and listing of securities by domestic enterprises shall be kept in the PRC. Without the approval of relevant competent authorities, it shall not be transferred overseas. Where archives or copies need to be transferred outside of the PRC, it shall be subject to the approval procedures in accordance with relevant PRC regulations.

**REGULATIONS RELATING TO CYBERSECURITY AND DATA SECURITY**

According to the Cybersecurity Law of the PRC (the "Cybersecurity Law") which was promulgated by the Standing Committee of the National People's Congress of the PRC (the "SCNPC") on November 7, 2016 and came into effect on June 1, 2017, network operators shall take all necessary measures in accordance with applicable laws, regulations and compulsory national requirements to safeguard the safe and stable operation of networks, respond to cybersecurity incidents effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality and usability of network data. The Cybersecurity Law also stipulates that the China adopts classified system for cybersecurity protection, under which network operators are required to fulfil relevant obligations of security protection to ensure that the network is free from interference, disruption or unauthorized access, and to prevent network data from being disclosed, stolen or tampered.

On September 22, 2020, the Ministry of Public Security issued the Guiding Opinions on Implementing the Cyber Security Protection System and Critical Information Infrastructure Security Protection System to further improve the national cyber security prevention and control system. On December 28, 2021, the Cyberspace Administration of China (the **"CAC"**) and several other government authorities published the Revised Cybersecurity Review Measures, which came into effect on February 15, 2022 and replaced the previous version. Pursuant to these measures, the purchase of network products and services by a critical information infrastructure operator or the data processing activities of a network platform operator that affect or may affect national security will be subject to a cybersecurity review. In addition, network platform operators with personal information of over one million users shall be subject to cybersecurity review before listing in foreign countries. The competent governmental authorities may also initiate a cybersecurity review against the operators if the authorities believe that the network product or service or data processing activities of such operators affect or may affect national security. Article 10 of the Revised Cybersecurity Review Measures also sets out certain general factors which would be the focus in assessing the national security risk during a cybersecurity review, including (i) risks of critical information infrastructure being illegally controlled or subject to interference or destruction; (ii) the harm caused by the disruption of the supply of the product or service to the business continuity of critical information infrastructure; (iii) the security, openness, transparency and diversity of sources of the product or service, the reliability of supply channels, and risks of supply disruption due to political, diplomatic, trade and other factors; (iv) compliance with PRC laws, administrative regulations and departmental rules by the provider of the product or service; (v) the risk of core data, important data or a large amount of personal information being stolen, leaked, damaged, illegally used, or illegally transmitted overseas; (vi) the risk that critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, and maliciously used by foreign governments for a listing, as well as network information security risks; and (vii) other factors that may endanger the security of critical information infrastructure, cybersecurity and data security.

On July 30, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructures, which took effect on September 1, 2021 and provide that "critical information infrastructures" refer to any important network facilities or information systems of important industries or fields such as public communication and information service, energy, communications, water conservation, finance, public services, e-government affairs and national defense science, and any other important network facilities or information systems which may endanger national security, people's livelihood and public interest in case of damage, function loss or data leakage. In addition, relevant administration departments of each critical industry and sector, or Protection Departments, shall be responsible to formulate eligibility criteria and determine the critical information infrastructure operator in the respective industry or field. The operators should be informed about the final determination as to whether they are categorized as critical information infrastructure operators. The regulations further require critical information infrastructures operators, among others, (i) to report to the competent Protection Departments in a timely manner when the identification result may be affected due to material changes in the critical information infrastructures; (ii) to plan, construct or put into use the security protection measures and the critical information infrastructures simultaneously; and (iii) to report to the competent Protection Departments in a timely manner in the event of merger division or dissolution, and deal with critical information infrastructures as required by the competent Protection Departments. Operators in violation of the regulations may be ordered to rectify, subject to warnings, fines and other administrative penalties or even criminal liabilities, and the directly responsible personnel in charge may also be imposed on fines or other liabilities.

On June 10, 2021, the SCNPC promulgated the Data Security Law of the PRC (the "**Data Security Law**"), with effect from September 1, 2021. The Data Security Law establishes a data classification and hierarchical protection system depending on the importance of the data in economic and social development, and the damage caused to national security, public interests, or the legitimate rights and interests of individuals and organizations if the data is falsified, damaged, disclosed, illegally obtained or illegally used. Under the Data Security Law, critical information infrastructure operators shall be subject to the Cybersecurity Law in connection with the cross-border transfer of important data collected and generated through their operations in China; and the cross-border transfer of important data collected and generated by other data processors shall be subject to the administrative measures adopted by the CAC in conjunction with other competent departments.

On July 7, 2022, the CAC promulgated the Security Assessment Measures for Cross-border Data Transfers with effect from September 1, 2022, a data processor shall declare security assessment for its outbound data transfer if: (i)where a data processor provides critical data abroad;(ii) where a critical information infrastructure operator or a data processor processing the personal information of more than one million individuals provides personal information abroad; (iii) where a data processor has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals in total abroad since January 1 of the previous year; and (iv) any other circumstances prescribed by the CAC.

On November 14, 2021, the CAC released the Regulations for the Administration of Network Data Security (Draft for Comments) (the "**Draft Network Data Security Regulations**"). The Draft Internet Data Security Regulations cover a wide range of internet data security issues, including the supervision and management of data security in the PRC, and apply to situations using networks to carry out data processing activities. The Draft Network Data Security Regulations set out general guidelines covering subjects including protection of personal information, security of important data, security management of cross-border data transmission, obligations of internet platform operators, supervision and management, and legal liabilities of internet data security. The Draft Network Data Security Regulations also require a data processor to apply to the CAC for cybersecurity review if it process the personal information of more than one million individuals and goes listing in foreign countries. As of the date of this Annual Report, the Draft Network Data Security Regulations were released for public comment only, and the provisions and anticipated adoption or effective date may be subject to change with substantial uncertainty.

**REGULATIONS RELATING TO PRIVACY PROTECTION**

The Civil Code of the PRC, issued by the National People's Congress of the PRC on May 28, 2020 and effective from January 1, 2021, provides legal basis for privacy and personal information infringement claims under the Chinese civil laws.

Criminal Law of the PRC, as amended on December 26, 2020, prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen's personal information obtained in performing duties or providing services or obtaining such information through theft or other illegal ways.

According to the Personal Information Protection Law of the PRC which was promulgated by the SCNPC on August 20, 2021 and came into effect on November 1, 2021, personal information shall be handled in accordance with the principles of lawfulness, legitimacy, necessity and good faith, and it is not allowed to handle personal information by misleading, fraud, coercion or otherwise. It creates a range of compliance obligations and sets forth specific requirements on protection of electronic and non-electronic information which is related to identified or identifiable natural persons.

According to the Law of the PRC on the Protection of Minors (2020 Revision), which was promulgated by the SCNPC on October 17, 2020 and came into effect on June 1, 2021, information processors shall obtain consent from minors' parents or other guardians when processing personal information of minors under the age of 14 via the internet. In addition, information processors must promptly take measures to correct or delete the personal information of minors if alerted by the minors, parents or other guardians.

**REGULATIONS ON LAND OR PROPERTY USE**

In June 1986, the SCNPC promulgated the Land Administration Law of the PRC, which was last amended on August 26, 2019 and became effective on January 1, 2020. In January 1991, the State Council published Regulations for Implementation of the Land Administration Law of the PRC which was last amended on July 2, 2021 and came into effect on September 1, 2021. According to the Land Administration Law and its regulations, enterprises and individuals shall use land strictly in accordance with the purpose stipulated in the land use master plan. Construction entities shall use state-owned land according to the stipulations of the land use right assignment contract or according to the provisions of the approval documents relevant to the allocation of land use rights. The conversion of the construction purposes of the land shall receive the consent of the competent land administrative authority and be submitted to the people's governments that originally granted land use approval. When changing the purpose of land within urban planning areas, consent shall be obtained from the relevant urban planning administration department before submission; without such approvals, the use of land specified in the relevant overall land utilization plan shall not be changed. Under these regulations, failure to comply with the approved usage may be subject to fines or other penalties, including potentially being required by the relevant land administrative authority to return the land.

**REGULATIONS RELATING TO LEASING**

Pursuant to the Law on Administration of Urban Real Estate of the PRC which took effect in January 1, 1995 with the latest amendment in August 26, 2019, lessors and lessees are required to enter into a written lease contract, containing such provisions as the term of the lease, the use of the premises, liability for rent and repair, and other rights and obligations of both parties. Pursuant to Administrative Measures on Leasing of Commodity Housing which were promulgated by the Ministry of Housing and Urban-Rural Development on December 1, 2010 and came into effect on February 1, 2011, the lessor and the lessee shall complete property leasing registration and filing formalities within 30 days from execution of the property lease contract with competent authority, otherwise individuals or organizations who violate the provision shall be ordered to make correction within a stipulated period. Where the individual or organization failed to make correction within the stipulated period, a fine shall be imposed.

**REGULATIONS RELATING TO INTELLECTUAL PROPERTY**

Regulations on Copyright

Pursuant to the Copyright Law of the PRC (the "Copyright Law"), which was promulgated by the SCNPC and last amended on November 11, 2020 with effect from June 1, 2021, creators of protected works enjoy personal and property rights with respect to publication, authorship, alteration, integrity, reproduction, distribution, lease, exhibition, performance, projection, broadcasting, dissemination via information network, production, adaptation, translation, compilation and related activities. Under the Copyright Law, the term of protection for copyrighted software is 50 years. The Regulations on the Protection of the Right to Communicate Works to the Public over Information Networks, as most recently amended on January 30, 2013, provide specific rules on fair use, statutory license, and a safe harbor for use of copyrights and copyright management technology and specify the liabilities of various entities for violations, including copyright holders, libraries and internet service providers. The Computer Software Copyright Registration Measures, promulgated by the National Copyright Administration on February 20, 2002, regulate registrations of software copyrights, exclusive licensing contracts for software copyrights and assignment agreements. The National Copyright Administration administers software copyright registration and the Copyright Protection Center of China are designated as the software registration authority. The Copyright Protection Center of China grants registration certificates to the computer software copyrights applicants which meet the relevant requirements.

**Regulations on Trademark**

Pursuant to the Trademark Law of the PRC, which was promulgated by the SCNPC and last amended on April 23, 2019 with effect from November 1, 2019, registered trademarks refer to trademarks that have been approved and registered by the Trademark Office of China National Intellectual Property Administration. Trademark registrants enjoy an exclusive right to use the trademark, which shall be protected by law. The initial effective term of a registered trademark is ten years and will be granted another ten-year effective term upon request after expiration of the first or any renewed ten-year term.

As with patents, Trademark Law has adopted a first-to-file principle with respect to trademark registration. If a trademark applied for is identical or similar to another trademark which has already been registered or subject to a preliminary examination and approval for use on the same or similar kinds of products or services, such trademark application may be rejected. Any person applying for the registration of a trademark may not injure existing trademark rights first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a "sufficient degree of reputation" through such party's use.

**Regulations on Patent**

Pursuant to the Patent Law of the PRC, which was promulgated by the SCNPC and last amended on October 17, 2020 with effect from June 1, 2021, after the grant of the patent right for an invention, utility model, or design, unless otherwise provided thereunder, no entity or individual may, without the authorization of the patent owner, infringe the patent. A patent is valid for a twenty-year term in the case of an invention, a fifteen-year term in the case of a design, and a ten-year term in the case of a utility model, starting from the application date.

Regulations on Domain Name

Pursuant to the Administrative Measures for Internet Domain Names, which were promulgated by the MIIT on August 24, 2017 with effect from November 1, 2017, the registration of domain names adopts the "first to file, first to register" principle and the registrant shall complete the registration via the domain name registration service institutions.

**REGULATIONS RELATING TO LABOR PROTECTION**

Pursuant to the Labor Law of the PRC, which was promulgated by the SCNPC on July 5, 1994 and most recently amended on December 29, 2018, an employer shall establish a comprehensive management system to safeguard the rights of its employees, including developing and improving its labor safety and health system, stringently implementing national protocols and standards on labor safety and health, conducting labor safety and health education for workers, guarding against labor accidents and reducing occupational hazards. An employer must provide employees with the necessary labor protection equipment that comply with labor safety and health conditions stipulated under national regulations, as well as provide regular check-ups for workers that engage in operations with occupational hazards.

The Labor Contract Law of the PRC, which was promulgated by the SCNPC on June 29, 2007 and became effective on January 1, 2008, and was amended on December 28, 2012, and the Implementation Regulations on Labor Contract Law of the PRC, which were promulgated and became effective on September 18, 2008, regulate employer and employee relations and contain specific provisions on the terms of the labor contract. Labor contracts must be made in writing. An employer may legally terminate a labor contract and dismiss its employees after reaching agreement upon due negotiations with the employee or by fulfilling the statutory conditions. Employers in most cases are also required to provide severance payment to their employees after their employment relationships are terminated. In addition, if an employer intends to enforce a non-compete provision in an employment contract or non-competition agreement with an employee, it has to compensate the employee on a monthly basis during the term of the restriction period after the termination or expiry of the labor contract.

Moreover, all PRC enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities.

Pursuant to the Social Insurance Law of the PRC, the Interim Regulations on the Collection and Payment of Social Insurance Premiums, the Regulations on Work Injury Insurance, the Regulations on Unemployment Insurance, the Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to time at locations where they operate their businesses or where they are located. According to the Social Insurance Law, an employer that fails to make social insurance contributions may be ordered to rectify the non-compliance and pay the required contributions within a stipulated deadline, and may be subject to a late payment fine at a daily rate of 0.05% of the outstanding amount, accruing from the date when the social insurance contributions were due and a fine equal to one to three times the outstanding amount.

According to the Regulations on the Administration of Housing Provident Fund, which were promulgated by the State Council and last amended on March 24, 2019, employers are required to contribute to housing provident funds for the benefit of their employees. According to the Regulations on the Administration of Housing Provident Fund, an enterprise that fails to make housing fund contributions may be ordered to rectify the noncompliance and pay the required contributions within a stipulated deadline; if the enterprise fails to rectify the non-compliance with the stipulated deadline, it be may be made to a local court for compulsory enforcement. In addition, an enterprise that fails to undertake contribution registration of housing provident fund or fails to go through the formalities of opening housing provident fund accounts for its employees may be ordered to rectify the noncompliance within a stipulated deadline, where failing to rectify the non-compliance at the expiration of the time limit, it be may be subject to a fine ranging from RMB10,000 or RMB 50,000.

**REGULATIONS RELATED TO TAXATION**

**Regulations on Income Tax**

We and our subsidiaries may be subject to tax in the jurisdictions in which we are organized or operate, reducing the amount of our net income and cash flows, including cash available for dividend payments. Under current Marshall Islands law, there is no income, corporate or profits tax or withholding tax, capital gains tax or capital transfer tax, estate or inheritance tax payable by us or our stockholders, other than stockholders ordinarily resident in the Republic of the Marshall Islands, if any. We believe that we should not be subject to tax under the laws of various countries, other than the United States, in which our subsidiaries' vessels conduct activities or in which our subsidiaries' customers are located. However, our belief is based on our understanding of the tax laws of those countries, and our tax position is subject to review and possible challenge by taxing authorities and to possible changes in law or interpretation. We cannot determine in advance the extent to which certain jurisdictions may require us to pay corporate income tax or to make payments in lieu of such tax. In addition, payments due to us from our subsidiaries' customers may be subject to tax claims. In computing our tax obligation in these jurisdictions, we may be required to take various tax accounting and reporting positions on matters that are not entirely free from doubt and for which we have not received rulings from the governing authorities. We cannot assure you that upon review of these positions the applicable authorities will agree with our positions. A successful challenge by a tax authority could result in additional tax imposed on us or our subsidiaries, further reducing the cash available for distribution. In addition, changes in our operations or ownership could result in additional tax being imposed on us or our subsidiaries in jurisdictions in which operations are conducted.

*Enterprise Income Tax Law*

According to the Enterprise Income Tax Law of the PRC, which was promulgated by the SCNPC and last amended on December 29, 2018, and the Implementation Rules to the Enterprise Income Tax Law of the PRC, which were promulgated by the State Council and last amended on April 23, 2019, enterprises are classified as either resident enterprises or non-resident enterprises. The income tax rate for resident enterprises, including both domestic-invested and foreign-invested enterprises, shall typically be 25%. Non-resident enterprises which have not established agencies or offices in China, or which have established agencies or offices in China but whose income has no association with such agencies or offices shall pay enterprise income tax on its income deriving from inside China at the reduced rate of 10%.

According to the Circular of Printing the Administrative Measures for Recognition of High-Tech Enterprises amended by the Ministry of Science and Technology, Ministry of Finance and State Taxation Administration 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 enterprise should keep all statutory required relevant materials in case of future inspection. This qualification is reassessed by relevant government authorities every three years.

According to the Notice on the Implementation of Inclusive Tax Concessions for Small and Micro Enterprises which took effect on January 1, 2019, jointly issued by the Ministry of Finance and the State Taxation Administration, for the portion of annual taxable income which does not exceed RMB1,000,000, the annual taxable income shall be deducted to 25% and the income tax shall be calculated at the rate of 20%; for the portion of annual taxable income from RMB1,000,000 to RMB3,000,000, the taxable income shall be deducted to 50% and the income tax shall be calculated at the rate of 20%, for the period from January 1, 2019 to December 31, 2021. The above-mentioned small and micro-enterprises refer to those enterprises that are engaged in industries not restricted or prohibited by the state and meet certain conditions, including annual taxable income not exceeding RMB3,000,000, number of employees not exceeding 300, and total assets not exceeding RMB50,000,000. In 2021, the Ministry of Finance and State Taxation Administration issued the Notice on the Implementation of Preferential Income Tax for Small and Micro Enterprises and Individual Entrepreneurs, which provides a 50% reduction in corporate income tax for small and micro enterprises with annual taxable income not exceeding RMB1,000,000, on top of the preferential policies stipulated in the Notice on the Implementation of Inclusive Tax Concessions for Small and Micro Enterprises, for the period from January 1, 2021 to December 31, 2022. In 2022, the Ministry of Finance and the State Taxation Administration issued the Notice on the Further Implementation of Preferential Income Tax for Small and Micro Enterprises, according to which the annual taxable income shall be deducted to 25% and the income tax shall be calculated at the rate of 20% for small and micro enterprises with annual taxable income from RMB1,000,000 to RMB3,000,000, on top of the preferential policies stipulated in the Notice on the Implementation of Inclusive Tax Concessions for Small and Micro Enterprises for the period from January 1, 2022 to December 31, 2024.

Regulations on Value-added Tax

According to the Provisional Regulations of the PRC on Value-added Tax which were promulgated by the State Council on December 13, 1993 and last amended on November 19, 2017, and the Implementation Rules for the Provisional Regulations the PRC on Value-added Tax, which were promulgated by the Ministry of Finance on December 25, 1993, and last amended on October 28, 2011, all taxpayers selling goods, providing processing, repair or replacement services, selling services, intangible properties or immovable properties within the China or importing goods to the China shall pay value-added tax.

**REGULATIONS RELATING TO FOREIGN EXCHANGE AND DIVIDEND DISTRIBUTION**

**Regulations on Foreign Exchange**

The fundamental regulation governing foreign exchange in China is the Foreign Exchange Administration Rules of the PRC (the "Foreign Exchange Administration Rules"), promulgated by the State Council on January 29, 1996 and most recently amended on August 5, 2008. Under these rules, Renminbi is generally freely convertible for payments of current account items, such as trade and service-related foreign exchange transactions and dividend payments, but not freely convertible for capital account items, such as direct investment, loan or investment in securities outside China, unless a prior approval of the State Foreign Exchange Administration of the PRC (the "SAFE") or its local counterparts is obtained.

Pursuant to the Circular of the State Administration of Foreign Exchange on Further Promoting the Reform of Foreign Exchange Administration and Improving the Examination of Authenticity and Compliance, which was promulgated by SAFE on January 26, 2017, a foreign-invested enterprise may pay dividends to its foreign direct investors through the financial institutions without the approval of SAFE; the bank shall check the relevant documents under the principle of authenticity.

According to the Circular on the Management of Foreign Exchange Control on Offshore Investment and Financing and Round Trip Investment by Domestic Residents through Special Purpose Vehicles (the "SAFE Circular 37") which was promulgated by SAFE on July 4, 2014 with effect from the same day, domestic residents shall register with the local branch of SAFE for foreign exchange registration of overseas investment before contributing the domestic and overseas lawful assets or interests into a special purpose vehicle (the "SPV"), and to update such registration in the event of any change of basic information of the registered SPV or major changes in the SPV's capital, including increases and decreases of capital, share transfers, share swaps, mergers or divisions. The SPV is defined as an "offshore enterprise directly established or indirectly controlled by the domestic resident (including domestic institution and resident individual) with their legally owned assets and equity of the domestic enterprise, or legally owned offshore assets or equity, for the purpose of investment and financing"; "Round Trip Investment refers to "the direct investment activities carried out by a domestic resident directly or indirectly via a SPV, i.e., establishing a foreign-invested enterprise or project within the PRC through a new entity, merger or acquisition and other ways, while obtaining ownership, control, operation and management and other rights and interests".

On February 13, 2015, SAFE promulgated the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies (the "**SAFE Circular 13**"), which came into effect on June 1, 2015. According to the SAFE Circular 13, the initial foreign exchange registration for establishing or taking control of a SPV by domestic residents can be conducted with a qualified bank, instead of a local branch of SAFE. The SAFE Circular 13 simplifies some procedures relating to foreign exchange for direct investments. On March 30, 2015, SAFE promulgated the Circular on Reforming of the Management Method of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises (the "**SAFE Circular 19**"), which came into effect from June 1, 2015. According to the SAFE Circular 19, the foreign exchange capital of foreign-invested enterprises shall be subject to the Discretional Foreign Exchange Settlement (the "**Discretional Foreign Exchange Settlement**"). The Discretional Foreign Exchange Settlement refers to the foreign exchange capital in the capital account of a foreign-invested enterprise for which the rights and interests of monetary contribution has been confirmed by the local branch of SAFE (or the book-entry registration of monetary contribution by the banks) can be settled at the banks based on the actual operational needs of the foreign-invested enterprise. Furthermore, the SAFE Circular 19 stipulates that the use of capital by foreign-invested enterprises shall follow the principles of authenticity and self-use within the business scope of enterprises.

On June 9, 2016, SAFE promulgated the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts (the "**SAFE Circular 16**"), which came into effect on the same day. Pursuant to the SAFE Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign currency to Renminbi on self-discretionary basis. The 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 self-discretionary basis which applies to all enterprises registered in the PRC. The SAFE Circular 16 reiterates the principle that Renminbi 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.

On October 23, 2019, SAFE issued the Circular on Further Promoting the Facilitation of Cross- border Trade and Investment (the "**SAFE Circular 28**"), which came into effect on the same day. The SAFE Circular 28 allows all foreign-invested enterprises to make equity investment in the PRC using their capital, with genuine investment projects and subject to compliance with the negative list. As of the date of this Annual Report, its interpretation and implementation in practice are still subject to substantial uncertainties.

**Regulations on Dividend Distribution**

Distribution of dividends of foreign investment enterprises are mainly governed by the Foreign Investment Enterprise Law, issued in 1986 and amended in 2000 and 2016, respectively, and the Implementation Rules under the Foreign Investment Enterprise Law, issued in 1990 and amended in 2001 and 2014, respectively. Under these regulations, foreign investment enterprises in the PRC may distribute dividends only out of their accumulative profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, no less than 10% of the accumulated profits of the foreign investment enterprises in the PRC are required to be allocated to fund certain reserve funds each year unless these reserves have reached 50% of the registered capital of the enterprises. A PRC company is not permitted to distribute any profits until any losses from previous fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. Under our current corporate structure, our Marshall Islands holding company may rely on dividend payments from Hongri PRC, which is a wholly foreign-owned enterprise incorporated in China, to fund any cash and financing requirements we may have.

**Regulations on Loans by Foreign Companies to their PRC Subsidiaries**

A loan made by foreign investors as shareholders in a foreign-invested enterprise is considered to be foreign debt in China and is regulated by various laws and regulations, including the Regulation of the People's Republic of China on Foreign Exchange Administration, the Interim Provisions on the Management of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions (Revised in 2020), the Detailed Rules for the Implementation of Provisional Regulations on Statistics and Supervision of External Debt, and the Administrative Measures for Registration of Foreign Debts. Under these rules and regulations, a shareholder loan in the form of foreign debt made to a PRC entity does not require the prior approval of the SAFE. However, such foreign debt must be registered with and recorded by the SAFE or its local branches within fifteen business days after entering into the foreign debt contract. Pursuant to these rules and regulations, the balance of the foreign debts of a foreign-invested enterprise shall not exceed the difference between the total investment and the registered capital of the foreign-invested enterprise (the "**Total Investment and Registered Capital Balance**").

On January 12, 2017, the People's Bank of China, promulgated the Notice of the People's Bank of China on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing (the "**PBOC Notice No. 9**"). Pursuant to PBOC Notice No. 9, within a transition period of one year from January 12, 2017, the foreign-invested enterprises may adopt the currently valid foreign debt management mechanism (the "**Current Foreign Debt Mechanism**"), or the mechanism as provided in PBOC Notice No. 9 (the "**Notice No. 9 Foreign Debt Mechanism**"), at their own discretions. PBOC Notice No. 9 provides that enterprises may conduct independent cross-border financing in RMB or foreign currencies as required. Pursuant to PBOC Notice No. 9, the outstanding cross-border financing of an enterprise (the outstanding balance drawn, here and below) shall be calculated using a risk-weighted approach, and shall not exceed certain specified upper limits. PBOC Notice No. 9 further provides that the upper limit of risk-weighted outstanding cross-border financing for enterprises shall be equal to 200% of its net assets multiplied by macro-prudential regulation parameter. The macro-prudential regulation parameter shall be 1. Enterprises shall file with SAFE in its capital item information system after entering into the relevant cross-border financing contracts and prior to three business days before drawing any money from the foreign debts.

In March 2020, the PBOC and SAFE issued the Notice on Adjustments to Comprehensive Macro-Prudential Regulation Parameters for Cross-border Financing, further increasing outstanding cross-border financing for enterprises to 250% of its net assets. FIEs can choose to calculate their maximum amount of foreign debts based on either (i) the Total Investment and Registered Capital Balance, or (ii) the Net Asset Limits. In addition, a foreign debt with a term longer than one year must be filed with the NDRC before the debt issuance, and the issuer shall submit the foreign debt information to the NDRC within 10 business days from completion of each debt issuance according to the Circular on Promoting the Reform of Filing and Registration Administrative Regime for the Foreign Debt Issuance by the NDRC. According to the Notice on Adjustments to the Macro-Prudential Adjustment Parameter for Cross-border Financing of Companies promulgated by the PBOC and SAFE, which took effect on January 7, 2021, the PBOC and the SAFE decide to lower the macro-prudential adjustment parameter for cross-border financing of companies to 1 from 1.25.

**The HFCAA and AHFCAA**

As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular China's, on May 20, 2020, the U.S. Senate passed the HFCAA, which includes requirements for the SEC to identify issuers whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor's local jurisdiction. The HFCAA was signed into law on December 18, 2020. The HFCAA 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 for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit its securities from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the Board 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 16, 2021, the PCAOB issued the Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) China of the China or Hong Kong, because of a position taken by one or more authorities in China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. Our auditor, Onestop, is a Singapore-based independent accounting firm that is registered with the PCAOB and can be inspected by the PCAOB and is subject to laws pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The PCAOB currently has access to inspect the working papers of our auditor. We have no intention of dismissing Onestop in the future or of engaging any auditor not subject to regular inspection by the PCAOB.

On August 26, 2022, the PCAOB announced and signed a Statement of Protocol (the "Protocol") with CSRC and the Ministry of Finance of the People's Republic of China. The Protocol provides the PCAOB with: (1) sole discretion to select the firms, audit engagements and potential violations it inspects and investigates, without any involvement of Chinese authorities; (2) procedures for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; (3) direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates. On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. The December 15, 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination.

Prior to enactment of the AHFCAA, the HFCAA provided that our securities will be prohibited from trading on any national securities exchange and in the over-the-counter market in the United States if our auditor cannot continue to be subject to full inspection by the PCAOB for three consecutive years. On December 29, 2022, the omnibus spending bill was signed into law, which included the enactment of provisions under the AHFCAA to accelerate the timeline for implementation of trading prohibitions under the HFCAA from three consecutive years to two consecutive years. The termination in or any restriction on the trading of our securities will significantly limit or completely hinder our ability to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

***Regulations Relating to Product Quality***

The principal legal provisions governing product liability are set forth in the PRC Product Quality Law, which was promulgated in February 1993 by the SCNPC and amended in July 2000 and August 2009.

The PRC Product Quality Law stipulates the responsibilities and obligations of product sellers and producers. Violations of the PRC Product Quality Law may result in the imposition of fines. In addition, the seller or producer may be ordered to suspend its operations, and its business license may be revoked. There may also be criminal liability in serious cases.

According to the PRC Product Quality Law, consumers or other victims who suffer injury or property losses due to product defects may demand compensation from the manufacturer as well as the seller. After compensating the consumer, the seller may recover the corresponding amount from the manufacturer if the manufacturer is responsible for the product defects, and vice versa.

***Regulations Relating to Consumer Protection***

The principal legal provisions for the protection of consumer interests are set forth in the Law of the PRC on Protection of Consumer Rights and Interests, or the Consumer Protection Law, which was promulgated in October 1993 amended in October 2013. The Consumer Protection Law sets forth standards of behavior that businesses must observe in their dealings with consumers.

Violations of the Consumer Protection Law may result in the imposition of fines. In addition, the violating entity may be ordered to suspend its operations, and its business license may be revoked. There may also be criminal liability in serious cases.

According to the Consumer Protection Law, if the legal rights and interests of a consumer are violated during the purchase or use of goods, the consumer may seek compensation from the seller. If the manufacturer or an upstream distributor is responsible, after compensating the consumer, the seller may recover the corresponding amount from the manufacturer or the upstream distributor. Consumers or other persons who suffer personal injury or property damages due to defects in products may seek compensation from the manufacturer as well as the seller. After compensating the consumer, the seller may recover the corresponding amount from the manufacturer if the manufacturer is responsible for the product defects, and vice versa.

***Regulations Relating to Environmental Matters***

Our facilities are subject to various governmental regulations related to environmental protection. We use a myriad of chemicals in our operations and produce emissions that could pose environmental risks. Our manufacturing facilities are subject to various pollution control regulations with respect to noise, water and air pollution and the disposal of waste and hazardous materials, including, China's Environmental Protection Law, Law of the People's Republic of China on Appraising of Environment Impacts, China's Law on the Prevention and Control of Water Pollution and its implementing rules, China's Law on the Prevention and Control of Air Pollution and its implementing rules, China's Law on the Prevention and Control of Solid Waste Pollution, and China's Law on the Prevention and Control of Noise Pollution. We are subject to periodic inspections by local environmental protection authorities.

We did not incur material costs in environmental compliance in fiscal years 2022, 2021 and 2020. We believe we are in material compliance with the relevant PRC environmental laws and regulations. We are not currently subject to any pending actions alleging any violations of applicable PRC environmental laws.

***Regulations on Stock Incentive Plans***

The State Administration of Foreign Exchange promulgated the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, or the Stock Incentive Plan Notice, in February 2012, replacing the previous rules issued by the State Administration of Foreign Exchange in March 2007. Pursuant to the Stock Incentive Plan Notice and other relevant rules and regulations, PRC residents participating in stock incentive plan in an overseas publicly-listed company are required to register with the State Administration of Foreign Exchange or its local branches and follow certain other procedures. Participants of a stock incentive plan who are PRC residents must conduct the registration and other procedures with respect to the stock incentive plan through a qualified PRC agent, which could be a PRC subsidiary of the overseas publicly listed company or another qualified institution appointed by the PRC subsidiary. In addition, the PRC agent is required to update the relevant registration should there be any material change to the stock incentive plan, the PRC agent or other material changes. The PRC agent must, on behalf of the PRC residents who have the right to exercise the employee stock options, apply to the State Administration of Foreign Exchange or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents' exercise of the employee stock options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed companies must be remitted into the bank accounts in the PRC opened by the PRC agents prior to distribution to such PRC residents.

We initially adopted an equity incentive plan in 2018, to award incentives and rewards to eligible participants. On January 11, 2022, our Board terminated the initial equity incentive plan and adopted a new equity incentive plan (the "2022 Plan"). On October 26, 2022, our Board terminated the 2022 Plan and adopted the New 2022 EIP. On May 7, 2025, the Board and shareholders of 65% of the outstanding capital stock of the Company, approved and adopted Amendment #1, and on August 1, 2025, the Board and shareholders of 52% of the outstanding capital stock of the Company adopted Amendment #2. We have advised the recipients of awards under our equity incentive plan to handle relevant foreign exchange matters in accordance with the Stock Incentive Plan Notice. However, we cannot guarantee that all employee-awarded equity-based incentives can successfully register with SAFE in full compliance with the Stock Incentive Plan Notice. See "Risk *Factors—Risks Related to Doing Business in China".*

**C. Organizational Structure**

See "—A. ***History and Development of the Company***" above for details of our current organizational structure.

**D. Property, Plants and Equipment** 

**ITEM 4A. UNRESOLVED STAFF COMMENTS**

Not required.

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included in this annual report and in particular, "Item 4. Information on the Company — B. Business Overview." This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could 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" and elsewhere in this Annual Report prepared our consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

**A. Operating Results**

Our operating results are primarily affected by the following factors:

●  ***Our ability to maintain and expand our brand portfolio or maintain and enhance our brand recognition,*** We mainly depend on our brand portfolio to scale our business, attract and retain our brand partners and customers. Our Luxventure portfolio seamlessly connected various brands from our suppliers. Although we have devoted significant resources to and incurred large amount of expenses on sourcing, maintaining, promoting and expanding our brands, we cannot assure you that these efforts will be successful. In addition, maintaining and enhancing the recognition of our brands are also key to our success, which could be affected by various factors, including the effectiveness of our brand marketing strategy, publicity about our business, quality of products offered under the brands as well as preference of consumers, certain of which are beyond our control. Any failure to maintain and expand our brand portfolio or maintain and enhance our brand recognition could have a material and adverse effect on our business, results of operations and prospects.

***Flexibility and sustainability of our product supply chain.*** Our success largely depends on our ability to consistently gauge customers' tastes and market trends, provide a balanced assortment of merchandize and source brands that satisfies customer demands in a timely manner. Our failure to anticipate, identify or react appropriately and timely to changes in customer preferences, tastes and market trends or economic conditions could lead to, among other things, missed opportunities, excess inventory or inventory shortages, markdowns and write-offs, all of which could negatively impact our profitability. In addition, failure to respond to changing customer preferences and trends in brand could negatively impact our brand image with our customers and result in diminished brand loyalty, and thus harm the prospects of our business.

***The ability to develop, upgrade and apply our technologies to support and expand our business.*** We rely on our technology infrastructure and operating systems to carry out the key aspects of our business, including identifying market trends in brands, selecting and partnering with quality brand partners, assisting in product designs for our private label brands, forecasting customers' demands, supporting our product supply chain, enabling effective marketing and distribution, and refining customer services. We use third party social media platforms to promote our products. If we are unable to leverage third party social media platforms to effectively attract followers and convert them into active buyers, if there is any change, disruption or discontinuity in the features and functions of such social media platforms, our ability to acquire new consumers and our financial condition may suffer.

***Financial Statement Presentation***

In December 2020, the Company acquired Flower Crown, which at the time, contributed two new segments, tourism cross-border merchandize sales and tourism. Flower Crown add Technology Solution for Tourism Cross-border operation segment in 2022. In October 2022, the Company disposed of the whole menswear business segment, which was presented as discontinued operation as set out below.

During 2025, the Company continued to expand its business operations in cross-boarder merchandize segment, focusing on wholesale trade sector and specializing in duty-free and cross-border consumer goods. We also continue providing integrated solutions in wholesale trade, including logistics, supply chain management, and technology solutions to support the efficient distribution of tourism-related products.

*Revenue.* During the periods covered by this section, we generated revenue from a) sales of tourism cross-border merchandize, b) sales of Software, and c) tourism products, which covers tourism package and airline ticket sale (including related services).

*Cost of sales.* Cost of sales primarily consisted of (a) the purchased costs of products online sold in connection with the revenue from cross-border merchandize, (b) the cost to purchase tourism supply up front and cancelling cost if any, (c) the cost for outsourcing the travelling work to certain travel agencies, and (d) cost on amortization of software, which are used for our software sales.

*Gross profit and gross margin.* For the periods covered by this section, our gross profit is equal to the difference between our net sales and cost of sales. Our gross margin is equal to the gross profit divided by net sales.

*Administrative expenses.* For the periods covered by this section, general and administrative expenses consisted primarily of compensation and benefits to our general management, finance and administrative staff, rental costs, office supplies, utilities, and other expenses incurred in connection with general operations.

***Comparison of Fiscal Years Ended December 31, 2025, 2024, and 2023***

The following table sets forth key components of our results of operations, for the years ended December 31, 2025, 2024, and 2023, both in U.S. dollars and as a percentage of or revenue.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year ended <br> December 31, 2025** | **Year ended <br> December 31, 2025** | **Year ended <br> December 31, 2024** | **Year ended <br> December 31, 2024** | **Year ended <br> December 31, 2023** | **Year ended <br> December 31, 2023** |
|  | **Amount** | **% of <br> Sales** | **Amount** | **% of<br> Sales** | **Amount** | **% of <br> Sales** |
| Revenue | 82936767 |  | 49840288 |  | 31840588 |  |
| Cost of sales | (72501980) | -87% | (41487972) | -83% | (26384219) | -83% |
| Gross profit | 10434787 | 13% | 8352316 | 17% | 5456369 | 17% |
| Operating expenses |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Distribution and selling expenses | (7725421) | -9% | (2651904) | -5% | (58981) | 0% |
| &nbsp;&nbsp;&nbsp;Administrative expenses | (13574769) | -16% | (1830214) | -4% | (2076876) | -7% |
| Total operating expenses | (21300190) | -26% | (4482118) | -9% | (2135857) | -7% |
| Other income | 35664 | 0% | 69113 | 0% | 71408 | 0% |
| Other gains and losses | (69682) | 0% | (107384) | 0% | (342954) | -1% |
| Finance costs | (41171) | 0% | (13895) | 0% | (5187) | 0% |
| (Loss)/profit before tax | (10940592) | -13% | 3818032 | 8% | 3043779 | 10% |
| Income tax | (60250) | 0% | (744225) | -1% | - | 0% |
| Total (loss)/profit for the year | (11000842) | -13% | 3073807 | 6% | 3043779 | 10% |

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Flower Crown is a subsidiary operating three sub-segment business, which are tourism (Luxury travel experiences), cross-border merchandise and B2B technology solution. The three sub-segments are presented as below:

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Tourism** | **Tourism** | **Tourism** | **Technology** | **Technology** | **Technology** | **Cross border<br> merchandize revenue** | **Cross border<br> merchandize revenue** | **Cross border<br> merchandize revenue** |
| | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** | **For the year ended<br> December 31,** |
| <br>**By business** | **2025** | **2024** | **2023** | **2025** | **2024** | **2023** | **2025** | **2024** | **2023** |
| Sales to external customers | 30669239 | 22048052 | 21561671 | 3307447 | 1530812 | 2719463 | 48960081 | 26261424 | 7559454 |
| Segment revenue | 30669239 | 22048052 | 21561671 | 3307447 | 1530812 | 2719463 | 48960081 | 26261424 | 7559454 |
| Segment gross margins/(loss) | 462297 | 730173 | 1981107 | 1894028 | 589968 | 2714434 | 8078462 | 7032175 | 760828 |
| Gross margin rate | 2% | 3% | 9% | 57% | 39% | 99 | 17% | 27% | 10% |

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Revenues are recognized at a point in time and denominated only in USD. Included in the "travel service", majority (99.99%) of the revenue amount represents the revenue for reselling of air-tickets requests by airline ticket agencies. Revenue for tickets purchased based on our judgment on potential trends, and revenue recorded from sales of tourism packages are insignificant of total revenue of tourism service.

In 2025, the total revenue increased to $83.0 million by 66% or $33.1 million from $49.8 million in 2024. The increase was mainly due to $22.7 million increase in revenue in cross-border merchandize segment and $8.7 million in tourism segment.

The increase in cross-border merchandize segment of $22.7 million are mainly due to following reasons: (i) the Company expanded its imported cosmetics business in 2025 while 2024 is the first year of the Company to run the business; (ii) the Company continued to allocate more resources into this sector.

The increase in revenue of tourism segment in 2025 is mainly due to the Company offered lower price to the customer to take more market share.

In 2025, the revenue of technology segment generated $3.3 million compared to $1.5 million in the previous year due to more customers accepted the Company's self-developed software.

In 2024, the total revenue increased to $49.8 million by 57% or $18.0 million from $31.8 million in 2023. The increase was mainly due to the increase in revenue in cross-border merchandize segment. The increase in cross-border merchandize segment of $18.7 million are mainly due to following reasons: (i) the Company expanded its imported luxury vehicle business in 2024 while 2023 is the first year of the Company to run the business; (ii) the Company started to run imported cosmetics business after acquiring certain brands distribution rights in 2024.

In 2024, the revenue of tourism segment generated $22.0 million compared to $21.6 million in previous year, representing a 2% increase.

In 2024, the revenue of technology segment generated $1.5 million compared to $2.7 million in the previous year due to our self-developed B2B technology solution for tourism cross-border merchandize were well penetrated in this niche industry and less potential clients left for the Company to promote. As a result, the Company started to sell upgraded system to these existing clients in 2024.

<u>Cost of sales and gross profit rate</u>

Cost of sales primarily consisted of (a) the purchased costs of products online sold in connection with the revenue from cross-border merchandize, (b) the cost to purchase tourism supply up front and cancelling cost if any, (c) the cost for outsourcing the travelling work to certain travel agencies, and (d) cost on amortization of software, which are used for our software sales.

Our cost of sales increased from $41.5 million in year 2024 to $72.5 million in year 2025, by 75%. The increase was mainly due to the increase of cost in connection with the increasing revenue in cross-border merchandize segment and tourism segment in year 2025 compared to 2024.

The gross profit ratio declined from 17% in 2024 to 13% in 2025. This decrease was primarily driven by a lower gross profit ratio in the cross-border merchandise segment, which fell from 27% in 2024 to 17% in 2025. The reduction in the gross profit ratio for this segment mainly reflects lower sales volumes of high-margin imported luxury cars and yachts during 2025.

Our cost of sales increased from $26.4 million in year 2023 to $41.5 million in year 2024, by 57%. The increase was mainly due to the increase of cost in connection with the increasing cross-border merchandize segment's revenue in year 2024 compared to 2023.

The gross profit ratio kept at 17% in 2023 and 2024. However, the gross profit ratio of our tourism segment decreased from 9% in 2023 to 3% in 2024, which contributed 44% of total revenue in 2024. The decrease in the gross profit ratio of our tourism segment mainly resulted from the Company intentionally decreasing its selling prices due to the competition in this segment. The gross profit ratio of technology sub-segment in 2024 decreased to 39% from 99% in 2023 due to the reason that amortization of purchased software was recorded as cost of revenue in 2024, while no such amortization in 2023. The gross profit ratio of cross-border merchandise sub-segment increased from 10% in 2023 to 27% in 2024. The increase of gross profit ratio is mainly due to the higher gross margin of imported luxury cars and yachts sales in 2024.

<u>Administrative expenses</u>

Administrative expenses increased by $11.7 million or 587% to $13.6 million for the year 2025 from $1.8 million for the year 2024. The increase was mainly due to $9.5 million share-based compensation to employees, $1.0 million impairment for intangible assets and $0.8 million Directors' compensation incurred in 2025.

Administrative expenses decreased by $0.2 million or 12% to $1.8 million for the year 2024 from $2.1 million for the year 2023. The change was mainly due to the Company cut down external service fee by $0.2 million, from $0.5 million in 2023 to $0.3 million in 2024.

<u>Distribution and selling expenses</u>

For the year ended December 31, 2025, distribution and selling expenses increased by $5.1 million, or 191%, to $7.7 million, compared with $2.6 million in 2024. The increase was primarily attributable to two factors: (i) the Company incurred approximately $3.9 million in promotional expenses to market its cross-border merchandise, compared with around $0.8 million in 2024; and (ii) the Company acquired several distribution rights for imported cosmetics during 2024 and 2025, leading to an incremental amortization expense of $1.6 million (increased from $1.8 million to $3.4 million).

The distribution and selling expenses increased by $2.6 million or 4396% to $2.6 million for the year 2024 from $0.1 million for the year ended December 31, 2023, primarily due to the reason that (i) the Company conducted a few exhibition events during year 2024 to promote its cross-border merchandise goods, which cost around $0.8 million in 2024, and (ii) the Company purchased several distribution rights of imported cosmetics, which resulted in an amortization expenses of $1.8 million in 2024.

<u>(Loss)/profit for the year</u>

We had a loss of $11.0 million in 2025 as compared to a profit of $3.1 million in 2024, representing a decrease of 458%. Net margin was -13% for the year ended December 31, 2025, compared to 6% for the year ended December 31, 2024.

We had a profit of $3.1 million in 2024 as compared to a profit of $3.0 million in 2023, representing an increase of 1%. Net margin was 6% for the year ended December 31, 2024, compared to 10% for the year ended December 31, 2023.

Profit for the year decreased $14.1 million from 2024 to 2025 mainly due to the operating expenses increased by $16.9 million, offset by gross profit increased by $2.1 million and income tax expenses decreased by $0.7 million.

Profit for the year increased 1% from 2023 to 2024 mainly due to the gross profit increased by $2.9 million and other losses decreased by $0.2 million, offset by the increased operating expenses of $2.3 million and income tax expense of $0.7 million.

**B. Liquidity and Capital Resources** 

As of December 31, 2025, we had cash and cash equivalents of $700,727. Our cash and cash equivalents consist of cash on hand and cash in the banks. As of December 31, 2025, the Company had a net working capital (defined as total current assets deducted by total current liabilities) of $6,193,505, accumulated deficit of $82,334,728, net loss of $11,000,842, and net cash outflows from operating activities of $4,093,184.

Our working capital is around $6.2 million, which is higher than the operating cash outflow of $4.1 million, which means that the cash and collections from receivables and prepayments support near-term operational needs. Furthermore, included in the current liability of $18.5 million, $7.2 million is related party payables. Related-party payables are unsecured, interest-free, and due on demand to the controlling shareholders. They will continue to support the company's operation and will not ask the Company to repay the loan when the Company is short of cash. Therefore, the related party payable is, to some degree, not a current liability for the Company to repay within 1 year. As a result, the management of the company believes that its operating income, combined with the related parties' commitment to cover operating expenses through loans, will enable the business to continue its operations. In parallel, the Company's management continually monitors its capital structure and operating plans and evaluates various potential funding alternatives that may be needed in order to finance the Company research and development activities, general and administrative expenses and growth strategy. These alternatives include raising funds through public or private equity markets and either from institutional or retail investors. Although there is no assurance that, if needed, the Company will be successful with its fundraising initiatives, management believes that the Company will be able to secure the necessary financing.

Given the above, the accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.

The following table provides detailed information about our net cash flow for all financial statement periods presented in this report:

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| | | | |
|:---|:---|:---|:---|
|  | **Fiscal Year Ended December 31,** | **Fiscal Year Ended December 31,** | **Fiscal Year Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Net cash provided by (used in) operating activities | $(4093184) | $7708626 | $(4519037) |
| Net cash provided by (used in) investing activities | (5531766) | (12011122) | 2625599 |
| Net cash provided by financing activities | 9098437 | 5140029 | 1873479 |
| Net increase (decrease) in cash and cash equivalents | (526513) | 837533 | (19959) |
| Effects of exchange rate change in cash | 42784 | (60388) | (93647) |
| Cash and cash equivalents at beginning of the period | 1184456 | 407311 | 520916 |
| Cash and cash equivalent at end of the period | $700727 | $1184456 | $407310 |

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***Operating Activities***

The net cash provided by operating activities consists of profit before tax, as adjusted by finance costs, change in fair value of warrant liabilities, interest income, shared based compensation, bad debt allowance, depreciation of property, plant and equipment, amortization of prepaid lease payment and trademark, amortization of subsidies prepaid to distributors, amortization of prepayment and premiums under operating leases, provision(Reversal) of inventory obsolescence, provision of impairment loss in prepayments, loss(gain) on disposal of property, plant and equipment, deferred income tax, which include trade and other receivables, prepayment and deferred expenses, inventory, trade and other payables.

Net cash used in operating activities in fiscal year 2025 was $4.1 million, compared with net cash provided by operating activities of $7.7 million in the year ended December 31, 2024. The cash outflow in 2025 is mainly resulted from net loss of $11.0 million, increase of trade and other receivables of $12.8 million, offset by depreciation and amortization of $5.1 million, impairment of intangible assets of $1.0 million and other non-cash expenses or losses of $9.6 million, and decrease of trade and other payables of $4.0 million.

Net cash provided by operating activities in fiscal year 2024 was $7.7 million, compared with net cash used in operating activities of $4.5 million in the year ended December 31, 2023. The cash inflow in 2024 is mainly resulted from net profit of $3.1 million, depreciation and amortization of $3.0 million and other non-cash expenses or losses of $0.3 million, decrease of trade and other receivables of $1.4 million, and increase of tax payable of $0.7 million by netting off decrease of trade and other payables of $0.7 million.

***Investing Activities***

Net cash used in investing activities in fiscal year 2025 was $5.5 million, compared with $12.0 million net cash used in investing activities in 2024. The net cash used in investing activities in 2025 mainly resulted from cash used to purchase intangible assets of $5.6 million, offset by cash proceeds on disposal of property and equipment of $0.1 million.

Net cash used in investing activities in fiscal year 2024 was $12.0 million, compared with $2.6 million net cash provided by investing activities in 2023. The net cash used in investing activities in 2024 mainly resulted from cash used to purchase intangible assets of $11.9 million, and cash used to purchase plant and equipment of $0.4 million, offset by cash proceeds on disposal of property and equipment of $0.2 million.

***Financing Activities***

Net cash generated from financing activities in fiscal year 2025 was $9.1 million, compared with $5.2 million net cash generated in financing activities in 2024.

Net cash generated from financing activities in 2025 mainly represents the proceeds from bank loans of $1.5 million and proceeds from related parties of $9.3 million, partially offset by repayment of bank loans of $1.7 million.

Net cash generated from financing activities in fiscal year 2024 was $5.2 million, compared with $1.8 million net cash generated in financing activities in 2023.

Net cash generated from financing activities in 2024 mainly represents the proceeds from bank loans of $1.7 million and proceeds from related parties of $3.5 million.

***The Company's Cash Flows and Summary Of Applicable Regulations***

The structure of cash flows within the entities in our corporate organization, and the applicable regulations, are as follows:

Our corporate structure is a direct holding structure, that is, the overseas entity listed in the U.S., JX Luxventure Group Inc., incorporated Marshall Islands, currently has no material operations on its own. It directly owns wholly owns Flower Crown Holding, a Cayman Islands company, which wholly owns Flower Crown (China) Holding Group Co., Limited, a limited company incorporated in Hong Kong ("Flower Crown HK") and, since August 23, 2023, the Billion Place Limited (Hong Kong) Co., Limited ("Billion HK"), also a limited company incorporation in Hong Kong. Flower Crown HK wholly owns all of the share capital of JX Hainan or WFOE, our indirect PRC subsidiary, which, in turns, owns other PRC operating entities. In 2024, JX Hainan acquired 100% equity interest of Tianjin Baoliting Intelligence Technology Co., Ltd ("Baoliting"). Separately, Billion HK wholly owns other PRC operating entities, including newly-formed Baofu (Zhuhai) Technology Co., Ltd. ("Baofu Technology"), Hainan Si Quan Run Hang International Travel Agency Co., Ltd. ("Hainan Travel"), and Hefei Si Quan Run Hang International Travel Agency Co., Ltd. ("Hefei Travel").

As of the date of this Annual Report, the Company has not established or maintained any cash management policies that dictate the purpose, amount and procedure of fund transfers among the Company, our subsidiaries, or investors. As of the date of this Annual Report, there have been no cash and asset transfers between the holding company and its PRC subsidiaries.

Within our direct holding structure, the cross-border transfer of funds within our corporate group is conducted in compliance with the laws and regulations of the PRC. To date, none of our subsidiaries have made any dividends or distributions to JX Luxventure Group Inc. and we have not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid to shareholders in the foreseeable future. If any of PRC subsidiaries determine to distribute dividends, it need to transfer the dividends to JX Hainan, JX Shenzhen and Baofu Technology in accordance with the laws and regulations of the PRC, and then JX Hainan will transfer the dividends to JX Luxventure, and the dividends will be distributed from JX Luxventure Group Inc. to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or investors in other countries.

Under Marshall Islands law, the Company may pay dividends on its shares out of either profit or share premium amounts, provided that in no circumstance may a dividend be paid if such payment would result in the Company being unable to pay its debts as they become due in the ordinary course of business. If we decide to pay dividends in the future, as a holding company, we will depend on receiving dividends from our PRC subsidiaries.

As a holding company, we may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements. The ability of our PRC subsidiaries to distribute dividends is based upon its distributable earnings. Current PRC regulations permit our PRC operating subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. Should our PRC subsidiaries incur debt on their own in the future, the instruments governing that debt may restrict the ability to pay dividends or make other payments. To the extent our cash in the business is in the PRC/Hong Kong or PRC/Hong Kong subsidiaries, the funds or assets may not be available to fund operations distribute dividends to our investors, or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries by the PRC government to transfer cash or assets. Any limitation on the ability of our PRC subsidiaries to distribute dividends to us may restrict our ability to satisfy our liquidity requirements.

In addition, each of our PRC subsidiaries, as a Foreign Invested Enterprise, or FIE, are required to set aside at least 10% of its after-tax profits each year, if any, to fund a common reserve, which may stop drawing its after-tax profits if the aggregate balance of the common reserve has already accounted for over 50% of its registered capital. These reserves are not distributable as cash dividends. The PRC government may continue to strengthen its capital controls which would subject dividends distribution from our PRC subsidiaries to the Company to heightened scrutiny. The PRC government imposes controls on the convertibility of RMB, the official currency of the PRC) into foreign currencies and, in certain cases, the remittance of currency out of China. The PRC government also imposes control on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange ("SAFE") in the PRC, as long as certain procedural requirements are met. Approval from appropriate government authorities is required if RMB is converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies.

The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and, if this occurs in the future, we may not be able to pay dividends in foreign currencies (i.e., U.S. dollars) to our shareholders and we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Therefore, we may experience difficulties in completing the processes necessary to obtain and remit foreign currency for the payment of any dividends.

In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and the governments of other countries or regions where the non-PRC resident enterprises are tax resident. Pursuant to the tax agreement between Mainland China and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%. However, if the relevant tax authorities determine that our transactions or arrangements are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future. Accordingly, there is no assurance that the reduced 5% withholding rate will apply to dividends received by our Hong Kong subsidiary from our PRC subsidiaries. This withholding tax will reduce the amount of dividends we may receive from our PRC subsidiaries.

***Loans, Other Commitments, Contingencies***

As of December 31, 2025, the Company has two loans outstanding as below:

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| | | | |
|:---|:---|:---|:---|
|  | **Annual<br> Interest**<br>**Rate** | **Maturity**<br>**date** | **December 31,**<br>**2025** |
| Industrial Bank | 2.80% | December 24, 2026 | $1072486 |
| Industrial Bank | 2.60% | May 6, 2026 | $500493 |
| Total |  |  | $1572979 |

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We may, however, in the future, require additional cash resources due to changing business conditions, implementation of our strategy to expand our business or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy the capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

**C. Research and Development, Patents and Licenses, Etc.**

Our industry is characterized by rapid technological change, evolving industry standards and changing customer demands. These conditions require continuous expenditures on product research and development to enhance existing products create new products and avoid product obsolescence. See Item 3 "Key Information—D. Risk Factors—If we are unable to develop competitive new products and service offerings our future results of operations could be adversely affected," — "If we are unable to keep pace with the rapid technological changes in our industry, demand for our products and services could decline which would adversely affect our revenue," and — "Our technology may become obsolete which could materially adversely affect our ability to sell our products and services." For a detailed analysis of research and development costs, see Item 5.A. "Operating Results—Results of Operations—Research and development expenses".

**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 year ended December 31, 2021 that are reasonably likely to have a material adverse 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. Off-Balance Sheet Arrangements**

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

**F. Tabular Disclosure of Contractual Obligations**

We have no other material long-term debt, capital or operating lease or fixed purchase obligations.

**Holding Company Structure**

JX Luxventure Group Inc. is our holding company which has no material operations of its own. We conduct all our operations through our operating subsidiaries in China. As a result, the Company's ability to pay dividends depends largely upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries in China are required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, our subsidiaries in China may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at their discretion, and may allocate a portion of their after-tax profits based on PRC accounting standards to a discretionary surplus fund at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.

**Inflation**

Inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in the Chinese economy and the apparel industry and continually maintain effective cost controls in operations.

**Seasonality**

Our business, like that of many retailers, is seasonal. Historically, we have realized more of our revenue and earnings in the fourth quarter, which includes the majority of the holiday shopping season, than in any other fiscal quarter.

**Critical Accounting Policies**

The preparation of financial statements is in conformity with IFRS as issued by the IASB. It requires the Company's management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. The Company has identified certain accounting policies that are significant to the preparation of Company's financial statements. These accounting policies are important for an understanding of the Company's financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of the Company's financial condition and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. The Company believes the following critical accounting policies involve the most significant estimates and judgments used in the preparation of the Company's financial statements.

<u>Revenue recognition</u>

*<u>Revenue from contracts with customers</u>*

Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Company will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Currently, the Company's contracts do not include such variable amount.

When the contract contains a financing component which provides the customer a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Company and the customer at contract inception. When the contract contains a financing component which provides the Company a significant financial benefit for more than one year, revenue recognized under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15. Currently, the Company's contract with its customers do not include financial benefit for more than one year.

Nature and timing of satisfaction of performance obligations for each of the revenue streams are as follows:

*<u>Revenue from the sale of goods</u>*

Performance obligation is satisfied at the point in time when control of the asset is transferred to the customer, generally on delivery and acceptance of the goods. The Company presents revenues from such transactions on a gross basis in the consolidated statements of comprehensive loss, as the Company acts as a principal to take inventory risks of these goods.

*<u>Revenue from the sale of Tourism Package</u>*

Performance obligation is satisfied when the tourism package is completed, generally when the tour group successfully returned from the tour destination to the place of origination. The Company presents revenues from such transactions on a gross basis in the consolidated statements of comprehensive loss, as the Company acts as a principal to provide a package of tourism services and take a full obligation to provide such services even if the suppliers are not able to deliver service.

*<u>Revenue from reselling of airline tickets</u>*

The Company is a reseller of airline tickets, it provides value-added services to its customers including guaranteed flight replacement and other financial benefits. The Company procured the tickets from different airline companies and resell them to the online airline ticket agency companies. The airline ticket agency company will put an online bid inviting from its suppliers once it receives the demands from its online customers. The Company is one of the airline ticket suppliers. The Company procures the tickets in responding the air-ticket agency companies' online bid inviting to ensure the seats are available to sell to the agency companies, or the Company procure the tickets based on its judgement on potential trend of certain airlines within certain period. Once the Company's deposit, the full amount of the air-ticket, was deducted by the airline company and the Company agreed to secure the seats from the airline company, the purchase of air-tickets was recorded. The Company decided how much and how soon to resell the airline tickets. The inventory period is from 1 minute to 4 months. The airline tickets are sold shortly after their purchase to lower the inventory risk. Sometimes, the Company holds the tickets longer to expect a higher margin, but if the tickets cannot be sold before flight time, the Company have to sell the tickets even lower than the purchase price to avoid further loss. Thus, the Company bears the inventory risks of the airline tickets, and the Company has discretion in setting the price for the specified service. Once the air-tickets are issued to passengers according to the online agency company's instruction, the revenue is recognized. In addition to the air-ticket of airline companies, the Company provided guaranteed flight replacement and cancellation to the platform companies. The platform can return the tickets to the Company without restriction, while the airline companies can accept some of the return on certain conditions. Thus, the Company offered additional service plus the standard airline tickets to its customer. As the Company (i) bears the inventory risks of the air-tickets, (ii) provides additional services on the services procured by the airline companies, and (iii) has discretion in setting the price for the specified service, the Company is considered as a principal and recognize the revenue in a gross basis.

*<u>Other income</u>*

 

Interest income is recognized on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Rental income is recognized on a time proportion basis over the lease terms.

Dividend income is recognized when the shareholders' right to receive payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

<u>Borrowing costs</u>

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

<u>Retirement benefit costs</u>

Pursuant to the relevant regulations of the PRC government, the Company's subsidiaries located in the PRC participate in a local municipal government retirement benefits scheme (the "Scheme"), whereby they contribute a prescribed percentage of the basic salaries of their employees to the Scheme to fund their retirement benefits. Once the Scheme has been funded via contributions by the Company's participating subsidiaries, the local municipal government takes responsibility for the retirement benefits obligations of all existing and future retired employees of those subsidiaries located in the PRC; accordingly, the only obligation of the Company with respect to the Scheme is to pay the on-going required contributions as long as the employees maintain employment with the Company. There are no provisions under the Scheme whereby forfeited contributions may be used to reduce future contributions. These plans are considered defined contribution plans. The Company has no legal or constructive obligations to pay further contributions after its payment of the fixed contributions into the pension schemes. Contributions to pension schemes are recognized as an expense in the period in which the related service is performed.

<u>Taxation</u>

The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case the tax is also recognized in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

<u>Leasing</u>

IFRS 16 Leases requires lessees to recognize assets and liabilities for most leases based on a 'right-of-use model' which reflects that, at the commencement date, a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The lessor conveys that right to use the underlying asset at lease commencement, which is the time when it makes the underlying asset available for use by the lessee.

IFRS 16 defines a lease term as the non-cancellable period for which the lessee has the right to use an underlying asset including optional periods when an entity is reasonably certain to exercise an option to extend (or not to terminate) a lease.

Under IFRS 16 lessees may also elect not to recognize assets and liabilities for leases with a lease term of 12 months or less. In such cases a lessee recognizes the lease payments in profit or loss on a straight-line basis over the lease term. The exemption is required to be applied by class of underlying assets. Lessees can also make an election for leases for which the underlying asset is of low value. This election can be made on a lease-by-lease basis. For leases where the Company is the lessee, the lease term is either cancelable or no longer than 12 months, so the Group has elected not to record the leased assets.

Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors continue to classify leases as either operating or finance leases using similar principles as in IAS 17. IFRS 16 did not have any significant impact on leases where the Company is the lessor.

<u>Property, plant and equipment</u>

Property, plant and equipment ("PPE") including buildings held for use in the production or supply of goods or services, or for administrative purposes other than construction in progress are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

Depreciation is provided to write off the cost of items of property, plant and equipment other than construction in progress over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method.

Construction in progress includes property, plant and equipment in the course of construction for production or for its own use purposes. Construction in progress is carried at cost less any recognized impairment loss. Construction in progress is classified to the appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period in which the item is de-recognized.

<u>Inventories</u>

Inventories are stated at the lower of cost and net realizable value. Costs of inventories are determined using the weighted average method. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

<u>Financial instruments – investments and other financial assets</u>

*Initial recognition and measurement*

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient of not adjusting the effect of a significant financing component, the Company initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with the policies set out for "Revenue recognition".

In order for a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest ("SPPI") on the principal amount outstanding.

The Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

All regular way purchases and sales of financial assets are recognized on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

*Subsequent measurement*

The subsequent measurement of financial assets depends on their classification as follows:

*Financial assets at amortized cost (debt instruments)*

The Company measures financial assets at amortized cost if both of the following conditions are met:

● The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.

● The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in the income statement when the asset is derecognized, modified or impaired.

*Financial assets at fair value through other comprehensive income (debt instruments)*

The Company measures debt instruments at fair value through other comprehensive income if both of the following conditions are met:

● The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling.

● The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

For debt instruments at fair value through other comprehensive income, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the income statement and computed in the same manner as for financial assets measured at amortized cost. The remaining fair value changes are recognized in other comprehensive income. Upon derecognition, the cumulative fair value change recognized in other comprehensive income is recycled to the income statement.

*Financial assets at fair value through other comprehensive income (equity investments)*

Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity investments designated at fair value through other comprehensive income when they meet the definition of equity under IFRS 9 Financial Instruments. The Company may make an irrevocable election at initial recognition for particular investments in equity instruments that would otherwise be measured at fair value through profit or loss to present subsequent changes in fair value in other comprehensive income.

Gains and losses on these financial assets are never recycled to the income statement. Dividends are recognized as other income in the income statement when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity investments designated at fair value through other comprehensive income are not subject to impairment assessment.

*Financial assets at fair value through profit or loss*

The Company may, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an 'accounting mismatch') that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognized in the income statement. This category includes derivative financial instruments and structured bank deposits.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognized in the income statement. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at fair value through profit or loss.

<u>Financial instruments – impairment of financial assets</u>

The Company recognizes an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flow will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

General approach

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Company considers a financial asset in default when contractual payments are 120 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flow.

Debt instruments at fair value through other comprehensive income and financial assets at amortized cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables which apply the simplified approach as detailed below.

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| | |
|:---|:---|
| Stage 1 – | Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs |
| Stage 2 – | Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs |
| Stage 3 – | Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs |

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Simplified approach

For trade receivables that do not contain a significant financing component or when the Company applies the practical expedient of not adjusting the effect of a significant financing component, the Company applies the simplified approach in calculating ECLs. Under the simplified approach, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For trade receivables that contain a significant financing component and lease receivables, the Company chooses as its accounting policy to adopt the simplified approach in calculating ECLs with policies as described above.

<u>Financial instruments – derecognition of financial assets</u>

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Company's consolidated statement of financial position) when:

● the rights to receive cash flows from the asset have expired; or

● the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass-through" arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company's continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original amount of the asset and the maximum amount of consideration that the Company could be required to repay.

<u>Financial instruments – financial liabilities</u>

Initial recognition and measurement

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs. The Company's financial liabilities include trade payables, other payables, financial liabilities included in accruals and interest-bearing bank borrowings.

Subsequent measurement

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the effective interest rate amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in the income statement.

<u>Financial instruments – derecognition of financial liabilities</u>

Financial liability is derecognized when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in the income statement.

<u>Financial instruments – offsetting financial instruments</u>

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

**G. Safe Harbor**

See "Introductory Notes—Forward-Looking Information."

**ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**

**A. Directors and Senior Management**

The following table sets forth certain information regarding our directors and senior management as of the date of this Annual Report.

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| | | |
|:---|:---|:---|
| **NAME** | **AGE** | **POSITION** |
| Sun Lei | 42 | Chief Executive Officer, Co-chairwoman and Director |
| Huidan Li | 44 | Co-chairman and Director |
| Mu Ruifeng | 61 | Independent Director |
| Tiange Yin | 26 | Independent Director |
| Jin Yan | 55 | Independent Director |

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**Ms. Sun Lei.** Ms. Sun, age 42, has been our Chief Executive Officer and a director of our Board since December 21, 2020, and our Interim Financial Officer and Co-Chairwoman since November 7, 2022. She is an expert in management operation and an avid world traveler. She was: i) the CEO of a family-owned conglomerate and, during her tenure, fully revamped its operation and expanded its business operation through mergers and acquisitions; ii) formed a partnership with Richemont International Group in Paris; and iii) founded Jinxuan Luxury Tourism Group in 2016, engaging in the operation of global high-end business jets, luxury brand yachts and automobiles. In addition to her rich experience in luxury goods management, Ms. Sun is also an E-Commerce entrepreneur. Ms. Sun Lei graduated from Emlyon Business School in France with a Bachelor's degree in business administration, a Master's Degree in economics and a Master's degree in finance. She also studied at School of Economics and Management of Tsinghua University.

**Mr. Huidan Li.** Mr. Li, age 44, has been our Chairman and a director of our Board since December 21, 2020, and now is a Co-chairman since November 7, 2022. He is the founder of Baofu (Beijing) Holding Co., Ltd ("Baofu"). For the past fifteen (15) years, Mr. Li successfully expanded its business into real estate, import and export, fin-tech and medical sectors. Baofu currently operates more than 15 companies. Mr. Li received his MBA degree from University of Hawaii.

**Mr. Mu Ruifeng.** Mr. Mu, age 62, has been the independent director of our Board since October 25, 2020. He is the founder of Xinruifeng Property Marketing Management Co., Ltd. and Xinruifeng Investment Group Co., Ltd. He is currently serving as the general manager and chairman of the board of those two companies. In addition, Mr. Mu also is the vice president of the Overseas Chinese Chamber of Commerce and a Hong Kong, Macao and Taiwanese specially invited member of the Foreign Affairs Committee. Mr. Mu is also an investor in Touch Stone Investment Pty, Ltd., a fund based in Australia focusing on the real estate market since 2015. Mr. Mu has acquired a range of expertise in business based upon his over 30 years in the business world. In addition, Mr. Mu was appointed by the board of directors as the Chair of the Audit Committee. Our board of directors has also determined that Mr. Mu is an "audit committee financial expert".

**Mr. Jin Yan.** Mr. Jin, age 56, has been the independent director of our Board since October 25, 2020. He has over 20 years of marketing experience in the entertainment industry. He is also a well-known entertainment agent, having represented superstars such as Andy Lau for almost ten years. Mr. Jin is currently the president of Zhongshi Culture Communication Co., Ltd, which he founded in 2015. Mr. Jin was also appointed as a member of the Audit Committee of the Company.

**Ms. Tiange Yin**, age 26, was appointed to our Board and to the Audit Committee on March 13, 2026, following the Board's determination that she meets the independence criteria for directors and additional independence criteria prescribed by Nasdaq listing rules and SEC Rule 10A-3 for members of the Audit Committee. She has over 5 years of experience in the accounting sector. For the last 5 years, she has been working at Zhi CPA, starting as an associate in 2022 and progressing to a position of senior manager in 2024. She is a graduate of King's College London.

Our Board currently consists of five (5) members. Each director will serve until the next annual meeting of shareholders of the Company or until removed by other actions, in accordance with the Company's Bylaws.

Huidan Li and Sun Lei are spouses. No other family relationship exists between any of the persons named above.

**B. Compensation** 

Following the SEC's approval of Nasdaq's proposed clawback listing standards, under Rule 10D-1, which directed companies to adopt and comply with a written clawback policy, to disclose and file the policy as an exhibit to its annual report, we adopted a clawback policy on November 30, 2023.

For the years ended December 31, 2025 and December 31, 2024, we did not pay cash as compensation to our directors and executive officers as a group. We do not set aside or accrue any amounts for pension, retirement or other benefits for our directors and senior management. However, we reimburse our directors for out-of-pocket expenses incurred in connection with their services in such capacity.

For the year ended December 31, 2025, we provided the following equity compensation to our directors:

On January 3, 2026, the Company issued an aggregate of 140,000 shares of its common stock (the "Bonus Shares") to the four members of the Board, including the Co-Chairman, Huidan Li, and the three independent directors, Baojun Zhu, Mu Ruifeng and Jin Yan. Each such director received 35,000 shares of Common Stock as compensation for such director's services for the fiscal year ended 2025.

For the years ended December 31, 2024 and December 2023, we did not grant shares to our directors and officers, including our Chief Executive Officer.

<u>Equity Incentive Plans</u>

On December 24, 2018, the Board of Directors of the Company adopted the 2018 Equity Incentive Plan, or the 2018 Plan, for up to 3,333 shares of Common Stock as equity incentives to its directors, employees and consultants.

<u>2022 Equity Incentive Plan</u>

On January 11, 2022, we terminated the 2018 equity incentive plan and adopted a new equity incentive plan (the "2022 Plan") that provided for a maximum of 16,667 shares of Common Stock authorized for issuance. Between February 12, 2022, and October 25, 2022, the Company issued all of the shares of Common Stock available for issuance under the 2022 Plan.

<u>The New 2022 EIP, as amended.</u>

On October 26, 2022, the Board terminated the 2022 Plan and adopted JX Luxventure Limited the New 2022 Equity Incentive Plan (the "New 2022 EIP"), which authorized 66,667 maximum shares of Common Stock for issuance. On May 7, 2025, the Company amended the New 2022 EIP by Amendment #1 to, among other things, (i) change the name of the plan from "JX Luxventure Limited New 2022 Equity Incentive Plan" to "JX Luxventure Group Inc. New 2022 Equity Incentive Plan", to reflect the current name of the Company; (ii) increase the maximum number of shares authorized under the New 2022 EIP to 1,666,667 shares of Common Stock, and (ii) eliminate limitation on the maximum number of shares to be issued under the New 2022 EIP to any individual participant in any one fiscal year of the Company. On August 1, 2025, the Company further amended the New 2022 EIP by Amendment #2, which reduced the maximum number of shares of Common Stock authorized for issuance under the New 2022 EIP from 1,666,667 to 666,667 shares of Common Stock. Amendment #2 was approved by the unanimous written consent of the Board and by written consent of the holders of 52% of the total issued and outstanding capital stock of the Company.

<u>The 2026 Equity Incentive Plan</u>

On January 5, 2026, the Board terminated 2022 EIP, as amended, and approved the adoption of the 2026 Equity Incentive Plan (the "2026 Plan"), effective immediately. The holders of approximately 61% of the total issued and outstanding capital stock of the Company approved the terms and provisions of the 2026 Plan, in accordance with the applicable provisions of the BCA and the Company's Bylaws.

The maximum aggregate number of shares of Common Stock, issuable under the 2026 Plan shall be four million five hundred thousand (4,500,000) shares, subject to adjustments in the event of certain reorganizations, mergers, combinations, recapitalizations, share splits, share dividends, or other similar events which change the number or kind of shares outstanding.

The following paragraphs summarize the terms of the 2026 Plan.

*Purpose.* The purposes of the 2026 Plan are to promote the long-term growth and profitability of the Company and its affiliates by stimulating the efforts of employees, directors and consultants of the Company and its affiliates who are selected to be participants, aligning the long-term interests of participants with those of shareholders, heightening the desire of participants to continue in working toward and contributing to our success, attracting and retaining the best available personnel for positions of substantial responsibility, and generally providing additional incentive for them to promote the success of our business through the grant of awards of or pertaining to our Common Stock. The 2026 Plan permits the grant of ISOs, NSOs, Restricted Shares, Restricted Share Units, Share Appreciation Rights, Performance Units and Performance Shares as the administrator of the 2026 Plan may determine.

*Administration*. The 2026 Plan is administered by our Board. The administrator has the authority to determine the specific terms and conditions of all awards granted under the 2026 Plan, including, without limitation, the number of shares of common stock subject to each award, the price to be paid for the shares and the applicable vesting criteria. The administrator has the discretion to make all other determinations necessary or advisable for the administration of the 2026 Plan.

*Eligibility*. NSOs, Restricted Shares, Restricted Share Units, Share Appreciation Rights, Performance Units and Performance Shares may be granted to employees, directors or consultants either alone or in combination with any other awards. ISOs may be granted only to employees of the Company, and of any parent or subsidiary.

*Shares Available for Issuance Under the 2026 Plan*. Subject to adjustment as described below, (a) the maximum aggregate number of shares that may be issued under the 2026 Plan is 4,500,000 shares of Common Stock, (b) to the extent consistent with Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), Subject to the certain provisions of the 2026 Plan, including but not limited to, the reorganizations, combinations, mergers, to the extent consistent with Section 422 of the Code, the shares may be issued as ISOs under the 2026 Plan as to be determined by the Administrator; only employees of the Company or any parent or subsidiary shall be eligible for the grant of ISOs; for awards denominated in Shares and satisfied in cash. The number and class of shares available under the 2026 Plan are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, share splits, share dividends, or other similar events which change the number or kind of shares outstanding.

*Transferability.* Unless otherwise provided in the 2026 Plan or otherwise determined by the administrator, an award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. However, the administrator may, at or after the grant of an award other than an ISO, provide that such award may be transferred by the recipient to a "family member" (as defined in the 2026 Plan); provided, however, that any such transfer is without payment of any consideration whatsoever and that no transfer shall be valid unless first approved by the administrator, acting in its sole discretion, and as required by our Restated Articles. If the administrator makes an award transferable, such award will contain such additional terms and conditions as the administrator deems appropriate.

*Termination of, or Amendments to, the 2026 Plan*. The Board may at any time amend, alter, suspend or terminate the 2026 Plan, provided that the Company will obtain shareholder approval of any amendment to the extent necessary and desirable to comply with applicable Laws. No amendment, alteration, suspension or termination of the 2026 Plan will impair the rights of any participant, unless mutually agreed otherwise between the participant and the administrator, which agreement must be in writing and signed by the participant and the Company. Termination of the 2026 Plan will not affect the administrator's ability to exercise the powers granted to it hereunder with respect to awards granted prior to the date of such termination.

The 2026 Plan will terminate ten years following the date it was adopted by the Board, unless sooner terminated by the Board.

**Employment Agreements**

We currently do not have employment agreements with our executive officers and we have not entered into any fixed compensation arrangements with any of our directors.

On July 12, 2022, the Company entered into the 2022 Employment Agreement with Sun Lei for a one (1) year term, which expired on July 11, 2023.

**C. Board Practices**

Our Board currently consists of five members, namely Sun Lei, Huidan Li, Mu Ruifeng, Jin Yan, and Tiange Yin.

The Board has established the Audit Committee, which is comprised entirely of independent directors. From time to time, the Board may establish other committees.

*<u>Audit Committee</u>*

Our Audit Committee is currently composed of three members: Mu Ruifeng, Jin Yan, and Tiange Yin. Our Board of Directors determined that each member of the Audit Committee meets the independence criteria prescribed by applicable regulation and the rules of the SEC for audit committee membership. Each Audit Committee member also meets NASDAQ's financial literacy requirements. Mu Ruifeng serves as Chair of the Audit Committee.

Our Board has determined that Mr. Mu Ruifeng is the "audit committee financial expert" as such term is defined in Item 407(d) of Regulation S-K promulgated by the SEC and also meets NASDAQ's financial sophistication requirements.

The Audit Committee oversees our accounting and financial reporting processes and the audits of the financial statements of our Company. The Audit Committee is responsible for, among other things:

● the appointment, compensation, retention and oversight of the work of the independent auditor;

● reviewing and pre-approving all auditing services and permissible non-audit services (including the fees and terms thereof) to be performed by the independent auditor;

● reviewing and approving all proposed related-party transactions;

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

● reviewing and discussing with management and the independent auditor (a) the adequacy and effectiveness of the Company's internal controls, (b) the Company's internal audit procedures, and (c) the adequacy and effectiveness of the Company's disclosure controls and procedures, and management reports thereon;

● reviewing reported violations of the Company's code of conduct and business ethics; and

● reviewing and discussing with management and the independent auditor various topics and events that may have significant financial impact on the Company or that are the subject of discussions between management and the independent auditors.

**D. Employees**

As of December 31, 2025, we employed 95 full-time employees. The following table sets forth the number of our full-time employees by function.

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| | | |
|:---|:---|:---|
| **Function** | **Number of <br> Employees** | **Number of <br> Employees** |
| Management and Administration |  | 6 |
| Finance |  | 2 |
| Business Development |  | 54 |
| IT R&D | | 33 |
| **TOTAL** | | 95 |

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We believe that we have maintained a satisfactory working relationship with our employees, and we have not experienced any significant labor disputes or any difficulty in recruiting staff for company's operations. None of company's employees is represented by a labor union.

Our employees in China participate in a state pension plan organized by Chinese municipal and provincial governments. In addition, the company is required by Chinese law to cover employees in China with various types of social insurance. ***See "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China— Our failure to fully comply with PRC laws relating to social insurance and housing accumulation fund may expose it to potential administrative penalties***."

**E. Share Ownership**

The following table lists, as of May 15, 2026, the number of shares of Common stock beneficially owned by (i) each person, entity or group each of our directors; (ii) each of our Named Executive Officers and (iii) all executive officers and directors as a group. Information relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each person using "beneficial ownership" concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose or direct the disposition of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest.

Except as noted below, each person has sole voting and investment power with respect to the shares beneficially owned and each stockholder's address is c/o JX Luxventure, Bin Hai Da Dao No. 270, Lang Qin Wan Guo Ji Du Jia Cun Zong He Lou, Xiu Ying District, Haikou City, Hainan Province 570100, People's Republic of China.

The percentages below are calculated based on 9,276,831 shares of Common Stock issued and outstanding as of May 15, 2026.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Office, If Any** | **Title of<br> Class** | **Amount and<br> Nature of<br> Beneficial<br> Ownership** | **Percent of<br> Class<sup>(3)</sup>** |
| **Officers and Directors** |  |  | | |
| Sun Lei | Chief Executive Officer, Interim Chief Financial Officer, Co-Chairwoman and Director | Common Stock | 2595473<sup>(1)(2)</sup> | 28.0% |
| Huidan Li | Co-Chairman | Common Stock | 685807 | 7.39 |
| Tiange Yin | Director | Common Stock | 0 | 0 |
| Mu Ruifeng | Director | Common Stock | 35167 | 0.38% |
| Jin Yan | Director | Common Stock | 35167 | 0.38% |
| **All current officers and directors as a group (5 persons named above)** |  | Common Stock | 3351614<sup>(1)(2)</sup> | 36% |

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\* Less than 1%

(1) Includes 350 shares of Common Stock held by Happy Brilliance Limited, a Cayman Islands company in which Sun Lei, our Chief Executive Officer, interim Chief Financial Officer, Co-Chairwoman and Director, has the sole voting and dispositive power.

(2) Does not include (i) 2,067 shares of Common Stock issuable upon conversion of 1,240,000 shares of Series A Preferred Stock; (ii) 1,250 shares of Common Stock issuable upon conversion of 150,000 shares of Series C Convertible Preferred Stock; and (iii) 1,733 shares of Common Stock issuable upon conversion of 80,000 shares of Series D Preferred Stock. All shares of preferred stock beneficially owned by Ms. Lei vote together with common stock on an as-converted basis.

(3) The percentage is calculated based upon Ms. Lei's sole voting and dispositive power over 2,600,523 shares of Common stock, including 5,050 shares of Common stock issuable upon conversion of shares of Series A, C and D Preferred Stock.

**ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**

**A. Major Shareholders**

Please refer to Item 6 "Directors, Senior Management and Employees—E. Share Ownership."

**B. Related Party Transactions**

On May 22, 2022, the Board granted 1,667 shares of Common Stock to Sun Lei pursuant to the employment agreement between the Company and Sun Lei dated June 22, 2021 (the "2021 Employment Agreement"). The Shares bear the restrictive legend, as issued without registration under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon an exemption under Section 4(a)(2) of the Securities Act.

On June 22, 2022, the Board authorized a share repurchase program of up to US$5,000,000 of the Company's common stock from time to time during a 12-month period by Mr. Lei, our Chief Executive Officer of Company (the "Share Repurchase Program"). The Repurchase Program provided that Mrs. Lei will not sell the shares in the public market for at least two years. Purchase to the Repurchase Program, on March 28, 2023, she acquired in private negotiated transactions 2,533 shares of Common Stock, at the total purchase price of $1,780,000; 1,240,000 shares of Series A Convertible Preferred Stock, convertible into 2,067 shares of Common Stock at the total purchase price of $1,240,000; and 80,000 shares of Series D Convertible Preferred Stock, convertible into 1,733 shares of Common Stock at the purchase price of $2,080,000.

On August 23, 2024, the Company issued to Huidan Li, the Co-Chairman of the Board, the 2024 Original Note, in the principal amount of $3,000,000 in consideration of the continuous advances of funds to the Company On August 26, 2024, Mr. Li sold, transferred, and assigned the 2024 Original Note and, collectively, all of his rights, title and interest in, to and under the 2024 Original Note to eight Assignees, pursuant to the Assignment Agreement among the Company, Mr. Li as Assignor and the Assignees, and the Company issued to the Assignees promissory notes on the terms of the 2024 Original Note. Pursuant to the 2024 Exchange Agreement among the Company and the Assignees, on September 26, 2024, the Assignees canceled the total outstanding principal amount due under the promissory notes issued by the Company to the Assignees in exchange for the issuance of an aggregate of 1,000,000 shares (each Holder was issued 125,000 shares) of Series E Convertible Preferred Stock.

On February 17, 2025, the Company issued a new promissory note (the "2025 Original Note") to Mr. Li in the principal amount of $3,500,000, in consideration of funds advanced by Mr. Li to the Company. On April 21, 2025, Mr. Li transferred and assigned to six (6) investors (the "Assignees") an aggregate of $1,380,000, representing a portion of the principal amount under the 2025 Original Note (the "Total Assigned Debt"), with each Assignee to be assigned a portion of the Total Assigned Debt equal to $230,000 (the "Assignment"), in consideration of the purchase price of $230,000 from each Assignee. Upon Mr. Li's assignment of the Total Assigned Debt to Assignees, the Company issued to Mr. Li a new promissory note in principal amount of $2,120,000, representing the total remaining outstanding amount due to Mr. Li under the 2025 Original Note, on the terms of the 2025 Original Note. The Company also issued promissory notes to each Assignee in the principal amount of $230,000 (the "Investor Note"), recognizing each Assignee as the legal holder of the Assignment and the noteholder of the Investor Note. The terms of the Investor Note are the same as the terms of the 2025 Original Note issued by the Company to Mr. Li. On March 6, 2026, the Company and Mr. Li entered into the Debt Exchange Agreement, pursuant to which on March 26, 2026, the Company issued to Mr. Li 650,307 shares of Common Stock, at the price of $3.23 per share, in exchange for the cancellation of $2,120,000 outstanding amount under the promissory note, dated April 21, 2025.

On July 14, 2025, the Company issued 33,337 shares of Common Stock to Ms. Lei in exchange for cancellation of $510,000, representing a portion of the total outstanding amount due owed by the Company to Ms. Lei.

On September 3, 2025, the Company and Sun Lei entered into a new debt exchange agreement (the "Debt Exchange Agreement"), pursuant to which 0n September 25, 2025, at the closing of the Debt Exchange Agreement, Company issued to her an aggregate of 2,352,941 shares of Common Stock at the purchase price of $0.85 per share in exchange for her cancellation of $2,000,000, representing a portion of the total outstanding amount of her loans to the Company.

On December 16, 2025, the Company and Sun Lei entered into the Debt Exchange Agreement, pursuant to which the Company on January 2, 2026, at the closing of the Debt Exchange Agreement, the Company issued to Ms. Lei an aggregate of 300,000 shares of Common Stock in exchange of her cancellation of $1,470,000, representing a portion of the total outstanding amount of her loans to the Company.

On March 26, 2026, the Company and Ms. Lei entered into a debt exchange agreement, pursuant to which on April 10, 2026, the Company issued to Ms. Lei 2,100,000 shares of Common Stock, at the price of $2.986 per share, in exchange for her cancellation of $6,270,600, representing a portion of the total outstanding amount due by the Company to Ms. Lei.

On January 3, 2026, the Company issued an aggregate of 140,000 shares of its common stock (the "Bonus Shares") to the four members of the Board, including the Co-Chairman, Huidan Li, and the three independent directors, Baojun Zhu, Mu Ruifeng and Jin Yan. Each such director received 35,000 shares of Common Stock as compensation for such director's services for the fiscal year ended 2025. The whole Board previously approved and authorized the issuance of the Bonus Shares.

**C. Interests of Experts and Counsel**

Not applicable.

**ITEM 8. FINANCIAL INFORMATION**

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

***Financial Statements***

We have appended consolidated financial statements filed as part of this report. See Item 18 "Financial Statements."

***Legal Proceedings***

We may be subject to legal proceedings, investigations and claims incidental to the conduct of our business from time to time. We are currently not party to any legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings and those involving any third party, which may have, or have had in the recent past, significant effects on our financial position or profitability.

***Dividend Policy***

We are a holding company incorporated in the Marshall Islands. As a Marshall Islands company, we may only declare and pay dividends except when the corporation is insolvent or would thereby be made insolvent or when the declaration or payment would be contrary to any restrictions contained in our Restated Articles. Dividends may be declared and paid out of surplus only; but in case there is no surplus, dividends may be declared or paid out of the net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. We currently anticipate that we will retain any available funds to finance the growth and operation of our business and we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our cash held in foreign countries may be subject to certain control limitations or repatriation requirements, limiting our ability to use this cash to pay dividends.

We have never declared or paid cash dividends and we have no plan to declare or pay any dividends in the near future on our shares of common stock. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. As of the date of this Annual Report, the Company has not established or maintained any cash management policies that dictate the purpose, amount and procedure of fund transfers among the Company, our subsidiaries, or investors and there have been no cash and asset transfers between the Company and its PRC subsidiaries.

PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See "*Risk Factors—Risks Related to Doing Business in China*" for more information. We may rely on dividends paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.

Our Board has discretion as to whether to distribute dividends, subject to above-referenced restrictions under Marshall Islands law. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, the amount of distribution, if any, received by us from our subsidiaries, general financial condition, contractual restrictions and other factors that the Board may deem relevant. Please see the section entitled "*PRC Regulations - Taxation*" for information on the potential tax consequences of any cash dividends declared.

**B. Significant Changes**

No significant change has occurred since the date of our consolidated financial statements filed as part of this annual report.

**ITEM 9. THE OFFER AND LISTING**

**A. Offer and Listing Details**

Our Common Stock is listed on the Nasdaq Capital Market since October 10, 2022. Between January November 3, 2014 and October 7, 2021, our Common Stock was traded on the Nasdaq Capital Market under the symbol "KBSF, between October 8, 2021 and October 9, 2022, our Common Stock was traded on the Nasdaq Capital Market under the symbol "LLL. between October 10, 2022 and December 19, 2024, it was traded under the symbol "JXJT." Since December 20, 2024, our Common Stock is trading on the Nasdaq Capital Market under the symbol "JXG."

On March 24, 2023, the Board and holders of a majority of the Company's voting power, approved, by written consent in lieu of a meeting (a) a reverse stock split of the Company's outstanding Common Stock in a ratio of not less than 1-for-5 and not more than 1-for-15 (the "Split Range") and granted the Board the ultimate authority to determine the exact split ratio of the reverse stock split within the Split Range, and (b) the form, terms, and provisions of an Amendment to the Amended and Restated Articles of Incorporation (the "Amendment"). On April 17, 2023, the Board determined that, based on the market price of the Company's Common Stock, a 1-for-10 split ratio would be appropriate (the "Reverse Stock Split"). On April 25, 2023, the Company filed the Amendment to the Restated Articles with the Registrar or Deputy Registrar of Corporations in the Marshall Islands, implementing the Reverse Stock Split. Upon the opening of the market on April 26, 2023, the Company's common stock began trading on the Nasdaq Capital Market on a post-split basis.

On December 20, 2024, the Board and the holders of a majority of the Company's voting power, approved, by written consent in lieu of a meeting (a) a reverse stock split of the Company's outstanding Common Stock at the 1-for-4 ratio and the name of the Company from "JX Luxventure Limited" to "JX Luxventure Group Inc." On December 27, 2024, the Company filed another Amendment to the Restated Articles with the Registrar of Corporations in the Marshall Islands, implementing the reverse stock split and the new name of the Company. On January 8, 2025, the Company's common stock began trading on the Nasdaq Capital Market under the new name and on a post-split basis.

On October 20, 2025, the Board, and on November 6, 2025, the holders 56% of the holders of the outstanding capital stock, approved the 1-for-15 reverse stock split of the Company's issued and outstanding Common Stock.

On November 18, 2025 the Company filed the Amendment with the Registrar or Deputy Registrar of Corporations in the Marshall Islands, which became effective upon filing. On November 21, 2025, the Company's Common Stock began trading on a post-split basis on The Nasdaq Capital Market.

**Approximate Number of Holders of Our Securities**

On May 15, 2026, there were approximately 409 holders of record of our Common Stock and 1 holder of record of our Preferred Stock. Certain of our securities are held in nominee or street name so the actual number of beneficial owners of our securities is greater than the number of record holders set forth above.

**B. Plan of Distribution**

Not applicable.

**C. Markets**

See our disclosures above under "A. Offer and Listing Details."

**D. Selling Shareholders**

Not applicable.

**E. Dilution**

Not applicable.

**F. Expenses of the Issue**

Not applicable.

**ITEM 10. ADDITIONAL INFORMATION**

**A. Share Capital**

Our Restated Articles of Incorporation, as amended, authorize the Company to issue up to 155,000,000 shares with a par value of $0.0001, consisting of 150,000,000 shares of Common Stock and 5,000,000 shares of Preferred stock. As of date of this Annual Report, 9,276,831 shares of Common Stock are issued and outstanding and 1,470,000 of Preferred Stock are issued and outstanding, consisting of 1,240,000 shares of Series A Preferred; 150,000 shares of Series C Preferred, 80,000 shares of Series D Preferred. All of the shares of Series E Preferred Stock and Series F Preferred Stock were converted into shares of Common Stock, and there are no outstanding shares of Series E Preferred Stock or Series F Preferred Stock.

**B. Memorandum and Articles of Association**

*The following represents a summary of certain key provisions of our articles of incorporation and bylaws. The summary does not purport to be a summary of all of the provisions of our articles of incorporation and bylaws. For more complete information you should read our amended and restated articles of incorporation, as amended, and bylaws, each listed as an exhibit to this report.*

We were incorporated in the Marshall Islands on January 26, 2012 under the Marshall Islands Business Corporations Act ("BCA"). The purpose of the Company is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the BCA. Our amended and restated articles of incorporation, as amended, and bylaws do not impose any limitations on the ownership rights of our stockholders.

***Description of Common Stock***

Each outstanding share of Common Stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Upon our dissolution, liquidation or winding up of the affairs of the Company, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders or our Common Stock will be entitled to receive pro rata our remaining assets available for distribution. Holders of Common Stock do not have conversion, redemption or preemptive rights to subscribe to any of our securities.

***Preferred Stock.***

Our Board of Directors is authorized, without any further vote or action by our stockholders, to issue up to 5,000,000 shares of preferred stock in different classes and series and, with respect to each class or series, to determine the designations, powers, preferences, privileges and other rights, including dividend rights, conversion rights, terms of redemption and liquidation preferences, any or all of which may be greater than the powers and rights associated with the common stock, at such times and on such other terms as they think proper. Our Board of Directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.

**Designations of our Preferred Stock.**

***Series A Convertible Preferred Stock***

On April 8, 2021, our Board of Directors, acting by unanimous written consent, in accordance with Section 35 of the BCA, duly adopted the resolutions creating a new series of preferred stock, par value $0.0001 per share ("Preferred Stock"), designated as "Series A Convertible Preferred Stock" and adopted the Certificate of Designations of the Series A Convertible Preferred Stock (the "Certificate of Designations of Series A") which authorized for issuance 1,500,000 shares of Series A Convertible Preferred Stock and had the stated initial stated value of US$1.00 per share (the "Series A Preferred"). On April 8, 2021, the Company offered and sold 1,500,000 shares of the Series A Preferred to a single investor for total subscription proceeds of $1,500,000. On April 20, 2022, our Board adopted resolutions, by unanimous written consent, pursuant to Section 35 of the BCA, in which it determined that the Certificate of Designation of Series A") was not filed with the Registrar of Corporations, in accordance with the provisions of sections 35 and 5 of the BCA at the time the Certificate of Designation of Series A Preferred was approved by the Board, and that it is in the best interests of the Corporation and its stockholders to correct the file the Certificate of Designation of Series A Preferred with the Registrar of Corporations, to correct an administrative oversight. On April 25, 2022, the Company filed the Certificate of Designations of Series A Preferred with the Registrar of Corporations under the Company's former name, KBS Fashion Group Limited, and on April 27, 2022, the Company filed with the Registrar of Corporations the First Amended and Restated Certificate of Designations of Series A, reflecting the Company's name "JX Luxventure Limited" and restating all provisions set forth in the Certificate of Designations of Series A Preferred. Pursuant to this unanimous written consent dated April 20, 2022, the Board of Directors ratified and confirmed to treat the investor that purported to have been issued 1,500,000 shares of Series A economically, as if such holder (the "Holder") has been the holder of 1,500,000 shares of Series A since April 8, 2021, the date of the purported issuance of Series A Preferred, rather than the date of the filing of the Certificate of Series A Preferred and the First Amended and Restated Certificate of Series A Preferred with the Registrar of Corporations. On May 10, 2022, the Company filed with the Registrar of Corporations the Second Amended and Restated Certificate of Designation of Series A Preferred. As set forth in the Second Amended and Restated Certificate of Series A Preferred, it features a stated value of $1.00 and is convertible to shares of our Common Stock at any time from the date of issue. Conversions are limited, however, such that no conversion may made to the extent that the number of shares of Common Stock to be issued pursuant to such conversion, when aggregated with all other shares of Common Stock owned by the Holder at such time, would result in the Holder beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.99% of our then issued and outstanding shares of Common Stock. Series A Convertible Preferred Stock votes together with holders of shares of Common Stock on an as-if-converted basis, has no special dividend rights, and ranks equally to our common stock with respect to rights upon liquidation. All shares of Common Stock issuable upon conversion of the Series A Preferred are subject to a two-year lock-up agreement running from the initial closing of the financing. Our offer and sale of the Series A Preferred was exempt under Rule 506(b) under Regulation D, as it did not involve any general solicitation or advertising and was made to an accredited investor within the meaning of Rule 501 under Regulation D. On May 10, 2022, the Holder converted 260,000 shares of Series A Preferred into 26,000 shares of Common Stock. On the date of this Annual Report, there are 1,240,000 shares of Series A Preferred issued and outstanding.

***Series B Participating Preferred Stock and Rights Dividend***

On March 12, 2021, we announced the authorization and declaration of a dividend distribution of one right (a "Right") for each outstanding share of Common Stock, par value $0.0001 per share, of the Company to stockholders of record as of the close of business on March 31, 2021 (the "Record Date"). Each Right entitles the registered holder to purchase from the Company one 0.00667 portion of a share of Series B Participating Preferred Stock, par value $0.0001 per share (the "Preferred Stock"), of the Company at an exercise price of $50.00 (the "Exercise Price"). The complete terms of the Rights are set forth in a Preferred Stock Rights Agreement (the "Rights Agreement"), dated as of March 11, 2021, between the Company and American Stock Transfer & Trust Company, LLC, as rights agent.

Our Board of Directors adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group that acquires 15% or more of the Company's Common Stock without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or to discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board. However, neither the Rights Agreement nor the Rights should interfere with any merger, tender or exchange offer or other business combination approved by our Board. On April 20, 2022, our Board adopted resolutions, by unanimous written consent, pursuant to Section 35 of the BCA, in which it determined that the Certificate of Designation of Series B Participating Preferred Stock was not filed with the Registrar of Corporations, in accordance with the provisions of sections 35 and 5 of the BCA at the time the Certificate of Designation of Series B Participating Preferred Stock was approved by the Board, and that it is in the best interests of the Corporation and its stockholders to correct the file the Certificate of Designation of Series B Participating Preferred Stock with the Registrar of Corporations, to correct an administrative oversight. On April 25, 2022, the Company filed the Certificate of Designation of Series B Participating Preferred Stock with the Registrar of Corporations under the Company's former name, and on April 27, 2022, we filed the Amended and Restated Certificate of Designation of Series B Participating Stock with the Registrar of Corporations reflecting the Company's current name.

**Series C Convertible Preferred Stock**

On September 1, 2021, our Board, acting by unanimous written consent, in accordance with Section 35 of the BCA, duly adopted the resolutions creating a new series of Preferred Stock, designated as "Series C Convertible Preferred Stock" and adopted the Certificate of Designations of the Series C Convertible Preferred Stock (the "Certificate of Designations of Series C") which authorized for issuance 150,000 shares of Series C Convertible Preferred Stock and had the stated initial stated value of US$10.00 per share (the "Series C Preferred"). On September 1, 2021, the Company sold 150,000 shares of the Series C Preferred for total subscription proceeds of $1,500,000 to Sun Lei, our Chief Executive Officer and a member of our Board. Our Series C Convertible Preferred Stock features a stated value of $10.00 and is convertible to shares of our Common Stock at any time after 6 months from the date of issue. On April 20, 2022, our Board adopted resolutions, by unanimous written consent, pursuant to Section 35 of the BCA, in which it determined that the Certificate of Designation of Series C Preferred was not filed with the Registrar of Corporations, in accordance with the provisions of sections 35 and 5 of the BCA at the time the Certificate of Designation of Series C Preferred was approved by the Board, and that it is in the best interests of the Corporation and its stockholders to correct the file the Certificate of Designation of Series C Preferred with the Registrar of Corporations, to correct an administrative oversight. Pursuant to this unanimous written consent dated April 20, 2022, the Board of Directors ratified and confirmed to treat the investor that purported to have been issued 150,000 shares of Series C economically, as if such holder (the "Holder") has been the holder of 150,000 shares of Series C Preferred since September 1, 2021, the date of the purported issuance of Series C Preferred, rather than the date of the filing of the Certificate of Series C Preferred and the Amended and Restated Certificate of Series C Preferred with the Registrar of Corporations. On April 25, 2022, the Company filed the Certificate of Designation of Series C Preferred with the Registrar of Corporations under the Company's former name, and on April 27, 2022, we filed the Amended and Restated Certificate of Designation of Series C Preferred with the Registrar of Corporations reflecting the Company's current name.

As stated in our Amended and Restated Certificate of Designation of Series C Preferred, each share of Series C Preferred is convertible into 5 shares of Common Stock, subject to adjustments resulting from reverse stock splits. As a result of the Reverse Stock Splits, 120 shares of the Series C Preferred Stock is convertible into 1 share of Common Stock. Series C Preferred votes together with holders of Common Stock on an as-if-converted basis, which is not exercisable for one year, has no special dividend rights, and ranks equally to our Common Stock with respect to rights upon liquidation. All shares of Common Stock issuable upon conversion of the Series C Preferred are subject to a one-year lock-up agreement running from the initial closing of the financing. Our offer and sale of the Series C Preferred was exempt under Rule 506(b) under Regulation D, as it did not involve any general solicitation or advertising and was made to an accredited investor within the meaning of Rule 501 under Regulation D.

**Series D Convertible Preferred Stock**

On October 18, 2021, our Board acting by unanimous written consent, in accordance with Section 35 of the BCA, duly adopted the resolutions creating a new series of Preferred Stock, designated as "Series D Convertible Preferred Stock" and adopted the Certificate of Designations of the Series D Convertible Preferred Stock (the "Certificate of Designations of Series D") which authorized for issuance 100,000 shares of Series D Convertible Preferred Stock and had the stated initial stated value of US$39.00 per share (the "Series D Preferred"). On November 1, 2021, the Company offered and sold 100,000 shares of Series D Preferred to an accredited investor for the total gross proceeds of $3,900,000, in reliance upon Section 4(a)(2) of the Securities Act. On April 20, 2022, our Board adopted resolutions, by unanimous written consent, pursuant to Section 35 of the BCA, in which it determined that the Certificate of Designation of Series D Preferred was not filed with the Registrar of Corporations, in accordance with the provisions of sections 35 and 5 of the BCA at the time the Certificate of Designation of Series D Preferred was approved by the Board, and that it is in the best interests of the Corporation and its stockholders to correct the file the Certificate of Designation of Series D Preferred with the Registrar of Corporations, to correct an administrative oversight. Pursuant to this unanimous written consent dated April 20, 2022, the Board of Directors ratified and confirmed to treat the investor that purported to have been issued 100,000 shares of Series D Preferred economically, as if such holder (the "Holder") has been the holder of 100,000 shares of Series D Preferred since November 1, 2021, the date of the purported issuance of Series D Preferred, rather than the date of the filing of the Certificate of Series D Preferred and the Amended and Restated Certificate of Series D Preferred with the Registrar of Corporations. On April 25, 2022, the Company filed the Certificate of Designation of Series D Preferred with the Registrar of Corporations, and on April 27, 2022, we filed the Amended and Restated Certificate of Designation of Series D Preferred with the Registrar of Corporations. As stated in the Amended and Restated Certificate of Designation of Series D Preferred, shares of Series D Preferred vote together with holders of shares of Common Stock on an as-if-converted basis; have no special dividend right, ranks equal to the Common Stock with respect to rights upon liquidation and are convertible into shares of Common Stock on a 1 do 13 basis at any time following the issuance, subject to the adjustments with respect to the reverse stock split, as a result of which each share of Series D Preferred Stock may be currently converted into 1.3 shares of Common Stock. However, the conversion is limited to the extent that no conversion may occur if the number of shares of Common Stock to be issued pursuant to such conversion, when aggregated with all other shares of Common Stock owned by the holder of such shares at such time, would result in the holder beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) in excess of 9.99% of the then issued and outstanding shares of Common Stock. On May 2, 2022, the Holder converted 20,000 shares of Series D Preferred into 26,000 shares of Common Stock.

**Series E Convertible Preferred Stock**

On August 26, 2024, our Board acting by unanimous written consent, in accordance with Section 35 of the BCA, and holders of majority of the voting power of the Company duly adopted the resolutions creating a new series of Preferred Stock, designated as "Series E Convertible Preferred Stock" and adopted the Certificate of Designation of Series E Convertible Preferred Stock (the "Certificate of Designation of Series E Stock") which authorized for issuance 1,000,000 shares of Series E Convertible Preferred Stock and had the stated initial stated value of US$3.00 per share (the "Series E Preferred"). On September 23, 2024, the Certificate of Designation of Series E Stock was filed with the Registrar of the Corporation. On September 26, 2024, the Company issued all shares of Series E Stock (125,000 shares of Series E Stock were issued to each shareholder) in exchange for cancellation of the Company's indebtedness to each holder under the promissory note in the principal amount of $375,000.

The Certificate of Designation of Series E Stock features a stated value of $3.00 per share, the conversion rate of 1 for 2.5 (reflecting the 1-for-4 post reverse split ratio on the dates when all Series F Stock were converted), no additional consideration by the Holder for the conversion of Series E Shares into the shares of the Company's common stock and provided the schedule of conversion, such as, (i) up to 30% of the Series E Shares issued to each Holder may be converted by such Holder at any time from the date of the issuance; (ii) up to additional 30% of the Series E Shares counted on the date of the issuance may be converted by such Holder at any time after 90 days from the date of the issuance; (iii) up to 40% of the Series E Shares counted on the date of the issuance may be converted by such Holder after six (6) months from the date of the issuance. Pursuant to the Certificate of Designation of Series E Stock, on April 3, 2025, the Company required holders to convert all Series E Shares that remained outstanding on or after March 14, 2025 into shares of common stock. As a result, as of the date of this Annual Report, all of 1,000,000 Series E Shares were converted into shares of Common Stock, and the Company does not have any outstanding shares of Series E Preferred Stock.

**Series F Convertible Preferred Stock**

On April 22, 2025, our Board acting by unanimous written consent, in accordance with Section 35 of the BCA, and holders of majority of the voting power of the Company duly adopted the resolutions creating a new series of Preferred Stock, designated as "Series F Convertible Preferred Stock" and adopted the Certificate of Designation of Series E Convertible Preferred Stock (the "Certificate of Designation of Series F Stock") which authorized for issuance 69,000 shares of Series F Convertible Preferred Stock and had the stated initial stated value of US$20.00 per share.

On May 23, 2025, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock (the "Certificate of Designation of Series F Stock") with the Registrar of the Corporation under the Marshall Island Business Corporations Act, establishing the Series F Stock.

Series F Shares feature a stated value of $20.00 per share and are convertible into shares of the Company's Common Stock at the conversion rate of 1 for 100 (pre-split) or 1 for 6.667 (following the 1-for-15 reverse stock split, effective November 18, 2025), without payment or any additional consideration by the holder thereof. Such conversion is subject to the following schedule: (i) up to 2,000 of the Series F Shares issued to each holder may be converted by such holder at any time from the date of the issuance; (ii) up to additional 2,500 of the Series F Shares may be converted by such Holder at any time after 90 days from the date of the issuance; (iii) up to 3,000 of Series F Shares counted on the date of the issuance may be converted by such Holder after six (6) months from the date of the issuance; and (iv) the remaining 4,000 of the Series F Shares may be converted by such holder after nine (9) months from the date of the issuance. If any Series F Shares remain outstanding on or after one (1) year from the date of the issuance, the Company will have the right, but not the obligations, to require the holders of such Series F Shares to convert them into the number of fully paid and non-assessable shares of common stock.

On May 29, 2025, at the closing of the Exchange Agreement, the Company issued to the holders of Series F Shares an aggregate of 69,000 shares of Series F Stock in cancellation of the Total Amount Due (each Holder received 11,550 shares of Series F Stock), in cancellation of $1,380,00 principal amount under the promissory notes issued the noteholders. As of the date of the Annual Report, all shares of Series F Stock were converted into shares of Common Stock.

***Directors***

The business and affairs of the Company are managed by or under the direction of our Board of Directors.

Our directors are elected by the holders of the shares representing a majority of the total voting power of the then-outstanding capital stock of the Company entitled to vote generally in the election of directors ("Voting Stock"). Our Restated Articles provide that cumulative voting shall not be used to elect directors. Each director will be elected to serve until the next annual meeting of shareholders and until his/her successor shall have been duly elected and qualified, except in the event of his/her death, resignation, removal or the earlier termination of his/her term of office.

Any director or the entire Board of Directors may be removed at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the total voting power of the Voting Stock entitled to vote thereon or with cause by directors constituting at least two-thirds of the entire Board.

Vacancies in the Board of Directors occurring by death, resignation, the creation of new directorships, the failure of the shareholders to elect the whole board at any annual election of directors, or, except as herein provided, for any other reason, including removal of directors for cause, may be filled either by the affirmative vote of a majority of the remaining directors then in office, although less than a quorum, at any special meeting called for that purpose or at any regular meeting of the Board. Vacancies occurring by removal of directors without cause may be filled only by vote of the shareholders.

***Shareholder Meetings***

Annual stockholder meetings will be held at a time and place selected by our Board. The meetings may be held in or outside of the Marshall Islands. Under our Restated Articles, special meetings may be called by the Board, or by the secretary of the Company requested by stockholders representing certain amount of voting power. Our Board shall give not less than 15 days and not more than 60 days prior written notice of a shareholders' meeting to each shareholder of record entitled to vote thereat and to each shareholder of record who, by reason of any action proposed at such meeting would be entitled to have his/her shares appraised if such action were taken, and the notice shall include a statement of that purpose and to that effect.

Our bylaws provide that a meeting of shareholders is duly constituted if, at the commencement of the meeting, there are shareholders present in person or by proxy representing not less than a majority of the votes of the shares issued and outstanding and entitled to vote on resolutions of shareholders to be considered at the meeting.

If a quorum is present, the affirmative vote of a majority of the shares of stock represented at the meeting will be the act of the shareholders. At any meeting of shareholders, each shareholder entitled to vote any shares on any manner to be voted upon at such meeting shall be entitled to one vote on such matter for each such share. Any action required or permitted to be taken at a meeting, may be taken without a meeting if consent in writing setting forth the action so taken, is signed by all the shareholders entitled to vote with respect to the subject matter thereof.

***Dissenters' Rights of Appraisal and Payment.***

Under the BCA, our stockholders have the right to dissent from various corporate actions, including any merger or sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. However, the right of a dissenting stockholder to receive payment of the fair value of his or her shares shall not be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation. In the event of any further amendment of our articles of incorporation, a stockholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting stockholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting stockholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the circuit court in the judicial circuit in the Marshall Islands in which our Marshall Islands office is situated. The value of the shares of the dissenting stockholder is fixed by the court after reference, if the court so elects, to the recommendations of a court-appointed appraiser.

***Stockholders' Derivative Actions***

Under the BCA, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of common stock both at the time the derivative action is commenced and at the time of the transaction to which the action relates.

***Indemnification of Officers and Directors***

The BCA authorizes corporations to limit or eliminate the personal liability of directors and officers to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties. Our Restated Articles include a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest extent permitted by law. We must indemnify our directors and officers to the fullest extent authorized by law. We are also expressly authorized to advance certain expenses (including attorneys' fees and disbursements and court costs) to our directors and offices and carry directors' and officers' insurance providing indemnification for our directors, officers and certain employees for some liabilities.

The limitation of liability and indemnification provisions in our Restated Articles and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

**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 Item 4 "Information on the Company," Item 5 "Operating and Financial Review and Prospects—F. Tabular Disclosure of Contractual Obligations," Item 7 "Major Shareholders and Related Party Transactions," or filed (or incorporated by reference) as exhibits to this annual report or otherwise described or referenced in this Annual Report.

**D. Exchange Controls**

***Marshall Islands Exchange Controls***

Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to nonresident holders of our shares.

***BVI Exchange Controls***

There are no material exchange controls restrictions on payment of dividends, interest or other payments to the holders of our common stock or on the conduct of our operations in the BVI, where we were incorporated. There are no material BVI laws that impose any material exchange controls on us or that affect the payment of dividends, interest or other payments to nonresident holders of our common stock. BVI law and our memorandum and articles of association do not impose any material limitations on the right of non-residents or foreign owners to hold or vote our common stock.

***PRC Exchange Controls***

<u>Regulations on Foreign Currency Exchange</u>

Under the PRC Foreign Currency Administration Rules promulgated on January 29, 1996 and last amended on August 5, 2008 and various regulations issued by SAFE and other relevant PRC government authorities, payment of current account items in foreign currencies, such as trade and service payments, payment of interest and dividends can be made without prior approval from SAFE by following the appropriate procedural requirements. By contrast, the conversion of RMB into foreign currencies and remittance of the converted foreign currency outside the PRC for the purpose of capital account items, such as direct equity investments, loans and repatriation of investment, requires prior approval from SAFE or its local office.

On February 13, 2015, SAFE promulgated the Circular on Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, effective from June 1, 2015, which cancels the requirement for obtaining approvals of foreign exchange registration of foreign direct investment and overseas direct investment from SAFE. The application for the registration of foreign exchange for the purpose of foreign direct investment and overseas direct investment may be filed with qualified banks, which, under the supervision of SAFE, may review the application and process the registration.

The Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or SAFE Circular 19, was promulgated on March 30, 2015 and became effective on June 1, 2015. According to SAFE Circular 19, a foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital account for which the relevant foreign exchange bureau has confirmed monetary contribution rights and interests (or for which the bank has registered the account-crediting of monetary contribution). For the time being, foreign-invested enterprises are allowed to settle 100% of their foreign exchange capitals on a discretionary basis; a foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of business; where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled, the invested enterprise shall first go through domestic re-investment registration and open a corresponding Account for Foreign Exchange Settlement Pending Payment with the foreign exchange bureau (bank) at the place of registration. The Circular of the SAFE on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, was promulgated and became effective on June 9, 2016. According to SAFE Circular 16, enterprises registered in PRC may also convert their foreign debts from foreign currency into Renminbi on 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 self—discretionary basis, which applies to all enterprises registered in the PRC. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope and may not be used for investments in securities or other investment with the exception of bank financial products that can guarantee the principal within the PRC unless otherwise specifically provided. Besides, the converted Renminbi shall not be used to make loans for related enterprises unless it is within the business scope or to build or to purchase any real estate that is not for the enterprise's own use with the exception for the real estate enterprise.

On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profits from domestic entities to offshore entities, including (i) banks must check whether the transaction is genuine by reviewing board resolutions regarding profit distribution, original copies of tax filing records and audited financial statements, and (ii) domestic entities must retain income to account for previous years' losses before remitting any profits. Moreover, pursuant to SAFE Circular 3, domestic entities must explain in detail the sources of capital and how the capital will be used, and provide board resolutions, contracts and other proof as a part of the registration procedure for outbound investment.

<u>Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents</u>

SAFE issued the Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which became effective in July 2014, to replace the Circular of the State Administration of Foreign Exchange on Issues Concerning the Regulation of Foreign Exchange in Equity Finance and Roundtrip Investments by Domestic Residents through Offshore Special Purpose Vehicles, to regulate foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. SAFE Circular 37 defines a SPV as an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate onshore or offshore assets or interests, while "round trip investment" is defined as direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights. SAFE Circular 37 stipulates that, prior to making contributions into an SPV, PRC residents or entities be required to complete foreign exchange registration with SAFE or its local branch. In addition, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which amended SAFE Circular 37 and became effective on June 1, 2015, requiring PRC residents or entities to register with qualified banks rather than SAFE in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

PRC residents or entities who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks. An amendment to the registration is required if there is a material change with respect to the SPV registered, such as any change of basic information (including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise that is established through round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested enterprise, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations. See "Risk Factors—Risks Related to Doing Business in China—PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary or limit our PRC subsidiary's ability to increase their registered capital or distribute profits."

<u>Regulations on Stock Incentive Plans</u>

SAFE promulgated the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, or the Stock Incentive Plan Notice, in February 2012, replacing the previous rules issued by SAFE in March 2007. Pursuant to the Stock Incentive Plan Notice and other relevant rules and regulations, PRC residents participating in stock incentive plan in an overseas publicly-listed company are required to register with SAFE or its local branches and follow certain other procedures. Participants of a stock incentive plan who are PRC residents must conduct the SAFE registration and other procedures with respect to the stock incentive plan through a qualified PRC agent, which could be a PRC subsidiary of the overseas publicly listed company or another qualified institution appointed by the PRC subsidiary. In addition, the PRC agent is required to update the relevant SAFE registration should there be any material change to the stock incentive plan, the PRC agent or other material changes. The PRC agent must, on behalf of the PRC residents who have the right to exercise the employee stock options, apply to SAFE or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents' exercise of the employee stock options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed companies must be remitted into the bank accounts in the PRC opened by the PRC agents prior to distribution to such PRC residents.

We initially adopted an equity incentive plan in 2018 under which we have the discretion to award incentives and rewards to eligible participants. On January 11, 2022, we terminated the 2018 equity incentive plan and adopted the new equity incentive plan (the "2022 Plan"). On October 26, 2022, we terminated the 2022 Plan and adopted the New 2022 EIP with 66,667 maximum authorized shares of Common Stock for issuance. On May 7, 2025, the Company amended the New 2022 EIP, pursuant to which, among other things, the number of maximum authorized shares of Common Stock available for issuance increased to 1,666,667 shares of Common Stock, and on August 1, 2025, our Board and the holders of 52% of the total issued and outstanding capital stock of the Company, approved Amendment #2 to the New 2022 EIP, which reduced the maximum number of shares of Common Stock authorized for issuance under the New 2022 EIP from 1,666,667 to 666,667 shares of Common Stock. On January 5, 2026, the Board terminated 2022 EIP, as amended, and approved the adoption of the 2026 Equity Incentive Plan (the "2026 Plan"), effective immediately, which was approved by the holders of approximately 61% of the total issued and outstanding capital stock of the Company. The 2026 Plan authorized a maximum of 4,500,000 shares of Common Stock for issuance. We have advised the recipients of awards under our equity incentive plan to handle relevant foreign exchange matters in accordance with the Stock Incentive Plan Notice. However, we cannot guarantee that all employee awarded equity-based incentives can successfully register with SAFE in full compliance with the Stock Incentive Plan Notice. See "*Risk Factors—Risks Related to Doing Business in China.*"

**E. Taxation**

*The following is a general summary of the material Marshall Islands, Hong Kong, BVI, PRC and U.S. federal income tax consequences relevant to an investment in our shares of common stock, sometimes referred to collectively in this summary as our "securities". The discussion is not intended to be, nor should it be construed as, legal or tax advice to any particular prospective purchaser. The discussion is based on laws and relevant interpretations thereof in effect as of the date of this Annual Report, all of which are subject to change or different interpretations, possibly with retroactive effect. The discussion does not address United States state or local tax laws, or tax laws of jurisdictions other than the Marshall Islands, Hong Kong, the BVI, the PRC and the United States. We recommend that you consult your own tax advisors with respect to the consequences of acquisition, ownership and disposition of our securities.*

**Marshall Islands Taxation**

The following are the material Marshall Islands tax consequences of our activities to us and to our stockholders of investing in our Common Stock. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax or income tax will be imposed upon payments of dividends by us to our stockholders or proceeds from the disposition of our Common Stock, provided such stockholders are not residents in the Marshall Islands. There is no tax treaty between the United States and the Republic of the Marshall Islands.

**BVI Taxation**

The BVI does not impose a withholding tax on dividends paid to us by our BVI subsidiary, nor does the BVI levy any capital gains or income taxes on us or our BVI subsidiary. However, our BVI subsidiary is required to pay the BVI government an annual license fee based on the number of shares it is authorized to issue.

There is no income tax treaty or convention currently in effect between the United States and the BVI.

**Hong Kong Taxation**

Our Hong Kong subsidiaries, under the current laws of Hong Kong, are subject to profits tax of 16.5%. No provision for Hong Kong profits tax has been made as our Hong Kong subsidiaries have no taxable income.

**PRC Taxation**

We are a holding company incorporated in the Marshall Islands, which indirectly holds our equity interests in our PRC operating subsidiaries. The EIT Law and its implementation rules, both of which became effective as of January 1, 2008, provide that a PRC enterprise is subject to a standard income tax rate of 25% and China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its overseas parent, will normally be subject to PRC withholding tax at a rate of 10%, unless there are applicable treaties between the overseas parent's jurisdiction of incorporation and China to reduce such rate.

Under the Arrangement between the Mainland 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 Taxation Arrangement, effective as of January 1, 2007, such dividend withholding tax rate is reduced to 5% if a Hong Kong resident enterprise owns over 25% of the PRC company distributing the dividends. Under the aforesaid arrangement, any dividends that our PRC operating subsidiaries pay to their Hong Kong holding companies may be subject to a withholding tax at the rate of 5% if they are not considered to be a PRC "resident enterprise" as described below. However, if the Hong Kong holdings companies are not considered to be the "beneficial owner" of such dividends under the Notice Regarding Interpretation and Recognition of Beneficial Owners under Tax Treaties promulgated by the State Administration of Taxation on October 27, 2009 (and not a PRC "resident enterprise"), such dividends would be subject to the withholding tax rate of 10%. The withholding tax rate of 5% or 10% applicable will have a significant impact on the amount of dividends to be received by us and ultimately by shareholders.

According to the Notice Regarding Interpretation and Recognition of Beneficial Owners under Tax Treaties, the term "beneficial owner" refers to a person who has the right to own and dispose of the income and the rights or properties generated from the said income. The "beneficial owner" may be an individual, a company or any other organization which is usually engaged in substantial business operations. A conduit company is not a "beneficial owner." The term "conduit company" refers to a company which is usually established for purposes of dodging or reducing taxes, and transferring or accumulating profits. Such a company is only registered in the country of domicile to satisfy the organizational form as required by law, but it does not engage in such substantial business operations as manufacturing, distribution and management. As our Hong Kong holding companies are controlling companies and are not engaged in substantial business operations, they could be considered as conduit companies by tax authorities and we do not expect them to be a beneficial owner.

In addition to the changes to the current tax structure, under the EIT Law, an enterprise established outside of China with "de facto management bodies" within China is considered a resident enterprise and will normally be subject to an EIT of 25% on its global income. The implementing rules define the term "de facto management bodies" as "an establishment that exercises, in substance, overall management and control over the production, business, personnel, accounting, etc., of a Chinese enterprise."

It remains unclear whether the PRC tax authorities would require or permit our overseas registered entities to be treated as PRC resident enterprises. We do not currently consider our company to be a PRC resident enterprise. However, if the PRC tax authorities determine that we are a "resident enterprise" for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on offering proceeds and non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law and its implementing rules dividends paid to us from our PRC subsidiaries would qualify as "tax-exempt income," we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new "resident enterprise" classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC shareholders and with respect to gains derived by our non-PRC shareholders from transferring our shares.

**U.S. Federal Income Taxation**

The following is a discussion of certain material U.S. federal income tax consequences of the acquisition, ownership and disposition of our securities. It does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a particular person's situation. The discussion applies only to holders that hold their securities as capital assets (generally property held for investment) within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended, or the Code. This discussion is based on the Code, income tax regulations promulgated thereunder, judicial positions, published positions of the Internal Revenue Service, or the IRS, and other applicable authorities, all as in effect as of the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion is general in nature and is not exhaustive of all possible tax considerations, nor does the discussion address any state, local or foreign tax considerations or any U.S. tax considerations (e.g., estate or gift tax) other than U.S. federal income tax considerations, that may be applicable to particular holders.

This discussion does not address all aspects of U.S. federal income taxation that may be relevant in light of particular circumstances, nor does it address the U.S. federal income tax consequences to persons who are subject to special rules under U.S. federal income tax law, including:

● banks, insurance companies or other financial institutions;

● persons subject to the alternative minimum tax;

● tax-exempt organizations;

● controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid United States federal income tax;

● certain former citizens or long-term residents of the United States;

● dealers in securities or currencies;

● traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

● persons that own, or are deemed to own, more than five percent of our capital stock;

● holders who acquired our stock as compensation or pursuant to the exercise of a stock option; or

● persons who hold our shares as a position in a hedging transaction, "straddle," or other risk reduction transaction.

For purposes of this discussion, a U.S. holder is (i) an individual who is a citizen or resident of the United States for U.S. federal income tax purposes; (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States (or treated as such under applicable U.S. tax laws), any state thereof, or the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source; or (iv) a trust if (a) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) it has a valid election in effect under applicable law and regulations to be treated as a U.S. person for U.S. federal income tax purposes. A non-U.S. holder is a holder that is neither a U.S. holder nor a partnership or other entity classified as a partnership for U.S. federal income tax purposes.

In the case of a partnership or entity classified as a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. Partners of partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them of the merger or of the ownership and disposition of our shares.

As a result of consummation of the Share Exchange, (i) we acquired substantially all the properties of KBS International, a U.S. corporation, and (ii) the former shareholders of KBS International held at least 80 percent of our Common Stock by reason of having held stock of KBS International. Accordingly, under Section 7874 of the Code, we are treated for U.S. federal tax purposes as a U.S. corporation and, among other consequences, are subject to U.S. federal income tax on our worldwide income. This discussion assumes that Section 7874 of the Code continues to apply to treat us as a U.S. corporation for all purposes under the Code. If, for some reason (e.g., future repeal of Section 7874 of the Code), we were no longer treated as a U.S. corporation under the Code, the U.S. federal income tax consequences described herein could be materially and adversely affected.

*<u>U.S. Federal Income Tax Consequences for U.S. Holders</u>*

*Distributions*

In the event that distributions are paid on our common stock, the gross amount of such distributions will be included in the gross income of the U.S. holder as dividend income on the date of receipt to the extent that the distribution is paid out of current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such dividends will be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations. Dividends received by non-corporate U.S. holders, including individuals, may be subject to reduced rates of taxation under current law. A U.S. holder may be eligible to claim a foreign tax credit with respect to any PRC withholding tax imposed on dividends paid by us. However, the foreign tax credit rules are complex, and their application in connection with Section 7874 of the Code and the Agreement Between the Government of the United States of America and the Government of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income, or the U.S.-PRC Tax Treaty, is not entirely clear at this time. U.S. holders should consult their own tax advisors with respect to any benefits they may be entitled to under the foreign tax credit rules and the U.S.-PRC Tax Treaty.

The extent that dividends paid on our Common Stock exceed current and accumulated earnings and profits, the distributions will be treated first as a tax-free return of tax basis on our Common Stock, and to the extent that the amount of the distribution exceeds tax basis, the excess will be treated as gain from the disposition of those common stock. Because Section 7874 of the Code has applied to treat us as a U.S. corporation only since the consummation of the Share Exchange in 2014, we may not be able to demonstrate to the IRS the extent to which a distribution on our common stock exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), in which case all of such distribution will be treated as a dividend for U.S. federal income tax purposes.

*Sale or Other Disposition*

U.S. holders of our Common Stock will recognize taxable gain or loss on any sale, exchange, or other taxable disposition of common stock equal to the difference between the amount realized for the common stock and the U.S. holder's tax basis in the common stock. This gain or loss generally will be capital gain or loss. Under current law, non-corporate U.S. holders, including individuals, are eligible for reduced tax rates if the common stock has been held for more than one year. The deductibility of capital losses is subject to limitations. A U.S. holder may be eligible to claim a foreign tax credit with respect to any PRC withholding tax imposed on gain from the sale or other disposition of common stock. However, the foreign tax credit rules are complex, and their application in connection with Section 7874 of the Code and the U.S.-PRC Tax Treaty is not entirely clear at this time. U.S. holders should consult their own tax advisors with respect to any benefits they may be entitled to under the foreign tax credit rules and the U.S.-PRC Tax Treaty.

*Unearned Income Medicare Contribution*

Certain U.S. holders who are individuals, trusts or estates are required to pay an additional 3.8% Medicare tax on, among other things, dividends on and capital gains from the sale or other disposition of shares of stock. U.S. holders should consult their own advisors regarding the effect, if any, of this rule on their ownership and disposition of our Common Stock.

*<u>U.S. Federal Income Tax Consequences for Non-U.S. Holders</u>*

*Distributions*

The rules applicable to non-U.S. holders for determining the extent to which distributions on our Common Stock, if any, constitute dividends for U.S. federal income tax purposes are the same as for U.S. holders. *See "–U.S. Federal Income Tax Consequences for U.S. Holders– Distributions."*

Any dividends paid to a non-U.S. holder by us are treated as income derived from sources within the United States and generally will be subject to U.S. federal income tax withholding at a rate of 30% of the gross amount of the dividends, or at a lower rate provided by an applicable income tax treaty if non-U.S. holders provide proper certification of eligibility for the lower rate (usually on IRS Form W-8BEN or W-8BEN-E). Dividends received by a non-U.S. holder that are effectively connected with such holder's conduct of a U.S. trade or business (and, if an income tax treaty applies, are attributable to a permanent establishment maintained by the non-U.S. holder in the U.S.) are exempt from such withholding tax, provided that applicable certification requirements are satisfied. In such case, however, non-U.S. holders will be subject to U.S. federal income tax on such dividends, net of certain deductions, at the rates applicable to U.S. persons. In addition, corporate non-U.S. holders may be subject to an additional branch profits tax equal to 30% or such lower rate as may be specified by an applicable tax treaty on dividends received that are effectively connected with the conduct of a trade or business in the United States.

If non-U.S. holders are eligible for a reduced rate of U.S. withholding tax pursuant to an applicable income tax treaty, such non-U.S. holders may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS.

*Sale or Other Disposition*

Except as described below for a reduced rate of U.S. withholding tax pursuant to an applicable income tax treaty, any gain realized by a non-U.S. holder upon the sale or other disposition of our Common Stock generally will not be subject to U.S. federal income tax unless:

● the gain is effectively connected with the conduct of a trade or business in the United States by such non- U.S. holder, and, if an income tax treaty applies, is attributable to a permanent establishment maintained by such non-U.S. holder in the U.S.;

● 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 the disposition, and certain other conditions are met; or

● We are or have been a "U.S. real property holding corporation," or USRPHC, for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period during which the holder has held our Common Stock.

Non-U.S. holders whose gain is described in the first bullet point above will be subject to U.S. federal income tax on the gain derived from the sale, net of certain deductions, at the rates applicable to U.S. persons. Corporate non-U.S. holders whose gain is described in the first bullet point above may also be subject to the branch profits tax described above at a 30% rate or lower rate provided by an applicable income tax treaty. Individual non-U.S. holders described in the second bullet point above will be subject to a flat 30% U.S. federal income tax rate on the gain derived from the sale, which may be offset by U.S.-source capital losses, even though such non-U.S. holders are not considered to be residents of the United States.

A corporation will be a USRPHC if the fair market value of its U.S. real property interests equals or exceeds 50 percent of the aggregate of its real property interests (U.S. and non-U.S.) and its assets used or held for use in a trade or business. Because we do not currently own significant U.S. real property, we believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock are regularly traded on an established securities market, such common stock will be treated as U.S. real property interests only if a non-U.S. holder actually or constructively holds more than 5% of such regularly traded common stock at any time during the applicable period that is specified in the Code.

*Foreign Account Tax Compliance*

The Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act (generally referred to as "FATCA"), when applicable, will impose a U.S. federal withholding tax of 30% on payments of dividends on, and (for dispositions after December 31, 2018) gross proceeds from dispositions of, our common stock that are held through "foreign financial institutions" (which is broadly defined for this purpose and in general includes investment vehicles) and certain other non-U.S. entities unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of certain interests in or accounts with those entities) have been satisfied or an exemption applies. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. U.S. Holders should consult their tax advisers regarding the effect, if any, of the FATCA provisions on their particular circumstances.

*Information Reporting and Backup Withholding*

Payments of dividends or of proceeds on the disposition of stock made to a holder of our Common Stock may be subject to information reporting and backup withholding at a current rate of 24% unless such holder provides a correct taxpayer identification number on IRS Form W-9 (or other appropriate withholding form) or establishes an exemption from backup withholding, for example by properly certifying the holder's non-U.S. status on a Form W-8BEN, Form W-8BEN-E or another appropriate version of IRS Form W-8. Payments of dividends to holders must generally be reported annually to the IRS, along with the name and address of the holder and the amount of tax withheld, if any. A similar report is sent to the holder. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in the holder's country of residence.

Backup withholding is not an additional tax; rather, the U.S. income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner

**F. Dividends and Paying Agents**

Not applicable.

**G. Statement by Experts**

Not applicable.

**H. Documents on Display**

We have filed this annual report on Form 20-F with the SEC under the Exchange Act. Statements made in this report as to the contents of any document referred to are not necessarily complete. With respect to each such document filed as an exhibit to this report, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference.

We are subject to the informational requirements of the Exchange Act as a foreign private issuer and file reports and other information with the SEC. Reports and other information filed by us with the SEC including this report, may be inspected and copied at the public reference room of the SEC at 100 F Street, N.E., Washington D.C. 20549. You can also obtain copies of this report by mail from the Public Reference Section of the SEC, 100 F. Street, N.E., Washington D.C. 20549, at prescribed rates. Additionally, copies of this material may be obtained from the SEC's Internet site at http://www.sec.gov. The SEC's telephone number is 1-800-SEC-0330. In accordance with NASDAQ Stock Market Rule 5250(d), we will also post this annual report on Form 20-F on our website at www.jxluxventure.com/en.

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.

**I. Subsidiary Information**

Not applicable.

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

***Interest Rate Risk***

We deposit surplus funds with Chinese banks earning daily interest. We do not invest in any instruments for trading purposes. Most of our outstanding debt instruments carry fixed rates of interest. Our operations generally are not directly sensitive to fluctuations in interest rates and we currently do not have any long-term debt outstanding. Management monitors the banks' prime rates in conjunction with our cash requirements to determine the appropriate level of debt balances relative to other sources of funds. We have not entered into any hedging transactions in an effort to reduce our exposure to interest rate risk.

***Foreign Exchange Risk***

While our reporting currency is the U.S. dollar, substantially all of our consolidated revenues and consolidated costs and expenses are denominated in RMB. Substantially all of our assets are denominated in RMB. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and the RMB. If the RMB depreciates against the U.S. dollar, the value of our RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. Assets and liabilities are translated at exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and equity is translated at historical exchange rates. Any resulting translation adjustments are not included in determining net income but are included in determining other comprehensive income, a component of equity. An average appreciation (depreciation) of the RMB against the U.S. dollar of 5% would increase (decrease) our comprehensive income by $3.0 million based on our outstanding revenues, costs and expenses, assets and liabilities denominated in RMB as of December 31, 2019. As of December 31, 2020, our accumulated other comprehensive loss was $(3.5) million. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

The value of RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China's political and economic conditions. Since July 2005, RMB has not been pegged to the U.S. dollar. Although the People's Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, PRC authorities may lift restrictions on fluctuations in RMB exchange rate and lessen intervention in the foreign exchange market.

***Inflation***

Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net revenues if the selling prices of our products do not increase with these increased costs.

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

**A. Debt Securities**

Not applicable.

**B. Warrants and Rights**

Not applicable.

**C. Other Securities**

Not applicable.

**D. American Depositary Shares**

We do not have any American Depositary Shares.

**PART II**

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

None.

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

None.

**ITEM 15. CONTROLS AND PROCEDURES**

**A. Disclosure Controls and Procedures**

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of the Company's disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2025.

The term "disclosure controls and procedures" as defined in Rules 13a-15(e) and 15d-15(e) means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by a company in reports, such as this report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on that evaluation, our CEO and interim CFO concluded that our disclosure controls and procedures were not effective as of December 31, 2025, due to a material weakness in our internal control over financial reporting. Specifically, we currently lack sufficient accounting personnel with the appropriate level of knowledge, experience and training in IFRS and SEC reporting requirements.

**B. Management's Annual Report on Internal Control Over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of our consolidated financial statements in accordance with IFRS. Our accounting policies and internal controls over financial reporting, established and maintained by management, are under the general oversight of the Board's audit committee.

Our internal control over financial reporting includes those policies and procedures that:

● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

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 or compliance with the policies or procedures may deteriorate.

Management assessed our internal control over financial reporting as of December 31, 2025.The standard measures adopted by management in making its evaluation are the measures in the Internal-Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on management's assessment using the COSO criteria, our CEO and CFO concluded that our internal control over financial reporting as of December 31, 2025 was ineffective. We have taken, and are taking, certain actions to remediate the material weakness related to our lack of IFRS and SEC reporting experience. We engaged a consultant with IFRS knowledge and experience to supplement our current internal accounting personnel and assist us in the preparation of our financial statements to ensure that our financial statements are prepared in accordance with IFRS.

The Company continues to make efforts to implementing our existing and newly adopted procedures to improve our disclosure controls and internal controls over financing reporting.

**C. Attestation Report of the Registered Public Accounting Firm**

Because the Company is a non-accelerated filer, this annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

**D. Changes in Internal Controls over Financial Reporting**

Other than discussed above, there has been no change to our internal control over financial reporting that occurred during the period covered by this annual report on Form 20-F that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**ITEM 16. [RESERVED]**

**ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT**

The audit committee of our Board currently consists of three members, Mu Ruifeng, Jin Yan and Tiange Yin . Our Board has determined that all of our audit committee members are "independent" under the Exchange Act and have the requisite financial knowledge and experience to serve as members of our audit committee. In addition, our Board has determined that audit committee financial expert is an "audit committee financial expert" as defined in Item 16A of the Instructions to Form 20-F and meets NASDAQ's financial sophistication requirements due to his current and past experience in various companies in which he was responsible for, amongst others, the financial oversight responsibilities.

**ITEM 16B. CODE OF ETHICS**

On October 25, 2014, our Audit Committee adopted a Code of Ethics that applies to all of the directors, officers and employees of the Company and its subsidiaries, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code. Copies of our Code of Ethics are available in print, free of charge, upon request to JX Luxventure Group Inc., Bin Hai Da Dao No. 270, Lang Qin Wan Guo Ji Du Jia Cun Zong He Lou, Xiu Ying District, Haikou City, Hainan Province 570100, People's Republic of China. During the fiscal year ended December 31, 2024, there were no waivers of our Code of Ethics.

**ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

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

---

| | | |
|:---|:---|:---|
|  | **Fiscal Year Ended <br> December 31,** | **Fiscal Year Ended <br> December 31,** |
|  | **2024** | **2025** |
| Audit Fees\* | $210000 | $210000 |

---

\* "Audit Fees" consisted of the aggregate fees billed for professional services rendered for the audit of our annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.

Our Audit Committee pre-approves all auditing services and permitted non-audit services to be performed for us by our independent auditor, including the fees and terms thereof (subject to the de minimums exceptions for non-audit services described in Section 10A(i)(l)(B) of the Exchange Act that are approved by our Audit Committee prior to the completion of the audit).

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

Prior to July 10, 2017, in lieu of an audit committee comprised of three independent directors, our audit committee was comprised of two independent members of our Board, namely, John Sano and Matthew C. Los. On July 10, 2017, the Board appointed Ms. Yuet Mei Chan as an independent director and a member of the audit committee. On October 21, 2020, John Sano and Matthew C. Los resigned from their positions as independent directors of the Company and on October 25, 2020, Mr. Mu Ruifeng and Mr. Jin Yan were appointed as independent directors of the Company and member of the Audit Committee of the Company. On May 2, 2022, Yuet Mei Chan resigned from her position as independent director of the Company and on May 3, 2022, Mr. Baojun Zhu was appointed as independent director of the Company and a member of the Audit Committee of the Company. As a result, we are in full compliance with the Nasdaq listing rules for the audit committee. On March 13, 2026, Mr. Zhu, resigned from serving as a member of the Board and the Audit Committee, and upon his resignation, the Board appointed Ms. Tiange Yin as a member of the Board and a member of the Audit Committee effective immediately. The Board determined that Mr. Yin meets the independence criteria for directors and additional independence criteria prescribed by Nasdaq listing rules and SEC Rule 10A-3 for members of the Audit Committee.

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

There were no purchases of equity securities made by or on behalf of us or any "affiliated purchaser" as defined in Rule 10b-18 of the Exchange Act during the period covered by this Annual Report.

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

None.

**ITEM 16G. CORPORATE GOVERNANCE**

We were incorporated in the Republic of the Marshall Islands ("RMI") and our corporate governance practices are governed by applicable RMI law, our Restated Articles and bylaws. In addition, because our Common Stock is listed on NASDAQ, we are subject to NASDAQ's corporate governance requirements. However, we are exempt from certain corporate governance requirements available for foreign private issuers described below.

NASDAQ Listing Rule 5615(a)(3) permits a foreign private issuer like us to follow home country practices in lieu of certain requirements of Listing Rule 5600, provided that such foreign private issuer discloses in its annual report filed with the SEC each requirement of Rule 5600 that it does not follow and describes the home country practice followed in lieu of such requirement. Our RMI counsel has provided a letter to NASDAQ indicating that we have elected to follow home country practices in lieu of NASDAQ Listing Rule 5600 with the exception of those rules which are required to be followed pursuant to the provisions of Nasdaq Listing Rule 5615(a)(3), and our practices with regards to these NASDAQ requirements are not prohibited by the laws of the RMI. We currently follow our home country practice that (i) does not require us to hold an annual meeting of shareholders no later than one year after the end of its fiscal year, (ii) does not require us to seek shareholder approval for the adoption of share incentive plans; and (iii) does not require us to establish a compensation committee or nominating committee or nominating process. As a result,

● in lieu of having a compensation committee under Nasdaq Listing Rule 5605(d), we currently do not have a compensation committee;

● in lieu of selecting or recommending director nominees for selection by either a majority of the independent directors or a nominating committee comprised solely of independent directors under Nasdaq Listing Rule 5605(e), we currently do not have a nominating committee or such nominating process;

● in lieu of holding a shareholder meeting each year under Nasdaq Listing Rule 5620(a), we did not hold an annual shareholder meeting in fiscal 2019; however, we may, hold annual shareholder meetings in the future if there are significant issues that require shareholders' approvals; and

● in lieu of obtaining shareholder approval under Nasdaq Listing Rule 5635(c) prior to the adoption of an agreement pursuant to which stock may be acquired by officers, directors, employees or consultants, our board of directors approves such adoption, including our 2018 equity incentive plan.

**ITEM 16H. MINE SAFETY DISCLOSURE**

Not applicable.

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

Not applicable.

**ITEM 16J. Insider trading policies**

We have adopted insider trading policies governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees. A copy of the insider trading policies is attached as an exhibit to this annual report.

**ITEM 16K. Cybersecurity**

**Risk Management and Strategy**

We have established policies and processes for assessing, identifying, and managing material risks from cybersecurity threats, and plan to integrate these processes into our overall risk management systems and processes.

We also implemented a set of procedures to ensure effective management of the cybersecurity risks associated with the use of third-party service providers, including conducting cybersecurity assessments and tracking the capabilities and qualifications of third-party security service providers through assessment process. vulnerabilities.

We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats. These risks include, among other things, operational risks; intellectual property theft; fraud; extortion; harm to employees or customers; violation of privacy or security laws and other litigation and legal risk; and reputational risks.

To address the increasing risks of cyber-attacks, we implemented a robust and scalable cybersecurity strategy to protect our infrastructure, customer data, and reputation, while leveraging third-party cloud services. We utilize advanced security features provided by our cloud partners, including encryption, intrusion detection, and continuous monitoring, to safeguard sensitive information and prevent unauthorized access. Our cybersecurity team enforces strict access controls, such as multi-factor authentication (MFA) and role-based permissions, while conducting regular vulnerability scans, penetration testing, and audits to identify and remediate potential weaknesses. Comprehensive employee training programs promote awareness of phishing and other threats, reducing human error risks. We maintain a well-defined incident response plan to swiftly contain, investigate, and resolve any security incidents, ensuring minimal disruption to our platform and services. By aligning with our cloud providers' compliance standards we meet regulatory requirements and protect customer trust.

We assess the impact of cybersecurity threats on our business, including our strategic direction, operational performance, and financial stability, using insights from any past cybersecurity incidents in the shipping industry of which we are aware.

We have implemented risk-based processes for assessing, identifying, and managing material risks from cybersecurity threats. These processes include access controls to organizational systems, data encryption, and cybersecurity training and security awareness campaigns, and are designed to systematically evaluate potential vulnerabilities and cybersecurity threats and minimize their potential impact on our organization's operations, assets, and stakeholders. Accordingly, we also implement processes to oversee and identify material cybersecurity risks associated with our utilization of third-party service providers on whom we have a material dependency, such as conducting due diligence assessments to evaluate their cybersecurity measures, data protection practices, and compliance with relevant regulatory requirements.

As we do not have a dedicated board committee solely focused on cybersecurity, our board of directors has oversight responsibility for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on financial and other risks. Senior management regularly discusses cyber risks and trends and, should they arise, any material incidents with our board of directors. We consult with outside counsel as appropriate, including on materiality analysis and disclosure matters, and in the event of an incident our board of directors will make the final materiality determinations and disclosure and other compliance decisions. Our external IT provider maintains a dedicated cybersecurity auditing team that independently tests our cybersecurity controls.

Overall, our approach to cybersecurity risk management includes the following key elements:

● <u>Open-Source Software Approval Process</u>: All OSS intended for use in our products or platform must be reviewed and approved by a designated compliance team. This process includes evaluating the OSS license to ensure compatibility with our business model and existing obligations, documenting the software's purpose, and verifying that it does not impose restrictive requirements, such as mandatory source code disclosure.

● <u>License Compliance Tracking:</u> We maintain a centralized inventory of all OSS components used in our systems, including their versions, licenses, and associated obligations. Developers are required to log each OSS component in a software bill of materials (SBOM) and ensure that license terms, such as attribution notices or copyleft provisions, are adhered to in our codebase and distributions.

● <u>Code Review and Scanning Policy:</u> All code, including OSS, must undergo automated scanning using tools to detect unlicensed or non-compliant OSS components before integration. Regular code reviews ensure that OSS is used in accordance with its license terms and that any modifications or derivative works comply with applicable requirements.

● <u>Developer Training and Guidelines:</u> Employees and contractors receive mandatory training on OSS licensing and compliance. Clear guidelines prohibit the use of high-risk licenses without explicit approval and outline procedures for incorporating OSS, such as including proper license notices in our products and ensuring no proprietary code is inadvertently mixed with copyleft-licensed OSS.

● <u>Third-Party Contribution Policy:</u> Developers are prohibited from contributing to external OSS projects on behalf of the company without prior approval. Any contributions must align with our licensing policies, and we ensure that contributions do not inadvertently incorporate our proprietary code into OSS projects under incompatible licenses.

These policies help ensure that our use of open-source software is compliant, minimizing legal and operational risks while maintaining the integrity of our platform and products.

Our business strategy, operating results and financial condition have not been materially affected by risks from cybersecurity threats, including as a result of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.

As of the date of this Annual Report, we have not experienced any material cybersecurity incidents or identified any material cybersecurity threats that have affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition.

**Governance**

Our Board is responsible for overseeing our cybersecurity risk management. Our Board shall (i) maintain oversight of the disclosure related to cybersecurity matters in current reports or periodic reports of our company, (ii) review updates to the status of any material cybersecurity incidents or material risks from cybersecurity threats to our company, and the disclosure issues, if any, presented by our cybersecurity officer on a quarterly basis, and (iii) review disclosure concerning cybersecurity matters in our annual report on Form 20-F presented by our cybersecurity officer.

**PART III**

**ITEM 17. FINANCIAL STATEMENTS**

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

**ITEM 18. FINANCIAL STATEMENTS**

The financial statements are filed as part of this annual report beginning on page F-1.

**ITEM 19. EXHIBITS**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 1.1 | [Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.3 to Amendment No. 4 to the registrant's Registration Statement on Form F-1 filed on October 24, 2012 (Commission File No. 333-180571)).](http://www.sec.gov/Archives/edgar/data/1546383/000114420412057558/v326493_ex3-3.htm) |
| 1.2 | [Articles of Amendment to the Amended and Restated Articles of Incorporation, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on October 31, 2014 (incorporated by reference to Exhibit 1.2 to the Annual Report on Form 20-F filed by the registrant on October 27, 2015)](http://www.sec.gov/Archives/edgar/data/1546383/000114420415060877/v422619_ex1-2.htm) |
| 1.3 | [Articles of Amendment to the Amended and Restated Articles of Incorporation, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on February 3, 2017 (incorporated by reference to Exhibit 99.1 to the Report of Foreign Private Issuer on Form 6-K furnished by the registrant on February 3, 2017)](http://www.sec.gov/Archives/edgar/data/1546383/000114420417005951/v458403_ex99-1.htm) |
| 1.4 | [Articles of Amendment to the Amended and Restated Articles of Incorporation, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on June 21, 2021 (incorporated by reference to Exhibit 1.4 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex1-4_jxluxventure.htm) |
| 1.5 | [Articles of Amendment to the Amended and Restated Articles of Incorporation, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on October 4, 2021 (incorporated by reference to Exhibit 3.1 to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on October 7, 2021)](http://www.sec.gov/Archives/edgar/data/1546383/000121390021051732/ea148493ex3-1_jxluxventure.htm) |
| 1.6 | [Articles of Amendment to the Amended and Restated Articles of Incorporation, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on April 25, 2023 (incorporated by reference to Exhibit 3.1 to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on April 25, 2023)](http://www.sec.gov/Archives/edgar/data/1546383/000121390023032367/ea177441ex3-1_jxluxventure.htm) |
| 1.7 | [Articles of Amendment to the Amended and Restated Articles of Incorporation, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on December 27, 2024 (incorporated by reference to Exhibit 3.1 to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on January 6, 2025)](http://www.sec.gov/Archives/edgar/data/1546383/000121390023032367/ea177441ex3-1_jxluxventure.htm) |
| 1.8 | [Articles of Amendment to the Amended and Restated Articles of Incorporation, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on November 18, 2025 (incorporated by reference to Exhibit 3.1 to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on November 18, 2025)](http://www.sec.gov/Archives/edgar/data/1546383/000121390023032367/ea177441ex3-1_jxluxventure.htm) |
| 1.9 | [By-laws as amended on September 22, 2014 (incorporated by reference to Exhibit 1.3 to the Annual Report on Form 20-F filed by the registrant on October 27, 2015)](http://www.sec.gov/Archives/edgar/data/1546383/000114420415060877/v422619_ex1-3.htm) |
| 2.1 | [Specimen of Common Stock Certificate (incorporated by reference to Exhibit 2.2 to the Annual Report on Form 20-F filed by the registrant on October 27, 2015)](http://www.sec.gov/Archives/edgar/data/1546383/000114420415060877/v422619_ex2-2.htm) |
| 2.2 | [Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on April 25, 2022 (incorporated by reference to Exhibit 2.2 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex2-2_jxluxventure.htm) |
| 2.3 | [Certificate of Designation, Preferences and Rights of Series B Participating Preferred Stock, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on April 25, 2022 (incorporated by reference to Exhibit 2.3 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex2-3_jxluxventure.htm) |
| 2.4 | [Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on April 25, 2022 (incorporated by reference to Exhibit 2.4 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex2-4_jxluxventure.htm) |
| 2.5 | [Certificate of Designation, Preferences and Rights of Series D Convertible Preferred Stock, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on April 25, 2022 (incorporated by reference to Exhibit 2.5 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex2-5_jxluxventure.htm) |
| 2.6 | [Amended and Restated Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on April 27, 2022 (incorporated by reference to Exhibit 2.6 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex2-6_jxluxventure.htm) |
| 2.7 | [Amended and Restated Certificate of Designation, Preferences and Rights of Series B Participating Preferred Stock, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on April 27, 2022 (incorporated by reference to Exhibit 2.7 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex2-7_jxluxventure.htm) |
| 2.8 | [Amended and Restated Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on April 27, 2022 (incorporated by reference to Exhibit 2.8 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex2-8_jxluxventure.htm) |
| 2.9 | [Amended and Restated Certificate of Designation, Preferences and Rights of Series D Convertible Preferred Stock, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on April 27, 2022 (incorporated by reference to Exhibit 2.9 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex2-9_jxluxventure.htm) |

---

---

| | |
|:---|:---|
| 2.10 | [Second Amended and Restated Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock, filed with the Office of the Registrar of Corporations of Republic of the Marshall Islands on May 10, 2022 (incorporated by reference to Exhibit 2.10 to the Annual Report on Form 20-F filed by the registrant on May 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022026185/f20f2021ex2-10_jxluxventure.htm) |
| 2.11 | [Certificate of Designation, Preferences and Rights of Series E Convertible Preferred Stock (incorporated by reference to Exhibit 10.1 to the Report on Form 6-K filed by the registrant on September 27, 2024)](http://www.sec.gov/Archives/edgar/data/1546383/000121390024082753/ea021587701ex10-1_jxlux.htm) |
| 2.12 | [Certificate of Designation, Preferences, Rights and Limitations of Series F Convertible Preferred Stock (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K by the registrant on May 30, 2025)](https://www.sec.gov/Archives/edgar/data/1546383/000121390025049490/ea024398201ex10-1_jxluxvent.htm) |
| 2.13 | [Description of Securities <u>(incorporated by reference to Exhibit 2.12 to the Annual Report on Form 20-F filed by the registrant on May 15, 2025)</u>](https://www.sec.gov/Archives/edgar/data/1546383/000121390025043744/ea023922701ex2-12_jxluxven.htm) |
| 4.1 | [Negotiable Promissory Note, dated August 23, 2024, issued by the registrant to Huidan Li, the Co-Chairman of the board of directors (incorporated by reference to Exhibit 4.1 of the Report of Foreign Private Issuer on Form 6-K filed by the registrant on August 28, 2024)](http://www.sec.gov/Archives/edgar/data/1546383/000121390024073945/ea021272101ex4-1_jxlux.htm) |
| 4.2 | [Form of Negotiable Promissory Note dated August 26, 2024, issued by the registrant to noteholders (incorporated by reference to Exhibit 4.2 of the Report of Foreign Private Issuer on Form 6-K filed by the registrant on August 28, 2024).](http://www.sec.gov/Archives/edgar/data/1546383/000121390024073945/ea021272101ex4-2_jxlux.htm) |
| 4.3 | [Negotiable Promissory Note dated April 21, 2025, issued by the registrant to Huidan Li, the Co-Chairman of the board of directors (incorporated by reference to Exhibit 4.1 of the Report of Foreign Private Issuer on Form 6-K filed by the registrant on April 24, 2025)](http://www.sec.gov/Archives/edgar/data/1546383/000121390025035093/ea023939101ex4-1_jxluxvent.htm) |
| 4.4 | [Form of Negotiable Promissory Note dated April 21, 2025, issued by the registrant to noteholders (incorporated by reference to Exhibit 4.2 to the Report on Form 6-K filed by the registrant on April 24, 2025)](http://www.sec.gov/Archives/edgar/data/1546383/000121390025035093/ea023939101ex4-2_jxluxvent.htm) |
| 4.5 | [Purchase Note related to the Stock Purchase Agreement between the registrant and Shenzhen Zhongjiyingfeng Investment Co., Ltd. dated October 19, 2022 (incorporated by reference to Exhibit 10.2 of the Report of Foreign Private Issuer on Form 6-K filed by the registrant on October 19, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022064861/ea167290ex10-2_jxluxventure.htm) |
| 4.6 | [Pledge and Security Agreement between the registrant and Shenzhen Zhongjiyingfeng Investment Co., Ltd. dated October 19, 2022 (incorporated by reference to Exhibit 10.3 of the Report of Foreign Private Issuer on Form 6-K filed by the registrant on October 19, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022064861/ea167290ex10-3_jxluxventure.htm) |
| 4.7 | [Rights Agreement between KBS Fashion Group Limited and American Stock Transfer & Trust Company, LLC, as rights agent, dated March 11, 2021 (incorporated by reference to Exhibit 4.1 to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on March 15, 2021)](http://www.sec.gov/Archives/edgar/data/1546383/000121390021015280/ea137580ex4-1_kbsfashion.htm) |
| 4.8 | [2022 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 filed by the registrant on February 11, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022006622/ea155237ex99-1_jxluxven.htm) |
| 4.9 | [The New 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on November 1, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022068287/ea167708ex10-1_jxluxventure.htm) |
| 4.10 | [Amendment # 1 to the New 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report of Foreign Private Issuer on Form 6-K filed by the registrant on May 8, 2025)](http://www.sec.gov/Archives/edgar/data/1546383/000121390025041090/ea024145101ex10-1_jxluxvent.htm) |
| 4.11 | [Amendment #2 to the New 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K filed by the registrant on August 4, 2025)](https://www.sec.gov/Archives/edgar/data/1546383/000121390025070904/ea025148701ex10-1_jxluxvent.htm) |
| 4.12 | [The 2026 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on January 6, 2026)](https://www.sec.gov/Archives/edgar/data/1546383/000121390026001607/ea027197301ex10-1_jxluxven.htm) |
| 8.1\* | [List of the registrant's subsidiaries](ea028961001ex8-1.htm) |

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10.1 [Share Exchange Agreement, by and among, KBS Fashion Group Limited, Flower Crown Holding and the shareholders of Flower Crown Holding, dated December 21, 2020 (incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K/A filed by the registrant on December 28, 2020)](http://www.sec.gov/Archives/edgar/data/1546383/000121390020044436/ea132213ex10-1_kbsfashion.htm)

10.2 [English Translation of Cross-Border Payment Agreement between Flower Crown (Hainan) Cross-Border E-Commerce Co., Ltd and Hainan New Generation Technology Co., Ltd., dated December 25, 2020 (incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on March 29, 2021)](http://www.sec.gov/Archives/edgar/data/1546383/000121390021018151/ea138457ex10-1_kbsfashion.htm)

10.3 [English Translation of Digital RMB Acceptance Agreement (incorporated by reference to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on April 12, 2021)](http://www.sec.gov/Archives/edgar/data/1546383/000121390021021141/ea139307ex10-1_kbsfashion.htm)

10.4 [English Translation of Cross-Border Payment Agreement (incorporated by reference to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on March 29, 2021)](http://www.sec.gov/Archives/edgar/data/1546383/000121390021018151/ea138457ex10-1_kbsfashion.htm)

10.5 [Strategic Cooperation Framework Agreement on Cross-border Supply Chain of Duty-free Merchandise (incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K filed by the registrant on March 15, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022012338/ea156864ex10-1_jxluxventure.htm)

10.6 [Framework Agreement on Strategic Cooperation executed by and between Jin Xuan Luxury Tourism (Hainan) Digital Technology Co., Ltd., a subsidiary of the registrant, and Ragdoll International Trading Co., Ltd. dated March 31, 2022 (incorporated by reference to Exhibit 10.1 of the Report of Foreign Private Issuer on Form 6-K filed by the registrant on April 4, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022017706/ea157916ex10-1_jxluxventure.htm)

10.7 [English Translation of Group Airline Ticket Framework Agreement by and between Beijing Heyang International Travel Service Co., Ltd., a registrant's subsidiary, and Tianjin China Travel International Travel Service Co., Ltd. dated May 21, 2022 (incorporated by reference to Exhibit 10.1 of the Report of Foreign Private Issuer on Form 6-K furnished May 24, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022029168/ea160510ex10-1_jxluxvent.htm)

10.8 [English Translation of Framework Agreement on Strategic Cooperation by and between Jin Xuan Luxury Tourism (Hainan) Digital Technology Co., Ltd., a subsidiary of the registrant and Hainan Douxing Cultural Media Co., Ltd. dated June 17, 2022 (incorporated by reference to Exhibit 10.1 of the Report of Foreign Private Issuer on Form 6-K furnished June 22, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022034162/ea161539ex10-1_jxluxventure.htm)

10.9 [English Translation of the Cooperation Agreement by and between Jin Xuan (Hainan) Holding Co., Ltd., a subsidiary of the Company, and Kaiwo International Trading Co. Ltd. dated July 26, 2022 (incorporated by reference to Exhibit 10.1 of the Report of Foreign Private Issuer on Form 6-K furnished July 26, 2022](http://www.sec.gov/Archives/edgar/data/1546383/000121390022041499/ea163317ex10-1_jxluxven.htm)

10.10 [English Translation of Strategic Cooperation Agreement by and between Flower Crown (China) Holding Group Co., Ltd. ("JXFC"), a subsidiary of the registrant and with Hainan Hang Seng Zhongli Commercial Holding Co., Ltd. dated October 3, 2022 (incorporated by reference to Exhibit 10.1 of the Report of Foreign Private Issuer on Form 6-K furnished October 3, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022060997/ea166624ex10-1_jxluxven.htm)

10.11 [English Translation of the Employment Agreement between the registrant and Sun Lei, Chief Executive Officer, dated July 12, 2022 (incorporated by reference to Exhibit 10.1 of the Report of Foreign Private Issuer on Form 6-K filed by the registrant on July 13, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022039086/ea162786ex10-1_jxluxventure.htm)

10.12 [Stock Purchase Agreement between the registrant and Shenzhen Zhongjiyingfeng Investment Co., Ltd. dated October 19, 2022 (incorporated by reference to Exhibit 10.1 of the Report of Foreign Private Issuer on Form 6-K filed by the registrant on October 19, 2022)](http://www.sec.gov/Archives/edgar/data/1546383/000121390022064861/ea167290ex10-1_jxluxventure.htm)

10.13 [English Translation of Technology Development and Promotion Commission Contract by and between Jinxuan Luxury Tourism (Hainan) Digital Technology Co., Ltd, a subsidiary of the registrant, and Tianjin Baixing Pharmaceutical Wholesale Co., Ltd. (incorporated by reference to Exhibit 10.1 of the Report of Foreign Private Issuer on Form 6-K furnished on July 19, 2023)](http://www.sec.gov/Archives/edgar/data/1546383/000121390023058067/ea181091ex10-1_jxluxventure.htm)

10.14 [English Translation of the Share Transfer Agreement by and between Jinxuan Product Travel (Hainan) Digital Technology Co., Ltd, a subsidiary of the registrant, and Xing Guilian for the sale of 100% ownership of Beijing Heyang International Travel Service Co., Ltd. dated October 10, 2023 (incorporated by reference to Exhibit 10.11 to the Annual Report on Form 20-F filed by the registrant on May 15, 2024)](http://www.sec.gov/Archives/edgar/data/1546383/000121390024043254/ea020574501ex10-11_jxlux.htm)

---

| | |
|:---|:---|
| 10.15 | [English Translation of the Supplemental Agreement to the Equity Transfer Agreement by and between Jinxuan Product Travel (Hainan) Digital Technology Co., Ltd., a subsidiary or the registrant and Xing Guilian for the sale of 100% ownership of Beijing Heyang International Travel Service Co., Ltd. dated October 10, 2023 (incorporated by reference to Exhibit 10.12 to the Annual Report on Form 20-F filed by the registrant on May 15, 2024)](http://www.sec.gov/Archives/edgar/data/1546383/000121390024043254/ea020574501ex10-12_jxlux.htm) |
| 10.16 | [Note Transfer and Assignment Agreement among the registrant, Assignor and the Assignees, dated August 26, 2024 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K, dated August 29, 2024)](http://www.sec.gov/Archives/edgar/data/1546383/000121390024073945/ea021272101ex10-1_jxlux.htm) |
| 10.17 | [Debt Exchange Agreement among the registrant and the noteholders, dated August 26, 2024 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 6-K dated August 29, 2024).](http://www.sec.gov/Archives/edgar/data/1546383/000121390024073945/ea021272101ex10-2_jxlux.htm) |
| 10.18 | [Note Transfer and Assignment Agreement among the registrant, Assignor and the Assignees, dated April 21, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K, dated April 24, 2025)](http://www.sec.gov/Archives/edgar/data/1546383/000121390025035093/ea023939101ex10-1_jxluxvent.htm) |
| 10.19 | [Debt Exchange Agreement among the registrant and the noteholders, dated August 22, 2025 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 6-K dated April 24, 2025).](http://www.sec.gov/Archives/edgar/data/1546383/000121390025035093/ea023939101ex10-2_jxluxvent.htm) |
| 10.20 | [Debt Exchange Agreement between the registrant and Sun Lei, dated July 14, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K dated July 17, 2025)](https://www.sec.gov/Archives/edgar/data/1546383/000121390025064935/ea024931701ex10-1_jxluxvent.htm) |
| 10.21 | [English translation of 2025 Strategic Cooperation Framework Agreement between Jin Xuan (Hainan) and Holding Group Co., Ltd. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K dated July 29, 2025)](https://www.sec.gov/Archives/edgar/data/1546383/000121390025068461/ea025057201ex10-1_jxluxvent.htm) |
| 10.22 | [Debt Exchange Agreement between the registrant and Sun Lei, dated September 3, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K dated September 4, 2025)](https://www.sec.gov/Archives/edgar/data/1546383/000121390025084286/ea025596801ex10-1_jxluxvent.htm) |
| 10.23 | [English translation of the System Equipment Sales and System Research and Development Exclusive Project Service Agreement between Jinxuan (Hainan) Digital Technology Co., Ltd., a subsidiary of the registrant and Beijing Shuhangtong Information Technology Co., Ltd dated September 22, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K dated September 23, 2025)](https://www.sec.gov/Archives/edgar/data/1546383/000121390025090362/ea025840501ex10-1_jxluxvent.htm) |
| 10.24 | [Debt Exchange Agreement between the registrant and Sun Lei, dated December 16, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K dated December 17, 2025)](https://www.sec.gov/Archives/edgar/data/1546383/000121390025122567/ea026998601ex10-1_jxluxven.htm) |
| 10.25 | [Debt Exchange Agreement between the registrant and Huidan Li, dated March 6, 2026 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K dated March 9, 2026)](https://www.sec.gov/Archives/edgar/data/1546383/000121390026025270/ea028065801ex10-1.htm) |
| 10.26 | [Debt Exchange Agreement between the registrant and Sun Lei dated March 26, 2026 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K dated March 26, 2026)](https://www.sec.gov/Archives/edgar/data/1546383/000121390026034444/ea028355301ex10-1.htm) |
| 10.27 | [Share Exchange Agreement among the registrant, Dazzly Investment, Inc., and shareholders of Dazzly Investment, Inc. dated April 13, 2026 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K dated April 14, 2026)](https://www.sec.gov/Archives/edgar/data/1546383/000121390026043241/ea028624001ex10-1.htm) |
| 11.1 | [Code of Ethics, adopted on October 25, 2014 (incorporated by reference to Exhibit 11.1 to the Annual Report on Form 20-F filed by the registrant on October 27, 2015)](http://www.sec.gov/Archives/edgar/data/1546383/000114420415060877/v422619_ex11-1.htm) |
| 11.2 | [Insider Trading Policy <u>(incorporated by reference to Exhibit 11.2 to the Annual Report on Form 20-F filed by the registrant on May 15, 2025)</u>](https://www.sec.gov/Archives/edgar/data/1546383/000121390025043744/ea023922701ex11-2_jxluxven.htm) |
| 12.1/12.2\* | [Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-1(a)](ea028961001ex12-1.htm) |
| 13.1/13.2\* | [Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ea028961001ex13-1.htm) |
| 15.1\* | [Consent from Onestop Assurance PAC, Independent Registered Public Accounting Firm.](ea028961001ex15-1.htm) |
| 97.1 | [Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the Annual Report on Form 20-F filed by the registrant on May 15, 2024)](http://www.sec.gov/Archives/edgar/data/1546383/000121390024043254/ea020574501ex97-1_jxlux.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). |

---

\* Filed herewith.

**SIGNATURE**

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorize the undersigned to sign this annual report on its behalf.

---

| | |
|:---|:---|
| Date: May 15, 2026 | **JX Luxventure Group Inc.** |
|  | /s/ Sun Lei |
|  | Sun Lei <br> Chief Executive Officer <br> (Principal Executive Officer) |

---

**JX Luxventure Group Inc.**

**Consolidated Financial Statements**

For the years ended December 31, 2025, 2024, 2023

(Stated in US dollars)

CONTENTS

---

| | |
|:---|:---|
|  | **PAGES** |
| [REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM](#f_001) | F-2 |
| [CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME](#f_002) | F-4 |
| [CONSOLIDATED STATEMENTS OF FINANCIAL POSITION](#f_003) | F-5 |
| [CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY](#f_004) | F-6 |
| [CONSOLIDATED STATEMENTS OF CASH FLOWS](#f_005) | F-7 |
| [NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS](#f_006) | F-8 - F-42 |

---

**Report of Independent Registered Public Accounting Firm**

To the shareholders and the board of directors of JX Luxventure Group Inc.

**Opinion on the Financial Statements**

 ****

We have audited the accompanying consolidated statements of financial position of JX Luxventure Group Inc. and its subsidiaries (collectively, the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive (loss)/income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes to the consolidated financial statements and schedule (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows cash flows for each of the three years in the period ended December 31, 2025, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

**Basis for Opinion**

 ****

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's 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 United States 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 audits to obtain reasonable assurance about whether the 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

 ****

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

**Impairment of property, plant and equipment and intangible assets -**

*Critical Audit Matter Description*

 

As of December 31, 2025, property, plant and equipment and intangible assets amounted to USD1.9 million and RMB16.3 million respectively. The non-financial assets are evaluated for impairment annually, or more frequently if events or circumstances indicate that the carrying value may not be recoverable, the management reviews the business performance of each cash generating unit ("CGU") and the recoverable amount of a CGU is determined based on a value-in-use calculation. As a result, impairment tests were performed over the CGU and the recoverable amount of each CGU is estimated using a discounted cash flow model covering the remaining useful life of the CGU.

We identified the impairment of cash generating unit as a critical audit matter. There was significant judgment made by management in estimating projected revenue growth, profit margins and discount rates. This in turn lead to high degree of auditor judgment, and effort in performing procedures to evaluate the significant assumption in the value in use estimation.

*How We Addressed the Matter in Our Audit*

 

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These audit procedures included:

● Evaluated the reasonableness of the estimation methodology and testing the aforementioned significant assumptions and the completeness, accuracy, and relevance of underlying data used.

● Significant assumptions were compared to current available financial data and evaluations were made of how changes to such assumptions, and other factors would affect the outcomes.

● Assessed the arithmetical correctness of the cash flow model and the completeness of disclosures in the consolidated financial statements.

/s/ Onestop Assurance PAC

Singapore

May 15, 2026

PCAOB ID number: 6732

We have served as the Company's auditor since 2022.

**JX Luxventure Group Inc.**

**Consolidated Statements of Operations and Comprehensive (Loss)/Income**

For the years ended December 31, 2025, 2024, 2023

(Stated in U.S. Dollars)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | <br>**Notes** | **2025** | **2024** | **2023** |
| Revenue | 8 | 82936767 | 49840288 | 31840588 |
| &nbsp;&nbsp;&nbsp;Cost of sales | 9 | (72501980) | (41487972) | (26384219) |
| **Gross profit** |  | **10434787** | **8352316** | **5456369** |
| &nbsp;&nbsp;&nbsp;Other income | 10 | 35664 | 69113 | 71408 |
| &nbsp;&nbsp;&nbsp;Other losses, net | 11 | (69682) | (107384) | (342954) |
| &nbsp;&nbsp;&nbsp;Distribution and selling expenses | 12 | (7725421) | (2651904) | (58981) |
| &nbsp;&nbsp;&nbsp;Administrative expenses | 13 | (13574769) | (1830214) | (2076876) |
| &nbsp;&nbsp;&nbsp;**(Loss)/profit from operations** |  | **(10899421)** | **3831927** | **3048966** |
| &nbsp;&nbsp;&nbsp;Finance costs | 14 | (41171) | (13895) | (5187) |
| &nbsp;&nbsp;&nbsp;**(Loss)/profit before tax** |  | **(10940592)** | **3818032** | **3043779** |
| &nbsp;&nbsp;&nbsp;Income tax expense | 15 | (60250) | (744225) | - |
| &nbsp;&nbsp;&nbsp;**(Loss)/profit for the year** |  | **(11000842)** | **3073807** | **3043779** |
| &nbsp;&nbsp;&nbsp;Non-controlling interest |  | 18 | 27 | - |
| &nbsp;&nbsp;&nbsp;(Loss)/profit attributed to shareholders |  | (11000824) | 3073834 | 3043779 |
| &nbsp;&nbsp;&nbsp;**Other comprehensive loss** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;- currency translation differences |  | 1163686 | (472993) | (214977) |
| **Total comprehensive (loss)/income for the year** |  | **(9837138)** | **2600841** | **2828802** |
| (Loss)/profit per share of common stock attributable to the Company |  |  |  |  |
| - Basic \* | 18 | (17.71) | 27.14 | 30.12 |
| - Diluted \* | 18 | (17.71) | 12.9 | 28.69 |
| Weighted average shares outstanding: |  |  |  |  |
| - Basic \* | 18 | 621322 | 113278 | 101054 |
| - Diluted \* | 18 | 621322 | 237911 | 106104 |

---

\* The Company effected a 1:10 reverse stock split on April 26, 2023, a 1:4 reverse stock split on January 8, 2025, and a 1:15 reverse stock split on November 21, 2025, as a result, the basic and diluted shares and per share number for all years presented here are adjusted retrospectively.

The accompanying notes are an integral part of these consolidated financial statements.

**JX Luxventure Group Inc.**

**Consolidated Statements of Financial Position**

As at December 31, 2025, and 2024

(Stated in U.S. Dollars)

---

| | | | |
|:---|:---|:---|:---|
|  | | **As of December 31,** | **As of December 31,** |
|  | <br>**Notes** | **2025** | **2024** |
| **Non-current assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Property, plant and equipment | 19 | 1901057 | 2128316 |
| &nbsp;&nbsp;&nbsp;Intangible assets | 20 | 16334777 | 15933010 |
| &nbsp;&nbsp;&nbsp;Right of use assets | 30 | 4364 | 11868 |
|  |  | 18240198 | 18073194 |
| **Current assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Trade receivables | 21 | - | 102 |
| &nbsp;&nbsp;&nbsp;Other receivables and prepayments | 21 | 24023758 | 10429962 |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | 22 | 700727 | 1184456 |
| &nbsp;&nbsp;&nbsp;Total current assets |  | 24724485 | 11614520 |
| &nbsp;&nbsp;&nbsp;**Total assets** |  | 42964683 | 29687714 |
| **Current liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Short-term loan | 23 | 1572979 | 1643993 |
| &nbsp;&nbsp;&nbsp;Note payable | 24 | 2120000 | - |
| &nbsp;&nbsp;&nbsp;Trade and other payables | 25 | 6576217 | 2612191 |
| &nbsp;&nbsp;&nbsp;Income tax payable |  | 826041 | 733666 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 27 | 7226210 | 3783415 |
| &nbsp;&nbsp;&nbsp;Contract liability | 26 | 205079 | - |
| &nbsp;&nbsp;&nbsp;Lease liabilities – current portion | 31 | 4454 | 7477 |
| Total current liabilities |  | 18530980 | 8780742 |
| **Non-current liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Lease liabilities – non-current portion | 31 | - | 4463 |
| Total non-current liabilities |  | - | 4463 |
| &nbsp;&nbsp;&nbsp;**Total liabilities** |  | 18530980 | 8785205 |
| **Equity** |  |  |  |
| &nbsp;&nbsp;&nbsp;Share capital | 29 | 143 | 899 |
| &nbsp;&nbsp;&nbsp;Series A equity interest with preferential rights | 29 | 1240000 | 1240000 |
| &nbsp;&nbsp;&nbsp;Series C equity interest with preferential rights | 29 | 1500000 | 1500000 |
| &nbsp;&nbsp;&nbsp;Series D equity interest with preferential rights | 29 | 3120000 | 3120000 |
| &nbsp;&nbsp;&nbsp;Series E equity interest with preferential rights | 29 | - | 2152500 |
| &nbsp;&nbsp;&nbsp;Series F equity interest with preferential rights | 29 | 480000 |  |
| &nbsp;&nbsp;&nbsp;Share premium | 29 | 94000824 | 78959218 |
| &nbsp;&nbsp;&nbsp;Other reserve | 30 | 6269108 | 6269108 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | 30 | (82334728) | (71333904) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation reserve | 30 | 158401 | (1005285) |
| Shareholders' equity |  | 24433748 | 20902536 |
| Non-controlling interests |  | (45) | (27) |
| Total equity |  | 24433703 | 20902509 |
| &nbsp;&nbsp;&nbsp;**Total liabilities and equity** |  | 42964683 | 29687714 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**JX Luxventure Group Inc.**

**Consolidated Statements of Changes in Equity**

For the years ended December 31, 2025, 2024, 2023

(Stated in U.S. Dollars)

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Share<br> capital** | **Preferred A <br> equity interest** | **Preferred C <br> equity interest** | **Preferred D <br> equity interest** | **Preferred E <br> equity interest** | **Preferred F <br> equity interest** | **Share<br> premium** | **Other<br> reserve** | **Accumulated<br> deficit** | **Foreign<br> currency<br> translation<br> reserve** | **Total<br> Shareholders'<br> equity** | **Non-<br> controlling<br> Interest** | **Total <br> equity** |
|  | Note 29 | Note 29 | Note 29 | Note 29 | Note 29 | Note 29 | Note 29 | Note 30 | Note 30 | Note 30 | | | |
| **Balance at December 31, 2022** | $6063 | $1240000 | $1500000 | $3120000 | $- | $- | $77959554 | $6269108 | $(77451517) | $(317316) | $12325892 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $12325892 |
| Reverse stock split | (5457) |  |  |  |  |  | 5457 |  |  |  |  |  |  |
| Profit for the year |  |  |  |  |  |  |  |  | 3043779 |  | 3043779 |  | 3043779 |
| Other comprehensive loss for the year | - | - | - | - | - | - | - | - | - | (214976) | (214976) | - | (214976) |
| **Balance at December 31, 2023** | $606 | $1240000 | $1500000 | $3120000 | $- |  | $77965011 | $6269108 | $(74407738) | $(532292) | $15154695 | $- | $15154695 |
| Preferred E shares issued |  |  |  |  | 3000000 |  |  |  |  |  | 3000000 |  | 3000000 |
| Shares issued for compensation | 10 |  |  |  |  |  | 146990 |  |  |  | 147000 |  | 147000 |
| Conversion of preferred E shares | 283 |  |  |  | (847500) |  | 847217 |  |  |  |  |  |  |
| Profit for the year |  |  |  |  |  |  |  |  | 3073834 |  | 3073834 | (27) | 3073807 |
| Other comprehensive loss for the year |  |  |  |  |  |  |  |  |  | (472993) | (472993) |  | (472993) |
| **Balance at December 31, 2024** | $899 | $1240000 | $1500000 | $3120000 | $2152500 |  | $78959218 | $6269108 | $(71333904) | $(1005285) | $20902536 | $(27) | $20902509 |
| Reverse stock split 1:4 | (674) |  |  |  |  |  | 674 |  |  |  |  |  |  |
| Preferred F issued |  |  |  |  |  | 1380000 |  |  |  |  | 1380000 |  | 1380000 |
| Conversion of preferred E shares issued | 179- |  |  |  | (2152500) |  | 2152321- |  |  |  |  |  |  |
| Conversion of preferred F shares issued | 282 |  |  |  |  | (900000) | 899718 |  |  |  |  |  |  |
| Liability convert to shares | 285 |  |  |  |  |  | 2509715 |  |  |  | 2510000 |  | 2510000- |
| Shares issued of ESOP | 1000 |  |  |  |  |  | 9477350 |  |  |  | 9478350 |  | 9478350 |
| Reverse stock split 1:15 | (1829) |  |  |  |  |  | 1829 |  |  |  |  |  |  |
| Loss for the year |  |  |  |  |  |  |  |  | (11000824) |  | (11000824) | (18) | (11000842) |
| Other comprehensive loss for the year |  |  |  |  |  |  |  |  |  | 1163686 | 1163686 |  | 1163686 |
| **Balance at December 31, 2025** | $143 | $1240000 | $1500000 | $3120000 | $- | $480000 | $94000824 | $6269108 | $(82334728) | $158401 | $24433748 | $(45) | $24433703 |

---

The Company effected a 1:10 reverse stock split on April 26, 2023, a 1:4 reverse stock split on January 8, 2025, and a 1:15 reverse stock split on November 21, 2025, as a result, the basic and diluted shares and per share number for all years presented here are adjusted retrospectively.

The accompanying notes are an integral part of these consolidated financial statements.

**JX Luxventure Group Inc.** 

**Consolidated Statements of Cash Flows**

For the years ended December 31, 2025, 2024, 2023

(Stated in U.S. Dollars)

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **OPERATING ACTIVITIES** |  |  |  |
| &nbsp;&nbsp;&nbsp;(Loss)/profit for the year | (11000842) | 3073807 | 3043779 |
| Adjustments for: |  |  |  |
| &nbsp;&nbsp;&nbsp;Share-based compensation | 9478350 | 147000 | - |
| &nbsp;&nbsp;&nbsp;Finance cost | 41171 | 13895 | 5187 |
| &nbsp;&nbsp;&nbsp;Interest income | (338) | (557) | (595) |
| &nbsp;&nbsp;&nbsp;Depreciation of property, plant and equipment | 242114 | 285019 | 286334 |
| &nbsp;&nbsp;&nbsp;Amortization of intangible assets | 4857269 | 2734258 | - |
| &nbsp;&nbsp;&nbsp;Amortization of right of use assets | 7469 | 3109 | - |
| &nbsp;&nbsp;&nbsp;Impairment loss of intangible assets | 995821 | - | - |
| &nbsp;&nbsp;&nbsp;Loss on disposal of property, plant and equipment | 39168 | 106686 | - |
| &nbsp;&nbsp;&nbsp;Loss on disposal of subsidiary | - | - | 342953 |
| Operating cash flows before movements in working capital | 4660182 | 6363217 | 3677658 |
| &nbsp;&nbsp;&nbsp;(Increase)/decrease in trade and other receivables | (12787752) | 1357705 | (9924198) |
| &nbsp;&nbsp;&nbsp;Decrease in inventories | - | - | 433870 |
| &nbsp;&nbsp;&nbsp;Increase/(decrease) in trade and other payables | 3985063 | (749975) | 1248305 |
| &nbsp;&nbsp;&nbsp;Increase in tax payables | 49323 | 737679 | 45328 |
| NET CASH (USED IN)/GENERATED FROM OPERATING ACTIVITIES | (4093184) | 7708626 | (4519037) |
| **INVESTING ACTIVITIES** |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest received | 338 | 557 | 595 |
| &nbsp;&nbsp;&nbsp;Proceeds from long-term receivable | - | - | 3000000 |
| &nbsp;&nbsp;&nbsp;Cash decrease due to disposal of a subsidiary | - | - | (374556) |
| &nbsp;&nbsp;&nbsp;Proceeds on disposal of property, plant and equipment | 33113 | 239291 | - |
| &nbsp;&nbsp;&nbsp;Purchase of property, plant and equipment | - | (396710) | (440) |
| &nbsp;&nbsp;&nbsp;Purchase of intangible assets | (5565217) | (11854260) | - |
| NET CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES | (5531766) | (12011122) | 2625599 |
| **FINANCING ACTIVITIES** |  |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds on bank loans | 1530435 | 1667657 | 1129797 |
| &nbsp;&nbsp;&nbsp;Repayment of borrowings | (1669565) | - | - |
| &nbsp;&nbsp;&nbsp;Interest paid | (41171) | (13895) | (5187) |
| &nbsp;&nbsp;&nbsp;Advance from related party | 9286188 | 3489305 | 748869 |
| &nbsp;&nbsp;&nbsp;Repayment of lease liabilities | (7450) | (3038) | - |
| NET CASH GENERATED FROM FINANCING ACTIVITIES | 9098437 | 5140029 | 1873479 |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (526513) | 837533 | (19959) |
| &nbsp;&nbsp;&nbsp;Effects of currency translation | 42784 | (60388) | (93646) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 1184456 | 407311 | 520916 |
| CASH AND CASH EQUIVALENTS AT END OF YEAR | 700727 | 1184456 | 407311 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**JX Luxventure Group Inc.**

**Notes to consolidated Financial Statements**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. GENERAL INFORMATION

On January 26, 2012, Acquisition Investments Corp ("Company") was organized as a blank check company pursuant to the laws of the Republic of the Marshall Islands for the purpose of acquiring through a merger, capital stock exchange, asset acquisition, stock purchase, or similar acquisition transaction, one or more operating businesses or assets.

On March 24, 2014, the Company entered into a Share Exchange Agreement and Plan of Liquidation (the "Agreement") among KBS International Holdings, Inc. ("KBS"), a Nevada corporation, Hongri International Holdings Ltd ("Hongri"), a company organized under the laws of the British Virgin Islands, and Cheung So Wa and Chan Sun Keung, the principal shareholders of KBS.

On August 1, 2014, the share exchange was completed. The acquisition was accounted for as a reverse merger and recapitalization where the Company, the legal acquirer is the accounting acquiree, and KBS, the legal acquiree, was the accounting acquirer. KBS changed its name to JX Luxventure Limited. On December 27, 2024, the name was changed to JX Luxventure Group Inc.

Description of Subsidiaries:

Hongri International Holdings Limited (the "Hongri"), formerly known as Wah Ying International Investment Inc., was incorporated in the British Virgin Islands (the "BVI") on July 8, 2008 as a limited liability company with authorized share capital of $50,000, divided into 50,000 common shares with $1 par value. Up through December 31, 2010, 10,000 common shares had been issued at par. On January 27, 2011, the Company issued an additional 10,000 common shares for cash consideration at $77 per share. The principal activity of the Company is investment holding. Hongri a directly wholly owned subsidiary of the Company.

France Cock (China) Limited ("France Cock") was incorporated in Hong Kong on September 21, 2005 as a limited liability company with authorized capital of HK$10,000, divided into 10,000 common shares with par value of HK$1. The capital has been fully paid up. The principal activity of France Cock is the holding of intellectual property rights such as trademarks. France Cock owns the Company's trademarks, including "KBS" and "Kabiniao". France Cock is a directly wholly owned subsidiary of Hongri.

Roller Rome Limited ("Roller Rome") was incorporated in the BVI on March 28, 2006 as a limited liability company with authorized share capital of $50,000, divided into 50,000 common shares with par value of $1. The principal activity of Roller Rome is the provision of design and development services for sports apparel. Roller Rome is a directly wholly owned subsidiary of Hongri.

Vast Billion Investment Limited ("Vast Billion") was incorporated in Hong Kong on November 25, 2010 as a limited liability company with authorized share capital of HK$10,000 divided into 10,000 ordinary shares with HK$1par value. One ordinary share has been issued at par. Vast Billion is an investment holding company, and is a directly wholly owned subsidiary of Hongri.

Hongri (Fujian) Sports Goods Co. Ltd. ("Hongri Fujian") was established in the People's Republic of China (the "PRC") on November 17, 2005 with a registered and paid up capital of RMB 5,000,000. On March 24, 2011, Hongri Fujian increased registered capital from RMB 70,000,000 to RMB75,000,000. As of September 30, 2011, the paid up capital was RMB 39,551,860. Hongri Fujian is engaged in the design, manufacture, marketing, and sale of apparel in the PRC. Hongri Fujian is a directly wholly owned subsidiary of Vast Billion.

Anhui Kai Xin Apparel Company Limited ("Anhui Kai Xin") was established in the PRC on March 16, 2011 with a registered and paid up capital of RMB 1,000,000. Anhui Kai Xin is a wholly owned subsidiary of Hongri Fujian. Anhui Kai Xin provides contracting manufacturing services for companies in the sports apparel business.

On October 19, 2022, the Company sold Hongri International Holding Limited to third party and from thereon, Hongri, France Cock, Roller Rome, Vast Billion, Hongri Fujian, Anhui Kai Xin are no longer the subsidiaries of the Company.

Flower Crown Holding ("Flower Crown") is a company incorporated on August 7, 2020 in the Cayman Islands. It has 50,000 shares issued and outstanding with a par value of $1. It is wholly owned by JX Luxventure Group Inc.

Flower Crown (China) Holding Group Co., Limited ("Flower Crown HK") was incorporated in Hong Kong on May 24, 2018. It has a total of 10,000 shares issued and outstanding with a par value of $1. It is wholly owned by Flower Crown Holding.

Jin Xuan (Hainan) Holding Co., Ltd ("JX Hainan") was incorporated in November 11, 2021. It has a registered capital of USD30,000,000. It is 100% owned by Flower Crow HK. Its business scope ranges from import & export to manufacturing.

Jin Xuan Luxury Tourism (Hainan) Digital Technology Co., Ltd. ("JX Digital") was incorporated in the PRC on August 4, 2016. It is 100% owned by JX Hainan. It has a registered capital of RMB20,000,000 and present shareholder shall pay up the registered capital prior to August 4, 2046. It operates Luxventure social platform and on-line activities.

Beijing Heyang International Travel Service Co., Ltd. ("Heyang Travel") was incorporated in the PRC on March 29, 2018. It is 100% owned by Jin Xuan Luxury Tourism. It has a registered capital of RMB5,000,000 and the shareholder shall pay up the registered capital prior to August 1, 2060. Heyang Travel engages in tourism business and selling carrier services. Heyang Travel was sold out to third party on October 8, 2023.

Hefei Aitong Culture Tourism Development Co., Ltd. ("Hefei Aitong") was incorporated in the PRC on December 27, 2023. It is 51% owned by JX Hainan with registered capital of RMB 1,000,000. It engages in tourism business and providing air-tickets sales agent services.

Billion Place Limited (Hong Kong) Co., Limited ("Billion Place HK"), a limited company incorporated in Hong Kong on March 13, 2023, was acquired by Flower Crown on August 3, 2023.

Baofu (Zhuhai) Technology Co., Ltd. ("Baofu Technology") was incorporated in the PRC on June 29, 2017 and acquired by the Company on March 7, 2024. It is 100% owned by Billion Place Limited with registered capital of RMB60,000,000.

Hainan Si Quan Run Hang International travel agency Co., Ltd. ("Hainan Travel") was incorporated in the PRC on August 9, 2023. On March 7, 2024, as a wholly-owned subsidiary of Baofu Technology, Hainan Travel became an indirect wholly-owned subsidiary of Billion Place HK when Baofu Technology was acquired by Billion Place HK. It will be engaged in Airline Tickets and Tourism Services business segment.

Hefei Si Quan Run Hang International travel agency Co., Ltd. ("Hefei Travel") was incorporated in the PRC on May 31, 2024, as a wholly-owned subsidiary of Baofu Technology. It will be engaged in Airline Tickets and Tourism Services business segment.

Tianjin Baoliting Intelligence Technology Co., Ltd ("Baoliting") was incorporated in the PRC on August 11, 2023 and acquired on April 15, 2024, as a wholly-owned subsidiary of JX Digital. It will be engaged in software development and technology support services.

Hefei Haohai International Travel Agency Co., Ltd. was incorporated in the PRC on January 20, 2025, as a wholly-owned subsidiary of Hainan Travel. It is engaged in Airline Tickets and Tourism Services business segment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. GROUP ORGANIZATION AND BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

Effective December 13, 2021, the Company reorganized its corporate subsidiary structure in the PRC under Flower Crown Holding. As a result of the Flower Crown Holding's China subsidiaries restructuring, the Company no longer operated those entities through a VIE structure and became the indirect sole shareholder of JX Hainan Digital and Beijing Heyang.

The Group structure as at the reporting date is as follows:

![](ea028961001_img11.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Interpretations and amendments to published standards effective in 2025

On January 1, 2025, the Company has adopted the new or amended IFRS and interpretations issued by the IFRS interpretations Committee IFRS IC that are mandatory for application for the fiscal year. Changes to the Company's accounting policies have been made as required, in accordance with the transitional provisions in the respective IFRS and IFRS IC.

The adoption of these new or amended IFRS and IFRS IC did not result in substantial changes to the Company's accounting policies and had no material effect on the amounts reported for the current or prior financial years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. MATERIAL ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

<u>Basis of preparation</u>

The consolidated financial statements have been prepared on the historical cost basis and in accordance with IFRS as issued by the IASB. The principal accounting policies are set out below.

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Company.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

<u>Foreign currencies</u>

Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the "functional currency").

The Company conducts its business predominately in the PRC and hence its functional currency is the Renminbi (RMB).

Translation from RMB to USD were used at the following rates:

---

| | | |
|:---|:---|:---|
|  | **Period end rates** | **Average rates** |
| December 31, 2023 | USD 1.00= RMB 7.0999 | USD 1.00=RMB 7.0809 |
| December 31, 2024 | USD 1.00= RMB 7.2993 | USD 1.00=RMB 7.1957 |
| December 31, 2025 | USD 1.00= RMB 6.9931 | USD 1.00=RMB 7.1875 |

---

Translation from HKD to USD were used at the following rates:

---

| | | |
|:---|:---|:---|
|  | **Period end rates** | **Average rates** |
| December 31, 2023 | USD 1.00= HKD 7.8109 | USD 1.00=HKD 7.8292 |
| December 31, 2024 | USD 1.00= HKD 7.7677 | USD 1.00=HKD 7.8030 |
| December 31, 2025 | USD 1.00= HKD 7.7833 | USD 1.00=HKD 7.7956 |

---

The results and financial positions in functional currency are translated into the presentation currency, USD, of the Company as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Share equity, share premium and dividends are translated at historical exchange rates; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) All resulting exchange differences are recognized in foreign currency translation reserve, a separate component of equity.

All financial information presented in USD has been rounded to the nearest dollar, except when otherwise indicated.

<u>Segment reporting</u>

Operating segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information provided regularly to the Company's most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Company's various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria. The Company's three segments are technology, tourism service and cross-border e-commerce.

<u>Revenue recognition</u>

*Revenue from contracts with customers*

Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Company will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Currently, the Company's contracts do not include such variable amount.

When the contract contains a financing component which provides the customer a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Company and the customer at contract inception. When the contract contains a financing component which provides the Company a significant financial benefit for more than one year, revenue recognized under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15. Currently, the Company's contract with its customers do not include financial benefit for more than one year.

Nature and timing of satisfaction of performance obligations for each of the revenue streams are as follows:

*<u>Revenue from the sale of goods</u>*

Performance obligation is satisfied at the point in time when control of the asset is transferred to the customer, generally on delivery and acceptance of the goods. The Company presents revenues from such transactions on a gross basis in the consolidated statements of operations and comprehensive income/(loss), as the Company acts as a principal to take inventory risks of these goods.

*<u>Revenue from the sale of packaged group tour service</u>*

Performance obligation is satisfied when the tour service is completed, generally when the tour group successfully returned from the tour destination to the place of origination. The Company presents revenues from such transactions on a gross basis in the consolidated statements of comprehensive income/(loss), as the Company acts as a principal to provide a package of tourism services and take a full obligation to provide such services even if the suppliers are not able to deliver service.

*<u>Revenue from reselling of air-ticket</u>*

The Company is a reseller of air-ticket, it provides value add services to its customers including guaranteed flight replacement and other financial benefits. The Company procured the tickets from different airline companies and resell them to the online air-ticket agency companies or other tourism companies. The air-ticket agency company will put an online bid inviting from its suppliers once it receives the demands from its online customers. The Company is one of the air-ticket suppliers. The Company procures the tickets in responding the air-ticket agency companies' online bid inviting to ensure the seats are available to sell to the agency companies, or the Company procure the tickets based on its judgment of potential trend of certain airlines within certain period. Once the Company's deposit, at the full or significant amount of the air-ticket, was deducted by the airline company and the Company agreed to secure the seats from the airline company, the purchase of air-tickets was recorded. The Company decided how much and how soon to resell the air-tickets. The inventory period is from 1 minute to few months. The air tickets are sold shortly after their purchase to lower the inventory risk. Sometimes, the Company hold the tickets longer to expect a higher margin, but if the tickets cannot be sold before flight time, the Company have to sell the tickets even lower than the purchase price to avoid further loss. Thus, the Company bears the inventory risks of the air-tickets and the Company has discretion in setting the price for the specified service. Once the air-tickets issued to passengers according to the client's instruction, the revenue is recognized. In addition to the air-ticket of airline companies, the Company provided guaranteed flight replacement and cancellation to the air-ticket agency companies. The air-ticket agency companies can return the tickets to the Company without restriction, while the airline companies can accept some of the return on certain conditions. Thus, the Company offered additional service plus the standard airline tickets to its customer. As the Company (i) bears the inventory risks of the air-tickets, (ii) provides additional services on the services procured by the airline companies, and (iii) has discretion in setting the price for the specified service, the Company is considered as a principal and recognize the revenue in a gross basis.

*<u>Revenue from the sale of software</u>*

Revenue from the sale of software is recognized at a point in time when control of the software is transferred to the customer. Control is deemed to have transferred when the customer has the ability to direct the use of and obtain substantially all the remaining benefits from the software, which generally occurs upon delivery, installation (if contractually required), and customer acceptance of the software. The Company presents revenues from sale of software on a gross basis in the consolidated statements of comprehensive income/(loss), as the Company acts as a principal to develop the software and take a full obligation to provide such service.

*<u>Other income</u>*

 

Interest income is recognized on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Government grants are recognized as a receivable when there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, the fair value is recognized as deferred income on the statement of financial position and is recognized as income in equal amounts over the expected useful life of the related asset.

When loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as additional government grant.

<u>Value added tax (VAT)</u>

Under prevailing tax regulations, the current standard output VAT rates are 13% for product sales and 6% for taxable service revenue. For small-scale taxpayers, the applicable VAT rate is 1%. The VAT payable is calculated as the remaining balance of output VAT after deducting the period's deductible input VAT.

<u>Borrowing costs</u>

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

<u>Retirement benefit costs</u>

Pursuant to the relevant regulations of the PRC government, the Company's subsidiaries located in the PRC participate in a local municipal government retirement benefits scheme (the "Scheme"), whereby they contribute a prescribed percentage of the basic salaries of their employees to the Scheme to fund their retirement benefits. Once the Scheme has been funded via contributions by the Company's participating subsidiaries, the local municipal government takes responsibility for the retirement benefits obligations of all existing and future retired employees of those subsidiaries located in the PRC; accordingly, the only obligation of the Company with respect to the Scheme is to pay the on-going required contributions as long as the employees maintain employment with the Company. There are no provisions under the Scheme whereby forfeited contributions may be used to reduce future contributions. These plans are considered defined contribution plans. The Company has no legal or constructive obligations to pay further contributions after its payment of the fixed contributions into the pension schemes. Contributions to pension schemes are recognized as an expense in the period in which the related service is performed.

<u>Taxation</u>

The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case the tax is also recognized in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit and at the time of the transaction does not give rise to equal taxable and deductible temporary differences.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

<u>Leasing</u>

IFRS 16 Leases requires lessees to recognize assets and liabilities for most leases based on a 'right-of-use model' which reflects that, at the commencement date, a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The lessor conveys that right to use the underlying asset at lease commencement, which is the time when it makes the underlying asset available for use by the lessee.

IFRS 16 defines a lease term as the non-cancellable period for which the lessee has the right to use an underlying asset including optional periods when an entity is reasonably certain to exercise an option to extend (or not to terminate) a lease.

Under IFRS 16 lessees may also elect not to recognize assets and liabilities for leases with a lease term of 12 months or less. In such cases a lessee recognizes the lease payments in profit or loss on a straight-line basis over the lease term. The exemption is required to be applied by class of underlying assets. Lessees can also make an election for leases for which the underlying asset is of low value. This election can be made on a lease-by-lease basis. For leases where the Company is the lessee, the lease term is either cancelable or no longer than 12 months, so the Company has elected not to record the leased assets.

Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors continue to classify leases as either operating or finance leases using similar principles as in IAS 17. IFRS 16 did not have any significant impact on leases where the Company is the lessor.

<u>Leasehold improvements</u>

Leasehold improvements, principally comprising costs of office buildings and shops renovation, are held for administrative and selling purposes. Leasehold improvements are initially measured at cost and amortized systematically over its useful life.

<u>Property, plant and equipment</u>

Property, plant and equipment ("PPE") including buildings held for use in the production or supply of goods or services, or for administrative purposes other than construction in progress are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

Depreciation is provided to write off the cost of items of property, plant and equipment other than construction in progress over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method.

Construction in progress includes property, plant and equipment in the course of construction for production or for its own use purposes. Construction in progress is carried at cost less any recognized impairment loss. Construction in progress is classified to the appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period in which the item is de-recognized.

<u>Intangible assets, net</u>

Intangible assets are recognized and measured at cost or at fair value if acquired through a business combination. The identifiable intangible assets acquired are amortized on a straight-line basis over the respective useful lives as follows:

---

| | |
|:---|:---|
| **Category** | **Estimated useful lives** |
| Software | 5 years |
| Trademark use rights | 1-5 years |

---

<u>Inventories</u>

Inventories, comprising of raw materials and merchandise inventories, are stated at the lower of cost and net realizable value. Costs of inventories are determined using the weighted average method. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

<u>Cash and cash equivalents</u>

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

<u>Share-based compensation expenses</u>

All share-based awards granted to employees, which are common shares, are measured at fair value on shares issuance date, and are recognized as an employee benefits expense, with a corresponding increase in equity. Share-based compensation expenses are recognized over the period during which the employees provide the relevant services.

<u>Financial instruments – investments and other financial assets</u>

*Initial recognition and measurement*

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient of not adjusting the effect of a significant financing component, the Company initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with the policies set out for "Revenue recognition".

In order for a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest ("SPPI") on the principal amount outstanding.

The Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

All regular way purchases and sales of financial assets are recognized on the trade date, that is, the date that the Company commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

*Subsequent measurement*

The subsequent measurement of financial assets depends on their classification as follows:

*Financial assets at amortized cost (debt instruments)*

The Company measures financial assets at amortized cost if both of the following conditions are met:

● The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.

● The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in the income statement when the asset is derecognized, modified or impaired.

*Financial assets at fair value through other comprehensive income (debt instruments)*

The Company measures debt instruments at fair value through other comprehensive income if both of the following conditions are met:

● The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling.

● The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

For debt instruments at fair value through other comprehensive income, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the income statement and computed in the same manner as for financial assets measured at amortized cost. The remaining fair value changes are recognized in other comprehensive income. Upon derecognition, the cumulative fair value change recognized in other comprehensive income is recycled to the income statement.

*Financial assets at fair value through other comprehensive income (equity investments)*

Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity investments designated at fair value through other comprehensive income when they meet the definition of equity under IFRS 9 Financial Instruments. The Company may make an irrevocable election at initial recognition for particular investments in equity instruments that would otherwise be measured at fair value through profit or loss to present subsequent changes in fair value in other comprehensive income

Gains and losses on these financial assets are never recycled to the income statement. Dividends are recognized as other income in the income statement when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity investments designated at fair value through other comprehensive income are not subject to impairment assessment.

*Financial assets at fair value through profit or loss*

The Company may, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an 'accounting mismatch') that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognized in the income statement. This category includes derivative financial instruments and structured bank deposits.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognized in the income statement. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at fair value through profit or loss.

<u>Financial instruments – impairment of financial assets</u> 

The Company recognizes an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

<u>General approach</u>

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Company considers a financial asset in default when contractual payments are 1 year past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Debt instruments at fair value through other comprehensive income and financial assets at amortized cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables which apply the simplified approach as detailed below.

Stage 1 – Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 – Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

<u>Simplified approach</u>

For trade receivables that do not contain a significant financing component or when the Company applies the practical expedient of not adjusting the effect of a significant financing component, the Company applies the simplified approach in calculating ECLs. Under the simplified approach, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For trade receivables that contain a significant financing component and lease receivables, the Company chooses as its accounting policy to adopt the simplified approach in calculating ECLs with policies as described above.

<u>Financial instruments – derecognition of financial assets</u> 

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Company's consolidated statement of financial position) when:

● the rights to receive cash flows from the asset have expired; or

● the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass-through" arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company's continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original amount of the asset and the maximum amount of consideration that the Company could be required to repay.

<u>Financial instruments – financial liabilities</u>

*Initial recognition and measurement*

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs. The Company's financial liabilities include trade payables, other payables, financial liabilities included in accruals and interest-bearing bank borrowings.

*Subsequent measurement*

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the effective interest rate amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in the income statement.

<u>Financial instruments – derecognition of financial liabilities</u>

A financial liability is derecognized when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in the income statement.

<u>Financial instruments – offsetting financial instruments</u> 

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

<u>Capital and Reserves</u>

Share capital represents the nominal value of shares that have been issued by the Company. Share capital is determined using the nominal value of shares that have been issued.

Retained profits include all current and prior period results as determined in the combined statement of comprehensive income.

Foreign currency translation reserve arising on the translation are included in the currency translation reserve.

In accordance with the relevant laws and regulations of PRC, the subsidiaries of the Company established in PRC are required to transfer 10% of its annual statutory net profit (after offsetting any prior years' losses) to the statutory reserve. When the balance of such reserve reaches 50% of the subsidiary's share capital, any further transfer of its annual statutory net profit is optional. Such reserve may be used to offset accumulated losses or to increase the registered capital of the subsidiary subject to the approval of the relevant authorities. However, except for offsetting prior years' losses, such statutory reserve must be maintained at a minimum of 25% of the share capital after such usage. The statutory reserves are not available for dividend distribution to the shareholders.

All transactions with owners of the Company are recorded separately within equity.

<u>(Loss)/profit per share</u>

Basic earnings per share ("EPS") are computed by dividing income attributable to holders of common shares by the weighted average number of common shares outstanding during the year. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares. Potential dilutive securities are excluded from the calculation of diluted EPS in loss periods as their effect would be anti-dilutive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES

The preparation of financial statements in conformity with IFRS requires management to exercise judgment in the process of applying the Company's accounting policies and requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and reported amount of revenue and expenses during the reporting period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company's accounting policies, which are described in Note 4, management is required to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next financial year.

<u>Impairment of non-financial assets</u>

Property, plant and equipment and intangible assets are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating-unit ("CGU") to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognized as an impairment loss in the income statement, unless the asset is carried at revalued amount, in which case, such impairment loss is treated as a revaluation decrease.

An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

A reversal of impairment loss for an asset other than goodwill is recognized in the income statement, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.

During the years ended 2025, 2024 and 2023, the Company recognized impairment losses of $995,821, $nil and $nil, respectively.

<u>Allowance for expected credit losses on other receivables</u>

The Company assessed the latest performance and financial position of the counterparties, adjusted for the future outlook of the industry in which the counterparties operate in, and concluded that there has been no significant increase in the credit risk since the initial recognition of the financial assets. Accordingly, the Company measured the impairment loss allowance using 12-month ECL and determined that the ECL is insignificant.

<u>Depreciation of property, plant and equipment</u>

As described in Note 4, the Company reviews the estimated useful lives and residual values of property, plant and equipment at the end of each reporting period. The cost of property, plant and equipment is depreciated on a straight-line basis over the assets' estimated useful lives. Management estimates the useful lives of these property, plant and equipment to be within 5 to 30 years. These are the common life expectancies applied in the same industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

<u>Amortization of intangible assets</u>

The Company estimated useful lives of intangible assets with finite useful lives are amortized on a systematic basis over their estimated useful lives. The amortization method should reflect the pattern in which the asset's economic benefits are consumed, which is at 1 to 5 years and also taken into the consideration of the competition of the industry, there is no residual value as there is no commitment from a third party to purchase the intangible asset at the end of its useful life or an active market for the intangible asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. SEGMENT REPORTING

Management currently identifies the Company's three sales models as operating segments, which are tourism products, technology and cross-border merchandise. Apart from the above three business segments, two segments were discontinued in 2022, which are wholesale and retail of menswear and subcontracting of menswear. The segment presentation is in accordance with management's expectation of future business developments. These operating segments are monitored and strategic decisions are made on the basis of segmental gross margins.

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Tourism products** | **Tourism products** | **Tourism products** | **Technology** | **Technology** | **Technology** | **Cross-border merchandise** | **Cross-border merchandise** | **Cross-border merchandise** | **Consolidated** | **Consolidated** | **Consolidated** |
| | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** | **For the year ended** |
| | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
| <br>**By business** | **2025** | **2024** | **2023** | **2025** | **2024** | **2023** | **2025** | **2024** | **2023** | **2025** | **2024** | **2023** |
| Sales to external customers | 30669239 | 22048052 | 21561671 | 3307447 | 1530812 | 2719463 | 48960081 | 26261424 | 7559454 | 82936767 | 49840288 | 31840588 |
| Segment revenue | 30669239 | 22048052 | 21561671 | 3307447 | 1530812 | 2719463 | 48960081 | 26261424 | 7559454 | 82936767 | 49840288 | 31840588 |
| Segment gross margins | 462297 | 730173 | 1981107 | 1894028 | 589968 | 2714434 | 8078462 | 7032175 | 760828 | 10434787 | 8352316 | 5456369 |
| Reconciling items |  |  |  |  |  |  |  |  |  | (21375379) | (4534285) | (2412591) |
| (loss)/profit before tax |  |  |  |  |  |  |  |  |  | (10940592) | 3818032 | 3043779 |
| Income tax expense |  |  |  |  |  |  |  |  |  | (60250) | (744225) |  |
| (loss)/profit for the year |  |  |  |  |  |  |  |  |  | (11000842) | 3073807 | 3043779 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** |
|  | **Technology** | **Tourism<br> products** | **cross-border<br> merchandise** | **Unallocated and elimination** | **Consolidated** |
| **Current assets** | 113114 | 524124 | 24145262 | (58015) | 24724485 |
| **Non-current assets** | 6731990 | - | 11508208 | - | 18240198 |
| **Total assets** | 6845104 | 524124 | 35653470 | (58015) | 42964683 |
| **Current liabilities** | 2096988 | 1730239 | 12021109 | 2682644 | 18530980 |
| **Non-current liabilities** | - | - | - | - | - |
| **Total liabilities** | 2096988 | 1730239 | 12021109 | 2682644 | 18530980 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Technology** | **Tourism<br> products** | **cross-border<br> merchandise** | **Unallocated and elimination** | **Consolidated** |
| **Current assets** | 1241312 | 234983 | 9859897 | 278328 | 11614520 |
| **Non-current assets** | 8116020 | - | 9945306 | 11868 | 18073194 |
| **Total assets** | 9357332 | 234983 | 19805203 | 290196 | 29687714 |
| **Current liabilities** | 3424897 | 489910 | 3227949 | 1637986 | 8780742 |
| **Non-current liabilities** | - | - | - | 4463 | 4463 |
| **Total liabilities** | 3424897 | 489910 | 3227949 | 1642449 | 8785205 |

---

<u>Geographical information</u>

The Company's operations are located in the PRC and all of the Company's revenue is derived from sales to customers in the PRC. Hence, no analysis by geographical area of operations is provided.

<u>Information about major customers</u> 

Major distributors that make up 10% or more of revenue are as below:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Customer A | 11384781 | 21003414 | 23621588 |
| Customer B | \* | 12253108 | \* |
| Customer C | \* | 6011902 | \* |
| Customer D | \* | 5071066 | \* |
| Customer E | 15196911 | \* | \* |
| Customer F | 14637628 | \* | \* |
| Customer G | 13655889 | \* | \* |
| Total revenue | 82936767 | 49840288 | 31840588 |

---

\* The revenue of this customer is not over 10% of total revenue of the Company.

<u>Information about major suppliers</u>

Major suppliers that make up 10% or more of purchases are as below:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Supplier A | \* | \* | 4722466 |
| Supplier B | \* | \* | 3064076 |
| Supplier C | \* | \* | 2964493 |
| Supplier D | \* | \* | 3005258 |
| Supplier E | 33584139 | 17194330 | 10474295 |
| Supplier D | 8769446 | \* | \* |
| Supplier E | 7571019 | \* | \* |
| Total purchase | 71087414 | 40546552 | 25943353 |

---

\* The purchase from this supplier is not over 10% of total purchase of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. REVENUE

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Travel service | 30669239 | 22048052 | 21561670 |
| Technology | 3307447 | 1530812 | 2719463 |
| Cross-border products | 48960081 | 26261424 | 7559455 |
| Total | 82936767 | 49840288 | 31840588 |

---

Revenues are recognized at a point in time and denominated only in USD. Included in the "travel service", majority of the revenue amount represents the revenue for reselling of air-tickets requests by airline ticket agencies. Revenue for tickets purchased based on our judgment of potential trends, and revenue recorded from sales of tourism packages are insignificant of total revenue of travel service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. COST OF SALES

Cost of sales for our cross-border business comprise the cost of products purchased and surcharges on purchase cost. Cost of revenue for our travel services comprise the cost of air-tickets brought from airline or the cost of services provided from local travel firms or persons, the cost for outsourcing the travelling work to certain travel agencies and additional air-ticket return cost paid to customers.

The following table shows a breakdown of cost of sales of all business for the periods presented for each category:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Changes in inventories of finished goods | - | - | 433870 |
| Purchases of finished goods | 40881440 | 19229038 | 6395036 |
| Outsourced service cost | 30095589 | 21310128 | 19294795 |
| Amortization of software | 1410081 | 938979 | - |
| Additional air-ticket return cost \*\* | 110385 | 7387 | 253522 |
| Taxes and surcharges \* | 4485 | 2440 | 6996 |
|  | 72501980 | 41487972 | 26384219 |

---

\* Tax and surcharges are mainly Urban Maintenance and Construction Tax (7% of Valued Added Tax payment amount), Extra Charges of Education Fund (3% of Valued Added Tax payment amount) and Local Surcharge for Education Fund (2% of Valued Added Tax payment amount).

\*\* Additional air-ticket return cost is the net loss of the return payments paid to customers offset by the return proceeds received from airline companies. The following table shows the gross amount of the return payment and proceeds;

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Return paid to customers | 3232466 | 2002413 | 2196070 |
| Return received from airline companies | (3122081) | (1995026) | (1942548) |
| Additional air-ticket return cost | 110385 | 7387 | 253522 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. OTHER INCOME

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Government grant | 4817 | 68529 | 70612 |
| Interest income on bank deposits | 338 | 557 | 595 |
| Other | 30509 | 27 | 201 |
|  | 35664 | 69113 | 71408 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. OTHER LOSSES

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Loss on disposal of subsidiaries\* | - | - | 342953 |
| Loss on disposal of plant and equipment | 39168 | 106686 | - |
| Others | 30514 | 698 | 1 |
|  | 69682 | 107384 | 342954 |

---

\* Details of sale of the subsidiary:

---

| | |
|:---|:---|
| Fair value of the consideration | 1 |
| Net asset of the disposed asset | (344243) |
| Loss on sale before foreign currency translation effect | (344242) |
| Foreign currency translation effect | 1289 |
| Loss on disposal of a subsidiary | (342953) |
| Carrying amount of the investment cost of the disposed subsidiary: |  |
| Cash | 374556 |
| Trade receivables | 3292 |
| Other current assets | 1413838 |
| Total assets | 1791686 |
| Short-term loan | (1126776) |
| Other current liabilities | (320667) |
| Total liabilities | (1447443) |
| Net assets | 344243 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. DISTRIBUTION AND SELLING EXPENSES

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Outsourced service fee | 4277941 | 855518 | 58942 |
| Amortization of trademark use rights | 3447188 | 1795279 | - |
| Others | 292 | 1107 | 39 |
|  | 7725421 | 2651904 | 58981 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. ADMINISTRATIVE EXPENSE

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Employee benefit expenses or labor cost (non-directors) | 9911681 | 271607 | 146138 |
| Directors' emoluments | 840000 | 30758 | - |
| Audit fee | 248989 | 253915 | 298516 |
| Professional and other service fee | 53454 | 277488 | 480646 |
| Depreciation and amortization charges | 249583 | 288128 | 286334 |
| Decoration | - | - | 3686 |
| Rental | 46238 | 13899 | 81304 |
| Travelling and entertainment | 126614 | 124689 | 74861 |
| Impairment loss of intangible assets | 995821 | - | - |
| Others | 1102389 | 569730 | 705391 |
|  | 13574769 | 1830214 | 2076876 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. FINANCE COSTS

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Interest expenses on bank borrowings | 40925 | 13729 | 5187 |
| Interest expenses on lease liabilities | 246 | 166 | - |
| Total finance costs | 41171 | 13895 | 5187 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. INCOME TAX EXPENSE

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
| **PRC enterprises income tax:** |  |  |  |  |  |  |
| Current tax | | 60,250 | | 744,225 | | - |
|  | | 60,250 | | 744,225 | | - |

---

Jin Xuan Luxury Tourism, Flower Crown China and Heyang Travel are located in PRC and subject to the applicable enterprise income tax rate of 25%.

KBS Fashion Group Limited was incorporated in the Marshall Island, and, under the current laws of the Marshall Island, is not subject to income taxes.

Flower Crown Holding was incorporated in the Cayman Islands, and, under the current laws of the Cayman Islands, is not subject to income taxes.

Flower Crown (China) Holding Group Co., Ltd. was incorporated in Hong Kong, and, under the current laws of Hong Kong, is subject to income taxes of 16.5%. Currently, Flower Crown (China) Holding Group Co., Ltd. is in accumulated loss, no income tax expense or deferred tax assets was considered.

The tax charge for the Company can be divided into non-PRC entities and PRC entities. As for the non-PRC entities, all the entities are expense center and not subject to any tax and also no deferred tax assets are considered. The accumulated loss for the non-PRC as of December 31, 2025 is $72,051,804.

The following table reconciles the income tax calculated at statutory rate of China of 25% to the Company's effective income tax for the years ended December 31, 2025, 2024 and 2023:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| (Loss)/profit before income tax | (10940592) | 3818032 | 3043779 |
| Tax calculated at a tax rate of 25% | (2735148) | 954508 | 760945 |
| Effect of preferential tax rate | 2535427 | (416084) | 6614 |
| Permanent difference for non-deductible expense | 11759 | 253296 | - |
| Permanent difference for non-tax or favorable tax items | (14046) | (27069) | - |
| Deferred tax not provided for | 650321 | 125289 | 6260 |
| Utilization of accumulated tax loss previously not recognized | (388063) | (145715) | (773819) |
| Income tax expense | 60250 | 744225 | - |

---

PRC entities are operating entities and may be subject to income tax and deferred tax are considered. For prudence purpose, the Company did not consider the deferred tax assets for tax loss carried forward. The following is the analysis of the deferred tax balances for financial reporting purposes:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **Temporary<br> difference** | **Deferred<br> tax assets** | **Temporary<br> difference** | **Deferred<br> tax assets** | **Temporary<br> difference** | **Deferred<br> tax assets** |
| Beginning of the year | 1793816 |  | 1212655 |  | 4386623 |  |
| Tax loss carried forward | 305592 |  | 1205989 |  | - |  |
| Reverse | (1552250) |  | (582858) |  | (2847182) |  |
| Effect of translation | 43888 |  | (41970) |  | (326786) |  |
| End of the year | 591046 |  | 1793816 |  | 1212655 |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. (LOSS)/PROFIT FOR THE YEAR

(Loss)/profit for the year has been arrived at after charging:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Cost of inventories recognized as expenses | 71087414 | 40546553 | 26377223 |
| Amortization of software | 1410081 | 938979 | - |
| Taxes and surcharges | 4485 | 2440 | 6996 |
| Cost of sales | 72501980 | 41487972 | 26384219 |
| Depreciation of property, plant and equipment | 242114 | 285019 | 286334 |
| Amortization of other intangible assets and ROU assets | 3454657 | 1798388 | - |
| Share-based compensation | 9478350 | 147000 | - |
| Impairment of intangible assets | 995821 | - | - |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. DIRECTORS' EMOLUMENTS

The emoluments paid or payable to the directors of the Company were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **<u>Salaries</u>** |  |  |  |
| Sun Lei | - | 15379 |  |
| Li Huidan | 210000 | 15379 |  |
| Mu Ruifeng | 210000 | - |  |
| Baojun Zhu | 210000 | - |  |
| Jin Yan | 210000 | - |  |
|  | 840000 | 30758 |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. (LOSS)/PROFIT PER SHARE

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Basic (Loss)/Profit Per Share Numerator** |  |  |  |
| (Loss)/profit for the year attributable to owners of the Company | $(11000824) | $3073834 | $3043779 |
| **Diluted (Loss)/Profit Per Share Numerator** |  |  |  |
| (Loss)/profit for the year attributable to owners of the Company | $(11000824) | $3073834 | $3043779 |
| **Basic (Loss)/Profit Per Share Denominator** |  |  |  |
| Original shares: | 149803 | 101053 | 101056 |
| *Additions from actual events:* |  |  |  |
| - Fractional common stock due to reverse split, weighted | - | - | (2) |
| - Issuance of common stock, weighted | 471519 | 12224 | - |
| Basic weighted average shares outstanding | 621322 | 113278 | 101054 |
| **Diluted (Loss)/Profit Per Share Denominator** |  |  |  |
| Basic weighted average shares outstanding | 621322 | 113278 | 101054 |
| *Dilutive shares: Potential additions from dilutive events:* |  |  |  |
| - Conversion of preferred shares\* | - | 124633 | 5050 |
| Diluted Weighted Average Shares Outstanding: | 621322 | 237911 | 106104 |
| **(Loss)/Profit Per Share\*\*** |  |  |  |
| - Basic | $(17.71) | $27.14 | $30.12 |
| - Diluted | $(17.71) | $12.92 | $28.69 |
| **Weighted Average Shares Outstanding\*** |  |  |  |
| - Basic | 621322 | 113278 | 101054 |
| - Diluted | 621322 | 237911 | 106104 |

---

*\** *There were no potential dilutive additions to diluted weighted shares outstanding as a result of the loss for the year ended December 31, 2025.*

*\*\** *The Company effected a 1:10 reverse stock split on April 26, 2023, a 1:4 reverse stock split on January 8, 2025, and a 1:15 reverse stock split on November 21, 2025, as a result, the basic and diluted shares and per share number for all years presented here are adjusted retrospectively.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. PROPERTY, PLANT AND EQUIPMENT

**Owner-occupied Property**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Property** | **Office <br> equipment** | **Motor <br> vehicles** | **Furniture <br> and <br> fixtures** | **Total** |
| **COST** | | | | | |
| At December 31, 2023 | 2099359 | 4822 | 908182 | 930 | 3013293 |
| Additions | - | - | 396710 | - | 396710 |
| Disposal | - | - | (439189) | - | (439189) |
| Translation adjustment | (57349) | (132) | (24206) | (25) | (81712) |
| At December 31, 2024 | 2042010 | 4690 | 841497 | 905 | 2889102 |
| Disposal | - | - | (89369) | - | (89369) |
| Translation adjustment | 89410 | 206 | 34362 | 39 | 124017 |
| At December 31, 2025 | 2131420 | 4896 | 786490 | 944 | 2923750 |
| **ACCUMULATED DEPRECIATION AND IMPAIRMENT** |  |  |  |  |  |
| At December 31, 2023 | (132959) | (3664) | (450331) | (802) | (587756) |
| Depreciation for the year | (65594) | (905) | (218439) | (81) | (285019) |
| Disposal | - | - | 93212 | - | 93212 |
| Translation adjustment | 4562 | 113 | 14079 | 23 | 18777 |
| At December 31, 2024 | (193991) | (4456) | (561479) | (860) | (760786) |
| Depreciation for the year | (65669) | - | (176445) |  | (242114) |
| Disposal | - | - | 19701 | - | 19701 |
| Translation adjustment | (10320) | (195) | (28942) | (37) | (39494) |
| At December 31, 2025 | (269980) | (4651) | (747165) | (897) | (1022693) |
| **CARRYING AMOUNT** |  |  |  |  |  |
| At December 31, 2025 | 1861440 | 245 | 39325 | 47 | 1901057 |
| At December 31, 2024 | 1848019 | 234 | 280018 | 45 | 2128316 |

---

Depreciation is provided on straight-line basis for all property, plant and equipment over their estimated useful lives of the assets as follows:

---

| | | |
|:---|:---|:---|
|  | **Useful life** | **Residual<br> Value** |
| Property | 30 years | 5% |
| Office equipment | 3 years | 5% |
| Motor vehicles | 4 years | 5% |
| Furniture and fixtures | 3 years | 5% |

---

Property include buildings owned by the Company are set out below:

---

| | | |
|:---|:---|:---|
| **Location** | **Description** | **Gross area (m<sup>2</sup>)** |
| 8-101 Bojingwan Beiyuan, Hexi District, Tianjing, the PRC \* | Office | 242 |

---

\* The property was pledged to a Chinese Bank to secure the Company's bank loan with principal amount of $500,493.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. INTANGIBLE ASSETS, NET

Intangible assets, net, consists of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **Software** | **Trademark <br> use rights** | **Total** |
| **COST** | | | |
| At December 31, 2023 | - | - | - |
| Additions | 7001021 | 11854260 | 18855281 |
| Translation adjustment | (58603) | (168208) | (226811) |
| At December 31, 2024 | 6942418 | 11686052 | 18628470 |
| Additions | - | 5565217 | 5565217 |
| Translation adjustment | 303980 | 666393 | 970373 |
| At December 31, 2025 | 7246398 | 17917662 | 25164060 |
| **ACCUMULATED AMORTIZATION AND IMPAIRMENT** |  |  |  |
| At December 31, 2023 | - | - | - |
| Amortization for the year | (938979) | (1795279) | (2734258) |
| Translation adjustment | 13323 | 25475 | 38798 |
| At December 31, 2024 | (925656) | (1769804) | (2695460) |
| Amortization for the year | (1410081) | (3447188) | (4857269) |
| Impairment loss for the year \* | - | (995821) | (995821) |
| Translation adjustment | (79729) | (201004) | (280733) |
| At December 31, 2025 | (2415466) | (6413817) | (8829283) |
| **CARRYING AMOUNT** |  |  |  |
| At December 31, 2025 | 4830932 | 11503845 | 16334777 |
| At December 31, 2024 | 6016762 | 9916248 | 15933010 |

---

As of April 15, 2024, the receivable balance of $7,000,000 was fully settled by means of acquisition of a wholly owned subsidiary and the intangible assets (software). The purchase consideration of $7,000,000 was allocated to the additions of intangible asset - software based on their relative fair values at the acquisition date, which amounting to $7,001,021 in accordance with IFRS 3 paragraph 2(b).

\* The Company assessed the recoverable amount of each trademark right. As at December 31, 2025, the expected discounted future cash flows for 4 out of the 12 trademark rights were lower than their respective carrying amounts. Accordingly, an aggregate impairment provision of $995,821 was recognized for the 2025 financial year.

Future estimated amortization expense of intangible assets is as follows:

---

| | |
|:---|:---|
| By December 31, 2026 | $5766869 |
| By December 31, 2027 | 5307564 |
| By December 31, 2028 | 4101756 |
| By December 31, 2029 | 1158588 |
| By December 31, 2030 | - |
| Total | $16334777 |

---

The amortization of intangible assets during 2025 and 2024 was $4,857,269 and $2,734,258, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21. TRADE RECEIVABLES, OTHER RECEIVABLES AND PREPAYMENTS

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31,** | **As at December 31,** | **As at December 31,** | **As at December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
| Trade receivables |  | &nbsp;&nbsp;&nbsp;&nbsp;- |  | 102 |
| Bad debt provision for trade receivables | | - | | - |
|  | | - | | 102 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31,** | **As at December 31,** | **As at December 31,** | **As at December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
| Other receivables |  | 164688 |  | 106116 |
| Prepayments | | 23,859,070 | | 10,323,846 |
|  | | 24,023,758 | | 10,429,962 |

---

\* On October 19, 2022, the Company entered into a stock purchase agreement with a Purchaser and closed the transaction pursuant to the terms of the Stock Purchase Agreement, resulting in the Company's sale of 20,000 shares of common stock (the "Shares") in Hongri International Holding Limited ("Hongri"), constituting all of the issued and outstanding capital stock in Hongri, in consideration for $10,000,000.

The Purchaser issued to the Company a 5% promissory note in the principal amount of $10,000,000, in payment of the Purchase Price (the "Note"). The Note is payable in four installments, on the following dates and in the following amounts: (a) $1,000,000, together with an accrued interest, is payable on or before November 19, 2022; (b) $2,000,000, together with an accrued interest, is payable on or before April 19, 2023; (c) $3,000,000, together with an accrued interest, is payable on or before April 19, 2024, and (d) the remaining $4,000,000, together with an accrued interest, is payable on or before October 19, 2024.

As of April 15, 2024, the receivable balance of $7,000,000 was fully settled by means of acquisition of a wholly owned subsidiary and the intangible assets (software). The acquisition of the subsidiary is considered as the acquisition of assets because there was no operation in the acquired subsidiary. The acquired of a group of assets does not constitute a business and those do not meets the definition of business combination under IFRS 3. The purchase consideration of $7,000,000 was allocated to the identifiable assets acquired based on their relative fair values at the acquisition date, in accordance with IFRS 3 paragraph 2(b).

The fair value of trade and other receivables have not been disclosed as, due to their short duration, management considers the carrying amounts recognized in the consolidated statements of financial position to be reasonable approximation of their fair values.

Prepayments include advances to suppliers for merchandised goods, prepaid expenses and prepaid income tax. As of December 31, 2025, the prepayments include advances to suppliers for merchandised goods of $23,859,070.

The aging analysis of trade receivables is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31,** | **As at December 31,** | **As at December 31,** | **As at December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
| Less than 4 months | | - | | 102 |
|  | | - | | 102 |

---

The provision for doubtful debts is recorded using a provision account unless the Company is satisfied that recovery is remote, in which case the unrecovered loss is written off against trade receivables and the provision for doubtful debts directly. The Company does not hold any collateral over these balances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22. CASH AND CASH EQUIVALENTS

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31,** | **As at December 31,** | **As at December 31,** | **As at December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
| Bank deposits |  | 491624 |  | 1052823 |
| Other monetary funds | | 209,103 | | 131,633 |
|  | | 700,727 | | 1,184,456 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31,** | **As at December 31,** | **As at December 31,** | **As at December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
| Renminbi |  | 666725 |  | 1167272 |
| Hong Kong Dollars | | 34,002 | | 17,184 |
|  | | 700,727 | | 1,184,456 |

---

Cash and cash equivalents comprise cash held by the Company and short-term deposits with an original maturity of three months or less. Majority of our cash is deposited with financial institution in the PRC. Remittance of funds out of the PRC is subject to the exchange restrictions imposed by the PRC government.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23. SHORT-TERM BANK LOAN

***Summary of short-term bank loan***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Annual<br> Interest**<br>**Rate** | **Maturity**<br>**date** | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Industrial Bank (i) | 2.6% | December 24, 2026 | 1072486 | 1027496 |
| Industrial Bank (ii) | 2.8% | May 6, 2026 | 500493 | 616497 |
| Total |  |  | 1572979 | 1643993 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(i) The bank loan is secured by a property of the Chairman and guaranteed by the CEO and Chairman of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;(ii) The bank loan is secured by a property of the Company and guaranteed by the CEO and Chairman of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;24. NOTE PAYABLE

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31,** | **As at December 31,** | **As at December 31,** | **As at December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
| Note payables | | 2,120,000 | | &nbsp;&nbsp;&nbsp;&nbsp;- |
|  | | 2,120,000 | | - |

---

On February 17, 2025, the Company issued to Huidan Li, the Co-Chairman of the board of directors of the Company, a negotiable promissory note (the "Note"), in the principal amount of $3,500,000 (the "Principal Amount"). The Note is transferable, does not bear interest, and is due on demand. The Principal Amount of the Note represented the amount of the continuous advances of funds to the Company by the Chairman for a period of over 3 years. On April 21, 2025, Huidan Li, the Co-Chairman transferred and assigned to six (6) investors (the "Assignees") an aggregate of $1,380,000, representing a portion of the principal amount under the 2025 Original Note (the "Total Assigned Debt"), with each Assignee to be assigned a portion of the Total Assigned Debt equal to $230,000 (the "Assignment"), in consideration of the purchase price of $230,000 from each Assignee. Upon Huidan Li, the Co-Chairman assignment of the Total Assigned Debt to Assignees, the Company issued to Huidan Li, the Co-Chairman, a new promissory note in principal amount of $2,120,000, representing the total remaining outstanding amount due to Huidan Li, the Co-Chairman under the 2025 Original Note, on the terms of the 2025 Original Note. As of December 31, 2025, $1,380,000 was converted into preferred F shares as disclosed in Note 29.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25. TRADE AND OTHER PAYABLES

---

| | | |
|:---|:---|:---|
|  | **As at December 31,** | **As at December 31,** |
|  | **2025** | **2024** |
| Trade payables | 4427737 | 416987 |
| Employee benefits payable | 28800 | 22723 |
| Accrued directors' emoluments | 840000 | - |
| Accrual and other payables | 1279680 | 2172481 |
|  | 6576217 | 2612191 |

---

The fair value of trade and other payables have not been disclosed as, due to their short duration, management considers the carrying amounts recognized in the consolidated statements of financial position to be reasonable approximation of their fair values.

Trade payables comprise amounts outstanding for trade purchase. The aging analysis of trade payables is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31,** | **As at December 31,** | **As at December 31,** | **As at December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
| Past due for less than 4 months | | 4,427,737 | | 416,987 |
|  | | 4,427,737 | | 416,987 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26. CONTRACT LIABILITY

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31,** | **As at December 31,** | **As at December 31,** | **As at December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
| Contract liability | | 205,079 | | - |
|  | | 205,079 | | - |

---

Contract liability represents the payments received from the customer but the obligation to transfer services yet to be delivered to the customer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27. RELATED PARTIES PAYABLE

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Nature of relationship with related parties

---

| | |
|:---|:---|
| **Name** | **Relationship with the Company** |
| Yan, Keyan | EX-chairman of the Board of Directors and interim Chief Financial Officer |
| Sun, Lei | Chief Executive Officer and Co-chairman of the Board of Directors |
| Li Huidan | Co-Chairman of the Board of Directors |
| Mu Ruifeng | Director |
| Jin Yan | Director |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Significant balances between the Company and the above related parties:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **As at December 31,** | **As at December 31,** | **As at December 31,** | **As at December 31,** |
| <br>**Name** | <br>**Nature** | **2025** | **2025** | **2024** | **2024** |
| Li, Huidan | Borrowing of funds |  | 2048901 |  | 2423433 |
| Sun, Lei | Borrowing of funds | | 5,177,309 | | 1,359,982 |
|  |  | | 7,226,210 | | 3,783,415 |

---

Related parties payables were unsecured, non-interest bearing and repayment on demand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Significant related parties transactions between the Company and the above related parties:

During 2024, the Company disposed a vehicle to Sun Lei with proceeds of $222,354.

During 2024, a bank loan of $1,643,993 of the Company was guaranteed by Sun Lei and Li Huidan.

During 2025, the Company disposed a vehicle to Li Huidan with proceeds of $13,913.04.

During 2025, a bank loan of $1,572,979 of the Company was guaranteed by Sun Lei and Li Huidan.

During 2025, the Company issued 190,200 shares to Sun Lei to offset its payable of $2,510,000 to her.

On January 3, 2026, the Company issued an aggregate of 140,000 shares of common stock (the "Bonus Shares") to the four members of the Board, who are the Co-Chairman, Huidan Li, and the three independent directors, Baojun Zhu, Mu Ruifeng and Jin Yan. Each such director received 35,000 shares of common stock as compensation for such director's services for the fiscal year ended 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28. RIGHTS

On March 12, 2021, the Company announced the authorization and declaration of a dividend distribution of one right for each outstanding share of common stock, par value $0.0001 per share, of the Company to stockholders of record as of the close of business on March 31, 2021. Each Right will entitle the holder to purchase, for the Exercise Price of $50, 0.00667 of a share of Preferred Stock having economic and other terms similar to that of one share of Common Stock. This portion of a share of Preferred Stock is intended to give the stockholder approximately the same dividend, voting and liquidation rights as would one share of Common Stock, and should approximate the value of one share of Common Stock.

If an Acquiring Person obtains beneficial ownership of 15 percent or more of the Common Stock, then each Right will entitle the holder thereof to purchase, for the Exercise Price, a number of shares of Common Stock (or, in certain circumstances, cash, property or other securities of the Company) having a then-current market value of twice the Exercise Price. All Rights that are or, under certain circumstances specified in the Rights Agreement, were beneficially owned by an Acquiring Person or certain of its transferees will be void.

In general, if anyone acquires 15% or more of the common stock of the Company, the Rights will give rights holders, other than the Acquiring Person, to buy common stock at lower price to significantly dilute the Acquiring Person. The Board adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group that acquires 15 percent or more of the shares of Common Stock without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board.

As of December 31, 2025, there are 4,233,272 rights issued and outstanding. The number of the rights since issued has not been changed.

The Company classified the Rights as permanent equity in the consolidated balance sheets because they are convertible to preferred B share which are further convertible to common stock of the Company. The Preferred Shares are recorded initially at fair value, net of issuance costs.

The fair value of the rights was determined using a Black-Scholes model. This model requires the input of highly subjective assumptions, including price volatility of the underlying stock. Changes in the subjective input assumptions can materially affect the estimate of fair value of the rights and the Company's results of operations could be impacted. This model is dependent upon several variables such as the instrument's expected term, expected strike price, expected risk-free interest rate over the expected instrument term, the expected dividend yield rate over the expected instrument term, and the expected volatility of the Company's stock price over the expected term. The expected term represents the period of time that the instruments granted are expected to be outstanding. The expected strike price is based upon a weighted average probability analysis of the strike price changes expected during the term as a result of the down round protection. The risk-free rates are based on U.S. Treasury securities with similar maturities as the expected terms of the options at the date of valuation. Expected dividend yield is based on historical trends. The Company measures volatility using the volatility rates of market index.

The inputs to the model were as follows:

---

| | |
|:---|:---|
|  | **As of the <br> date of <br> grant** |
| Exercise price | 50 |
| Dividend yield | - |
| Risk-free rate | 1.54% |
| Expected term (in years) | 10 |
| Expected volatility | 79.68% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;29. SHARE CAPITAL AND SHARE PREMIUM

*The number of shares in this Note 28 reflects the 1:10 reverse stock split of common stock of the Company, effective on April 26, 2023, the 1:4 reverse stock split of common stock of the Company, effective on January 8, 2025, and 1:15 reverse stock split of common stock of the Company, effective on November 21, 2025.*

The details of the Company's share capital are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of<br> shares** | **Share<br> capital** | **Share<br> premium** |
| Shares outstanding as December 31, 2023 | 101053 | 606 | 77965011 |
| Shares issued for compensation | 1667 | 10 | 146990 |
| Conversion of preferred shares | 47083 | 283 | 847217 |
| Shares outstanding as December 31, 2024 | 149803 | 899 | 78959218 |
| Shares issued for compensation | 666667 | 1000 | 9477350 |
| Conversion of preferred shares | 419583 | 462 | 3052038 |
| Liabilities convert to shares | 190200 | 285 | 2509715 |
| Face value changes and fractional shares due to reverse stock split | 269 | (2503) | 2503 |
| Shares outstanding as December 31, 2025 | 1426522 | 143 | 94000824 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of<br> shares** | **Share<br> capital** | **Share<br> premium** |
| Authorized Common shares of US$0.0001 as at December 31, 2025 | 150000000 | $15000 | $- |
| Issue and fully paid common shares of US$0.0001 as at December 31, 2023 | 101053 | 606 | $77965011 |
| Issue and fully paid common shares of US$0.0001 as at December 31, 2024 | 149803 | 899 | $78959218 |
| Issue and fully paid common shares of US$0.0001 as at December 31, 2025 | 1426522 | 143 | $94000824 |

---

<u>Preferred Stock</u>

The Company is authorized to issue 5,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined by the Company's board of directors.

On April 8, 2021, the Company issued 1,500,000 shares of our newly-designated Series A Convertible Preferred Stock to a single investor for total subscription proceeds of $1,500,000. Each Series A Convertible Preferred Stock features a stated value of $1.00 and is convertible to 0.1 share of our common stock at any time after 6 months from the date of issue. All shares of common stock issuable upon conversion of the Series A Preferred Stock are subject to a two-year lock-up agreement running from the initial closing of the financing.

On September 1, 2021, the Company issued 150,000 shares of our newly-designated Series C Convertible Preferred Stock to Sun Lei, our Chief Executive Officer for total subscription proceeds of $1,500,000 of a private offering. A Series C Convertible Preferred Stock features a stated value of $10.00 and is convertible to shares of our common stock on a 1 to 0.5 basis at any time after 6 months from the date of issue. Series C Convertible Preferred Stock votes together without common stock on an as-if-converted basis, which is not exercisable for one year, has no special dividend rights, and ranks equally to our common stock with respect to rights upon liquidation. All shares of common stock issuable upon conversion of the Series C Preferred Stock are subject to a one-year lock-up agreement running from the initial closing of the financing.

On November 1, 2021, the "Company closed the private placement offering (the "Offering") of its newly-designated Series D Convertible Preferred Stock, par value $0.0001 per share ("Series D Convertible Preferred Stock"), in which the Company issued 100,000 shares of Series D Convertible Preferred Stock (the "Shares") for the total gross proceeds of $3,900,000. As stated in the Certificate of Designation, shares of Series D Convertible Preferred Stock vote together with holders of shares of common stock, par value $0.0001 per share (the "Common Stock") of the Company on an as-if-converted basis; have no special dividend right, ranks equal to the Common Stock with respect to rights upon liquidation and are convertible into shares of Common Stock on a 1 to 1.3 basis at any time following the issuance.

On August 26, 2024, the Company entered into a debt exchange agreement (the "2024 Exchange Agreement"), pursuant to which, the note holders of the Company agreed to cancel the total amount of the Company's indebtedness issued to each Holder in exchange for the issuance of shares of a new series of the Company's preferred stock, designated as Series E Convertible Preferred Stock (the "Series E Stock"), pursuant to the terms and subject to conditions set forth in the 2024 Exchange Agreement. Upon satisfaction of the closing conditions, at the Closing, the Company will issue an aggregate of 1,000,000 shares of Series E Stock (the "Series E Shares") to the note holders at the exchange price of $3.00 per share, in consideration of cancellation of the total outstanding debt by the Company to the note holders with aggregate amount of $3,000,000. Pursuant to the terms of the Certificate of Designation of Series E Stock, Series E Shares features a stated value of $3.00 per share and are convertible to shares of the Company's common stock at the conversion rate of 1 for 10, such as each Series E Share to be converted into 10 shares of the Company's common stock without the payment or any additional consideration by the Holder thereof. Such conversion is subject to the following schedule: (i) up to 30% of the Series E Shares issued to each Holder may be converted by such Holder at any time from the date of the issuance; (ii) up to additional 30% of the Series E Shares counted on the date of the issuance may be converted by such Holder at any time after 90 days from the date of the issuance; (iii) up to 40% of the Series E Shares counted on the date of the issuance may be converted by such Holder after six (6) months from the date of the issuance. If any Series E Shares remain outstanding on or after March 14, 2025, the Company will have the right, but not the obligations, to require the Holder of such Series E Shares to convert them into the number of fully paid and non-assessable shares of common stock as would result from multiplying the number of Series E Shares by 10. Holders of Series E Shares vote together with holders of shares of common stock on a one-for-one basis, without regard to the number of shares of common stock into which each Series E Share is convertible, have no special dividend rights, and ranks equally to our common stock with respect to rights upon liquidation.

On April 22, 2025, the Company and the Holders entered into a debt exchange agreement (the "Exchange Agreement"), pursuant to which, the Holders agreed to cancel the total amount of the Company's indebtedness under the Assignee Notes, in exchange for the issuance of an aggregate of 69,000 shares (each Holder to receive 11,550 shares) of a new series of the Company's preferred stock, designated as Series F Convertible Preferred Stock (the "Series F Stock"), at the exchange price of $20.00 per share. As contemplated by the terms, and subject to conditions, of the Exchange Agreement, the closing of the transactions contemplated by the Exchange Agreement (the "Closing") is scheduled to occur on or about May 16, 2025, upon satisfaction of certain conditions, including, among other things (i) the Company's submission of Listing of Additional Shares Notification Form with Nasdaq Capital Market at least 15 calendar days prior to the issuance of the shares of Series F Stock; (ii) obtaining the shareholder approval for the issuance of 20% or more of the Company's issued and outstanding share capital, as required by Nasdaq Marketplace Rule 5635(d); and (iii) filing of the Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock (the "Certificate of Designation of Series F Stock") with the Registrar of the Corporation under the Marshall Island Business Corporations Act (the "BCA"), establishing the Series F Stock.

Holders of Series A, C, D, E and F Convertible Preferred Stock converted certain preferred stock to common stock during 2021, 2024 and 2025. Following table shows the changes of the preferred stock during 2023, 2024 and 2025:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred A** | **Preferred A** | **Preferred C** | **Preferred C** | **Preferred D** | **Preferred D** | **Preferred E** | **Preferred E** | **Preferred F** | **Preferred F** | **Total** | **Total** |
|  | **Shares** | **Amount $** | **Shares** | **Amount $** | **Shares** | **Amount $** | **Shares** | **Amount $** | **Shares** | **Amount** | **Shares** | **Amount $** |
| At December 31, 2023 | 1240000 | 1240000 | 150000 | 1500000 | 80000 | 3120000 | - | - | - | - | 1470000 | 5860000 |
| Issued | - | - | - | - | - | - | 1000000 | 3000000 | - | - | 1000000 | 3000000 |
| Converted |  |  |  |  |  |  | (282500) | (847500) | - | - | (282500) | (847500) |
| At December 31, 2024 | 1240000 | 1240000 | 150000 | 1500000 | 80000 | 3120000 | 717500 | 2152500 | - | - | 2187500 | 8012500 |
| Issued | - | - | - | - | - | - |  |  | 69000 | 1380000 | 69000 | 1380000 |
| Converted |  |  |  |  |  |  | (717500) | (2152500) | (45000) | (900000) | (762500) | (3052500) |
| At December 31, 2025 | 1240000 | 1240000 | 150000 | 1500000 | 80000 | 3120000 | - | - | 24000 | 480000 | 1494000 | (1672500) |
| Common shares convertible after 1:4 reverse share split | 2067 | N/A | 1250 | N/A | 1733 | N/A | - | N/A | 40000 | N/A | 45050 | N/A |

---

The Company classified all Preferred Shares as permanent equity in the consolidated balance sheets because they are not redeemable and convertible to common stock of the Company. The Preferred Shares are recorded initially at fair value, net of issuance costs. The Preferred Shares A, C, D, E and F can be converted into 45,050 shares of common stock of the Company.

<u>Common Stock</u>

The Company is authorized to issue 150,000,000 shares of common stock with a par value of $0.0001 per share.

No shares were issued during year 2023.

On August 1, 2024, the Company issued1,667 shares at $88.18 per share (adjusted to reflect 1:4 reverse stock split and 1:15 reverse stock split) to a service provider for in lieu of its compensation.

In September and October 2024, the Company issued 47,083 shares at $18 per share (adjusted to reflect 1:4 reverse stock split and 1:15 reverse stock split) to certain preferred E shares holders to satisfy their conversion requests.

In January and March 2025, the Company issued 119,583 shares at $18.00 per share (adjusted to reflect 1:15 reverse stock split) to certain preferred E shares holders to satisfy their conversion requests.

In June, August, September and December 2025, the Company issued 300,000 shares at $3.00 per share (adjusted to reflect 1:15 reverse stock split) to certain preferred F shares holders to satisfy their conversion requests.

In July 2025, the Company issued 33,337 shares at $15.30 per share (adjusted to reflect 1:15 reverse stock split) to the CEO to offset its payable of $510,000 to her.

In September 2025, the Company issued 156,863 shares at $12.75 per share (adjusted to reflect 1:15 reverse stock split) to the CEO to offset its payable of $2,000,000 to her.

On July 17 2025, the Company issued 16,667 shares at $16.05 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On July 19 2025, the Company issued 16,667 shares at $15.60 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On July 22 2025, the Company issued 16,667 shares at $19.35 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On July 23 2025, the Company issued 16,667 shares at $16.35 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On July 25 2025, the Company issued 16,667 shares at $17.10 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On July 27 2025, the Company issued 16,667 shares at $17.10 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On July 31 2025, the Company issued 33,333 shares at $15.15 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On August 3 2025, the Company issued 33,333 shares at $15.15 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On August 10 2025, the Company issued 50,000 shares at $15.23 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On August 13 2025, the Company issued 50,000 shares at $14.53 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On August 18 2025, the Company issued 50,000 shares at $14.10 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On September 1 2025, the Company issued 50,000 shares at $14.55 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On September 7 2025, the Company issued 50,000 shares at $13.65 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On September 8 2025, the Company issued 50,000 shares at $13.52 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On September 19 2025, the Company issued 50,000 shares at $12.67 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On September 26 2025, the Company issued 50,000 shares at $12.12 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On September 30 2025, the Company issued 50,000 shares at $12.37 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

On October 6 2025, the Company issued 50,000 shares at $12.79 per share (adjusted to reflect 1:15 reverse stock split) to employees for their compensation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30. OTHER RESERVE

<u>Statutory surplus reserve</u>

As stipulated by the relevant laws and regulations applicable to China's foreign investment enterprises, the Company's PRC subsidiaries are required to maintain a statutory surplus reserve which is non-distributable. Appropriations to such reserve are made out of net profit after tax of the statutory financial statements of the PRC subsidiaries at the amounts determined by their respective boards of directors annually up to 50% of authorized capital, but must not be less than 10% of the net profit after tax.

The statutory surplus reserve can be used for making up losses of the Company entities in Mainland China, if any. The statutory surplus reserve may also be used to increase capital or to meet unexpected or future losses. The statutory surplus reserve is non-distributable other than upon liquidation.

The statutory surplus reserve of the Company amounts to nil and nil at December 31, 2025 and 2024, respectively.

<u>Retained profits/ (accumulated deficits)</u>

The retained profits/(accumulated deficits) comprise the cumulative net gains and losses recognized in the Company's income statement.

<u>Foreign currency translation reserve (other comprehensive income)</u>

Foreign currency translation reserve represents the foreign currency translation difference arising from the translation of the financial statements of companies within the Company from their functional currency to the Company's presentation currency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31. LEASE

The Company primarily has operating leases for administrative office or employees' dormitories, through third-parties. A summary of supplemental balance sheet information related to operating leases as of December 31, 2025 and 2024 was as follows:

---

| | | |
|:---|:---|:---|
|  | **As of <br> December 31, <br> 2025** | **As of <br> December 31,<br> 2024** |
| **Lease right-of-use assets, net** | $4364 | $11868 |
| Lease liabilities, current | 4454 | 7477 |
| Lease liabilities, non-current | - | 4463 |
| **Total lease liabilities** | $4454 | $11940 |
| Weighted average remaining lease term | 7 months | 19 months |
| Weighted average discount rate\* | 2.9% | 2.9% |

---

\* The discount rate is based on its incremental internal bank loan borrowing rate.

A summary of lease expenses recognized in the consolidated statement of income and comprehensive income(loss) for the year ended December 31, 2025 and 2024 and supplemental cash flow information related to operating leases were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the <br> year ended<br> December 31,<br> 2025** | **For the<br> year ended<br> December 31,<br> 2024** |
| Operating lease expenses – short-term lease | $46238 | $13899 |
| Interest for lease liability | 246 | 166 |
| Right-of-use assets amortization | 7469 | 3109 |

---

Minimum future lease payments under non-cancellable operating leases described above as of December 31, 2025 were as follows:

---

| | |
|:---|:---|
|  | **As of<br> December 31,<br> 2025** |
| By December 31, 2026 | $4497 |
| By December 31, 2027 | $- |
| Total future lease payments | 4497 |
| Less: present value discount | (43) |
| Total operating lease liabilities | $4454 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32. BORROWINGS

A reconciliation of liabilities arising from financing activities excluding bank overdrafts is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **January 1, <br> 2025** | **Cashflows** | **Interest** | **Foreign<br> currency<br> translation<br> difference<br> and others** | **December 31, <br> 2025** |
| Lease liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;- current | 7477 | (7696) | 246 | 4427 | 4454 |
| &nbsp;&nbsp;&nbsp;- non-current | 4463 | - | - | (4463) | - |
| &nbsp;&nbsp;&nbsp;Bank borrowings | 1643993 | (180055) | 40925 | 68116 | 1572979 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;33. RISK MANAGEMENT AND FAIR VALUES

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Capital risk

The Company manages its capital to ensure that entities in the Company will be able to continue as a going concern while maximizing the return to owners through the optimization of the debt and equity balance. The Company's overall strategy remains unchanged during the year.

The capital structure of the Company consisted of borrowings net of bank balances and cash, and equity attributable to owners of the Company comprising issued share capital and various reserves.

The directors of the Company review the capital structure regularly. As part of this review, the Company considers the cost of capital and the risks associated with each class of capital, and will balance its overall capital through the payment of dividends, new share issues as well as the issue of new debt or the redemption of existing debt.

The Company monitors capital using the Gearing Ratio, which is net debt divided by total equity. Net debt represents borrowings less cash and cash equivalents. The Company met its objective by minoring borrowing activities.

The Company and its subsidiaries are not subject to externally imposed capital requirements.

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2025** | **December 31,<br> 2024** |
| Total borrowing | 1572979 | 1643993 |
| Less: cash and cash equivalents | (700727) | (1184456) |
| Net debt | 872252 | 459537 |
| Shareholders' equity | 24433748 | 20902536 |
| Total capital | 25306000 | 21362073 |
| Gearing ratio | 3.57% | 2.20% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Financial risk

Financial risk management objectives and policies

The Company's major financial instruments include trade and other receivables, related parties receivables, cash and cash equivalents, trade and other payables, related parties payables and short-term loans. Details of these financial instruments are disclosed in the respective notes. The risks associated with these financial instruments include credit risk, market risk (interest rate risk and currency risk) and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Market risk

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Foreign currency risk

While our reporting currency is the U.S. dollar, substantially all of our consolidated revenues and consolidated costs and expenses are denominated in RMB. Substantially all of our assets are denominated in RMB. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and the RMB. If the RMB depreciates against the U.S. dollar, the value of our RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. Assets and liabilities are translated at exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and equity is translated at historical exchange rates. Any resulting translation adjustments are not included in determining net income but are included in determining other comprehensive income, a component of equity. As of December 31, 2024, our accumulated other comprehensive loss was $1.0 million. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Interest rate risk

We deposit surplus funds with Chinese banks earning daily interest. We do not invest in any instruments for trading purposes. Most of our outstanding debt instruments carry fixed rates of interest. Our operations generally are not directly sensitive to fluctuations in interest rates and we currently do not have any long-term debt outstanding. Management monitors the banks' prime rates in conjunction with our cash requirements to determine the appropriate level of debt balances relative to other sources of funds. We have not entered into any hedging transactions in an effort to reduce our exposure to interest rate risk.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Credit risk

As at December 31, 2025, the Company's maximum exposure to credit risk which will cause a financial loss to the Company due to failure to perform an obligation by the counterparties is arising from the carrying amount of the respective recognized financial assets as stated in the consolidated statement of financial position.

In order to minimize the credit risk, the management of the Company has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Company's credit risk is significantly reduced.

The Company's exposure to credit risk on receivables in influenced mainly by the individual characteristics of each customer therefore concentrations of credit risk primarily arise when the Company has significant exposure to individual customers. In order to minimize the credit risk, management continuously monitors the level of exposure to ensure that follow-up actions and/or corrective actions are taken promptly to lower the risk exposure or to recover overdue balances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Liquidity risk

In the management of the liquidity risk, the Company monitors and maintains a level of cash and bank balances deemed adequate by the management to finance the Company's operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

Liquidity tables

The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities as at December 31, 2025 based on agreed repayment terms. The tables have been drawn up based on undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.

As at December 31, 2025

---

| | | | |
|:---|:---|:---|:---|
|  | **Within<br> 1 year** | **Over<br> 1 year** | **Total** |
| Short-term bank loans and related interests | 1572979 |  | 1572979 |
| Trade and other payables | 6576217 |  | 6576217 |
| Related parties payables | 7226210 |  | 7226210 |
| Operating lease liabilities | 4454 |  | 4454 |
| Total | 15379860 |  | 15379860 |

---

As at December 31, 2024

---

| | | | |
|:---|:---|:---|:---|
|  | **Within<br> 1 year** | **Over<br> 1 year** | **Total** |
| Short-term bank loans and related interests | 1643993 | - | 1643993 |
| Trade and other payables | 2612191 | - | 2612191 |
| Related parties payables | 3783415 | - | 3783415 |
| Operating lease liabilities | 7477 | 4463 | 11940 |
| Total | 8047076 | 4463 | 8051539 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Fair value

The fair value of financial assets and financial liabilities is determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

The following table presents the fair value of the Company's financial instruments measured at the end of the reporting period on a recurring basis, categorized into the three-level fair value hierarchy as defined in IFRS 13, Fair Value Measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

- Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

- Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available.

- Level 3 valuations: Fair value measured using significant unobservable inputs.

During the years ended December 31, 2025 and 2024, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3. The Company's policy is to recognize transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

*Valuation techniques and inputs used in Level 2 fair value measurements*

The fair value of financial assets in Level 2 is determined by the model as disclosed in note 28.

The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortized cost approximate their fair values.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;34. COMMITMENTS AND CONTINGENCIES

From time to time, the Company is subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity. As of December 31, 2025, the Company has no significant outstanding litigation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;35. EVENTS AFTER THE BALANCE SHEET

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were available to be issued. Based on the review, the Company did not identify any material subsequent event that is required disclosure except as disclosed below and elsewhere in the consolidated financial statements.

On January 3, 2026, the Company issued an aggregate of 140,000 shares of common stock (the "Bonus Shares") to the four other members of the Board, the Co-Chairman, Huidan Li, and the three independent directors, Baojun Zhu, Mu Ruifeng and Jin Yan. Each such director received 35,000 shares of common stock as compensation for such director's services for the fiscal year ended 2025.

From February 28, 2026 till April 30, 2026, the Company issued an aggregate of 4,500,000 shares of common stock (the "ESOP Shares") to the different employees of the Company for their compensation.

By April 30, 2026, the Company issued 160,002 shares of common stock to certain preferred F shares holders to satisfy their conversion requests.

By April 30, 2026, the Company issued 650,307 shares and 2,400,000 shares to Huidan Li and Lei Sun, respectively, to offset their payables.

\* \* \* \* \*

## Exhibit 8.1

**Exhibit 8.1**

**List of Subsidiaries of JX Luxventure Group Inc.** 

---

| | | |
|:---|:---|:---|
| **Name of Subsidiary** | **Jurisdiction of Incorporation or<br> Organization** | **Percentage of<br> Ownership** |
| Flower Crown Holding | Cayman Islands | 100% |
| Flower Crown (China) Holding Group Co., Limited | Hong Kong | 100% |
| Billion Place Limited (Hong Kong) Co., Limited | Hong Kong | 100% |
| Jin Xuan (Hainan) Holding Co., Ltd. | PRC | 100% |
| Jinxuan Luxury Tourism (Hainan) Digital Technology Co., Ltd. | PRC | 100% |
| Tianjin Baoliting Intelligence Technology Co., Ltd. | PRC | 100% |
| Jin Xuan (Shenzhen) International Trade Co., Ltd. | PRC | 100% |
| Shenzhen Siquanrun Technology Co., Ltd. | PRC | 100% |
| Baofu (Zhuhai) Technology Co., Ltd. | PRC | 100% |
| Hainan Si Quan Run Hang International Travel Agency Co., Ltd. | PRC | 100% |
| Hefei Si Quan Run Hang International Travel Agency Co., Ltd. | PRC | 100% |
| Hefei Hao Hai International Travel Agency Co., Ltd. | PRC | 100% |
|  | PRC | 100% |

---

## Exhibit 12.1

**Exhibit 12.1/12.2**

**Certifications**

**Pursuant to Rule 13a-14(a) of the Exchange Act**

I, Sun Lei, certify that:

1. I have reviewed this Annual Report on Form 20-F of JX Luxventure
Group Inc. (the "Company") for the year ended December 31, 2025.

2. Based on my knowledge, this Annual 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 Annual 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 Annual Report.

4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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;(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;

&nbsp;&nbsp;&nbsp;&nbsp;(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 International
Financial Reporting Standards (IFRS);

&nbsp;&nbsp;&nbsp;&nbsp;(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

&nbsp;&nbsp;&nbsp;&nbsp;(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.

5. I, the certifying officer, 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;(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

&nbsp;&nbsp;&nbsp;&nbsp;(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

---

| | |
|:---|:---|
| By: | /s/ Sun Lei |
|  | Sun Lei |
|  | Chief Executive Officer and Interim Financial Officer |
|  | (Principal Executive Officer and Principal Financial <br> and Accounting Officer) |

---

## Exhibit 13.1

**Exhibit 13.1/13.2**

**Certification by the Principal Executive Officer**

**and Principal Financial and Accounting Officer**

**Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

In connection with the Annual Report of JX Luxventure Group Inc. (the "Company") on Form 20-F for the fiscal year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Sun Lei, Chief Executive Officer and Interim 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, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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/ Sun Lei |
| Name: | Sun Lei |
| Title: | Chief Executive Officer and<br> Interim Chief Financial Officer<br> (Principal Executive Officer and<br> Principal Financial and Accounting Officer) |

---

## Exhibit 15.1

**Exhibit 15.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in Registration Statements Nos. 333-287591, 333-292959 and 333-293935 on Form S-8 of our report dated May 15, 2026, relating to the consolidated financial statements of JX Luxventure Group Inc., appearing in this Annual Report on Form 20-F for the year ended December 31, 2025.

 

*/s/ OneStop Assurance PAC* 

Singapore

May 15, 2026