# EDGAR Filing Document

**Accession Number:** 0001684425
**File Stem:** 0001213900-26-045630
**Filing Date:** 2026-4
**Character Count:** 590232
**Document Hash:** 088dd173f2cd36b74a5bc40ba33e9315
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-045630.hdr.sgml**: 20260420

**ACCESSION NUMBER**: 0001213900-26-045630

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 91

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260420

**DATE AS OF CHANGE**: 20260420

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** TDH Holdings, Inc.
- **CENTRAL INDEX KEY:** 0001684425
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE AGENTS & MANAGERS (FOR OTHERS) [6531]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 000000000
- **STATE OF INCORPORATION:** D8
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38206
- **FILM NUMBER:** 26875445

**BUSINESS ADDRESS:**
- **STREET 1:** C/O BEIJING WENXIN CO., LTD., ROOM 1104
- **STREET 2:** FULL TOWER, 9 EAST THIRD RING MIDDLE RD.
- **CITY:** CHAOYANG DISTRICT, BEIJING
- **STATE:** F4
- **ZIP:** 0000
- **BUSINESS PHONE:** 86-187-0642-0269

**MAIL ADDRESS:**
- **STREET 1:** C/O BEIJING WENXIN CO., LTD., ROOM 1104
- **STREET 2:** FULL TOWER, 9 EAST THIRD RING MIDDLE RD.
- **CITY:** CHAOYANG DISTRICT, BEIJING
- **STATE:** F4
- **ZIP:** 0000

?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 (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

OR

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

for the transition period from ____________ to ____________

Commission file number 001-38206

**TDH Holdings, Inc.**

(Exact name of the Registrant as specified in its charter)

**<u>British Virgin Islands</u>**

(Jurisdiction of incorporation or organization)

**c/o Beijing Wenxin Co., Ltd.**

**Room 1104, Full Tower, 9 East Third Ring Middle Road, Chaoyang District, Beijing**

**People's Republic of China**

**Tel: +86-178-1320-4760**

(Address of principal executive offices)

**Dandan Liu, Chief Executive Officer c/o Beijing Wenxin Co., Ltd.**

**Room 1104, Full Tower, 9 East Third Ring Middle Road, Chaoyang District, Beijing**

**People's Republic of China**

**Tel: +86-178-1320-4760**

(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** | **Name of each exchange on which registered** |
| **SHARES, PAR VALUE $0.02** | PETZ | **The NASDAQ Stock Market LLC** |

---

&nbsp;&nbsp;&nbsp;&nbsp;

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

**None.**

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

**None.**

As of the close of the period covered by this annual report the issuer had 10,323,268 shares outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

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

☐ Large Accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer <br> ☐ 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. ☐

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 statement 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:

☒ US 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 ☒

**Table of Contents**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| **[PART I](#a_001)** |  |  |
| ITEM 1. | [IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#a_002) | 1 |
| ITEM 2. | [OFFER STATISTICS AND EXPECTED TIMETABLE](#a_003) | 1 |
| ITEM 3. | [KEY INFORMATION](#a_004) | 1 |
| ITEM 4. | [INFORMATION ON THE COMPANY](#a_005) | 24 |
| ITEM 4A. | [UNRESOLVED STAFF COMMENTS](#a_006) | 48 |
| ITEM 5. | [OPERATING AND FINANCIAL REVIEW AND PROSPECT](#a_007) | 48 |
| ITEM 6. | [DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](#a_008) | 67 |
| ITEM 7. | [MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](#a_009) | 74 |
| ITEM 8. | [FINANCIAL INFORMATION](#a_010) | 76 |
| ITEM 9. | [THE OFFER AND LISTING](#a_011) | 77 |
| ITEM 10. | [ADDITIONAL INFORMATION](#a_012) | 77 |
| ITEM 11. | [QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK](#a_013) | 84 |
| ITEM 12. | [DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](#a_014) | 84 |
| **[PART II](#a_015)** |  |  |
| ITEM 13. | [DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES](#a_016) | 85 |
| ITEM 14. | [MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](#a_017) | 85 |
| ITEM 15. | [CONTROLS AND PROCEDURES](#a_018) | 85 |
| ITEM 16. | [RESERVED](#a_019) | 86 |
| ITEM 16A. | [AUDIT COMMITTEE FINANCIAL EXPERT.](#a_020) | 86 |
| ITEM 16B. | [CODE OF ETHICS.](#a_021) | 86 |
| ITEM 16C. | [PRINCIPAL ACCOUNTANT FEES AND SERVICES.](#a_022) | 86 |
| ITEM 16D. | [EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.](#a_023) | 86 |
| ITEM 16E. | [PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.](#a_024) | 86 |
| ITEM 16F. | [CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.](#a_025) | 86 |
| ITEM 16G. | [CORPORATE GOVERNANCE](#a_026) | 86 |
| ITEM 16H. | [MINE SAFETY DISCLOSURE](#a_027) | 87 |
| ITEM 16I. | [DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.](#a_028) | 87 |
| ITEM 16J. | [INSIDER TRADING POLICY](#a_029) | 87 |
| ITEM 16K. | [CYBERSECURITY](#a_030) | 87 |
| **[PART III](#a_032)** |  |  |
| ITEM 17. | [FINANCIAL STATEMENTS](#a_031) | 88 |
| ITEM 18. | [FINANCIAL STATEMENTS](#a_033) | 88 |
| ITEM 19. | [EXHIBITS](#a_034) | 88 |

---

i

**CERTAIN INFORMATION**

In this Annual Report on Form 20-F (the "Annual Report"), unless otherwise indicated, numerical figures included in this Annual Report have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

For the sake of clarity, this Annual Report follows the English naming convention of first name followed by last name, regardless of whether an individual's name is Chinese or English.

Except where the context otherwise requires and for purposes of this Annual Report only:

● Depending on the context, the terms "we," "us," "our company," and "our" refer to TDH Holdings, Inc., a British Virgin Islands company;

● TDH HK Limited, a Hong Kong company wholly owned by TDH Holdings, Inc.;

● TDH Foods Limited, a Hong Kong company wholly owned by TDH Holdings, Inc.;

● TDH Group BVBA, a Belgium company wholly owned by TDH Holdings, Inc., disposed in May 2025 as a result of the completion of its bankruptcy proceedings;

● TDH Income Corporation, a Nevada corporation wholly owned by TDH Holdings Inc.;

● Ruby21Noland LLC, a Missouri corporation wholly owned by TDH Income Corporation;

● HARDEES2470 LLC, a Missouri corporation wholly owned by TDH Income Corporation;

● Qingdao Tiandihui Pet Foodstuffs Co., Ltd., a Chinese limited liability company wholly owned by TDH Foods Limited, has been deregistered and dissolved as of the date of this filing;

● Qingdao Tiandihui Foodstuffs Sales Co., Ltd., a Chinese limited liability company wholly owned by Qingdao Tiandihui Pet Foodstuffs Co., Ltd., has been deregistered and dissolved as of the date of this filing;

● Beijing Wenxin Company, Ltd., a Chinese limited liability company wholly owned by TDH Holdings, Inc.;

● Qingdao Chihong Information Consulting Co., Ltd., a Chinese limited liability company wholly owned by Beijing Wenxin Company, Ltd.;

● Vigour Management Limited, a British Virgin Islands company, 90% by TDH Holdings, INC.

● Hengzhuo Investment Limited, a Hong Kong company wholly owned by Vigour Management Limited.;

● Beijing Ruihe Commercial Management Co., Ltd., a Chinese limited liability company wholly owned by Hengzhuo Investment Limited;

● Beijing Ruihe Space Commercial Management Co., Ltd., a Chinese limited liability company wholly owned by Beijing Ruihe Commercial Management Co., Ltd.;

● Beijing Jingshi Commercial Management Co., Ltd., a Chinese limited liability company in which Beijing Wenxin Company. Ltd. owns 60% of its equity interest;

● Beijing Jingshi Space Commercial Management Co., Ltd., a Chinese limited liability company wholly owned by Beijing Jingshi Commercial Management Co., Ltd.;

● "shares" and "common shares" refer to our shares, $0.02 par value per share;

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

● all references to "RMB" and "Renminbi" are to the legal currency of China, all references to "USD" and "U.S. Dollars" are to the legal currency of the United States, and all references to "Euro" and "€" are to the legal currency of Belgium.

ii

**FORWARD-LOOKING STATEMENTS**

This Report contains "forward-looking statements" that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are "forward-looking statements" including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management's beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as "may", "will", "should", "could", "would", "predicts", "potential", "continue", "expects", "anticipates", "future", "intends", "plans", "believes", "estimates" and similar expressions, as well as statements in the future tense, identify forward-looking statements.

These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based on the success of our business.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management's belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings "Risk Factors", "Operating and Financial Review and Prospects," "Information on the Company" and elsewhere in this Annual Report.

This Annual Report should be read in conjunction with our audited financial statements and the accompanying notes thereto, which are included in Item 18 of this Annual Report.

**<u>Summary of Risk Factors</u>**

*Investing in our Common Shares involves significant risks. You should carefully consider all of the information in this annual report before making an investment in our Common Shares. Below please find a summary of the principal risks we face, organized under the relevant headings. These risks are discussed more fully in the section titled "Risk Factors"*

 

**Risks related to our business. See "Risk Factors – Risks Related to Our Business"**

Risk and uncertainties related to our business include, but are not limited to, the following:

● We have historically incurred recurring losses and it is uncertain whether we may continue to incur losses in the future.

● We depend on our key personnel, and our business and growth prospects may be severely disrupted if we lose their services.

● We do not maintain key man life insurance on any of our senior management or key personnel.

● While we are not aware of any data breach in the past, cyber-attacks, computer viruses or any future failure to adequately maintain security and prevent unauthorized access to electronic and other confidential information could result in a data breach which could materially adversely affect our reputation, financial condition and operating results.

iii

**Risks related to our commercial property management business. See "Risk Factors – Risks Related to the Commercial Property Management Business"**

Risk and uncertainties related to our commercial property management business include, but are not limited to, the following:

● In order to grow we need to continue to acquire investment properties. The acquisition of investment properties may be subject to competitive pressures.

● Negative market conditions or adverse events affecting our existing or potential tenants, or the industries in which they operate, could have an adverse impact on our ability to attract new tenants, re-lease space, collect rent or renew leases, which could adversely affect our cash flow from operations and inhibit growth.

● We face potential adverse effects from tenant bankruptcies or insolvencies. .

● We may not be able to lease newly developed properties and renew leases and relet space at existing properties.

● Construction and redevelopment projects are subject to risks that materially increase the costs of completion.

 ****

● Our portfolio of properties are dependent upon regional and local economic conditions and are geographically concentrated in Missouri, United States and Beijing, China, which may cause us to be more susceptible to adverse developments in those markets than if we owned a more geographically diverse portfolio.

● We face significant competition in the leasing market, which may decrease or prevent increases of the occupancy and rental rates of our properties.

 ****

● We may be required to make rent or other concessions and/or significant capital expenditures to improve our properties in order to retain and attract tenants, causing our financial condition, results of operations, and cash flow, to be adversely affected.

 ****

● The actual rents we receive for the properties in our portfolio may be less than our asking rents, which could negatively impact our ability to generate cash flow growth.

 ****

● We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties.

 ****

● Acquired properties may expose us to unknown liability.

 ****

● As a property owner, we may be subject to unknown environmental liabilities.

● Real estate ownership is subject to particular conditions that may have a negative impact on our revenue.

 ****

● Real estate property investments are illiquid. We may not be able to acquire or dispose of properties when desired or on favorable terms.

 ****

● Our acquisition of additional properties may have a significant effect on our business, liquidity, financial position and/or results of operations.

 ****

● Property and/or value-added taxes may increase without notice.

 ****

● Because we invest in properties located in the PRC, we are exposed to additional risks.

● The direct and indirect impact on us and our tenants from severe weather, flooding, and other effects of climate change, and the economic and reputational impacts of the transition to non-carbon based energy, could adversely affect our financial condition, operating results, and cash flows.

● Our success is materially dependent upon the tenants' financial stability.

 ****

iv

**Risks related to Doing Business in China. See "Risk Factors – Risks Related to Doing Business in China"**

Risk and uncertainties related to doing business in China include, but are not limited to, the following:

● Because of our corporate structure, we as well as the investors are subject to unique risks due to uncertainty of the interpretation and the application of the PRC laws and regulations.

● Uncertainties with respect to the PRC legal system could have a material adverse effect on us.

● The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could result in a material change in our operations and the value of our Common Shares.

● Draft rules for China-based companies seeking for securities offerings in foreign stock markets was released by the Chinese Securities Regulatory Commission (the "CSRC") for public consultation. While such rules have not yet come into effect, the Chinese government may exert more oversight and control over overseas public offerings conducted by China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our Common Shares to investors and could cause the value of our Common Shares to significantly decline or become worthless.

● We are required to file with the CSRC and may be subject to the approval of, filing or other procedures with other Chinese regulatory authorities in connection with securities offerings under PRC law, and we cannot predict whether we will be able, or how long it will take us, to obtain such approval or complete such filing or other procedures.

● We may be liable for improper use or appropriation of personal information provided by our customers.

● Since our operations and some of our assets are located in the PRC, shareholders may find it difficult to enforce a U.S. judgment against the assets of our company, our directors and executive officers.

● We hold certain of our cash balances in RMB in uninsured bank accounts in China.

● The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

● Fluctuation of the Renminbi may indirectly affect our financial condition by affecting the volume of cross-border money flow.

● We may be a passive foreign investment company for the fiscal 2025 year, which could result in adverse U.S. tax consequences to U.S. investors.

● If any dividend is declared in the future and paid in a foreign currency, you may be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive.

● Introduction of new laws or changes to existing laws by the PRC government may adversely affect our business.

● Governmental control of currency conversion may affect the value of your investment.

● PRC's labor law restricts our ability to reduce our workforce in the PRC in the event of an economic downturn and may increase our production costs.

● Changes in PRC's political and economic policies could harm our business.

v

● If relations between the United States and China worsen, our share price may decrease and we may have difficulty accessing U.S. capital markets.

● Because the majority of our operations are located in the PRC, information about our operations is not readily available from independent third-party sources.

● Failure to comply with PRC laws and regulations related to labor and employee benefits may subject us to penalties or additional cost.

● We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law.

● Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements.

● U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China.

● Our business may be materially and adversely affected if any of our PRC subsidiaries declares bankruptcy or becomes subject to a dissolution or liquidation proceeding.

● Under the PRC Enterprise Income Tax Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.

● The PRC government may impose restrictions on our ability to transfer cash out of China and to U.S. investors.

**Risks related to the Ownership of our Common Shares. See "Risk Factors – Risks Related to the Ownership of our Common Shares"**

Risk and uncertainties related to ownership of our Commons Shares include, but are not limited to, the following:

● We are a holding company incorporated in the British Virgin Islands. As a holding company with no material operations of our own, we conduct a substantial majority of our operations through our subsidiaries established in the PRC.

● Recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and an act passed by the U.S. Senate 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 listing.

● The Holding Foreign Companies Accountable Act 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.

● If our financial condition deteriorates as a NASDAQ listed company, we may not meet continued listing standards on the NASDAQ Capital Market.

● We are a "foreign private issuer," and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance and prospects.

● The market price of shares may be volatile, which could cause the value of your investment to decline.

● If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Shares may decline.

● As the rights of shareholders under British Virgin Islands law differ from those under U.S. law, you may have fewer protections as a shareholder.

● British Virgin Islands companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of the ability to protect their interests.

● The laws of the British Virgin Islands may provide less protection for minority shareholders than those under U.S. law, so minority shareholders may have less recourse than they would under U.S. law if the shareholders are dissatisfied with the conduct of our affairs.

● We may not be able to pay any dividends on our shares in the future due to British Virgin Islands law.

vi

**PART I**

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

Not required.

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

Not required.

**ITEM 3. KEY INFORMATION**

&nbsp;&nbsp;&nbsp;&nbsp;**A.** **[Reserved]** 

&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Capitalization and Indebtedness** 

Not required.

&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Reasons for the Offer and Use of Proceeds** 

Not required.

&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Risk factors** 

*Before you decide to purchase our Common Shares, you should understand the high degree of risk involved. You should carefully consider the following risks and other information in this report, including our consolidated financial statements and related notes. If any of the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result, the trading price of our Common Shares could decline, perhaps significantly.*

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

**We have historically incurred recurring losses and it is uncertain whether we may continue to incur losses in the future.**

Historically, although we reported net income of approximately $2.68 million for the year ended December 31, 2024, a portion of such net income was derived from investment income. For the year ended December 31, 2025, our commercial real estate property management business was adversely affected by the prevailing economic conditions and intense market competition, resulting in an operating loss of approximately $1.82 million. Part of such operating loss is attributable to management and administrative expenses allocated from our British Virgin Islands affiliated entities. Our ability to achieve a business turnaround depends, in part, on our successful operation, acquisition and leasing of additional commercial properties. If we fail to effectively operate, acquire and lease additional income-producing commercial properties, we may be unable to grow and sustain our business as expected. Failure to successfully implement these initiatives may materially and adversely affect our ability to maintain or enhance profitability in future periods.

**We depend on our key personnel, and our business and growth prospects may be severely disrupted if we lose their services.**

Our future success depends heavily upon the continued service of our key executives. We rely on their business, industry, financial and capital markets knowledge and experience. If our CEO or CFO became unable or unwilling to continue in their present positions, we may not be able to replace them easily, our business may be significantly disrupted and our financial condition and results of operations may be materially adversely affected.

**We do not maintain key man life insurance on any of our senior management or key personnel.**

The loss of any one of them would have a material adverse effect on our business and operations. Competition for senior management and our other key personnel is intense and the pool of suitable candidates is limited. We may be unable to locate a suitable replacement for any senior management or key personnel that we lose. In addition, if any member of our senior management or key personnel joins a competitor or forms a competing company, they may compete with us for customers, business partners and other key professionals and staff members of our Company. In addition, we compete for qualified personnel with other companies, and we face competition in attracting skilled personnel and retaining the members of our senior management team. These personnel possess technical and business capabilities which are difficult to replace. There is intense competition for experienced senior management with technical and industry expertise in our industry, and we may not be able to retain our key personnel. Intense competition for these personnel could cause our compensation costs to increase, which could have a material adverse effect on our results of operations. Our future success and ability to grow our business will depend in part on the continued service of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract and retain qualified employees, we may be unable to meet our business and financial goals.

**While we are not aware of any data breach in the past, cyber-attacks, computer viruses or any future failure to adequately maintain security and prevent unauthorized access to electronic and other confidential information could result in a data breach which could materially adversely affect our reputation, financial condition and operating results.**

As part of business operations, we collect, process, store and transmit our employees, business partners and other third party data. Our customers, business partners and employees expect we adequately safeguard and protect their sensitive personal and business information. We may experience cyber-attacks and other security incidents of varying degrees from time to time, and we may incur significant costs in protecting against or remediating such incidents. In addition, we are subject to a variety of laws and regulations in the PRC and other countries relating to cybersecurity and data protection. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with customers and cooperation partners could be severely damaged. Affected third parties or government authorities could initiate legal or regulatory actions against us in connection with any actual or perceived security breaches or improper access to or disclosure of data, which could cause us to incur significant expense and liability, and our business and operations could be materially and adversely affected.

**<u>Risks Related to the Commercial Property Management Business</u>**

**In order to grow we need to continue to acquire investment properties. The acquisition of investment properties may be subject to competitive pressures.**

We face competition in the acquisition and operation of our properties. We expect competition from businesses, individuals, fiduciary accounts and plans, and other entities engaged in real estate investment and financing. This competition may result in a higher cost for properties we wish to purchase.

**Negative market conditions or adverse events affecting our existing or potential tenants, or the industries in which they operate, could have an adverse impact on our ability to attract new tenants, re-lease space, collect rent or renew leases, which could adversely affect our cash flow from operations and inhibit growth.**

Cash flow from operations depends in part on our ability to lease space to our tenants on economically favorable terms and to collect rent from our clients on a timely basis. We could be adversely affected by various facts and events over which we have limited or no control, such as:

● Lack of demand in areas where our properties are located;

● Inability to retain existing tenants and attract new tenants;

● Oversupply of space and changes in market rental rates;

● Declines in our tenants' creditworthiness and ability to pay rent, which may be affected by their operations (including as a result from changes in consumer behaviors or preferences impacting our tenants operations), economic downturns and competition within their industries from other operators;

● Defaults by and bankruptcies of tenants, failure of tenants to pay rent on a timely basis, or failure of our tenants to comply with their contractual obligations;

● Changes in laws, rules or regulations that negatively impact clients or our properties;

● Epidemics, pandemics or outbreaks of illness, disease or virus that affect countries or regions in which our tenants or in which our properties are located;

● Changes in consumer behaviors (e.g., decrease in discretionary consumer spending), preferences or demographics impacting our tenants' operations;

● Supply chain disruptions;

● Economic or physical decline of the areas where the properties are located; and

● Deterioration of physical condition of our properties.

If our tenants do not renew their leases as they expire, we may not be able to rent or sell the properties. Leases that are renewed, and some new leases for properties that are re-leased, may have terms that are less economically favorable than expiring lease terms, or may require us to incur significant costs, such as renovations, improvements on behalf of the tenant or lease transaction costs. Negative market conditions may cause us to sell vacant properties for less than their carrying value, which could result in impairments. Any of these events could adversely affect our cash flow from operations and our ability to make distributions to our stockholders and service our indebtedness. A significant portion of the costs of owning and leasing property, such as real estate taxes, insurance and maintenance, are not necessarily reduced when circumstances cause a decrease in rental revenue from the properties. In a weakened financial condition, our tenants may not be able to pay these costs of ownership and we may be unable to recover these operating expenses from them.

**We face potential adverse effects from tenant bankruptcies or insolvencies.**

Bankruptcy filings or insolvencies by tenants can occur regularly in the course of our operations. Most of our tenants are individuals or individual businesses, and we cannot be sure that they will avoid the risk of insolvency. However, in accordance with the Regulation on Individual Businesses (2016), and General Rules of the Civil Law (2017) in the PRC, the debts of an individual business shall be secured with the individual's property if the business is operated by an individual and with the household's property. Our tenant leases also provide that we are entitled to terminate the lease if the tenant cannot make rental payments to us in a timely manner, as well as to claim all pre-bankruptcy balances due under the lease, fines for delayed payments, the security deposit, and any related damages. A bankruptcy filing by, or relating to, one of our tenants would bar all efforts by us to collect pre-bankruptcy debts from that tenant, or from their property, unless we receive an order permitting us to do so from the court. In addition, we cannot be sure that their property is adequate to satisfy their debt. A bankrupt tenant may not vacate its space in a timely manner, and we may be unable to re-lease the vacated space during that time at attractive rates, or at all. Furthermore, we may be required to incur significant expense in replacing the bankrupt tenant. If the tenant is a corporation, according to the Enterprise Bankruptcy Law of the PRC (2006), all pre-bankruptcy balances due under the lease are classified as common bankruptcy claims, which shall be satisfied after other secured claims such as employees' wages and welfares, and unpaid taxes are repaid from the bankruptcy estate. In addition, common bankruptcy claims are repaid in the same percentage as all other holders of the common bankruptcy claims, if the bankruptcy estate assets are not sufficient to satisfy all common bankruptcy claims in full. As a result, it is likely that we would recover substantially less than the full value of any claims we hold. We continually seek to re-lease vacant spaces resulting from tenant terminations. The bankruptcy or insolvency of a tenant may make the re-leasing of their space difficult and costly, and it also may be more difficult to lease the remainder of the space at the affected properties. Future tenant bankruptcies may impact our ability to successfully execute our re-leasing strategy and could materially and adversely affect us.

**We may not be able to lease newly developed properties and renew leases and relet space at existing properties.**

We may not be able to lease new properties to an appropriate mix of tenants. Also, when leases for our existing properties expire, the premises may not be relet or the terms of reletting, including the cost of allowances and concessions to tenants, may be less favorable than the current lease terms. To the extent that our leasing goals are not achieved, we could be materially and adversely affected.

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**Construction and redevelopment projects are subject to risks that materially increase the costs of completion.** 

When we decide to redevelop existing properties, we will be subject to risks and uncertainties associated with construction and redevelopment. These risks include, but are not limited to, risks related to obtaining all necessary zoning, land-use, building occupancy and other governmental permits and authorizations, risks related to the environmental concerns of government entities or community groups, risks related to changes in economic and market conditions between redevelopment commencement and stabilization, risks related to construction labor disruptions, adverse weather, acts of God or shortages of materials which could cause construction delays and risks related to increases in the cost of labor and materials which could cause construction costs to be greater than projected and adversely impact our results of operations or financial condition.

**Our portfolio of properties are dependent upon regional and local economic conditions and are geographically concentrated in Missouri, United States and Beijing, China, which may cause us to be more susceptible to adverse developments in those markets than if we owned a more geographically diverse portfolio.** 

Our properties are located in Missouri, United States and Beijing, China, which exposes us to greater economic risks than if we owned a more geographically diverse portfolio. If there is a downturn in the economy in our markets, our operations and our revenue could be materially adversely affected. Our operations may also be affected if competing properties are built in our markets. Moreover, submarkets within our markets may be dependent upon a limited number of industries. Any adverse economic or real estate developments in Missouri and Beijing, China, or any decrease in demand for retail space resulting from the regulatory environment, business climate or energy or fiscal problems, could adversely impact our financial condition, results of operations, cash flow, and our ability to satisfy our debt service obligations.

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**We face significant competition in the leasing market, which may decrease or prevent increases of the occupancy and rental rates of our properties.** 

We compete with numerous developers, owners and operators of real estate, many of which own properties similar to ours in the same submarkets in which our properties are located. If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates below those we currently charge or to offer more substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to retain tenants when our tenants' leases expire. As a result, our financial condition, results of operations, and cash flow could be adversely affected.

**We may be required to make rent or other concessions and/or significant capital expenditures to improve our properties in order to retain and attract tenants, causing our financial condition, results of operations, and cash flow, to be adversely affected.** 

To the extent adverse economic conditions continue in the real estate market and demand for leased space falls, we expect that, upon expiration of leases at our properties, we may be required to make rent or other concessions to tenants, accommodate requests for renovations, build-to-suit remodeling and other improvements or provide additional services to our tenants. As a result, we may have to make significant capital or other expenditures in order to retain tenants whose leases expire and to attract new tenants in sufficient numbers. Additionally, we may need to raise capital to make such expenditures. If we are unable to do so or capital is otherwise unavailable, we may be unable to make the required expenditures. This could result in non-renewals by tenants upon expiration of their leases, which could cause an adverse effect to our financial condition, results of operations, and cash flow.

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**The actual rents we receive for the properties in our portfolio may be less than our asking rents, which could negatively impact our ability to generate cash flow growth.** 

As a result of various factors, including competitive pricing pressure and adverse conditions in our markets, and a general economic downturn and the desirability of our properties compared to other properties in our markets, we may be unable to realize the asking rents across of our properties. In addition, the degree of discrepancy between our asking rents and the actual rents we are able to obtain may vary both from property to property and among different leased spaces within a single property. If we are unable to obtain rental rates that are on average comparable to our asking rents of our properties, then our ability to generate cash flow growth will be negatively impacted. In addition, depending on asking rental rates at any given time as compared to expiring leases in our properties, from time to time rental rates for expiring leases may be higher than starting rental rates for new leases.

**We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties.**

In the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications. Further, reconstruction or improvement of such a property would likely require significant upgrades to meet zoning and building code requirements. Environmental and legal restrictions could also restrict the rebuilding of our properties.

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**Acquired properties may expose us to unknown liability.** 

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We may acquire properties or invest in joint ventures that own properties subject to liabilities and without any recourse, or with only limited recourse, against the prior owners or other third parties with respect to unknown liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it, which could adversely affect our results of operations and cash flow. Unknown liabilities with respect to acquired properties might include:

● liabilities for clean-up of undisclosed environmental contamination;

● claims by clients, vendors or other persons against the former owners of the properties;

● liabilities incurred in the ordinary course of business; and

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● claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.

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**As a property owner, we may be subject to unknown environmental liabilities.**

The presence of hazardous substances on a property may adversely affect our client's ability to continue to operate that property or our ability to lease or sell that property and we may incur substantial remediation costs or third-party liability claims. Although our leases generally require our clients to operate in compliance with all applicable laws, ordinances and regulations, and to indemnify us against any environmental liabilities arising from the clients' activities on the properties, we could nevertheless be subject to liability, including strict liability, by virtue of our leasehold and/or ownership interest. There also can be no assurance that our clients could or would satisfy their indemnification obligations under their leases. The discovery of environmental liabilities attached to our properties could have an adverse effect on our results of operations, our financial condition, or our ability to make distributions to stockholders and to pay the principal of and interest on our debt securities and other indebtedness.

**Real estate ownership is subject to particular conditions that may have a negative impact on our revenue.**

We are subject to all of the inherent risks associated with the ownership of real estate. In particular, we face the risk that rental revenue from our properties may be insufficient to cover all corporate operating expenses, debt service payments on indebtedness we incur, and any distributions on our common shares. Additional real estate ownership risks include:

● Adverse changes in general or local economic conditions;

● Changes in supply of, or demand for, similar or competing properties;

● Changes in interest rates and operating expenses (including energy costs, shortages and rationing);

● Competition within an industry and for our clients;

● Changes in market rents;

● Inability to lease properties upon termination of existing leases;

● Renewal of leases at lower rental rates;

● Inability to collect rental revenue from our clients due to financial hardship, including bankruptcy;

● Changes in tax, real estate, zoning and environmental laws that may have an adverse impact upon the value of real estate;

● Uninsured property liability;

● Property damage or casualty losses;

● Unexpected expenditures for capital improvements, including requirements to bring properties into compliance with applicable federal, state and local laws;

● The need to periodically renovate and repair our properties;

● Risks assumed as manager for development or redevelopment projects;

● Physical or weather-related damage to properties;

● The potential risk of functional obsolescence of properties over time;

● Acts of terrorism and war;

● Changes in consumer behaviors, preferences or demographics;

● The impacts of climate change; and

● Acts of God and other factors beyond the control of our management.

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**Real estate property investments are illiquid. We may not be able to acquire or dispose of properties when desired or on favorable terms.**

Real estate investments are relatively illiquid. Our ability to quickly buy, sell or exchange any of our properties in response to changes in economic and other conditions will be limited and U.S. and PRC tax and regulatory regimes and authorities may impose or have the effect of restricting or limiting our ability to sell properties. No assurances can be given that we will recognize full value, at a price and at terms that are acceptable to us, for any property that we are required to sell for liquidity reasons. Our inability to respond rapidly to changes in the performance of our investments could adversely affect our financial condition and results of operations.

 **Our acquisition of additional properties may have a significant effect on our business, liquidity, financial position and/or results of operations.**

Our future success will depend, in part, upon our ability to manage our acquisitions, and expansion opportunities under prevailing market conditions. We are engaged in the process of identifying, analyzing, underwriting, and negotiating possible acquisition transactions. We cannot provide any assurances that we will be successful in consummating future acquisitions on favorable terms or that we will realize expected cash yields, operating efficiencies, cost savings, revenue enhancements, synergies, or other benefits. Our inability to consummate one or more acquisitions on such terms, our failure to adequately underwrite and identify risks and obligations when acquiring properties, or our failure to realize the intended benefits from one or more acquisitions, could have a significant adverse effect on our business, liquidity, financial position and/or results of operations, including as a result of our incurrence of additional indebtedness and related interest expense and our assumption of unforeseen contingent liabilities in connection with completed acquisitions.

 **Property and/or value-added taxes may increase without notice.**

Real estate property taxes and/or value-added taxes on our properties (including properties we develop or acquire) may increase as property tax rates change and as those properties are assessed or reassessed by tax authorities. An increase real estate property and/or value-added taxes could adversely affect our financial condition and results of operations.

**Because we invest in properties located in the PRC, we are exposed to additional risks.**

We have invested, and may continue to invest, in properties located in the PRC. These investments may be affected by factors particular to the local jurisdiction where the property is located and may expose us to additional risks, including:

● enactment of laws relating to foreign ownership of property (including expropriation of investments), or laws and regulations relating to our ability to repatriate invested capital, profits, or cash and cash equivalents back to the United States;

● legal systems where the ability to enforce contractual rights and remedies may be more limited than under U.S. law;

● difficulty in complying with conflicting obligations in various jurisdictions and the burden of observing a variety of evolving foreign laws, regulations, and governmental rules and policies, which may be more stringent than U.S. laws and regulations (including land use, zoning, environmental, financial, and privacy laws and regulations);

● tax requirements vary by country and existing foreign tax laws and interpretations may change, which may result in additional taxes on our international investments;

● increased energy and commodity prices in the PRC;

● foreign exchange rates; and

● geopolitical and military conflict risk and adverse market conditions caused by changes in national or regional economic or political conditions, including the ongoing conflict between Russia and Ukraine, rising tensions between China and Taiwan and the conflict in the Middle East (which may impact relative interest rates, the terms or availability of debt financing, customers' ability and willingness to renew agreements, make payments, and enter into new agreements, and energy costs).

The failure of our compliance and internal control systems to properly mitigate such additional risks, or of our operating infrastructure to support such international investments, could result in operational failures, regulatory fines, or other governmental sanctions. Failure to comply with applicable requirements may expose us, our operating subsidiaries, or the entities we manage to additional liabilities.

In addition, the lack of publicly available information in certain jurisdictions could impair our ability to analyze transactions and may cause us to forego an investment opportunity. It may also impair our ability to receive timely and accurate financial information from tenants necessary to meet reporting obligations to financial institutions or governmental and regulatory agencies.

We are also subject to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar because we translate revenue denominated in foreign currency into U.S. dollars for our financial statements (our principal exposure is to the euro). Our results of our foreign operations are adversely affected by a stronger U.S. dollar relative to foreign currencies (i.e., absent other considerations, a stronger U.S. dollar will reduce both our revenues and our expenses).

**The direct and indirect impact on us and our tenants from severe weather, flooding, and other effects of climate change, and the economic and reputational impacts of the transition to non-carbon based energy, could adversely affect our financial condition, operating results, and cash flows.**

The adverse impacts from hurricanes, water shortages, changing sea levels, flooding, wildfires and other severe weather conditions are likely to worsen as a result of climate change. These events may result in property damage and closures and may adversely impact the operations of our tenants. Even if these events do not directly impact our properties, they may impact us and our tenants through increases in insurance, energy or other costs. In addition, the ongoing transition to non-carbon based energy presents certain risks for us and our tenants, including risks related to high energy costs and energy shortages, among other things. Changes in laws or regulations, including federal, state, or local laws, relating to climate change could result in increased capital expenditures to improve the energy efficiency of our properties.

**Our success is materially dependent upon our tenants' financial stability.**

The success of our investments is materially dependent on the financial stability of our tenants. Revenues from several of our tenants/guarantors constitute a significant percentage of our lease revenues. Lease payment defaults by tenants could negatively impact our net income and reduce the amounts available for distribution to stockholders.

**<u>Risks Related to Doing Business in China</u>**

**Because of our corporate structure, we as well as the investors are subject to unique risks due to uncertainty of the interpretation and the application of the PRC laws and regulations, including but not limited to limitation regulatory review of overseas listing of PRC companies through a special purpose vehicle. We are also subject to the risks of uncertainty about any future actions of the PRC government in this regard. We may also be subject to sanctions imposed by PRC regulatory agencies including the CSRC if we fail to comply with their rules and regulations. Adverse changes in political, economic and other policies of the Chinese government could have a material adverse effect on the overall economic growth of China, which could materially and adversely affect the growth of our business and our competitive position.**

Our PRC subsidiaries are located in China. Accordingly, our business, financial condition, results of operations and prospects are affected significantly by economic, political and legal developments in China. China's economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. The PRC government exercises significant control over China's economic growth through strategical allocation of resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies. While the Chinese economy has experienced significant growth in the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any prolonged slowdown in the Chinese economy may reduce the demand for our services and materially and adversely affect our business and results of operations. Furthermore, any adverse change in the economic conditions in China, in policies of the PRC government or in laws and regulations in China could have a material adverse effect on the overall economic growth of China and market demand for our properties and services. Such developments could adversely affect our businesses, lead to reduction in demand for our properties and services and adversely affect our competitive position.

**Uncertainties with respect to the PRC legal system could have a material adverse effect on us.**

The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. We conduct some of our business through our PRC Subsidiaries, and therefore these subsidiaries are generally subject to laws and regulations applicable to foreign investment in China. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to us. Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the "Opinions on Severely Cracking Down on Illegal Securities Activities According to Law," or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements, etc. The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future. In addition, some regulatory requirements issued by certain PRC government authorities may not be consistently applied by other government authorities (including local government authorities), thus making strict compliance with all regulatory requirements impractical, or in some circumstances impossible. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since PRC administrative and court authorities have discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to predict the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into with our business partners, customers and suppliers. In addition, such uncertainties, including any inability to enforce our contracts, together with any development or interpretation of PRC law that is adverse to us, could materially and adversely affect our business and operations. Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other more developed countries. 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.

**The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could result in a material change in our operations and the value of our Common Shares.**

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to securities regulation, data protection, cybersecurity and mergers and acquisitions and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Government actions in the future could significantly affect economic conditions in China or particular regions thereof and could require us to materially change our operating activities or divest ourselves of any interests we hold in Chinese assets. Our business may be subject to various government and regulatory interference in the provinces in which we operate. We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. Our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry.

**Draft rules for China-based companies seeking for securities offerings in foreign stock markets was released by the CSRC for public consultation. While such rules have not yet come into effect, the Chinese government may exert more oversight and control over overseas public offerings conducted by China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our Common Shares to investors and could cause the value of our Common Shares to significantly decline or become worthless.**

On December 24, 2021, the CSRC and relevant departments of the State Council published the Draft Rules Regarding Overseas Listings, which aim to regulate overseas securities offerings and listings by China-based companies, are available for public consultation. The Draft Rules Regarding Overseas Listing aim to lay out the filing regulation arrangement for both direct and indirect overseas listing and clarify the determination criteria for indirect overseas listing in overseas markers.

The Draft Rules Regarding Overseas Listing, among other things, stipulate that, after making initial applications with overseas stock markets for initial public offerings or listings, all China-based companies shall file with the CSRC within three working days. The required filing materials with the CSRC include (without limitation): (i) record-filing reports and related undertakings, (ii) compliance certificates, filing or approval documents from the primary regulator of the applicants' businesses (if applicable), (iii) security assessment opinions issued by related departments (if applicable), (iv) PRC legal opinions, and (v) prospectus. In addition, overseas offerings and listings may be prohibited for such China-based companies when any of the following applies: (1) if the intended securities offerings and listings are specifically prohibited by the laws, regulations or provision of the PRC; (2) if the intended securities offerings and listings may constitute a threat to, or endanger national security as reviewed and determined by competent authorities under the State Council in accordance with laws; (3) if there are material ownership disputes over applicants' equity interests, major assets, core technologies, etc.; (4) if, in the past three years, applicants' domestic enterprises, controlling shareholders or de facto controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (5) if, in the past three years, any directors, supervisors, or senior executives of applicants have been subject to administrative punishments for severe violations, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (6) other circumstances as prescribed by the State Council. The Draft Administrative Provisions further stipulate that a fine between RMB 1 million and RMB 10 million may be imposed if an applicant fails to fulfill the filing requirements with the CSRC or conducts an overseas offering or listing in violation of the Draft Rules Regarding Overseas Listings, and in cases of severe violations, a parallel order to suspend relevant businesses or halt operations for rectification may be issued, and relevant business permits or operational license revoked.

The Draft Rules Regarding Overseas Listings, if enacted, may subject us to additional compliance requirements in the future, and though we believe that none of the situations that would clearly prohibit overseas listing and offering applies to us, we cannot assure you that we will be able to receive clearance of such filing requirements in a timely manner, or at all. There is also the possibility that we may not be able to obtain or maintain such approval or that we inadvertently concluded that such approval was not required. If prior CSRC approval was required while we inadvertently concluded that such approval was not required or if applicable laws and regulations or the interpretation of such were modified to require us to obtain the CSRC approval in the future, we may face regulatory actions or other sanctions from the CSRC or other Chinese regulatory authorities. These authorities may impose fines and penalties upon our operations in China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from offerings into China, or take other actions that could have a material adverse effect upon our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our Common Shares. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer the Common Shares, cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations, and cause the Common Shares to significantly decline in value or become worthless.

**We are required to file with the CSRC and may be subject to the approval of, filing or other procedures with other Chinese regulatory authorities in connection with securities offerings under PRC law, and we cannot predict whether we will be able, or how long it will take us, to obtain such approval or complete such filing or other procedures.**

The Chinese government has exercised, and may continue to exercise, substantial influence or control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in mainland China could be undermined if our Chinese subsidiaries and consolidated entities are not able to obtain or maintain approvals to operate in mainland China. The central or local governments could impose new, stricter regulations or interpretations of existing regulations that could require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

As of the date of this Annual Report, we are required to submit filings to the CSRC in connection with the future issuance of our equity securities to foreign investors. As there are uncertainties with respect to the Chinese legal system and changes in laws, regulations and policies, including how those laws, regulations and policies will be interpreted or implemented, there can be no assurance that we will not be subject to additional requirements, approvals, or permissions in the future. We are required to obtain certain approvals from Chinese authorities in order to operate our Chinese subsidiaries.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, appear to require that offshore special purpose vehicles, controlled by Chinese companies or individuals formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of Chinese domestic companies or assets in exchange for the shares of the offshore special purpose vehicles, obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. Further, on July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law, pursuant to which Chinese regulators are required to accelerate rulemaking related to the overseas issuance and listing of securities, and update the existing laws and regulations related to data security, cross-border data flow, and management of confidential information. Numerous regulations, guidelines and other measures have been or are expected to be adopted in addition to the Cyber Security Law and Data Security Law.

Additionally, the Draft Rules, if declared into effect, will implement a new regulatory framework requiring China-based companies such as us to submit filings to CSRC in connection with the issuance of equity securities to foreign investors. The instructions on the Draft Rules released by the CSRC suggest that companies already listed on overseas exchanges will be exempt, such that prior offerings will not need to be filed with the CSRC. However, if the Draft Rules are declared into effect, we may be required to submit filings to the CSRC in connection with any future offerings, including follow-on offerings, secondary offerings or other shelf offerings, within three working days following the completion of any such offering(s).

As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure investors that we will be able to comply with new regulatory requirements relating to our future overseas capital-raising activities, and we may become subject to more stringent requirements with respect to matters including data privacy and cross-border investigation and enforcement of legal claims.

If our Chinese subsidiaries or consolidated entities do not receive or maintain approvals or inadvertently conclude that approvals needed for their business are not required or if there are changes in applicable laws (including regulations) or interpretations of laws and our Chinese subsidiaries or consolidated entities are required but unable to obtain approvals in the future, then such changes or need for approvals (if not obtained) could adversely affect the operations of our Chinese subsidiaries or consolidated entities, including limiting or prohibiting the ability of our Chinese subsidiaries or consolidated entities to operate, and the value of our common shares could significantly decline or become worthless.

To operate our general business activities currently conducted in mainland China, each of our Chinese subsidiaries and consolidated entities is required to obtain a business license from the local counterpart of the State Administration for Market Regulation, or SAMR. Each of our Chinese subsidiaries and consolidated entities has obtained a valid business license from the local counterpart of the SAMR, and no application for any such license has been denied.

As of the date of this Annual Report, we have not received any inquiry, notice, warning or sanction regarding obtaining approval, completing filing or other procedures in connection with issuing securities to foreign investors from the CSRC or any other Chinese regulatory authorities that have jurisdiction over our operations. Based on the above and our understanding of the Chinese laws and regulations currently in effect, we were not required to submit an application to the CSRC or any other Chinese regulatory authorities for issuing securities to foreign investors. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities, and we cannot assure you that the relevant Chinese regulatory authorities, including the CSRC, would reach the same conclusion as us. If it is determined in the future that the approval of, filing or other procedure with the CSRC or any other regulatory authority is required for issuing our securities to foreign investors, it is uncertain whether we will be able and how long it will take for us to obtain the approval or complete the filing or other procedure, despite our best efforts. If we, for any reason, are unable to obtain or complete, or experience significant delays in obtaining or completing, the requisite relevant approval(s), filing or other procedure(s), we may face sanctions by the CSRC or other Chinese regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in mainland China, limit our ability to pay dividends outside of mainland China, limit our operations in mainland China, delay or restrict the repatriation of the proceeds from our public offerings into mainland China 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 shares. In addition, if the CSRC or other regulatory authorities later promulgate new rules requiring that we obtain their approvals or complete filing or other procedures for any future public offerings, we may be unable to obtain a waiver of such requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such a requirement could have a material adverse effect on the trading price of our shares, including potentially making those shares worthless.

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**We may be liable for improper use or appropriation of personal information provided by our customers.**

Our business can potentially involve collecting and retaining certain internal and customer data. We also maintain information about various aspects of our operations as well as regarding our employees. The integrity and protection of our customer, employee and company data is critical to our business. Our customers and employees expect that we will adequately protect their personal information. We are required by applicable laws to keep strictly confidential the personal information that we collect, and to take adequate security measures to safeguard such information.

The PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), 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. On November 7, 2016, the SCNPC issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber Security Law, network operators must not, without users' consent, collect their personal information, and may only collect users' personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations.

The Civil Code of the PRC (issued by the PRC National People's Congress 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. PRC regulators, including the CAC, the Ministry of Industry and Information Technology, or MIIT, and the Ministry of Public Security, have been increasingly focused on regulation in data security and data protection.

The PRC regulatory requirements regarding cybersecurity are evolving. For instance, various regulatory bodies in China, including the CAC, the Ministry of Public Security and SAMR, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. In April 2020, the Chinese government promulgated Cybersecurity Review Measures, which came into effect on June 1, 2020, was amended on December 28, 2021, and became effective on February 15, 2022. According to the Cybersecurity Review Measures, (i) operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security; (ii) online platform operators who are engaged in data processing are also subject to the regulatory scope; (iii) the CSRC is included as one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review working mechanism; (iv) online platform operators holding more than one million users/users' individual information and seeking a listing outside China shall file for cybersecurity review; and (v) the risks of core data, material data or large amounts of personal information being stolen, leaked, destroyed, damaged, illegally used or illegally transmitted to overseas parties and the risks of critical information infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously shall be collectively taken into consideration during the cybersecurity review process.

Certain internet platforms in China have been reportedly subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of the date of this Annual Report, we and our PRC subsidiaries have not been informed by any PRC governmental authority of any requirement that we file for a cybersecurity review. However, if any of us is deemed to be a critical information infrastructure operator or a company that is engaged in data processing and holds personal information of more than one million users, we could be subject to PRC cybersecurity review.

As of the date hereof, we are of the view that we and our PRC subsidiaries are in compliance with the applicable PRC laws and regulations governing the data privacy and personal information in all material respects, including the data privacy and personal information requirements of the CAC, and we and our PRC subsidiaries have not received any complaints from any third party, or been investigated or punished by any PRC competent authority in relation to data privacy and personal information protection. However, as there remains significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations, we or our PRC subsidiaries could be subject to cybersecurity review, and if so, we may not be able to pass such review. In addition, we or our PRC subsidiaries could become subject to enhanced cybersecurity review or investigations launched by PRC regulators in the future. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website closure, removal of our app from the relevant app stores, and revocation of prerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations.

On June 10, 2021, the SCNPC promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data an information.

As uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we and our PRC subsidiaries will comply with such regulations in all respects and we or our PRC subsidiaries may be ordered to rectify or terminate any actions that are deemed illegal by regulatory authorities. We or our PRC subsidiaries may also become subject to fines and/or other sanctions which may have material adverse effect on our business, operations and financial condition.

While we and our PRC subsidiaries take various measures to comply with all applicable data privacy and protection laws and regulations, the current security measures and those of our third-party service providers may not always be adequate for the protection of our customer, employee or company data. We or our PRC subsidiaries may be a target for computer hackers, foreign governments or cyber terrorists in the future.

Unauthorized access to our proprietary internal and customer data may be obtained through break-ins, sabotage, breach of our secure network by an unauthorized party, computer viruses, computer denial-of-service attacks, employee theft or misuse, breach of the security of the networks of our third-party service providers, or other misconduct. Because the techniques used by computer programmers who may attempt to penetrate and sabotage our proprietary internal and customer data change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques.

Unauthorized access to our proprietary internal and customer data may also be obtained through inadequate use of security controls. Any of such incidents may harm our reputation and adversely affect our business and results of operations. In addition, we may be subject to negative publicity about our security and privacy policies, systems, or measurements. Any failure to prevent or mitigate security breaches, cyber-attacks or other unauthorized access to our systems or disclosure of our customers' data, including their personal information, could result in loss or misuse of such data, interruptions to our service system, diminished customer experience, loss of customer confidence and trust, impairment of our technology infrastructure, and harm our reputation and business, resulting in significant legal and financial exposure and potential lawsuits**.**

**Since our operations and some of our assets are located in the PRC, shareholders may find it difficult to enforce a U.S. judgment against the assets of our company, our directors and executive officers.**

Our operations and some assets are located in the PRC. In addition, most of our executive officers and directors are non-residents of the U.S., and substantially all the assets of such persons are located outside the U.S. As a result, it could be difficult for investors to effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against us or any of these persons.

**We hold certain of our cash balances in RMB in uninsured bank accounts in China.**

We maintain certain of our cash with various banks located in mainland China. Cash maintained in banks within the People's Republic of China of less than RMB 0.5 million (equivalent to $72,149) per bank are covered by "Deposit Insurance Regulation" promulgated by the State Council of the People's Republic of China. Our cash accounts maintained in China are not insured or otherwise protected. Should any bank or trust company holding our cash deposits become insolvent, or if we are otherwise unable to withdraw funds, we would lose the cash on deposit with that particular bank or escrow agent.

**The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.**

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the "M&A Rules," adopted by six PRC regulatory agencies in 2006 and amended in 2009, and recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the Ministry of Commerce when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the Prior Notification Rules, issued by the State Council in August 2008 is triggered. In addition, the security review rules issued by the Ministry of Commerce that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by the Ministry of Commerce, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce or its local counterparts may delay or inhibit our ability to complete such transactions. It is clear that our business would not be deemed to be in an industry that raises "national defense and security" or "national security" concerns. However, the Ministry of Commerce or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected.

**Fluctuation of the Renminbi may indirectly affect our financial condition by affecting the volume of cross-border money flow.**

The value of the RMB fluctuates and is subject to changes in the PRC's political and economic conditions. We do not currently engage in hedging activities to protect against foreign currency risks. Even if we choose to engage in such hedging activities, we may not be able to do so effectively. Future movements in the exchange rate of the RMB could adversely affect our financial condition as we may suffer financial losses when transferring money raised outside of China into the country or paying vendors for services performed outside of China. 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. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an appreciation of the Renminbi against the U.S. dollar. While the international reaction to the Renminbi revaluation has generally been positive, there remains international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more rapid appreciation of the Renminbi against the U.S. dollar. Any material revaluation of Renminbi may materially and adversely affect our cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, our common shares in U.S. dollars. For example, an appreciation of Renminbi against the U.S. dollar would make any new Renminbi denominated investments or expenditures more costly to us, to the extent that we need to convert U.S. dollars into Renminbi for such purposes.

**If any dividend is declared in the future and paid in a foreign currency, you may be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive.**

If you are a United States holder, you will be taxed on the U.S. dollar value of your dividends, if any, at the time you receive them, even if you actually receive a smaller amount of U.S. dollars when the payment is in fact converted into U.S. dollars. Specifically, if a dividend is declared and paid in a foreign currency, the amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the payments made in the foreign currency, determined at the spot rate of the foreign currency to the U.S. dollar on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Thus, if the value of the foreign currency decreases before you actually convert the currency into U.S. dollars, you will be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive.

**We believe we may be classified as a passive foreign investment company for the 2025 fiscal year, which could result in adverse U.S. tax consequences to U.S. investors.**

Based on the nature of our business activities and our financial composition for fiscal year 2025, we believe there is a risk that we may be treated as a passive foreign investment company ("PFIC") for the 2025 fiscal year by the U.S. Internal Revenue Service ("IRS") for U.S. federal income tax purposes. Our classification as a PFIC is primarily attributable to our substantial cash balances rather than an intentional shift toward becoming an investment company. We maintain significant cash reserves specifically to fund the strategic growth and operational expansion of our commercial property management business. However, we maintain that we are not an 'investment company' as defined under the Investment Company Act of 1940, as our primary business remains the operation and management of commercial real estate properties. For fiscal year 2025, our passive investment income represented in excess of 75% of our gross income, and the aggregate value of cash and marketable securities comprised more than 50% of our total assets. These elevated levels of passive income and passive assets are temporary and attributable to short-term capital positioning during fiscal 2025. Our primary and long-term business focus remains the operation and management of commercial real estate properties, which generates active, non-passive income. We are committed to the disciplined deployment of capital into our commercial property management business at the most strategically advantageous time.

Such characterization could result in adverse U.S. tax consequences to you if you are a U.S. investor. For example, a U.S. investor will become subject to burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. Specifically, we will be classified as a PFIC for U.S. tax purposes if either:

● 75% or more of our gross income in a taxable year is passive income; or

● the average percentage of our assets by value in a taxable year that produce or are held for the production of passive income (including cash) is at least 50%.

The calculation of the value of our assets is based, in part, on the then market value of our common shares, which is subject to change. We cannot assure that we will not be a PFIC for any taxable year.

**Introduction of new laws or changes to existing laws by the PRC government may adversely affect our business.**

The PRC legal system is a codified legal system made up of written laws, regulations, circulars, administrative directives and internal guidelines. Unlike common law jurisdictions such as the U.S., decided cases (which may be taken as reference) do not form part of the legal structure of the PRC and thus have no binding effect. Furthermore, in line with its transformation from a centrally planned economy to a more market-oriented economy, the PRC government is still in the process of developing a comprehensive set of laws and regulations. As the legal system in the PRC is still evolving, laws and regulations or their interpretation may be subject to further changes. Such uncertainty and prospective changes to the PRC legal system could adversely affect our results of operations and financial condition.

**Governmental control of currency conversion may 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 the PRC, which may take as long as six months in the ordinary course. We receive the majority of our revenues in Renminbi. Under our current corporate structure, our income is derived from payments from WFOE. The October 8, 2016 Provisional Measures for Filling Administration of Establishment and Changes of Foreign-Investment Enterprise (the "Establishment and Changes Provision") promulgated by the PRC Ministry of Commerce and was amended on July 30, 2017, regulates the recordation procedures with respect to the establishment and changes of a foreign-invested enterprise which do not fall within the scope of special administration measures for foreign investment admission as stipulated by the state; for those entities that do fall within the regulatory reach of special administration measures must go through approval procedures according to relevant laws and regulations governing foreign investment. We do not believe that such measures will have any impact on our income derived from payment from our WFOE because:

● We do not fall within the scope of special access administrative measures for foreign investment admission as stipulated by the state and therefore are not required to go through approval procedures.

● The Establishment and Changes Provision regulates the recordation procedures relating to the establishment and changes of a foreign-invested enterprise, which including but not limited to: (i) the changes of company name, registered address, duration of operation, business scope, registered capital, total investment, shareholders, merger, division and termination of the enterprise; and (ii) the corporate name change, domicile or place of incorporation, subscribed capital, investment period. Based on the foregoing and our current corporate structure, our income is derived from payment from our WFOE, but the Establishment and Changes Provisions do not regulate our origin of income or dividend policy and therefore will not have any impact on our dividend distribution.

Shortages in the availability of foreign currency may restrict the ability of WFOE to remit sufficient foreign currency to pay dividends or other payments to us or otherwise satisfy their foreign currency denominated obligations. 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 PRC SAFE by complying with certain procedural requirements. However, approval from appropriate PRC government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.

**PRC's labor law restricts our ability to reduce our workforce in the PRC in the event of an economic downturn and may increase our production costs.**

In June 2007, the National People's Congress of the PRC enacted new labor law legislation called the Labor Contract Law, which became effective on January 1, 2008 and was amended on December 28, 2012, to clarify certain details in connection with the implementation of the Labor Contract Law, the PRC State Council promulgated the Implementing Rules for the Labor Contract Law on September 18, 2008, which came into effect immediately (collectively as "new laws"). The legislation formalized workers' rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. Considered one of the strictest labor laws in the world, among other things, these new laws provide for specific standards and procedures for the termination of an employment contract and places the burden of proof on the employer. In addition, the new laws require the payment of a statutory severance pay upon the termination of an employment contract in most cases, including the case of the expiration of a fixed-term employment contract. Further, the new laws require an employer to conclude an "employment contract without a fixed-term" with any employee who either has worked for the same employer for 10 consecutive years or more or has had two consecutive fixed-term contracts with the same employer. An "employment contract without a fixed term" can no longer be terminated on the ground of the expiration of the contract, although it can still be terminated pursuant to the standards and procedures set forth under the new laws. Because of the lack of precedent for the enforcement of such a law, the standards and procedures set forth under the new laws in relation to the termination of an employment contract have raised concerns among foreign investment enterprises in the PRC that such an "employment contract without a fixed term" might in fact become a "lifetime, permanent employment contract." Finally, under the new laws, downsizing of either more than 20 people or more than 10% of the workforce may occur only under specified circumstances, such as a restructuring undertaken pursuant to the PRC's Enterprise Bankruptcy Law, or where a company suffers serious difficulties in production and/or business operations, or where there has been a material change in the objective economic circumstances relied upon by the parties at the time of the conclusion of the employment contract, thereby making the performance of such employment contract not possible. To date, there has been very little guidance or precedent as to how such specified circumstances for downsizing will be interpreted and enforced by the relevant PRC authorities. All of our employees working for us exclusively within the PRC are covered by the new laws and thus, our ability to adjust the size of our operations when necessary in periods of recession or less severe economic downturns may be curtailed. Accordingly, if we face future periods of decline in business activity generally or adverse economic periods specific to our business, these new laws can be expected to exacerbate the adverse effect of the economic environment on our results of operations and financial condition.

**Changes in PRC's political and economic policies could harm our business.**

Our results of operations, financial condition and prospects are subject to economic, political and legal developments in the PRC. China's economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, and control of foreign exchange and allocation of resources. The PRC economy has historically been a planned economy subject to governmental plans and quotas and has, in certain aspects, been transitioning to a more market-oriented economy. Although we believe that the economic reform and the macroeconomic measures adopted by the PRC government have had a positive effect on the economic development of PRC, we cannot predict the future direction of these economic reforms or the effects these measures may have on our business, financial position or results of operations. In addition, the PRC economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development ("OECD"). These differences include, without limitation:

● economic structure;

● level of government involvement in the economy;

● level of development;

● level of capital reinvestment;

● control of foreign exchange;

● methods of allocating resources; and

● balance of payments position.

As a result of these differences, our business may not develop in the same way or at the same rate as might be expected if the PRC economy were similar to those of the OECD member countries. Since 1979, the Chinese government has promulgated many new laws and regulations covering general economic matters. Despite these efforts to develop a legal system, the PRC's system of laws is not yet complete. Even where adequate law exists in the PRC, enforcement of existing laws or contracts based on existing law may be uncertain or sporadic, and it may be difficult to obtain swift and equitable enforcement or to obtain enforcement of a judgment by a court of another jurisdiction. The relative inexperience of the PRC's judiciary, in many cases, creates additional uncertainty as to the outcome of any lawsuit. In addition, interpretation of statutes and regulations may be subject to government policies reflecting domestic political changes. Our activities in the PRC will also be subject to administration review and approval by various national and local agencies of the PRC's government. Because of the changes occurring in the PRC's legal and regulatory structure, we may not be able to secure the requisite governmental approval for our activities. Although we have obtained all required governmental approvals to operate our business as currently conducted, to the extent we are unable to obtain or maintain required governmental approvals, the PRC government may, in its sole discretion, prohibit us from conducting our business.

**If relations between the United States and China worsen, our share price may decrease and we may have difficulty accessing U.S. capital markets.**

At various times during recent years, the United States and China have had disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversy between the United States and China could adversely affect the market price of our common shares and our ability to access U.S. capital markets.

**The Chinese government could change its policies toward private enterprise or even nationalize or expropriate private enterprises, which could result in the total loss of our investment in that country.**

Our business is subject to political and economic uncertainties and may be adversely affected by political, economic and social developments in the PRC. Over the past several years, the PRC government has pursued economic reform policies including the encouragement of private economic activity and greater economic decentralization. The PRC government may not continue to pursue these policies or may alter them to our detriment from time to time with little, if any, prior notice. Changes in policies, laws and regulations or in their interpretation or the imposition of confiscatory taxation, restrictions on currency conversion, restrictions or prohibitions on dividend payments to shareholders, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business. Nationalization or expropriation could even result in the total loss of our investment in the PRC and in the total loss of any investment in us.

**Because the majority of our operations are located in the PRC, information about our operations is not readily available from independent third-party sources.**

Our shareholders may have greater difficulty in obtaining information about them on a timely basis than would shareholders of a U.S.-based company. Because the majority of our operations will continue to be conducted in the PRC and shareholders may have difficulty in obtaining information about them from sources other than the companies themselves. Information available from newspapers, trade journals, or local, regional or national regulatory agencies such as issuance of construction permits and contract awards for development projects will not be readily available to shareholders and, where available, will likely be available only in Chinese. Shareholders will be dependent upon management for reports of their progress, development, activities and expenditure of proceeds.

**Failure to comply with PRC laws and regulations related to labor and employee benefits may subject us to penalties or additional cost.**

Companies operating in China are required to comply with various laws and regulations related to labor and employment benefits. For example, companies are required to participate in various government-sponsored employee benefit plans, including certain social insurance, housing provident 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 employees up to a maximum amount specified by the local government from time to time at locations where our employees are based. The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. Apart from that, if a company intends adopt flexible working hour arrangement and comprehensive working hour scheme, it shall fulfill the requirements in relevant regulations, and make filings with labor authorities, or the company will be subject to penalties and may be required to pay extra fees to its employees. As confirmed by the relevant local authorities and our directors, in no records of violation were found on PRC subsidiaries for social insurance and/or housing fund during 2025.

However, we cannot assure you that we have complied or will be able to comply with all labor-related law and regulations, including those relating to obligations to make social insurance payments, contribute to the housing provident funds, as well as make all filing for comprehensive working hour scheme. Our failure to make contributions to various employee benefit plans and in complying with applicable PRC labor-related laws may subject us to fines, penalties, government investigations or labor disputes and we could be required to make up the contributions for these plans as well as to pay late fees and fines, which may adversely affect our financial condition and results of operations.

**We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law.**

We are subject to the U.S. Foreign Corrupt Practices Act ("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 are also subject to Chinese anti-corruption laws, which strictly prohibit the payment of bribes to government officials. We have operations, agreements with third parties, and make sales in China, which may experience corruption. Our activities in China create the risk of unauthorized payments or offers of payments by one of the employees, consultants or distributors of our company, because these parties are not always subject to our control. We implemented an anticorruption program, which prohibits the offering or giving of anything of value to foreign officials, directly or indirectly, for the purpose of obtaining or retaining business. We believe to date we have complied in all material respects with the provisions of the FCPA and Chinese anti-corruption law. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA or Chinese anti-corruption law 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 government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

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**Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements.**

We are a holding company incorporated in the British Virgin Islands. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, Our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of its after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends. Furthermore, 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.

In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements we currently have in place in a manner that would materially and adversely affect our PRC subsidiaries' ability to pay dividends and other distributions to us. 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, the Enterprise Income Tax Law of PRC, and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

**U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China.**

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The SEC, the U.S. Department of Justice and other U.S. authorities may also have difficulties in bringing and enforcing actions against us or our directors or executive officers in the PRC. The SEC has stated that there are significant legal and other obstacles to obtaining information needed for investigations or litigation in China. Under a revised securities law that became effective on March 1, 2020, Article 177 provides, among other things, that no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without governmental approval in China, no entity or individual in China may provide documents and information relating to securities business activities to overseas regulators when it is under direct investigation or evidence discovery conducted by overseas regulators, which could present significant legal and other obstacles to obtaining information needed for investigations and litigation conducted outside of China.

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**Our business may be materially and adversely affected if any of our PRC subsidiaries declares bankruptcy or becomes subject to a dissolution or liquidation proceeding.**

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The Enterprise Bankruptcy Law of the PRC, or the Bankruptcy Law, came into effect on June 1, 2007. The Bankruptcy Law provides that an enterprise will be liquidated if the enterprise fails to settle its debts as and when they fall due and if the enterprise's assets are, or are demonstrably, insufficient to clear such debts.

Our PRC subsidiaries hold certain assets that are important to our business operations. If any of our PRC subsidiaries undergoes a voluntary or involuntary liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

According to the SAFE's Notice of the State Administration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, effective on December 17, 2012, and the Provisions for Administration of Foreign Exchange Relating to Inbound Direct Investment by Foreign Investors, effective May 13, 2013, if any of our PRC subsidiaries undergoes a voluntary or involuntary liquidation proceeding, prior approval from the SAFE for remittance of foreign exchange to our shareholders abroad is no longer required, but we still need to conduct a registration process with the SAFE local branch. It is not clear whether "registration" is a mere formality or involves the kind of substantive review process undertaken by SAFE and its relevant branches in the past.

**Under the PRC Enterprise Income Tax Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.**

Under the PRC Enterprise Income Tax Law, or the EIT Law, that became effective in January 2008, an enterprise established outside the PRC with "de facto management bodies" within the PRC is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, a circular, known as SAT Circular 82, issued in April 2009 by the State Administration of Taxation, or the SAT, specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders' meetings; and half or more of the senior management or directors having voting rights. Further to SAT Circular 82, the SAT issued a bulletin, known as SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of such "Chinese-controlled offshore incorporated resident enterprises." SAT Bulletin 45 provides procedures and administrative details for the determination of resident status and administration on post-determination matters.

Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT's general position on how the "de facto management body" test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups or by PRC or foreign individuals.

If the PRC tax authorities determine that the actual management body of TDH Holdings, Inc. is within the territory of China, TDH Holdings, Inc may be deemed to be a PRC resident enterprise for PRC enterprise income tax purposes and a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations.

Up to the date of this report, TDH Holdings, Inc has not been notified or informed by the PRC tax authorities that it has been deemed to be a resident enterprise for the purpose of the EIT Law.

Finally, dividends payable by us to our investors and gains on the sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our shares.

**The PRC government may impose restrictions on our ability to transfer cash out of China and to U.S. investors.**

The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. To the extent that our income is received in Renminbi, shortages in foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. 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, or SAFE, as long as certain procedural requirements are met. Approval from appropriate government authorities is required if Renminbi 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.

To address persistent capital outflows and the RMB's depreciation against the U.S. dollar in the fourth quarter of 2016, the People's Bank of China and the SAFE implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries' dividends and other distributions may be subject to tightened scrutiny in the future. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, there can be no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer or distribute cash within our organization or to foreign investors, which could result in an inability or prohibition on making transfers or distributions outside of China or Hong Kong and adversely affect our business as well as your investment.

As of the date of this Annual Report, we are not aware of other material restrictions and limitations on our ability to distribute earnings from our businesses, including our subsidiaries, to the parent company and U.S. investors or our ability to settle amounts owed, or on foreign exchange or our ability to transfer cash between entities within our group, across borders, or to U.S. investors.

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**<u>Risks Related to the Ownership of Our Common Shares</u>**

**We are a holding company incorporated in the British Virgin Islands. As a holding company with no material operations of our own, we conduct a substantial majority of our operations through our subsidiaries.**

Investors in our common shares should be aware that they may never directly hold equity interests in our subsidiaries, but rather purchasing equity solely in TDH Holdings, Inc. our British Virgin Islands holding company, which does not directly own substantially all of our business in China and the United States and conducted by our subsidiaries. Our Common shares are shares in TDH Holdings, Inc., a BVI holding company instead of shares of our subsidiaries in China and the United States. This structure is subject to certain legal and operational risks, including risks associated with our subsidiaries' operations in China, including changes in the legal, political and economic policies of the Chinese government, the relations between China and the United States, Chinese or United States regulations, all of which may materially and adversely affect our business, financial condition and results of operations and/or the value of our Common Shares or could significantly decline or become worthless.

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**Recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and an act passed by the U.S. Senate 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 listing.**

In May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC, and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by the PCAOB, the CSRC or the PRC Ministry of Finance in the United States and the PRC, respectively. The PCAOB continues to be in discussions with the CSRC, and the PRC Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with PCAOB and audit Chinese companies that trade on U.S. exchanges.

On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. The joint statement reflects a heightened interest in an issue that has vexed U.S. regulators in recent years.

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On June 4, 2020, the U.S. President issued a memorandum ordering the President's Working Group on Financial Markets, or the PWG, to submit a report to the President within 60 days of the memorandum that includes recommendations for actions that can be taken by the executive branch and by the SEC or PCAOB on Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect investors in the U.S.

On August 6, 2020, the PWG released a report recommending that the SEC take steps to implement the five recommendations outlined in the report. In particular, to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfill its statutory mandate, or NCJs, the PWG recommends enhanced listing standards on U.S. stock exchanges. This would require, as a condition to initial and continued exchange listing, PCAOB access to work papers of the principal audit firm for the audit of the listed company. Companies unable to satisfy this standard as a result of governmental restrictions on access to audit work papers and practices in NCJs may satisfy this standard by providing a co-audit from an audit firm with comparable resources and experience where the PCAOB determines it has sufficient access to audit work papers and practices to conduct an appropriate inspection of the co-audit firm. There is currently no legal process under which such a co-audit may be performed in China. The report permits the new listing standards to provide for a transition period until January 1, 2022 for listed companies but would apply immediately to new listings once the necessary rulemakings and/or standard-setting are effective. The measures in the PWG Report are presumably subject to the standard SEC rulemaking process before becoming effective. On August 10, 2020, the SEC announced that SEC Chairman had directed the SEC staff to prepare proposals in response to the PWG Report, and that the SEC was soliciting public comments and information with respect to these proposals.

On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the Act. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant's annual report regarding the audit arrangements of, and governmental influence on, such a registrant.

Furthermore, the Holding Foreign Companies Accountable Act ("HFCA Act"), which requires that the PCAOB be permitted to inspect the issuer's public accounting firm within three years, may result in the delisting of our Company in the future if the PCAOB is unable to inspect our accounting firm at such future time.

In addition, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act ("AHFCAA"), which, if signed into law, would amend the HFCA Act and 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 instead of three consecutive years.

On November 5, 2021, the SEC approved the PCAOB's Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether it 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 a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China, and (2) Hong Kong. The lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firms' audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors in our stock to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. Our auditor is headquartered in California and is not subject to this determination announced by the PCAOB.

On August 26, 2022, the PCAOB signed a SOP with the CSRC and the MOF of the PRC regarding cooperation in the oversight of PCAOB-registered public accounting firms in the PRC and Hong Kong which establishes a method for the PCAOB to conduct inspections of PCAOB-registered public accounting firms in the PRC and Hong Kong, as contemplated by the Sarbanes-Oxley Act. Under the agreement, (a) the PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates without consultation with, or input from, PRC authorities; (b) procedures are in place for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; (c) the PCAOB has direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates; and (d) the PCAOB shall have the unfettered ability to transfer information to the SEC in accordance with the Sarbanes-Oxley Act, and the SEC can use the information for all regulatory purposes, including administrative or civil enforcement actions. The PCAOB was required to reassess its determinations as to whether it is able to carry out inspections and investigations completely and without obstruction by the end of 2022. On December 15, 2022, the PCAOB determined that the PCAOB 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. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB will consider the need to issue a new determination.

Congress passed fiscal year 2023 Omnibus spending legislation in December 2022, which contained provisions to accelerate the HFCAA timeline for implementation of trading prohibitions from three years to two years. As a result, the SEC is required to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections or complete investigations for two consecutive years.

Our auditor, the independent registered public accounting firm that issues the audit report for the year ended December 31, 2025 included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor is headquartered in California and was last inspected by the PCAOB in May 2025. According to our auditor, the PCAOB will conduct regular inspections. In the event that, in the future, either there is any regulatory change or step taken by PRC regulators that does not permit YCM CPA INC. to provide audit documentations located in China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the determinations so that we will be subject to the HFCA Act, as the same may be amended, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including "over-the-counter" trading, may be prohibited, under the HFCA Act. The recent developments would add uncertainties to our listing and we cannot assure you whether Nasdaq Capital Market or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit.

**The HFCA Act 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 May 20, 2020, the U.S. Senate passed the HFCA Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company's auditors for three consecutive years, the issuer's securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the HFCA Act. On December 18, 2020, the HFCA Act 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 HFCA Act. A company will be required to comply with these rules if the SEC identifies it as having a "non-inspection" year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCAA, which, if signed into law, would amend the HFCA Act and 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 instead of three consecutive years. 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 HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCAA, which, if signed into law, would amend the HFCA Act and 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 instead of three consecutive years. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China and (2) Hong Kong. Our auditor is headquartered in California and is not subject to this determination announced by the PCAOB.

Our auditor, the independent registered public accounting firm that issues the audit report for the year ended December 31, 2025 included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor is headquartered in California and was last inspected by the PCAOB in May 2025. According to our auditor, the PCAOB will conduct regular inspections.

The recent developments would add uncertainties to our listing and we cannot assure you whether the Nasdaq Capital Market or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit. Furthermore, the HFCA Act, which requires that the PCAOB be permitted to inspect the issuer's public accounting firm within three years, may result in the delisting of our Company in the future if the PCAOB is unable to inspect our accounting firm at such future time.

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

Our current management team has limited experience in managing a U.S. publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to U.S. public companies. Prior to the completion of our initial public offering, we mainly operated our businesses as a private company in the PRC. As a result of our IPO, our company became subject to significant regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors, and our management currently has no experience in complying with such laws, regulations and obligations. Our management team may not successfully or efficiently manage our transition to becoming a U.S. public company. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial conditions and results of operations.

**If our financial condition deteriorates as a NASDAQ listed company, we may not meet continued listing standards on the NASDAQ Capital Market.**

If our shares are delisted from the NASDAQ Capital Market at some later date, our shareholders could find it difficult to sell our shares. In addition, if our common shares are delisted from the NASDAQ Capital Market at some later date, we may apply to have our common shares quoted on the Bulletin Board or in the "pink sheets" maintained by the National Quotation Bureau, Inc. The Bulletin Board and the "pink sheets" are generally considered to be less efficient markets than the NASDAQ Capital Market. In addition, if our common shares are not so listed or are delisted at some later date, our common shares may be subject to the "penny stock" regulations. These rules impose additional sales practice requirements on broker-dealers that sell low-priced securities to persons other than established customers and institutional accredited investors and require the delivery of a disclosure schedule explaining the nature and risks of the penny stock market. As a result, the ability or willingness of broker-dealers to sell or make a market in our common shares might decline. If our common shares are delisted from the NASDAQ Capital Market at some later date or become subject to the penny stock regulations, it is likely that the price of our shares would decline and that our shareholders would find it difficult to sell their shares.

**We are a "foreign private issuer," and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance and prospects.**

We are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed individual executive compensation information. Furthermore, our directors and executive officers will not be required to report equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime. As a foreign private issuer, we will also be 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. However, we will still be subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies.

**The market price of shares may be volatile, which could cause the value of your investment to decline.**

Worldwide market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our stock in spite of our operating performance. In addition, our results of operations could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly results of operations, additions or departures of key management personnel, failure to meet analysts' earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about our industry in or individual scandals, and in response the market price of our common shares could decrease significantly. In the past few years, stock markets have experienced extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company's securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources, or at all.

**If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Shares may decline.**

As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. In addition, we are required to furnish a report by management on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. Currently we have not established and maintained effective disclosure controls and procedures. In addition, there are material weaknesses in our internal control over financial reporting. Specifically, the material weakness identified by our management include (i) a lack of sufficient accounting staff and resources with appropriate knowledge of generally accepted accounting principles in the United States ("U.S. GAAP") and SEC reporting and compliance requirements; and (ii) a lack of an effective review process which may lead to material audit adjustments to the financial statements. In order to address the foregoing material weakness, we have put in place additional controls, including, among others, hiring and replacing certain management team members. Our CEO has established a new management team to deal with operation management challenges of the Company, and our CFO has been working on improving the Company's financial and reporting functions. We also plan to hire more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and implement regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel. As of the date of this annual report, we have not fully addressed the above-referenced weaknesses. However, we have made progress in implementing remedial measures, specifically:

We have engaged an external consultant to assist with financial reporting and will continue to do so;

We are in the process of establishing standardized business processes and formal operating procedures, with a target completion date in 2026; and

We are strengthening our internal control and supervision mechanisms, particularly in the areas of segregation of duties, data sharing, and interdepartmental coordination and oversight.

However, if we are unable to resolve material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

**As the rights of shareholders under British Virgin Islands law differ from those under U.S. law, you may have fewer protections as a shareholder.**

Our corporate affairs will be governed by our memorandum and articles of association, the BVI Business Companies Act, 2004 (as amended), referred to below as the "BVI Act", and the common law of the British Virgin Islands. The rights of shareholders to take legal action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are governed by the BVI Act and the common law of the British Virgin Islands. The common law of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from the common law of England and the wider Commonwealth, which has persuasive, but not binding, authority on a court in the British Virgin Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are largely codified in the BVI Act but are potentially not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law. As a result of all of the above, holders of our shares may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than they would as shareholders of a U.S. company.

**British Virgin Islands companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of the ability to protect their interests.**

Shareholders of British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States Shareholders of a British Virgin Islands company could, however, bring a derivative action in the British Virgin Islands courts, and there is a clear statutory right to commence such derivative claims under Section 184C of the BVI Act. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred. The British Virgin Islands courts are also unlikely to recognize or enforce against us judgments of courts in the United States based on certain liability provisions of U.S. securities law; and to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain liability provisions of U.S. securities laws that are penal in nature. There is no statutory recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will generally recognize and enforce the non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. This means that even if shareholders were to sue us successfully, they may not be able to recover anything to make up for the losses suffered.

**The laws of the British Virgin Islands may provide less protection for minority shareholders than those under U.S. law, so minority shareholders may have less recourse than they would under U.S. law if the shareholders are dissatisfied with the conduct of our affairs.**

Under the laws of the British Virgin Islands, the rights of minority shareholders are protected by provisions of the BVI Act dealing with shareholder remedies and other remedies available under common law (in tort or contractual remedies). The principal protection under statutory law is that shareholders may bring an action to enforce the constitutional documents of the company (i.e. the memorandum and articles of association) as shareholders are entitled to have the affairs of the company conducted in accordance with the BVI Act and the memorandum and articles of association of the company. A shareholder may also bring an action under statute if he feels that the affairs of the company have been or will be carried out in a manner that is unfairly prejudicial or discriminating or oppressive to him. The BVI Act also provides for certain other protections for minority shareholders, including in respect of investigation of the company and inspection of the company books and records. There are also common law rights for the protection of shareholders that may be invoked, largely dependent on English common law, since the common law of the British Virgin Islands for business companies is limited.

**We may not be able to pay any dividends on our shares in the future due to British Virgin Islands law.**

Under British Virgin Islands law, we may only pay dividends to our shareholders if the value of our assets exceeds our liabilities and we are able to pay our debts as they become due. We cannot give any assurance that we will declare dividends of any amounts, at any rate or at all in the future. Future dividends, if any, will be at the discretion of our board of directors, and will depend upon our results of operations, cash flows, financial condition, payment to us of cash dividends by our subsidiaries, capital needs, future prospects and other factors that our directors may deem appropriate.

**ITEM 4. INFORMATION ON THE COMPANY**

**History and Development of the Company**

We started our company in 2002 in Qingdao, Shandong Province, PRC as a petfood company.

The following chart reflects our organizational structure as of the filling date:

![](ea028652101_img1.jpg)

On September 20, 2018, the Board approved acquisitions by the Company of TDH Group BVBA, a company established under the laws of Belgium and TDH JAPAN, a company established under the laws of Japan. In connection with the foregoing transactions the Company executed Share Sale and Purchase Agreements (together, the "Agreements") pursuant to which the Company agreed to pay approximately USD$936,782 and USD $156,130 (RMB 6 million and RMB 1 million), respectively, to acquire all of outstanding securities of TDH Group BVBA and TDH JAPAN, respectively, from the sole shareholder of each entity, Rongfeng Cui, the Company's former CEO. The purchase consideration under the Agreements was paid by issuance of 936,782 and 156,130 restricted common shares of the Company, respectively. Rongfeng Cui incorporated TDH Group BVBA in 2012 and TDH JAPAN in 2017 to develop and maintain all the clients in Europe and Japan, and to distribute and expand product sales in European and Japanese markets. Effective August 2, 2019, Rongfeng Cui ceased to be Company's CEO and Dandan Liu was appointed as the CEO in his stead. TDH Japan was deregistered and dissolved in February 2021. On May 6, 2025, the Court announced that the bankruptcy liquidation of BVBA had been completed and the bankruptcy proceedings were concluded. As a result, BVBA was fully disposed of as of December 31, 2025.

On April 22, 2002 Tiandihui was incorporated in Qingdao City, PRC. On March 16, 2022, the People's Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors' application of bankruptcy liquidation of Tiandihui and it entered into bankruptcy proceedings. On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui had been implemented and the bankruptcy proceedings were completed.

On July 19, 2016, Tiandihui acquired 100% shares of Chongai Jiujiu from Rongfeng Cui and Yanjuan Wang for $87,849 (RMB 610,000). The acquisition of Chongai Jiujiu was a transaction between entities under common control. Chongai Jiujiu had immaterial operations and suffered recurring operating losses since its inception. In December 2023, the Company transferred all its ownership interests in Chongai Jiujiu to a third party.

On January 22, 2020, Qingdao Tiandihui Pet Foodstuffs Co., Ltd. ("Tiandihui Pet Foodstuffs") was incorporated in Qingdao City, PRC. Tiandihui Pet Foodstuffs has been deregistered and dissolved in April 2025.

On January 21, 2020, Qingdao Tiandihui Foodstuffs Sales Co., Ltd. ("Tiandihui Foodstuffs Sales") was incorporated in Qingdao City, PRC. Tiandihui Foodstuffs Sales is a wholly owned subsidiary of Tiandihui Pet Foodstuffs. Tiandihui Foodstuffs Sales has been deregistered and dissolved in June 2025.

On February 27, 2020, TDH Foods Limited was incorporated in Hong Kong, with the purpose of being a holding company for equity interests in Tiandihui Pet Foodstuffs. TDH Foods Limited does conduct any operations or own any material assets or liabilities.

On August 24, 2020, TDH Holdings, Inc. acquired 100% equity interests of TDH Foods Limited.

In December 2020, TDH Holdings Inc. acquired remaining 1% equity interest of TDH Petfood LLC. As a result, TDH Petfood LLC became a wholly-owned subsidiary of TDH Holdings, Inc. TDH Petfood LLC had no active business operations since its incorporation, and it has been deregistered and dissolved in 2021.

On June 4, 2021, TDH Income Corporation ("TDH Income") was incorporated in Nevada. TDH Holdings, Inc. owns a 99.99% interest in TDH Income, and in December 2021, TDH Holdings, Inc. acquired the remaining 0.01% interest in TDH Income. As a result, TDH Income became a wholly-owned subsidiary of TDH Holdings, Inc.

On June 9, 2021, Ruby21Noland LLC ("Ruby21Noland") was incorporated in Missouri. Ruby21Noland is a wholly owned subsidiary of TDH Income.

On October 31, 2021, TDH Income Corporation acquired 51% equity interests of Far Ling's Inc. In June 2024, the Company transferred all its ownership interests in Far Ling's Inc to a third party.

On October 31, 2021, TDH Income Corporation acquired 100% equity interests of Bo Ling's Chinese Restaurant, Inc. In June 2024, the Company transferred all its ownership interests in Bo Ling's Chinese Restaurant, Inc to a third party.

On January 22, 2022, Beijing Wenxin Co., Ltd. ("Beijing Wenxin") was incorporated in Beijing City, PRC.

On March 27, 2023, Qingdao Chihong Information Consulting Co., Ltd. ("Qingdao Chihong") was incorporated in Qingdao City, PRC.

On April 30, 2024, Beijing Wenxin Co., Ltd. acquired 60% equity interests of Beijing Jingshi Commercial Management Co., Ltd.

On May 14, 2024, HARDEES2470 LLC ("HARDEES2470") was incorporated in Missouri. HARDEES2470 is a wholly owned subsidiary of TDH Income.

On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Vigour Management Limited.

On April 30, 2024, Beijing Wenxin Co., Ltd. acquired 60% equity interests of Beijing Jingshi Space Commercial Management Co., Ltd.

On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Hengzhuo Investment Limited.

On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Beijing Ruihe Commercial Management Co., Ltd.

On November 15, 2024, Beijing Ruihe Space Commercial Management Co., Ltd. was incorporated in Beijing City, PRC.

**Recent Developments**

In 2025, we strengthened our brand building and customer relationships. We believe we have enhanced our brand image and improved our market competitiveness by, among other things, upgrading service quality and optimizing the leasing process. Meanwhile, we are committed to establishing long-term and stable cooperative relationships with our customers, laying a solid foundation for the sustained growth of our business. We expect that revenue from our commercial real estate leasing business will continue to grow in the near term.

**Business Overview**

**<u>Special Considerations</u>**

***Implications of the HFCA Act***

We are not a Chinese operating company but a British Virgin Islands holding company with operations conducted by our subsidiaries established in Missouri, Nevada, PRC, Belgium, and Hong Kong.

PRC laws and regulations governing business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in the operations of our PRC subsidiaries and Hong Kong subsidiaries, significant depreciation of the value of our Common Shares, or a complete hindrance of our ability to offer or continue to offer our securities to investors and cause the value of such securities to significantly decline or be worthless. The Chinese government may intervene or influence the operations of our PRC operating entities at any time and may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in the operations of our PRC operating entities and/or the value of our Common Shares. Further, any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers 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. Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.

Trading in our Common Shares may be prohibited on national exchanges or "over-the-counter" markets under the HFCA Act if the PCAOB is unable to inspect our auditors for three consecutive years beginning in 2021, and as a result, an exchange may determine to delist our securities. Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCAA, which, if signed into law, would amend the HFCA Act and 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 instead of three consecutive years. Pursuant to the HFCA Act, the PCAOB 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 PRC, and (2) Hong Kong. In addition, the PCAOB's report identified the specific registered public accounting firms which are subject to these determinations.

Our auditor is currently subject to PCAOB inspections and the PCAOB is thus able to inspect our auditor. Our auditor is headquartered in California and was last inspected by the PCAOB in May 2025. According to our auditor, the PCAOB will conduct regular inspections. Our auditor is not headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB's determination. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit YCM CPA INC., to provide audit documentations located in China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB expands the scope of its determination so that we are subject to the HFCA, as the same may be amended, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including trading on the national exchange and trading on "over-the-counter" markets, may be prohibited under the HFCA Act.

***Cash Flows through Our Organization***

 

We are a holding company with no operations of its own. We conduct our operations principally in the United States and China through our subsidiaries. Our subsidiaries in the PRC generate and retain cash generated from operating activities and re-invest it in our business.

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Current PRC regulations permit our subsidiaries in mainland China to pay dividends to the Company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under our current corporate structure, we rely on dividend payments or other distributions from our subsidiaries to fund any cash and financing requirements we may have, including the funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur. If any subsidiary incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to us. In addition, under PRC laws and regulations, each of our Chinese subsidiaries is required to set aside a portion of their net income each year to fund a statutory surplus reserve until such reserve reaches 50% of its registered capital. This reserve is not distributable as dividends. As a result, our PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to us in the form of dividends, loans or advances. Further, the PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. If we are unable to receive funds from our subsidiaries, we may be unable to pay cash dividends on our common shares.

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Cash dividends, if any, on our common shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%. A 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises. Any gain realized on the transfer of common shares by such investors is also subject to PRC tax at a current rate of 10% which in the case of dividends will be withheld at source if such gain is regarded as income derived from sources within the PRC.

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Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC resident enterprise. However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong resident enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kong resident enterprise must directly hold no less than 25% share ownership in a PRC entity during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot be certain that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our PRC subsidiaries to our Hong Kong subsidiaries. As of the date of this report, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Our Hong Kong subsidiaries intend to apply for the tax resident certificate when our subsidiaries in mainland China plan to declare and pay dividends to their Hong Kong parent companies.

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As an offshore holding company, we will be permitted under PRC laws and regulations to provide funding from the proceeds of our offshore fund-raising activities to our subsidiaries in China only through loans or capital contributions, subject to the satisfaction of the applicable government registration and approval requirements. Before providing loans to our PRC subsidiaries, we will be required to make filings about details of the loans with the State Administration of Foreign Exchange of the PRC (the "SAFE") in accordance with relevant PRC laws and regulations. Our PRC subsidiaries that receive the loans are only allowed to use the loans for the purposes set forth in these laws and regulations. Under regulations of the SAFE, Renminbi is not convertible into foreign currencies for capital account items, such as loans, repatriation of investments and investments outside of China, unless the prior approval of the SAFE is obtained and prior registration with the SAFE is made.

Under PRC law, we may provide funding to our PRC subsidiaries only through capital contributions or loans, and prior to the dismantling of our PRC consolidated affiliated entities only through loans to our former consolidated affiliated entities, subject to satisfaction of applicable government registration and approval requirements.

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For the year ended December 31, 2025 and 2024, we provided working capital loans of $0 million and $0 million in aggregate to our subsidiaries.

We have not declared or paid any cash dividends, nor do we have any present plan to pay any cash dividends on our common shares in the foreseeable future. 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 report, we do not anticipate any difficulties on our ability to transfer cash between subsidiaries. We have not installed any cash management policies that dictate the amount of such funds and how such funds are transferred.

**Permissions Required from the PRC Authorities for Our Operations**

We conduct some of our business in China through our PRC subsidiaries established under PRC law. We are required to obtain certain permissions from the PRC authorities to operate, issue securities to foreign investors, and transfer certain data. The PRC government has exercised, and may continue to exercise, substantial influence or control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be undermined if our PRC subsidiaries are not able to obtain or maintain approvals to operate in China. The central or local governments could impose new, stricter regulations or interpretations of existing regulations that could require additional expenditures, and efforts on our part to ensure our compliance with such regulations or interpretations. To operate our general business activities currently conducted in mainland China, each of our PRC subsidiaries is required to obtain a business license from the local counterpart of the State Administration for Market Regulation, or SAMR. Each of our PRC subsidiaries has obtained a valid business license from the local SAMR, and no application for any such license has been denied. Our PRC subsidiaries are also required to obtain certain licenses and permits. As of the date of this report, we and our PRC subsidiaries have received all requisite permits, approvals and certificates from the PRC government authorities to conduct our business operations in China. To our knowledge, no permission or approval has been denied or revoked. However, given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by government authorities, we cannot be certain that relevant policies in this regard will not change in the future, which may require us or our PRC subsidiaries to obtain additional licenses, permits, filings or approvals for conducting our business in the PRC. If we or our PRC subsidiaries do not receive or maintain required permissions or approvals, or inadvertently conclude that such permissions or approvals are not required, we may be subject to governmental investigations or enforcement actions, fines, penalties, suspension of operations, or be prohibited from engaging in relevant business or conducting securities offering, and these risks could result in a material adverse change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we and our PRC subsidiaries, (i) are not required to obtain permissions from the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority. However, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers.

On July 10, 2021, the CAC published a revised draft revision to the Cybersecurity Review Measures for public comment, or the Revised Cybersecurity Measures. Under these measures, an operator having more than one million users shall be subject to cybersecurity review before listing abroad. The cybersecurity review will evaluate the risk of critical information infrastructure, core data, important data, or a large amount of personal information being influenced, controlled or maliciously used by foreign governments after going public overseas. The procurement of network products and services, data processing activities and overseas listing should also be subject to cybersecurity review if they concern or potentially pose risks to national security. According to the effective Cybersecurity Review Measures, online platform/website operators of certain industries may be identified as critical information infrastructure operators by the CAC, once they meet standard as stated in the National Cybersecurity Inspection Operation Guide, and such operators may be subject to cybersecurity review. On December 28, 2021, the CAC, the National Development and Reform Commission ("NDRC"), and other government agencies jointly issued the final version of the Revised Measures for Cybersecurity Review, or the Measures, which took effect on February 15, 2022 and replaced the previously issued Revised Cybersecurity Review Measures. Under the Measures, an "online platform operator" in possession of personal data of more than one million users must apply for a cybersecurity review if it intends to list its securities on a foreign stock exchange. The operators of critical information infrastructure and the online platform operators (collectively, the "Operators") carrying out data processing activities that affect or may affect national security, shall conduct a cybersecurity review, and any online platform operator who controls more than one million users' personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to be listed in a foreign country. Pursuant to the Measures, we believe we are not subject to the cybersecurity review by the CAC, given that (i) we possess personal information of a relatively small number of users in our business operations as of the date of this report, significantly less than one million users; and (ii) data processed in our business does not have a bearing on national security and thus shall not be classified as core or important data by the PRC authorities. We don't believe that we are an Operator within the meaning of the Measures, nor do we control more than one million users' personal information, and as such, we should not be required to apply for a cybersecurity review under the Revised Measures. Further, an expert interpretation of the Measures published at the CAC's website on February 17, 2022 indicated no application review is required for operators that have been listed abroad before the implementation of the Revised Cybersecurity Measures. However, the Measures were just recently released and there is a general lack of guidance and substantial uncertainties exist with respect to their interpretation and implementation. Whether the data processing activities carried out by traditional enterprises (such as food, medicine, manufacturing, and merchandise sales enterprises) are subject to such review and the scope of the review remain to be further clarified by the regulatory authorities in the subsequent implementation process.

The PRC government recently initiated a series of regulatory actions and statements to regulate business operations in China, including adopting new measures to extend the scope of cybersecurity reviews, cracking down on illegal activities in the securities market, and expanding the efforts in anti-monopoly enforcement. The PRC government is increasingly focused on data security. In July 2021, the CAC opened cybersecurity probes into several U.S.-listed technology companies focusing on anti-monopoly regulation, and how companies collect, store, process and transfer data. On November 14, 2021, the CAC published the Draft Regulations on Network Data Security Management for public comments, which among other things, stipulates that a data processor listed overseas must conduct an annual data security review by itself or by engaging a data security service provider and submit the annual data security review report for a given year to the municipal cybersecurity department before January 31 of the following year. If the Draft Regulations on Network Data Security Management are enacted in the current form, we, as an overseas listed company, would be required to carry out an annual data security review and comply with the relevant reporting obligations. As of the date of this report, the draft regulations have been released for public comment only and have not been formally adopted. The final provisions and the timeline for its adoption are subject to changes and uncertainties. We have been closely monitoring the regulatory development in China, particularly regarding the requirements of approvals, annual data security review or other procedures that may be imposed on us. If any approval, review or other procedure is in fact required, we cannot assure our investors that we will be able to obtain such approval or complete such review or other procedure timely or at all. For any approval that we may be able to obtain, it could nevertheless be revoked and the terms of its issuance may impose restrictions on our operations and/or securities offerings. The PRC regulatory requirements with respect to cybersecurity and data security are constantly evolving and can be subject to varying interpretations and significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with these cybersecurity and data privacy requirements in a timely manner, or at all, may subject us to government enforcement actions and investigations, fines, penalties, suspension or disruption of our operations.

On February 17, 2023, the CSRC issued the Trial Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises and five supporting guidelines (collectively, the "Trial Measures" or "Overseas Listing Rules"), which took effect on March 31, 2023. Under the Trial Measures, a company established in mainland China seeking securities offering and listing, by both direct or indirect means, in an overseas market is required to undertake filing procedures with the CSRC for its overseas offering and listing activities. The Trial Measures also set forth a list of circumstances under which overseas offering and listing by domestic companies established in mainland China is prohibited, including: (i) where such securities offering and listing is explicitly prohibited by the PRC laws; (ii) where the intended securities offering and listing may endanger national security as reviewed and determined by competent PRC authorities under the State Council in accordance with PRC laws; (iii) where the domestic company established in mainland China, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three (3) years; (iv) where the domestic company established in mainland China seeking securities offering and listing is suspected of committing crimes or major violations of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; and (v) where there are material ownership disputes over equity held by the controlling shareholder of the company established in mainland China or by other shareholders that are controlled by the controlling shareholder and/or actual controller. In accordance with the Trial Measures, the listing and trading of our common shares on Nasdaq is deemed as an indirect overseas offering and listing by domestic companies established in mainland China, and thus, we are subject to the relevant filing procedures as required. Further, we believe, as of the date of this report, none of the circumstances prohibiting the overseas offering and listing by domestic companies established in mainland China as listed above applies to us, and we can offer and continue to offer our common shares on Nasdaq.

In accordance with the Notice on the Arrangement for the Filing of Overseas Offering and Listing by Domestic Companies issued by the CSRC, we are deemed as an "Existing Issuer" because we had been listed overseas before March 31, 2023. Under such Notice, we are not required to undertake the initial filing procedure immediately. However, we shall carry out filing procedures as required in a timely manner for the subsequent events, including any further follow-up offerings on Nasdaq, dual and/or secondary offering and listing on different overseas markets, and occurrence of material events including change of control, investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities, change of listing status or transfer of listing segment, and voluntary or mandatory delisting. Among other things, if an overseas listed issuer intends to effect any follow-on offering in an overseas stock market, it should, through its major operating entity incorporated in the PRC, submit filing materials to the CSRC within three working days after the completion of the offering. The required filing materials shall include, but not be limited to, (1) filing report and relevant commitment letter and (2) domestic legal opinions. We may be subject to additional compliance requirements in the future, and we cannot assure you that we will be able to get the above-mentioned clearance of filing procedures on a timely basis, or at all. If we or our PRC Subsidiaries in the future fail to undertake filing procedures as stipulated in the Trial Measures or offer and list securities in an overseas market in violation of the Trial Measures, the CSRC may order rectification, issue warnings to us and/or our PRC Subsidiaries, and impose a fine of between RMB 1,000,000 and RMB 10,000,000. The CSRC may also inform its regulatory counterparts in the overseas jurisdictions, such as the SEC, via cross-border securities regulatory cooperation mechanisms.

Further, on February 24, 2023, the CSRC, together with Ministry of Finance, National Administration of State Secrets Protection, and National Archives Administration of China, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises (the "Confidentiality Provisions"), which went into effect on March 31, 2023 with the Trial Measures. Under the Confidentiality Provisions, domestic companies established in mainland China seeking overseas offering and listing, by both direct and indirect means, are required to institute a sound confidentiality and archives system. If such domestic companies established in mainland China intend to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, they shall obtain approval from competent authorities and complete the relevant filing procedure with the competent secrecy administrative department prior to their disclosure or provision of such documents and materials. Further, if they provide or publicly disclose documents and materials which may adversely affect national security or public interests, they shall strictly follow the corresponding procedures in accordance with relevant laws and regulations. Any failure or perceived failure by us or our subsidiaries to comply with the above confidentiality and archives administration requirements under the Confidentiality Provisions and other relevant PRC laws and regulations may cause relevant entities to be held legally liable by competent authorities and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime. As of the date of this report, we believe that we and our subsidiaries have not provided or publicly disclosed any documents or materials involving state secrets or work secrets of PRC government agencies or any of which may adversely affect national security or public interests, to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals. We intend to comply with the Confidentiality Provisions and other relevant PRC laws and regulations in our future offerings.

However, any failure of us or our PRC Subsidiaries to fully comply with the Trial Measures and/or the Confidentiality Provisions, may significantly limit or completely hinder our ability to offer or continue to offer our common shares on Nasdaq, cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause our common shares to significantly decline in value or become worthless.

For more detailed information, see "Item 3. Key Information-D. Risk Factors-Risks Relating to Doing Business in China."

**Overview and History**

We currently focus on commercial real estate management. However, we started our company in 2002 in Qingdao, Shandong Province, PRC with a single mission of becoming a producer of high-quality petfood for pet owners in China and worldwide.

Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayments upon maturity, we suspended our production and normal business operations and we were involved in certain legal proceedings beginning in November 2019. Although we resumed our operations in May 2020 factors including the Covid-19 pandemic, the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; and decreased demand for sales of petfood, led to a continuous decrease in our petfood revenue from $0.02 million in 2022 to $0 million in 2023. Accordingly, we sought strategic alternatives to the petfood industry and entered the restaurant segment on October 31, 2021, when we acquired 51% equity interests of Far Ling's Inc and 100% equity interests of Bo Ling's Chinese Restaurant, Inc. This resulted in an increase of $3.1 million and $3.2 million in restaurant food service revenue for the years ended December 31, 2022 and 2023, respectively.

We discontinued our restaurant business segment during the second quarter of 2024. The Company now focuses on the commercial real estate management. We believe this pivot to the commercial real estate management in the best interests of our shareholders due to high costs we were experiencing in the restaurant segment business line, and the Company believes it can obtain stable revenue from rental income and property appreciation income from the increasing demand in the commercial real estate market from small and medium sized enterprises Accordingly, beginning in 2024, we have been acquiring, leasing and managing commercial real estate properties that generate rental revenue under lease agreements with our commercial clients.

Our properties are concentrated in Missouri and Beijing, China. As of December 31, 2025, we owned one property and had leasehold interests in 42 commercial properties that we are subleasing, aggregating approximately 57 thousand net rentable square feet, consisting of our one owned restaurant and 42 subleased office workplaces.

**<u>Business Strategy</u>**

We intend to make capital investments where the risk adjusted returns on such capital is accretive to our stockholders. We intend to allocate capital to value-added improvements of commercial properties to increase rents, extend long-term leases and increase occupancy. We plan to selectively allocate capital to revenue enhancing projects that we believe will improve the market position of a given property or location.

We believe that actively managing a diversified portfolio of commercial properties under long-term net lease agreements produces consistent and predictable income.

A net lease typically requires the client to be responsible for monthly rent and certain property operating expenses including property taxes, insurance, and maintenance. We believe that a portfolio of properties under long-term net lease agreements with our commercial clients generally produces a more predictable income stream than many other types of real estate portfolios, while continuing to offer the potential for growth in rental income.

**<u>Investment Strategy</u>**

We generally seek to own or hold interests in commercial real estate that has some or all of the following characteristics:

● Properties in markets or locations important to our tenants;

● Properties with real estate valuations that approximate replacement costs;

● Properties with rental or lease payments that approximate market rents for similar properties;

● Properties that can be purchased with the simultaneous execution or assumption of long-term net lease agreements, offering both current income and the potential for future rent increases;

● Properties that leverage relationships with clients, sellers, investors, or developers as part of a long-term strategy; and

● Properties in locations and geographic markets we expect to remain strong or strengthen in the future.

We research and conduct analysis to identify what we consider to be appropriate property locations, tenants, and industries for investment. We believe this research analysis is instrumental to uncovering investment opportunities in markets where we believe we can add value.

In selecting potential investments, we generally look for tenants with the following attributes:

● Reliable and sustainable cash flow, including demonstrated economic resiliency; and

● Willingness to sign a lease greater than one year.

After applying this investment strategy, we pursue those transactions where we believe we can achieve an attractive investment spread over our cost of capital and favorable risk-adjusted returns. We will continue to evaluate all investments for consistency with our objective of owning net lease assets.

**<u>Sales and Marketing</u>**

We obtain new customers and tenants by word-of-mouth referrals and have found that satisfied tenants are loyal tenants. In addition, we encourage our entire staff from senior management to front-line staff to focus on marketing. We believe that this approach is crucial to winning and retaining tenants and increases our ability to withstand competition.

In addition to our own marketing department, we use numerous platforms to advertise and promote our business, including radio, media and online marketing. Online marketing allows us to efficiently educate prospective tenants about our properties and assists us in expanding the reach of our market. We publicize and promote our properties through media such as Douyin, Rednote and WeChat Video Channel. In addition, we rely on our website for advertising.

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

The commercial retail real estate management industry in China is dynamic and competitive. We face significant competition in our market from several large companies and some smaller regional competitors. Large companies like Dobe Group and Shanghai Golden Union Business Management own numerous properties all over China. There are barriers to entry in our market limiting the number of qualified competitors. These barriers result from the required capital to owning or leasing a property and requirements for consistent improvements, maintenance and support.

The principal competitive factors in our markets include:

● the ability to provide properties attractive to tenants;

● pricing for leases;

● ability to find redevelopment projects and negotiate with local governments;

● reputation in the market;

● ability to find new tenants;

● ability to address unique tenant needs; and

● ability to attract tenants.

The existence of competitive alternatives could have a material adverse effect on our ability to lease space and on the level of rents we can obtain. This results in competition for both the tenants to occupy the properties and rental revenue. We believe that there are numerous factors that make our commercial properties highly desirable to retailers and customers, including:

● the quality, and location and diversity of our properties;

● our management and operational commitment;

● our focus on relationships with tenants, owners, developer and local governments; and

● our tenant mix.

**<u>Seasonal Operations</u>**

We do not consider our business to be seasonal to any material degree.

**<u>Environment</u>**

Certain PRC and U.S. laws and regulations may impose liability on current or previous real property owners or operators for the cost of investigating, cleaning up or removing contamination caused by hazardous or toxic substances at a property. If contamination is present during our role as a property manager or developer, we could be held liable for such costs as a current "operator" of a property, regardless of the legality of the acts or omissions that caused the contamination and without regard to whether we knew of, or were responsible for, the presence of such hazardous or toxic substances. Further, PRC, U.S. laws and local governments have enacted various laws, regulations and treaties governing climate change, particularly for "greenhouse gas emissions" which seek to tax, penalize or limit their release. Such regulations could lead to increased operational or compliance costs over time. We are not aware of any material noncompliance with the environmental laws or regulations currently applicable to us, and we are not the subject of any material claim for liability with respect to contamination at any location. However, these laws and regulations may discourage leasing activities with respect to some properties, which may adversely affect us. Environmental contamination or other environmental liabilities may also negatively affect the value of commercial real estate assets held by entities that are managed by our investment management and development services businesses.

**Human Capital Management** 

As of the date of this filing, we employ approximately 12 full-time employees. All of our employees are located in Beijing and Shandong Province, PRC.

Our operational and financial performance depends on the talents, energy, experience and well-being of our employees. Our ability to attract and retain talented people depends on a number of factors, including work environment, career development and professional training, compensation and benefits, and the health, safety and wellness of our employees.

We are committed to the quality, growth and development of our people as part of our strategy to drive long-term value for our shareholders. We aim to ensure that all employees have the opportunity to make their maximum contribution to us and to their own career goals. It has been, and will continue to be, our policy to recruit, hire, assign, promote and train in all job titles without regard to race, national origin, religion, age, color, sex, sexual orientation, gender identity, disability, protected veteran status, or any other characteristic protected by local, state, or federal and PRC laws, rules, or regulations. Our hiring practices do not, and have not, included quotas or numerical targets based on any of these characteristics.

**Our History and Corporate Structure**

We are a holding company incorporated in the British Virgin Islands (incorporated on September 30, 2015) that owns all of the outstanding capital stock of TDH HK Limited, our wholly-owned Hong Kong subsidiary (TDH HK). We also own all of the outstanding capital stock of TDH Foods Limited, another wholly-owned Hong Kong subsidiary, and holds a 100% interest in TDH Income Corporation, a Nevada corporation. TDH HK, in turn, owned all of the outstanding capital stock of Tiandihui, our former operating subsidiary based in Qingdao City, Shandong Province, China, incorporated in April 2002 as a PRC limited liability company Tiandihui. TDH Foods Limited owns 100% of the outstanding capital stock of Qingdao Pet Foodstuffs, with its wholly-owned subsidiary of Tiandihui Foodstuffs Sales. Tiandihui Foodstuffs Sales was deregistered and dissolved in April 2025, while Tiandihui Pet Foodstuffs completed deregistration and dissolution in June 2025. TDH HK Limited owns 100% of the outstanding capital stock of Tiandihui Pet Foodstuffs, with its wholly-owned subsidiary of Beijing Chongai Jiujiu Cultural Communication Co., Ltd. On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed, and we fully disposed Tiandihui. In December 2023, the Company transferred all its ownership interests in Chongai Jiujiu to a third party. TDH Income Corporation owns 100% of the outstanding capital stock of Ruby21Noland LLC. Ruby21Noland LLC was incorporated in the State of Missouri on June 9, 2021. On October 31, 2021, TDH Income Corporation acquired 51% equity interests of Far Ling's Inc. On October 31, 2021, TDH Income Corporation acquired 100% equity interests of Bo Ling's Chinese Restaurant, Inc. In June 2024, the Company sold all its ownership interests in Far Ling's Inc and Bo Ling's Chinese Restaurant, Inc to third parties. On January 22, 2022, Beijing Wenxin was incorporated in Beijing City, PRC. On March 27, 2023, Qingdao Chihong was incorporated in Qingdao City, PRC. On April 30, 2024, Beijing Wenxin Co., Ltd. acquired 60% equity interests of Beijing Jingshi Commercial Management Co., Ltd. On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Vigour Management Limited. TDH Income Corporation owns 100% of the outstanding capital stock of HARDEES2470 LLC. HARDEES2470 LLC was incorporated in the State of Missouri on May 14, 2024. On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Hengzhuo Investment Limited. On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Beijing Ruihe Commercial Management Co., Ltd. On November 15, 2024, Beijing Ruihe Space Commercial Management Co., Ltd. was incorporated in Beijing City, PRC.

On September 20, 2018, the Board approved acquisitions by the Company of TDH Group BVBA, a company established under the laws of Belgium and TDH JAPAN, a company established under the laws of Japan. In connection with the foregoing transactions the Company executed Share Sale and Purchase Agreements (together, the "Agreements") pursuant to which the Company agreed to pay approximately USD$936,782 and USD $156,130 (RMB 6 million and RMB 1 million), respectively, to acquire all of outstanding securities of TDH Group BVBA and TDH JAPAN, respectively, from the sole shareholder of each entity, Rongfeng Cui, the Company's former CEO. The purchase consideration under the Agreements was paid by issuance of 936,782 and 156,130 restricted common shares of the Company, respectively. Rongfeng Cui incorporated TDH Group BVBA in 2012 and TDH JAPAN in 2017 to develop and maintain all the clients in Europe and Japan, and to distribute and expand product sales in European and Japanese markets. TDH Japan has been deregistered and dissolved in February 2021. On May 6, 2025, the Court announced that the bankruptcy liquidation of BVBA had been completed and the bankruptcy proceedings were concluded. As a result, BVBA was fully disposed of as of December 31, 2025.

**Intellectual Property**

The PRC has domestic laws for the protection of rights in copyrights, patents, trademarks and trade secrets. The PRC is also a signatory to all of the world's major intellectual property conventions, including:

● Convention establishing the World Intellectual Property Organization (June 3, 1980);

● Paris Convention for the Protection of Industrial Property (March 19, 1985);

● Patent Cooperation Treaty (January 1, 1994); and

● Agreement on Trade-Related Aspects of Intellectual Property Rights (November 11, 2001).

The PRC Trademark Law, adopted in 1982 and revised in 2013, with its implementation rules adopted in 2014, protects registered trademarks. The Trademark Office of the State Administration of Industry and Commerce of the PRC, handles trademark registrations and grants trademark registrations for a term of ten years.

We do not currently have any patents related to our commercial real estate business.

**Properties** 

Under Chinese law, all of the land in China is either state-owned or collectively-owned, depending on its location and the specific laws governing such land. Collectively-owned land is owned by rural collectives and generally cannot be used for non-agricultural purposes unless approved by the Chinese government. Collectively-owned land cannot be transferred, leased or mortgaged to non-collectives without first being converted into state-owned land. Individuals and entities may acquire rights to use state-owned land, or land-use-rights, for commercial, industrial or residential purposes by means of mutual agreement, tender, auction or listing for sale from local land authorities or an existing holder of a land-use-right. Land-use-rights granted for commercial, industrial and residential purposes may be granted for a period of up to 40, 50 or 70 years, respectively. This period may be renewed at the expiration of the initial and any subsequent terms, subject to compliance with relevant laws and regulations. Land-use-rights are transferable and may be used as security for borrowings and other obligations.

Our properties are concentrated in Missouri and Beijing, China. As of December 31, 2025, we owned one property and had leasehold interests in 42 commercial properties that we are subleasing, aggregating approximately 57 thousand net rentable square feet, consisting of one owned restaurant and 42 subleased office workplaces.

**Owned Property**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Property** | **Location** | **Net <br> Rentable <br> Square Feet** | **Net <br> Rentable <br> Square Feet** | **Approximate <br> Annual <br> Revenue** | **Approximate <br> Annual <br> Revenue** | **Lease <br> Expiration <br> Date** |
| HARDEES2470 LLC | 4011 S Noland Rd, Independence, Missouri |  | 3427 |  | 91648.30 | VACANT |

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**Leased Properties** 

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| | | | | |
|:---|:---|:---|:---|:---|
| **Property** | **Location** | **Net <br> Rentable <br> Square Feet** | **Approximate <br> Annual <br> Revenue** | **Lease <br> Expiration <br> Date** |
| Rm A1203A Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 568 | 16673.61 | 2030/4/22 |
| Rm A1203 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 548 | 16006.86 | 2030/4/22 |
| Rm A1208 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1675 | 55023.59 | 2030/4/22 |
| Rm A1208A Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 565 | 18341.20 | 2030/4/22 |
| Rm A1210 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 2240 | 53751.39 | 2030/4/22 |
| Rm A1210A Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 667 | 16006.87 | 2030/4/22 |
| Rm A1205A Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 505 | 16673.82 | 2031/4/6 |
| Rm A1205 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1552 | 45019.33 | 2031/4/6 |
| Rm A1205B Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1383 | 46686.71 | 2031/4/6 |
| Rm A1206 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1677 | 56024.04 | 2031/4/6 |
| Rm A1209A Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 602 | 20808.92 | 2031/4/6 |
| Rm A1209 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1432 | 50021.47 | 2031/4/6 |
| Rm A1209B Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 898 | 28492.23 | 2031/4/6 |
| Rm 3209 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 2102 | 65027.90 | 2027/10/24 |
| Rm 3209A Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1624 | 48354.09 | 2027/10/24 |
| Rm 3202 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1737 | 82876.78 | 2027/10/24 |
| Rm 3201A Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1187 | 69892.20 | 2027/10/24 |
| Rm 3201 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 2360 | 90672.10 | 2027/10/24 |
| Rm 901 Building 8 Wanda Plaza | Building 8, 93 Jianguo Road, Chaoyang District, Beijing PRC | 1170 | 18007.73 | 2027/7/5 |
| Rm 902 Building 8 Wanda Plaza | Building 8, 93 Jianguo Road, Chaoyang District, Beijing PRC | 1135 | 29121.75 | 2027/7/5 |
| Rm 903-1 Building 8 Wanda Plaza | Building 8, 93 Jianguo Road, Chaoyang District, Beijing PRC | 1544 | 36465.78 | 2027/7/5 |
| Rm 903 Building 8 Wanda Plaza | Building 8, 93 Jianguo Road, Chaoyang District, Beijing PRC | 1462 | 25010.73 | 2027/7/5 |
| Rm 905 Building 8 Wanda Plaza | Building 8, 93 Jianguo Road, Chaoyang District, Beijing PRC | 1407 | 25010.73 | 2027/7/5 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Property** | **Location** | **Net <br> Rentable <br> Square Feet** | **Approximate <br> Annual <br> Revenue** | **Lease <br> Expiration <br> Date** |
| Rm 906 Building 8 Wanda Plaza | Building 8, 93 Jianguo Road, Chaoyang District, Beijing PRC | 1165 | 52822.67 | 2027/7/5 |
| Rm 502-1 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1252 | 62403.76 | 2026/12/31 |
| Rm 502-2 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1753 | 60025.76 | 2026/12/31 |
| Rm 502-3 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1159 | 42527.56 | 2026/12/31 |
| Rm 502-4 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 457 | 14976.90 | 2026/12/31 |
| Rm 3807-1 Fortune Financial Center | 33rd Floor, Building 3/4, 7 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1814 | 79876.79 | 2029/11/30 |
| Rm 3807-2 Fortune Financial Center | 33rd Floor, Building 3/4, 7 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 2908 | 79561.70 | 2029/11/30 |
| Rm 2606-1 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 583 | 24010.31 | 2030/10/7 |
| Rm 2606-2 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 631 | 26645.30 | 2030/10/7 |
| Rm 2607-1 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1306 | 51587.09 | 2030/10/7 |
| Rm 2607-2 Full Tower | 9 East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1350 | 53356.23 | 2030/10/7 |
| Rm A1201 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 898 | 21365.52 | 2031/10/31 |
| Rm A1201A Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 580 | 8336.92 | 2031/10/31 |
| Rm A1202 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 2120 | 50426.53 | 2031/10/31 |
| Rm A1202A Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 463 | 26646.08 | 2031/10/31 |
| Rm A1207 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1120 | 40017.17 | 2031/10/31 |
| Rm B705 Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1819 | 45259.03 | 2031/12/11 |
| Rm B705A Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 1269 | 31573.94 | 2031/12/11 |
| Rm B705B Tianyuan Port Center | C2 North East 3rd Ring Middle Road, Chaoyang District, Beijing PRC | 853 | 18341.20 | 2031/12/11 |

---

Our principal executive office is located at Beijing Wenxin Co., Ltd., Room 1104, Full Tower, 9 East Third Ring Middle Road, Chaoyang District, Beijing, PRC. Our telephone number is +86-178-1320-4760. Our website address is www.tiandihui.com. The information on our website is not part of this Annual Report.

**REGULATIONS**

**Regulations on Intellectual Property Rights**

*Patent*. Patents in the PRC are principally protected under the Patent Law of the PRC. The duration of a patent right is either 10 years, 15 years or 20 years from the date of application, depending on the type of patent right.

*Copyright*. Copyrights in the PRC, including copyrighted software, is principally protected under the Copyright Law of the PRC and related rules and regulations. Under the Copyright Law, the term of protection for copyrighted software is 50 years.

*Trademark*. The PRC Trademark Law has adopted a "first-to-file" principle with respect to trademark registration. Registered trademarks are protected under the Trademark Law of the PRC and related rules and regulations. Trademarks are registered with the Trademark Office of the SAMR. Where registration is sought for a trademark that is identical or similar to another trademark which has already been registered or given preliminary examination and approval for use in the same or similar category of commodities or services, the application for registration of such trademark may be rejected. Trademark registrations are effective for a renewable ten-year period unless otherwise revoked.

*Domain Names*. Domain name registrations are handled through domain name service agencies established under the relevant regulations, and applicants become domain name holders upon successful registration.

**Regulations Relating to Foreign Exchange**

***Regulations on Foreign Currency Exchange***

The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, most recently amended in August 2008. Under the PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments, and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where RMB is converted into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments, and investments in securities outside of China.

In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, which substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special-purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated another circular in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches. On February 13, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13. After SAFE Notice 13 became effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks. Under the supervision of SAFE, the qualified banks may directly review the applications and conduct the registration.

On March 30, 2015, SAFE promulgated Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide. Circular 19 came into force and replaced both previous Circular 142 and Circular 36 on June 1, 2015. On June 9, 2016, SAFE promulgated Circular 16 to further expand and strengthen such reform. Under Circular 19 and Circular 16, foreign-invested enterprises in the PRC are allowed to use their foreign exchange funds under capital accounts and RMB funds from exchange settlement for expenditure under current accounts within its business scope or expenditure under capital accounts permitted by laws and regulations, except that such funds shall not be used for (i) expenditure beyond the enterprise's business scope or expenditure prohibited by laws and regulations; (ii) investments in securities or other investments than banks' principal-secured products; (iii) granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) construction or purchase of real estate for purposes other than self-use (except for real estate enterprises).

In January 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 profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years' losses before remitting the profits. Further, according to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment.

On October 23, 2019, SAFE issued 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 allows non-investment foreign-invested enterprises to make domestic equity investment with their capital funds in accordance with the law under the premise that such investment does not violate the existing special administrative measures (Negative List) for foreign investment and the project invested in China is authentic and compliant. Pursuant to SAFE Circular 28, upon receiving the payment of consideration from a foreign investor for the equity transfer under foreign direct investment, the domestic transferor, with relevant registration certificates, can process the formalities for account opening, fund receipt, and foreign exchange settlement and use directly at the bank. The foreign investor's deposit remitted from overseas or transferred from domestic accounts can be directly used for its lawful domestic capital contribution as well as domestic and overseas payment after the transaction is concluded.

On April 10, 2020, SAFE issued the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business, or SAFE Circular 8, pursuant to which, eligible enterprises are allowed to use the income under capital account, from such sources as capital funds, foreign debt and overseas listing, for domestic payment without having to provide supporting authentication materials to the banks for every transaction in advance, but the use of funds shall be true and compliant as well as conform to the existing administration regulations regarding use of income under capital account. The concerned bank shall conduct spot checking in accordance with the relevant requirements.

 ****

***Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents***

SAFE issued SAFE Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, that became effective in July 2014, replacing the previous SAFE Circular 75. SAFE Circular 37 regulates 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. Under SAFE Circular 37, an SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities to seek offshore financing or make an offshore investment, using legitimate onshore or offshore assets or interests. A "round trip investment" refers to direct investment in China by PRC residents or entities through SPVs, establishing foreign-invested enterprises to obtain ownership, control rights, and management rights. SAFE Circular 37 provides that, before contributing to an SPV, PRC residents or entities must complete foreign exchange registration with SAFE or its local branch. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for 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.

We are aware that our PRC resident beneficial owners subject to these registration requirements have registered with the local SAFE branches and/or qualified banks to reflect the recent changes to our corporate structure.

**Regulations Relating to Dividend Distributions** 

Under our current corporate structure we may rely on dividend payments from paid to us by our subsidiaries, which are wholly foreign-owned enterprises incorporated in China, to fund any cash and financing requirements we may have. The principal regulations governing the distribution of dividends of foreign-invested enterprises include Foreign Investment Law of the People's Republic of China and the Company Law of the People's Republic of China. Under these laws, wholly foreign-owned enterprises in China may freely make remittance inward and outward in RMB or foreign exchange of capital contribution, profits, capital yield, income from asset disposal, intellectual property licensing fees, indemnity obtained according to law or income from compensation and liquidation.

According to the PRC Company Law and Foreign Investment Law, each of our PRC subsidiaries is required to draw 10% of its after-tax profits each year, if any, to fund certain statutory reserve, which may stop drawing its after-tax profits if the aggregate balance of the statutory reserve has already accounted for over 50% of its registered capital. These reserves are not distributable as cash dividends. The PRC subsidiaries may, at their discretion, allocate a portion of their after-tax profits based on PRC accounting standards to optional reserve funds. After making up the losses and allocating reserve funds, the remaining after-tax profits of our PRC subsidiaries may be distributed to their shareholders.

**Regulations Relating to Overseas Listings and M&A Rules**

On February 17, 2023, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfil the filing procedure and report relevant information to the CSRC. On the same day, the CSRC held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that (1) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, such as completion of registration in the market of the United States, but have not completed the indirect overseas listing; and (2) domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges on or prior to the effective date of the Trial Measures, may reasonably arrange the timing for submitting their filing applications with the CSRC, and shall complete the filing before completion of their overseas offering and listing. However, since the Trial Measures was newly promulgated, its interpretation, application and enforcement remain unclear. As the filing procedure with the CSRC under the Trial Measures is required for any future offerings, listing or any other capital raising activities by us, it is uncertain whether we could complete the filing procedure in a timely manner, or at all.

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission, the SAT, the SAIC, the China Securities Regulatory Commission, or CSRC, and the SAFE, jointly issued the *Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors*, or the M&A Rules, which became effective on September 8, 2006 and was amended on June 22, 2009. The M&A Rules, among other things, require that (i) PRC subsidiaries or individuals obtain MOFCOM approval before they establish or control a special purpose vehicle, or SPV, overseas, provided that they intend to use the SPV to acquire their equity interests in a PRC company at the consideration of newly issued share of the SPV, or Share Swap, and list their equity interests in the PRC company overseas by listing the SPV in an overseas market; (ii) the SPV obtains MOFCOM's approval before it acquires the equity interests held by the PRC subsidiaries or PRC individual in the PRC company by Share Swap; and (iii) the SPV obtains CSRC approval before it lists overseas.

On February 17, 2023, the CSRC issued the Trial Measures and five application guidelines, or the Overseas Listing Rules, which became effective on March 31, 2023. According to the Overseas Listing Rules, among other things, after making initial applications with overseas stock markets for offerings or listings, all China-based companies shall file with the CSRC within three business days. Subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within three business days after the offering is completed. Subsequent securities offerings and listings of an issuer in other overseas markets than where it has offered and listed shall be filed with the CSRC within three business days after the applications are made. In addition, overseas offerings and listings are prohibited for such China-based companies when any of the following applies: (a) where such securities offering and listing is explicitly prohibited by provisions in PRC laws, administrative regulations and relevant state rules; (b) where 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; (c) where the domestic company intending to make the securities offering and listing, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (d) where the domestic company intending to make the securities offering and listing is suspected of committing crimes or major violations of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; (e) where there are material ownership disputes over equity held by the domestic company's controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller. The Overseas Listing Rules further stipulate that a fine between RMB 1 million and RMB 10 million may be imposed if a company fails to fulfill the filing requirements with the CSRC or conducts an overseas offering or listing in violation of the Overseas Listing Rules. According to the Notice on the Filing Management Arrangements for Overseas Offerings and Listings by Domestic Companies published by the CSRC on February 17, 2023, existing listed companies are not required to make any filings until they conduct a new offering or financing transaction in the future. A company is regarded as an existing listed company if it (a) has already completed overseas listing or offering, or (b) has already obtained the approval for the offering or listing from overseas securities regulatory authorities or stock exchanges but has not completed such offering or listing before the effective date of the Overseas Listing Rules and also completes the offering or listing before September 30, 2023. On the effective date of the Overseas Listing Rules, PRC companies that have already submitted offering and listing applications but have not yet obtained the approvals from overseas securities regulators or exchanges shall make filings with the CSRC at a reasonable time before the completion of the offerings or listings. For those that have already obtained CSRC's approvals for overseas listings or offerings may continue their process without additional filings but shall make the filing pursuant to the Overseas Listing Rules if they cannot complete the offering or listing before the expiration of the original approval from CSRC.

**Regulations Relating to Employment**

The PRC Labor Law and the Labor Contract Law require that employers must execute written employment contracts with full-time employees. In the event that an employer fails to enter into a written employment contract with an employee within one year from the date on which the employment relationship is established, the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the employee's salary for the period from the day following the lapse of one month from the date of establishment of the employment relationship to the day prior to the execution of the written employment contract. All employers must compensate their employees with wages equal to at least the local minimum wage standards. Violations of the PRC Labor Law and the Labor Contract Law may result in the imposition of fines and other administrative sanctions, and serious violations may result in criminal liabilities.

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 a housing provident fund, and contribute to the plans or funds 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. Failure to make adequate contributions to various employee benefit plans may be subject to fines and other administrative sanctions.

Currently, we are making contributions to the plans based on the minimum standards although the PRC laws required such contributions to be based on the actual employee salaries up to a maximum amount specified by the local government. Therefore, in our consolidated financial statements, we have made an estimate and accrued a provision in relation to the potential make-up of our contributions for these plans as well as to pay late contribution fees and fines. If we are subject to late contribution fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. See "Risk Factors — Risks Related to Doing Business in China — Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties."

**Regulations Related to Companies**

The Company Law of PRC (the "PRC Company Law") was promulgated on December 29, 1993, which became effective on July 1, 1994, and was subsequently amended in 1999, 2004, 2005, 2013, 2018 and 2023 respectively. All companies established in the PRC are subject to the PRC Company Law. The PRC Company Law regulates the establishment, operation, corporate structure, and management of corporate entities in China and classifies companies into limited liability companies and companies limited by shares. Foreign-invested companies are also subject to the PRC Company Law, except as otherwise provided in the foreign investment laws. Under the latest amended PRC Company Law, which will become effective on July 1, 2024, there are several noteworthy changes, including (i) shareholders of a limited liability company are required to fully contribute their subscribed capital within five years from the establishment of the company; (ii) transfer equity by any shareholder of a limited liability company is no longer subject to the consent by other shareholders and such transferring shareholder is required to notify other shareholders in writing of the quantity of equities to be transferred, transfer price, payment method and the term of the transfer. The other shareholders shall have a right of first refusal under the equivalent conditions; (iii) a company can establish an audit committee comprised of directors responsible for supervising the company's financial and accounting matters, with no board of supervisors or supervisors established; and (iv) where any shareholder of a company evades the debts by abusing the independent status of legal person of the company or the limited liability of shareholders and thus seriously damages the interests of any creditor of the company, it shall be jointly and severally liable for the debts of the company, and where a shareholder commits any of the acts as mentioned above by using two or more companies under its control, each company shall be jointly and severally liable for the debts of the other company(ies).

**Regulations Related 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 2023, which applies to both PRC domestic companies and foreign-invested companies. On March 15, 2019, the National People's Congress approved the Foreign Investment Law, and on December 26, 2019, the State Council promulgated the Implementing Rules of the PRC Foreign Investment Law, or the Implementing Rules, to further clarify and elaborate the relevant provisions of the Foreign Investment Law. The Foreign Investment Law and the Implementing Rules both took effect on January 1, 2020. They replaced three previous major laws on foreign investments in China, namely, the Sino-foreign Equity Joint Venture Law, the Sino-foreign Cooperative Joint Venture Law and the Wholly Foreign-owned Enterprise Law, together with their respective implementing rules. Pursuant to the Foreign Investment Law, "foreign investments" refer 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. The Foreign Investment Law and the Implementing Rules introduce a see-through principle and further provide that foreign-invested enterprises that invest in the PRC shall also be governed by the Foreign Investment Law and the Implementing Rules.

The Foreign Investment Law and the Implementing Rules provide that a system of pre-entry national treatment and negative list shall be applied for the administration of foreign investment. "Pre-entry national treatment" means that the treatment given to foreign investors and their investments at market access stage is no less favorable than that given to domestic investors and their investments. "Negative list" means the special administrative measures for foreign investment's access to specific fields or industries, which will be proposed by the competent investment department of the State Council in conjunction with the competent commerce department of the State Council and other relevant departments, and be reported to the State Council for promulgation, or be promulgated by the competent investment department or competent commerce department of the State Council after being reported to the State Council for approval. Foreign investment beyond the negative list will be granted national treatment. Foreign investors shall not invest in the prohibited fields as specified in the negative list, and foreign investors who invest in the restricted fields shall comply with the special requirements on the shareholding, senior management personnel, etc. In the meantime, relevant competent government departments will formulate a catalog of industries for which foreign investments are encouraged according to the needs for national economic and social development, to list the specific industries, fields, and regions in which foreign investors are encouraged and guided to invest.

Investment activities in the PRC by foreign investors were principally governed by the Catalogue for the Guidance of Foreign Investment Industries, or the Catalogue, which was promulgated and is amended from time to time by the MOFCOM and the NDRC. Industries listed in the Catalogue were divided into three categories: encouraged, restricted and prohibited. Industries not listed in the Catalogue were generally deemed as constituting a fourth "permitted" category. The Catalog was replaced by the Special Administrative Measures for Access of Foreign Investment (Negative List) and the Catalogue of Industries for Encouraging Foreign Investment in 2018 and 2019, respectively. On December 27, 2021, the NDRC and MOFCOM issued the latest Special Administrative Measures for Access of Foreign Investment (Negative List) (2021 Edition) (the "Negative List 2021"), which came into effect on January 1, 2022. The Negative List 2021 sets out the areas where foreign investment is prohibited and the areas where foreign investment is allowed only on certain conditions. Foreign investment in areas not listed in the Negative List 2021 is treated equally with domestic investment and the relevant provisions of the Negative List for Market Access shall apply to domestic and foreign investors on a unified basis. Moreover, according to Negative List 2021, PRC entities which engage in any field forbidden by the Negative List 2021 for access of foreign investment shall be approved by competent PRC authorities when they seek listing offshore, and foreign investors shall not participate in operation and management and their shareholding ratio shall be in compliance with PRC laws.

According to the Implementing Rules, the registration of foreign-invested enterprises shall be handled by the State Administration for Market Regulation ("SAMR") or its authorized local counterparts. Where a foreign investor invests in an industry or field subject to licensing in accordance with laws, the relevant competent government department responsible for granting such license shall review the license application of the foreign investor in accordance with the same conditions and procedures applicable to PRC domestic investors unless it is stipulated otherwise by the laws and administrative regulations, and the competent government department shall not impose discriminatory requirements on the foreign investor in terms of licensing conditions, application materials, reviewing steps and deadlines, etc. However, the relevant competent government departments shall not grant the license or permit enterprise registration if the foreign investor intends to invest in the industries or fields as specified in the negative list without satisfying the relevant requirements. In the event that a foreign investor invests in a prohibited field or industry as specified in the negative list, the relevant competent government department shall order the foreign investor to stop the investment activities, dispose of the shares or assets or take other necessary measures within a specified time limit, and restore to the status before the occurrence of the investment described above. The illegal gains, if any, shall be confiscated. In the event that the investment activities of a foreign investor violate the special administration measures for access restrictions on foreign investments as stipulated in the negative list, the relevant competent government department shall order the investor to make corrections within the specified time limit and take necessary measures to meet the relevant requirements. In the event that the foreign investor fails to make corrections within the specified time limit, the provisions above regarding the circumstance that a foreign investor invests in the prohibited field or industry shall apply.

Pursuant to the Foreign Investment Law and the Implementing Rules, and the Information Reporting Measures for Foreign Investment jointly promulgated by the MOFCOM and the SAMR, 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 MOFCOM 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 Land Use Right and Construction**

Pursuant to the PRC Land Administration Law promulgated in June 1986 with the latest amendment in August 2019 and the PRC Civil Code, any entity that needs land for the purposes of construction must obtain land use right and must register with local counterparts of Land and Resources Ministry. Land use right is established at the time of registration.

According to the Measures for Control and Administration of Grant and Assignment of Right to Use Urban State-owned Land promulgated by the Ministry of Housing and Urban-Rural Development in December 1992, and the PRC Law on Urban and Rural Planning promulgated by the National People's Congress in October 2007 and became effective in January 2008 with the latest amendment in April 2019, the Measures for Administration of Granting Permission for Commencement of Construction Works promulgated by the Ministry of Housing and Urban-Rural Development in June 2014 with the latest amendment in March 2021, the Administrative Measures for Archival Filing on Inspection Upon Completion of Buildings and Municipal Infrastructure promulgated by the Ministry of Housing and Urban-Rural Development in April 2000 with the latest amendment in October 2009, the Provisions on Inspection Upon Completion of Buildings and Municipal Infrastructure promulgated by the Ministry of Housing and Urban-Rural Development, and the Regulations on the Quality Management of Construction Engineering promulgated by the State Council latest amended in April 2019, after obtaining land use right, the owner of land use right must obtain construction land planning permit, construction works planning permit from the relevant municipal planning authority, and a construction permit from relevant construction authority in order to commence construction. After a building is completed, an examination of completion by the relevant governmental authorities and experts must be organized.

**Regulations Relating to Leasing**

Pursuant to the Law on Administration of Urban Real Estate which took effect in January 1995 with the latest amendment in August 2019 and the Administrative Measures on Leasing of Commodity Housing which was promulgated by Ministry of Housing and Urban-Rural Development on December 1, 2010 and took effect on February 1, 2011, 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. Both lessor and lessee are also required to register the lease with the real estate administration department, and failure to comply with the registration requirement may result in a fine ranging from RMB1,000 to RMB10,000.

**Regulations Relating to Environmental Protection**

Pursuant to the PRC Law on Environment Impact Assessment promulgated in 2002 and most recently amended in 2018, and the Administrative Regulations on the Environmental Protection of Construction Projects promulgated in 1998 with the latest amendment in July 2017, each construction project is required to undergo an environmental impact assessment, and an environmental impact assessment report must be submitted to the relevant governmental authorities for approval before the commencement of construction. In the event that there is a material change in respect of the construction site, scale, nature, the production techniques employed, or the measures adopted for preventing pollution and preventing ecological damage of a given project, a new environmental impact assessment report must be submitted for approval. Moreover, after the completion of a construction project, the constructing entity is required to obtain a completion acceptance on environmental protection for the project. Failure to comply with the above-mentioned regulations may subject an enterprise to fines, suspension of the construction and other administrative liabilities, and even criminal liabilities under severe circumstances.

**Regulations Relating to Fire Prevention**

The Fire Prevention Law of the PRC, or the Fire Prevention Law, was adopted on April 29, 1998, and amended on October 28, 2008, April 23, 2019, and April 29, 2021. According to the Fire Prevention Law and other relevant laws and regulations of the PRC, the Ministry of Public Security and its local counterparts at or above the county level shall monitor and administer the fire prevention affairs. The fire prevention departments of such public securities are responsible for implementation. The Fire Prevention Law provides that the fire prevention design or construction of a construction project must conform to the national fire prevention technical standards (as the case may be). According to Provisions on the Interim Provisions on the Administration of Fire Protection Design Review and Acceptance of Construction Projects, issued on April 1, 2020, and took effect on June 1, 2020, for those construction projects with more than 500 square meters, the construction entity shall apply to the fire prevention department of a public security authority for fire protection design approval.

For the construction projects other than the conditions foregoing, the construction entity shall, within seven days of obtaining the construction permit of the project, submit the fire protection filing for fire protection design through the website of the fire prevention department of the public security authority at the provincial level or at the service office of the fire prevention department of the public security authority. For a construction project whose investment is less than RMB300,000 or whose construction area is less than 300 square meters, fire protection design approval or filing is not required.

**Regulations Relating to Intellectual Property**

China has adopted comprehensive legislation governing intellectual property rights, including copyrights, trademarks, patents and domain names. China is a signatory to the primary international conventions on intellectual property rights and has been a member of the Agreement on Trade Related Aspects of Intellectual Property Rights since its accession to the World Trade Organization in December 2001.

*Copyright*

On September 7, 1990, the SCNPC promulgated the Copyright Law of the People's Republic of China, or the Copyright Law, effective on June 1, 1991 and amended on October 27, 2001, February 26, 2010, and November 11, 2020, respectively. The amended Copyright Law extends copyright protection to internet activities, products disseminated over the Internet and software products. In addition, there is a voluntary registration system administered by the Copyright Protection Center of China.

Under the Regulations on the Protection of the Right to Network Dissemination of Information that took effect on July 1, 2006 and was amended on January 30, 2013, it is further provided that an Internet information service provider may be held liable under various situations, including that if it knows or should reasonably have known a copyright infringement through the Internet and the service provider fails to take measures to remove or block or disconnect links to the relevant content, or, although not aware of the infringement, the Internet information service provider fails to take such measures upon receipt of the copyright holder's notice of such infringement.

In order to further implement the Regulations on Computer Software Protection, promulgated by the State Council on December 20, 2001 and amended on January 8, 2011 and January 30, 2013, respectively, the National Copyright Administration issued the Measures for the Registration of Computer Software Copyright on February 20, 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights.

*Trademark*

According to the Trademark Law of the People's Republic of China promulgated by the SCNPC on August 23, 1982, and amended on February 22, 1993, October 27, 2001, August 30, 2013 and April 23, 2019, respectively, the Trademark Office of the SAMR is responsible for the registration and administration of trademarks in China. The SAMR under the State Council has established a Trademark Review and Adjudication Board for resolving trademark disputes. Registered trademarks are valid for ten years from the date the registration is approved. A registrant may apply to renew a registration within twelve months before the expiration date of the registration. If the registrant fails to apply in a timely manner, a grace period of six additional months may be granted. If the registrant fails to apply before the grace period expires, the registered trademark shall be deregistered. Renewed registrations are valid for ten years. On April 29, 2014, the State Council issued the revised the Implementing Regulations of the Trademark Law of the People's Republic of China, which specified the requirements of applying for trademark registration and renewal.

*Patent*

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

*Domain Names*

On August 24, 2017, the MIIT promulgated the Administrative Measures for Internet Domain Names, or the Domain Name Measures, which became effective on November 1, 2017. The MIIT is the major regulatory body responsible for the administration of the PRC internet domain names, under supervision of which China Internet Network Information Center, or the CNNIC, is responsible for the daily administration of CN domain names and PRC domain names. Pursuant to the Domain Name Measures, the registration of domain names adopts the "first to file" principle and the registrant shall complete the registration via the domain name registration service institutions. The Domain Name Measures regulate the registration of domain names, such as China's national top-level domain name ".CN". The CNNIC issued the Measures for the Resolution of Country Code Top-Level Domain Name Disputes on June 18, 2019, pursuant to which, in the event of a domain name dispute, the disputed parties may lodge a complaint to the designated domain name dispute resolution institution to initiate the domain name dispute resolution procedure, file a suit to the People's Court, or initiate an arbitration procedure.

**Regulations Relating to Offshore Special Purpose Companies Held by PRC Residents**

SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents on May 10, 2013, which became effective on May 13, 2013 and which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.

SAFE promulgated Notice on Issues Relating to Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or the SAFE Circular 37, on July 4, 2014, that requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and term of operation), capital increase or capital reduction, transfers or exchanges of shares, or mergers or divisions. SAFE Circular 37 was issued to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purposes Vehicles.

SAFE further enacted the Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment, or the SAFE Circular 13, which allows PRC residents or entities to register with qualified banks in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. However, remedial registration applications made by PRC residents that previously failed to comply with the SAFE Circular 37 continue to fall under the jurisdiction of the relevant local branch of SAFE. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from distributing profits to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary.

On January 26, 2017, SAFE issued the Notice on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange Control, or the SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years' losses before remitting the profits. Moreover, pursuant to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements and provide board resolutions, contracts, and other proof when completing the registration procedures in connection with an outbound investment.

**Regulations Relating to Anti-Monopoly Enforcement**

The PRC Anti-Monopoly enforcement agencies have in recent years strengthened enforcement under the PRC Anti-Monopoly Law. In March 2018, the State Administration for Market Regulation (the "SAMR"), was formed as a new governmental agency to take over, among other things, the Anti-Monopoly enforcement functions from the relevant departments under the MOFCOM, the National Development Reform Committee ("NDRC") and the pre-existing State Administration for Industry and Commerce, respectively. Since its inception, the SAMR has continued to strengthen Anti-Monopoly enforcement. In December 2018, the SAMR issued the Notice on Anti-Monopoly Enforcement Authorization, which grants authorities to its province-level branches to conduct Anti-Monopoly enforcement within their respective jurisdictions. In September 2020, the SAMR issued Anti-Monopoly Compliance Guideline for Operators, which requires, under the PRC Anti-Monopoly Law, operators to establish Anti-Monopoly compliance management systems to prevent Anti-Monopoly compliance risks. On February 7, 2021, the Anti-Monopoly Commission of the State Council officially promulgated the Anti-Monopoly Guidelines for Internet Platforms. Pursuant to an official interpretation from the Anti-Monopoly Commission of the State Council, the Anti-Monopoly Guidelines for Internet Platforms mainly covers five aspects, including general provisions, monopoly agreements, abusing market dominance, concentration of undertakings, and abusing of administrative powers eliminating or restricting competition. On June 24, 2022, the SCNPC passed the Amendments to Anti-Monopoly Law (the "Amendments to the AML") which have come into effect on August 1, 2022. The Amendments to the AML set out new substantive rules including safe harbor for monopoly agreements, introduced "stop-the-clock" mechanism and enhanced personal liability and monetary penalties for substantive violations.

As the Amendments to the AML are newly published and it still takes time for it to come into effect, we are unable to estimate its specific impact on our business, financial condition, results of operations and prospects and future acquisition of any PRC subsidiaries. We cannot assure you that our business operations will comply with such regulations and authorities' requirements in all respects. Any failure or perceived failure by us to comply such regulations and authorities' requirements may result in governmental investigations or enforcement actions, lawsuits or claims against us and could have an adverse effect on our business, financial condition and results of operations upon our future acquisition of PRC subsidiaries.

**Regulation on Information Protection on Networks**

On December 28, 2012, SCNPC issued Decision of the Standing Committee of the National People's Congress on Strengthening Information Protection on Networks, pursuant to which network service providers and other enterprises and institutions shall, when gathering and using electronic personal information of citizens in business activities, publish their collection and use rules and adhere to the principles of legality, rationality and necessarily, explicitly state the purposes, manners and scopes of collecting and using information, and obtain the consent of those from whom information is collected, and shall not collect and use information in violation of laws and regulations and the agreement between both sides; and the network service providers and other enterprises and institutions and their personnel must strictly keep such information confidential and may not divulge, alter, damage, sell, or illegally provide others with such information.

On July 16, 2013, the MIIT issued the Provisions on the Protection of Personal Information of Telecommunication and Internet User, which was effective as of September 1, 2013. The requirements under this order are stricter and wider compared to the above decision issued by the National People's Congress. According to the provisions, if a network service provider wishes to collect or use personal information, it may do so only if such collection is necessary for the services it provides. Furthermore, it must disclose to its users the purpose, method and scope of any such collection or usage, and must obtain consent from the users whose information is being collected or used. Network service providers are also required to establish and publish their protocols relating to personal information collection or usage, keep any collected information strictly confidential and take technological and other measures to maintain the security of such information. Network service providers are required to cease any collection or usage of the relevant personal information, and provide services for the users to de-register the relevant user account, when a user stops using the relevant Internet service. Network service providers are further prohibited from divulging, distorting or destroying any such personal information, or selling or providing such personal information unlawfully to other parties. In addition, if a network service provider appoints an agent to undertake any marketing or technical services that involve the collection or usage of personal information, the network service provider is required to supervise and manage the protection of the information. The provisions state, in broad terms, that violators may face warnings, fines, public exposure and, criminal liability whereas the case constitutes a crime.

On June 1, 2017, the Cybersecurity Law of the PRC promulgated in November, 2016 by SCNPC became effective. This law also absorbed and restated the principles and requirements mentioned in the aforesaid decision and order, and further provides that, where an individual finds any network operator collects or uses his or her personal information in violation of the provisions of any law, regulation or the agreement of both parties, the individual shall be entitled to request the network operator to delete his or her personal information; if the individual finds that his or her personal information collected or stored by the network operator has any error, he or she shall be entitled to request the network operator to make corrections, and the network operator shall take measures to do so. Pursuant to this law, the violators may be subject to: (i) warning; (ii) confiscation of illegal gains and fines equal to one to ten times of the illegal gains; or if without illegal gains, fines up to RMB1,000,000; or (iii) an order to shut down the website, suspend the business operation for rectification, or revoke business license. Besides, responsible persons may be subject to fines between RMB10,000 and RMB100,000.

On June 10, 2021, the SCNPC promulgated the PRC Data Security Law, which has been taken effect on September 1, 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data and information.

On August 20, 2021, the SCNPC promulgated the PRC Personal Information Protection Law, or the PIPL, which has taken effect in November 2021. In addition to other rules and principles of personal information processing, the PIPL specifically provides rules for processing sensitive personal information. Sensitive personal information refers to personal information that, once leaked or illegally used, could easily lead to the infringement of human dignity or harm to the personal or property safety of an individual, including biometric recognition, religious belief, specific identity, medical and health, financial account, personal whereabouts and other information of an individual, as well as any personal information of a minor under the age of 14. Only where there is a specific purpose and sufficient necessity, and under circumstances where strict protection measures are taken, may personal information processors process sensitive personal information. A personal information processor shall inform the individual of the necessity of processing such sensitive personal information and the impact thereof on the individual's rights and interests. Article 38 of the PIPL provides that where a personal information processor needs to provide personal information outside the territory of the PRC due to business or other needs, it shall meet any of the following conditions: (i) it shall pass the security evaluation organized by the CAC; (ii) it shall have been certified by a specialized agency for protection of personal information in accordance with the provisions of the CAC; (iii) it shall enter into a contract with the overseas recipient under the standard contract formulated by the CAC, specifying the rights and obligations of both parties; and (iv) it shall meet other conditions prescribed by laws, administrative regulations or the CAC. To provide the foundation and basic requirements for personal information protection and to implement Article 38 of the PIPL, the CAC passed the Measures for the Security Assessment of Outbound Data on July 7, 2022 which became effective on September 1, 2022 and published the Notice of the Cyberspace Administration of China on Seeking Public Comments on the Provisions on Standard Contracts for Cross-border Transfers of Personal Information (Exposure Draft) on June 30, 2022, and the National Information Security Standardization Technical Committee published for public comment the draft Practical Guide to Cybersecurity Standards – Technical Guidelines on Certification of Personal Information Cross-border Processing Activities on April 29, 2022. On February 22, 2023, the CAC promulgated the Measures for the Standard Contract for Outbound Transfer of Personal Information, along with the standard form of contract for outbound transfer of personal information, which became effective on June 1, 2023.

On December 28, 2021, the CAC published the Cybersecurity Review Measures (2021), which came into effect on February 15, 2022 and has replaced the current Cybersecurity Review Measures (2020). The Cybersecurity Review Measures provides that the operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. In addition, if an "online platform operator" that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. Based on a set of Q&A published on the official website of the State Cipher Code Administration in connection with the issuance of the Cybersecurity Review Measures (2021), an official of the said administration indicated that an online platform operator should apply for a cybersecurity review prior to the submission of its listing application with non-PRC securities regulators. Given the recency of the issuance of the Cybersecurity Review Measures (2021), there is a general lack of guidance and substantial uncertainties exist with respect to their interpretation and implementation. For example, it is unclear whether the requirement of cybersecurity review applies to follow-on offerings by an "online platform operator" that is in possession of personal data of more than one million users where the offshore holding company of such operator is already listed overseas.

**ITEM 4A. UNRESOLVED STAFF COMMENTS**

Not applicable.

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

**Overview**

We started our company in 2002 in Qingdao, Shandong Province, PRC with a single mission of becoming a producer of high-quality petfood for pet owners in China and worldwide. Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayments upon maturity, we suspended our production and normal business operations, and we were involved in certain legal proceedings beginning in November 2019. Although we resumed our operations in May 2020 factors including the Covid-19 pandemic, the increase in costs of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; decreased demand for sales of petfood, led to a dramatic decrease in our petfood sales revenue. Additionally, our remaining production facility was frozen by court order and became subject to Tiandihui's bankruptcy proceeding in 2022. On March 16, 2022, the People's Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors' application of bankruptcy liquidation of Qingdao Tiandihui Foodstuffs Co., Ltd., and it entered into bankruptcy proceedings. We decided to discontinue our petfood manufacturing business segment in the first quarter of 2023 due to the above operational challenges. Accordingly, we sought strategic alternatives to the petfood industry and entered the restaurant segment on October 31, 2021, when we acquired 51% equity interests of Far Ling's Inc and 100% equity interests of Bo Ling's Chinese Restaurant, Inc. and plan to focus on our restaurant segment.

We discontinued our restaurant business segment during the second quarter of 2024. The Company now focuses on the commercial real estate management. We believe this pivot to commercial real estate management is in the best interests of our shareholders due to high costs we were experiencing in the restaurant segment business line, and the Company believes it can obtain stable revenue from rental income and property appreciation income from the increasing demand in the commercial real estate market from small and medium sized enterprises Accordingly, beginning in 2024, we have been acquiring, leasing and managing commercial real estate properties that generate rental revenue under lease agreements with our commercial clients.

We are a holding company incorporated in the British Virgin Islands (incorporated on September 30, 2015) that owns all of the outstanding capital stock of TDH HK Limited, our wholly-owned Hong Kong subsidiary (TDH HK). We also own all of the outstanding capital stock of TDH Foods Limited, another wholly-owned Hong Kong subsidiary, and holds a 100% interest in TDH Income Corporation, a Nevada limited liability company. TDH HK, in turn, owned all of the outstanding capital stock of Tiandihui, our former operating subsidiary based in Qingdao City, Shandong Province, China, incorporated in April 2002 as a PRC limited liability company Tiandihui. TDH Foods Limited owns 100% of the outstanding capital stock of Qingdao Pet Foodstuffs, with its wholly-owned subsidiary of Tiandihui Foodstuffs Sales. Tiandihui Foodstuffs Sales was deregistered and dissolved in April 2025, while Tiandihui Pet Foodstuffs completed deregistration and dissolution in June 2025. TDH HK Limited owns 100% of the outstanding capital stock of Tiandihui Pet Foodstuffs, with its wholly-owned subsidiary of Beijing Chongai Jiujiu Cultural Communication Co., Ltd. On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed, and we fully disposed Tiandihui. In December 2023, the Company transferred all its ownership interests in Chongai Jiujiu to a third party. TDH Income Corporation owns 100% of the outstanding capital stock of Ruby21Noland LLC. Ruby21Noland LLC was incorporated in the State of Missouri on June 9, 2021. On October 31, 2021, TDH Income Corporation acquired 51% equity interests of Far Ling's Inc. On October 31, 2021, TDH Income Corporation acquired 100% equity interests of Bo Ling's Chinese Restaurant, Inc. In June 2024, the Company sold all its ownership interests in Far Ling's Inc and Bo Ling's Chinese Restaurant, Inc to third parties. On January 22, 2022, Beijing Wenxin was incorporated in Beijing City, PRC. On March 27, 2023, Qingdao Chihong was incorporated in Qingdao City, PRC. On April 30, 2024, Beijing Wenxin Co., Ltd. acquired 60% equity interests of Beijing Jingshi Commercial Management Co., Ltd. On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Vigour Management Limited. TDH Income Corporation owns 100% of the outstanding capital stock of HARDEES2470 LLC. HARDEES2470 LLC was incorporated in the State of Missouri on May 14, 2024. On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Hengzhuo Investment Limited. On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Beijing Ruihe Commercial Management Co., Ltd. On November 15, 2024, Beijing Ruihe Space Commercial Management Co., Ltd. was incorporated in Beijing City, PRC. On May 6, 2025, the Court announced that the bankruptcy liquidation of BVBA had been completed and the bankruptcy proceedings were completed. As a result, BVBA was fully disposed of as of December 31, 2025.

Our principal executive office is located at Beijing Wenxin Co., Ltd., Room 1104, Full Tower, 9 East Third Ring Middle Road, Chaoyang District, Beijing, PRC. Our telephone number is +86-178-1320-4760. Our website address is www.tiandihui.com. The information on our website is not part of this Annual Report.

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual filing. 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 "Risk Factors" and elsewhere in this annual filing.*

 

**Recent Developments**

In 2025, we strengthened our brand building and customer relationships. We believe we have enhanced our brand image and improved our market competitiveness by, among other things, upgrading service quality and optimizing the leasing process. Meanwhile, we are committed to establishing long-term and stable cooperative relationships with our customers, laying a solid foundation for the sustained growth of our business. We expect that revenue from our commercial real estate leasing business will continue to grow in the near term.

**Overview**

We were founded in 2002 in Qingdao, Shandong Province, the People's Republic of China, with the initial mission of becoming a manufacturer of high-quality pet food for pet owners in China and globally. Due to sharp increases in raw material market prices, insufficient operational efficiency of our production facilities, and our failure to repay bank loans upon maturity, we suspended production and normal business operations and became involved in certain legal proceedings commencing in November 2019. Although we resumed operations in May 2020, factors including the COVID-19 pandemic, rising production raw material costs, reduced order intake to avoid unprofitable orders and customers, and decreased demand for pet food products led to a significant decline in our pet food sales revenue.

In addition, our remaining production facility was frozen by court order and became subject to the bankruptcy proceeding of Tiandihui in 2022. On March 16, 2022, the People's Court of Huangdao District, Qingdao City, Shandong Province issued a civil ruling accepting the creditors' application for the bankruptcy liquidation of Qingdao Tiandihui Foodstuffs Co., Ltd., and such entity entered bankruptcy proceedings. As a result of the foregoing operational challenges, we decided to discontinue our pet food manufacturing business segment in the first quarter of 2023.

Accordingly, we pursued strategic alternatives outside the pet food industry and entered the restaurant business on October 31, 2021, through the acquisition of a 51% equity interest in Far Ling's Inc. and a 100% equity interest in Bo Ling's Chinese Restaurant, Inc., with a plan to focus on the restaurant segment.

We discontinued our restaurant business segment during the second quarter of 2024. The Company now focuses on commercial real estate management. We believe this strategic pivot to commercial real estate management is in the best interests of our shareholders due to the high costs incurred in our restaurant business. The Company expects to generate stable revenue from rental income and property appreciation, supported by growing demand for commercial real estate from small and medium-sized enterprises. Accordingly, commencing in 2024, we have been acquiring, leasing and managing commercial real estate properties that generate rental revenue under lease agreements with our commercial tenants. We generated revenue of $1.25 million from our commercial real estate business in 2025.

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***Revenues from continuing operations***

Historically before 2019, our revenue primarily was generated from sales of our petfood products to customers mainly through our overseas and domestic distribution agents, and online sales through various electronic commerce platforms. Revenue consists of the invoiced value for the sales, net of value-added tax ("VAT"), business tax, applicable local government levies and returns. Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayment upon maturity, we suspended our production and normal business operations, and we were involved in certain legal proceedings beginning in November 2019. Although we resumed our operations in May 2020 factors including the COVID-19 pandemic, the increase in cost of raw materials required for production; accepting less orders in an attempt to avoid unprofitable orders and customers; and decreased demand for sales of petfood, led to a decrease in our petfood revenue from $0.47 million in 2021, to $0.02 million in 2022 and to only $0 million in 2023. We decided to discontinue our petfood manufacturing business segment in the first quarter 2023. On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed, and our pet food business line has been substantially terminated.

On October 31, 2021, we acquired 51% equity interests of Far Ling's Inc and 100% equity interests of Bo Ling's Chinese Restaurant, Inc. and started our restaurant business. This resulted in an increase of $3.1 million, $3.2 and $1.3 million in food service revenue for the years ended December 31, 2022, 2023 and 2024, respectively.

We discontinued operations in the restaurant segment in the second quarter of 2024 while focusing on our commercial real estate management business. Our revenues from the commercial real estate management business were $1.25 million and $0.56 million for the years ended December 31, 2025 and 2024, respectively.

The following factors affected the revenues we derived from our operations from 2023 to 2025.

 

*Our ability to maintain our competitive advantages.* We decided to discontinue our petfood manufacturing business segment in the first quarter 2023 and focus on our restaurant segment, and we discontinued our restaurant segment in 2024 to focus on commercial real estate management going forward. However, the market conditions and consumer preferences change rapidly. If we fail to maintain our reputation and competitive advantages, tenant demand for our properties could decline. In addition, competition in the commercial real estate management industry is intense. We compete with numerous developers, owners and operators of real estate, many of which own properties similar to ours in the same submarkets in which our properties are located. If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates below those we currently charge or to offer more substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to retain tenants when our tenants' leases expire. We face significant competition in our market from several large companies and some smaller regional competitors. Large companies like Dobe Group and Shanghai Golden Union Business Management own numerous properties all over China. We expect our environment to continue to be highly competitive, and our results in any particular reporting period may be impacted by a contracting commercial real estate market or by new or continuing actions, property offerings or consolidation of our competitors and third-party partners, which may have a short-term or long-term impact on our results. We compete on the basis of property choice, quality, affordability, and location.

The existence of competitive alternatives could have a material adverse effect on our ability to lease space and on the level of rents we can obtain. This results in competition for both the tenants to occupy the properties and rental revenue. We believe that there are numerous factors that make our commercial properties highly desirable to retailers and customers, including:

● the quality, and location and diversity of our properties;

● our management and operational commitment;

● our focus on relationships with tenants, owners, developer and local governments; and

● our tenant mix.

There can be no assurance our strategies in making our properties desirable will be effective, and some strategies may be effective at improving some metrics while adversely affecting other metrics, which could have the overall effect of harming our business.

 

*Loss of key personnel.* Our revenue was derived from our competitive advantages in our products. We rely heavily on the expertise and leadership of our senior management to maintain our core competence. The loss of the service of any of our key personnel could adversely affect our business.

*Macro-economic conditions.* Our business, financial condition and results of operations may be materially adversely affected by a challenging economic climate, including adverse changes in interest rates, volatile commodity markets and inflation, contraction in the availability of credit in the market and reductions in consumer spending. A macroeconomic downturn, which decreases the income, may contribute to decreased occupancy at our properties.

***Costs and Expenses from continuing operations***

Our costs and expenses primarily include the following:

*Costs of revenues.* Cost of revenues of our commercial real estate management business consists primarily, lease and occupancy costs, depreciation and amortization costs and agency service costs.

*Selling, general and administrative expenses*. Selling, general and administrative expenses consist primarily of compensation expense for our corporate staff in supporting departments, communication costs, gasoline, welfare expenses, education expenses, professional fees (including consulting, audit and legal fees), travel and business hospitality expenses.

*Income tax expense.* We account for income taxes under the provisions of Section 740-10-30 of the FASB Accounting Standards Codification, which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or tax returns.

The following factors affect our cost of revenues and expense.

Cost of Revenues

Depreciation and Amortization. Our depreciation expenses are primarily driven by leasehold improvements relating to office space renovations. Depreciation of leasehold improvements is calculated based on cost, less estimated residual value, if any, using the straight-line method over the shorter of the estimated useful life of the improvements or the remaining lease term. Our amortization expenses consist of the amortization of right-of-use assets arising from our head lease arrangements, recognized over the respective lease terms in accordance with applicable accounting standards. Any impairment of our leasehold improvements or right-of-use assets, or any change in our depreciation and amortization accounting policies, may adversely affect our operating results.

General and Administrative Expenses

Prevailing salary levels. Our general and administrative expenses are impacted by prevailing salary levels. Although we have not been subject to significant wage inflation, a significant increase in the market rate for wages could harm our operating results and operating margin. Our ability to attract, retain, and expand our senior management and professional and technical staff is an important factor in determining our future success. From time to time, it may be difficult to attract and retain qualified individuals with the required expertise at competitive compensation levels.

***Results of Operations***

***For the years ended December 31, 2025, 2024 and 2023***

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31** | **December 31** | **December 31** | | |
|  | **2025** | **2024** | **2023** | **2025 vs**<br>**2024** | **2024 vs**<br>**2023** |
|  | **$** | **$** | **$** | | |
| Net revenues from continuing operations | 1251259 | 563726 | 754 | 121.96% | 74664.72% |
| Cost of revenues from continuing operations | 1263000 | 325304 | 976 | 288.25% | 33230.33% |
| Gross profit(loss) | (11741) | 238422 | (222) | -104.92% | -107497.3% |
| Gross margin | -0.94% | 42.29% | -29.39% | N/A | N/A |
| Selling expense | 49583 |  | 22 | 100% | -100% |
| General and administrative expenses | 1769395 | 1745247 | 3145280 | 1.38% | -44.51% |
| Stock-based compensation expense |  |  | 3040000 | N/A | -100% |
| Impairment of goodwill | - | 325832 | - | -100% | 100% |
| Loss from operations | (1830719) | (1832657) | (6185524) | -0.11% | 70.37% |

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***Revenues from continuing operations***

Our revenues from continuing operations were $1,251,259, $563,726 and $754 for the years ended December 31, 2025, 2024 and 2023, respectively. Our total revenues from continuing operations increased by $687,533 or 121.96% when comparing 2025 to 2024 and $562,972 or 74,664.72% when comparing 2024 to 2023.

The following table displays our revenues from our continuing operations by different marketing channels.

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| | | | |
|:---|:---|:---|:---|
|  | **December 31** | | |
|  | **2023** | **2025 vs**<br>**2024** | **2024 vs**<br>**2023** |
|  | **$** | $ | |
| Pet food domestic sales |  | N/A | -100% |
| commercial real estate management business revenue |  | 122.34% | 100% |
| Less: Sales tax and additional surcharge |  | 234.3% | 100% |
| Total revenues from continuing operations |  | 121.96% | 74664.72% |

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*Year Ended December 31, 2025 Compared to Year Ended December 31, 2024*

 

For the year ended December 31, 2025, revenue from our continuing commercial real estate management business increased by $687,533, or 121.96%. We have strengthened our brand image and enhanced our market competitiveness by upgrading service quality and optimizing the leasing process, among other measures. Meanwhile, we are committed to establishing long-term and stable cooperative relationships with our clients, laying a solid foundation for the sustained growth of our business. We expect revenue from our commercial real estate leasing business to maintain a growth trend in the near term.

 

 

*Year Ended December 31, 2024 Compared to Year Ended December 31, 2023*

For the year ended December 31, 2024, revenue generated from continuing commercial real estate management business increased by $563,726 or 100%, and there were no sales of petfood products. We discontinued our restaurant business segment during the second quarter of 2024 to focus on owning, operating and managing commercial real estate properties. Since the commercial real estate management business is a newly added a business line, revenue from our continuing business only amounted to $563,726 for the year ended December 31, 2024. We expect our revenue from the commercial real estate management business will continue to grow in the near future.

 

The revenue generated from different business lines from our continuing operations are set forth as following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31** | **2025 vs** | **2024 vs** |
|  | **2023** | **2024** | **2023** |
|  | **$** | $ | |
| Commercial real estate management business revenue |  | 122.34% | 100% |
| Others |  | N/A | -100% |
| Less: Sales tax and additional surcharge |  | 234.3% | 100% |
| Total revenues from continuing operations |  | 121.96% | 74664.72% |

---

 

*Year Ended December 31, 2025 Compared to Year Ended December 31, 2024*

 

For the year ended December 31, 2025, revenue from our continuing commercial real estate management business increased by $687,533, or 121.96%. We currently focus on commercial real estate property management. We expect revenue from our commercial real estate leasing business to maintain a growth trend in the near term.

 

*Year Ended December 31, 2024 Compared to Year Ended December 31, 2023*

For the year ended December 31, 2024, in terms of continuing operations, our revenue generated from the commercial real estate management business increased by $563,726 or 100% as compared to fiscal year 2023, and there was no sale of petfood products in fiscal year 2024 because it had been discontinued by the end of fiscal year 2023. We discontinued our restaurant business segment during the second quarter of 2024. The Company now focuses on the commercial real estate property management.

 

The revenue generated from different countries from our continuing operations are set forth as following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31** | **2025 vs** | **2024 vs** |
|  | **2023** | **2024** | **2023** |
|  | **$** | $ | |
| China |  | 132.13% | 67825.33% |
| U.S. |  | 28.57% | 100% |
| Less: Sales tax and additional surcharge |  | 234.3% | 100% |
| Total revenues from continuing operations |  | 121.96% | 74664.72% |

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*Year Ended December 31, 2025 Compared to Year Ended December 31, 2024*

For the year ended December 31, 2025, revenue generated from continuing commercial real estate management business grew 676,691 or 132.13% in the China domestic market and generated revenue of $15,275 or 28.57% in the United States. We currently focus on commercial real estate property management. We expect revenue from our commercial real estate leasing business to maintain a growth trend in the near term.

 

*Year Ended December 31, 2024 Compared to Year Ended December 31, 2023*

For the year ended December 31, 2024, revenue generated from continuing commercial real estate management business grew $512,157 or 100% in the China domestic market and generated revenue of $53,461 or 100% in the United States. We discontinued our restaurant business segment during the second quarter of 2024. The Company now focuses on its commercial real estate business. There was no such revenue for the years ended December 31, 2024 and 2023.

***Cost of revenues from continuing operations***

Our cost of revenues from our continuing operations is primarily comprised of lease and occupancy costs, depreciation and amortization costs and agency service costs. Our cost of revenues from continuing operations increased by $937,696 or 288.25% for the year ended December 31, 2025 as compared to the year ended December 31, 2024. This increase was in line with the growth in revenues from our continuing operations. Our cost of revenues as a percentage of revenue was 100.94% and 57.71% for the years ended December 31, 2025, and 2024, respectively.

Our cost of revenues from our continuing operations is primarily comprised of lease and occupancy costs, depreciation and amortization costs and agency service costs. Our cost of revenues from continuing operations, increased by $324,328 or 33,227.25% for the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to our focus on the commercial real estate management business in the second quarter of 2024. Our cost of revenues as a percentage of revenue was 57.71% and 129.39% for the years ended December 31, 2024, and 2023, respectively.

***Gross margin from continuing operations***

Our gross margin from continuing operations was -0.94% for the year ended December 31, 2025, compared with a gross margin of 42.29% for the year ended December 31, 2024. The decrease in gross margin in 2025 was mainly due to the reclassification of agency service costs and maintenance costs directly related to the leasing business from administrative expenses to cost of revenues.

Our gross margin from continuing operations was 42.29% for the year ended December 31, 2024, compared with a negative gross margin of -29.39% for the year ended December 31, 2023. The negative gross margin in fiscal year 2023 was primarily associated with limited petfood sales. The increase in gross margin in 2024 was mainly due to our focus on the commercial real estate property management service business line beginning in the second quarter of 2024. The commercial real estate property management business line has higher gross margins than the gross margins associated with petfood sales.

**Operating expenses from continuing operations** 

Operating expenses from our continuing operations were $1,818,978 and $2,071,079, for the years ended December 31, 2025 and 2024, respectively, a decrease of $252,101, or -12.17% in fiscal year 2025 as compared to fiscal year 2024. The ratio of operating expenses as a percentage of revenue decrease from 367.39% for the year ended December 31, 2024 to 145.37% for the year ended December 31, 2025.

Selling expense from our continuing operations was $49,583 and $0 for the years ended December 31, 2025, and 2024, respectively, an increase of $49,583 or 100%. Our selling expenses was $49,583 in 2025 as compared to $0 in 2024, mainly due to expenses incurred to expand its sales activities.

General and administrative expenses from our continuing operations were $1,769,395 and $1,745,247 for the years ended December 31, 2025 and 2024 respectively, representing an increase of $24,148, or 1.38%, in fiscal year 2025 as compared to fiscal year 2024. The main reason for the increase was mainly due to property management fees and depreciation expenses relating to additional properties.

Operating expenses from our continuing operations were $2,071,079 and $6,185,302, for the years ended December 31, 2024 and 2023, respectively, a decrease of $4,114,223, or 66.52% in fiscal year 2024 as compared to fiscal year 2023. The ratio of operating expenses as a percentage of revenue decreased from 819,951.18% for the year ended December 31, 2023 to 367.39% for the year ended December 31, 2024.

Selling expense from our continuing operations was $0 and $22 for the years ended December 31, 2024, and 2023, respectively, a decrease of $22 or $100%. Our selling expenses was $0 in 2024 as compared to 2023, mainly due to the company's management saving expenses.

General and administrative expenses from our continuing operations were $1,745,247 and $3,145,280 for the years ended December 31, 2024 and 2023 respectively, representing a decrease of $1,400,033, or $44.51%, in fiscal year 2024 as compared to fiscal year 2023. The main reason for the decrease was mainly due to decreased payroll expenses as a result of the decrease in the number of employees and the company's cost control efforts.

Impairment of goodwill was $0, $325,832 and $0 for the years ended December 31, 2025, 2024 and 2023, respectively. No goodwill impairment was recognized in 2025.

***Loss from operations from continuing operations*.**

Our loss from operations associated with our continuing operations was $1,830,719 for the year ended December 31, 2025, while our loss from operations was $1,832,657 for the year ended December 31, 2024. Our operating loss as a percentage of total revenues was negative 146.31% and 325.10%, for the years ended December 31, 2025 and 2024, respectively. The decrease in loss from operation was mainly due to the increase in revenue.

Our loss from operations associated with our continuing operations was $1,832,657 for the year ended December 31, 2024, while our loss from operations was $6,185,523 for the year ended December 31, 2023. Our operating loss as a percentage of total revenues was negative 325.10%, and 819,980.58% for the years ended December 31, 2024 and 2023, respectively. The decrease in loss from operations was mainly due to decreased operating expenses in 2024.

***Income taxes expense from continuing operations*.**

Due to our recurring operating losses for the years ended December 31, 2025, 2024 and 2023, we reported minimal income tax benefit for those years.

***Net loss from discontinued operations***

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On June 7, 2024, the Company sold its 51% equity interest in Far Ling's Inc. and 100% equity interest in Bo Ling's Chinese Restaurant, Inc. to third parties. As a result, the Company discontinued its restaurant business and started to focus on owning, operating and managing commercial real estate properties going forward. As a result, we reported $0, net income of $575,249 and net loss of $153,054 from discontinued operations associated with our restaurant business for the years ended December 31, 2025, 2024 and 2023, respectively.

On March 16, 2022, the People's Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors' application of bankruptcy liquidation of Tiandihui, and it entered into bankruptcy proceedings. On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed. In the consolidated statements of operations and comprehensive income (loss), results from discontinued operations is reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis. In order to present the financial effects of the continuing operations and discontinued operations, revenues and expenses arising from intra-group transactions are eliminated except for those revenues and expenses that are considered to continue after the disposal of the discontinued operations. Our net loss from discontinued operations amounted to $0, $0 and $15,095,547 for the years ended December 31, 2025, 2024 and 2023, respectively.

***Net loss***.

As a result of the above, we reported a total net income was $1,781,077 for the year ended December 31, 2025, compared with total net income of $2,500,561 for the year ended December 31, 2024. The decrease in our net income was attributable to losses recognized in connection with the disposal of Tiandihui Pet Foodstuffs and Tiandihui Foodstuffs Sales businesses, together with losses arising from the conclusion of the bankruptcy proceedings of BVBA.

We reported a total net income was $2,500,561 for the year ended December 31, 2024, compared to the net loss of $23,631,516 for the year ended December 31, 2023. The increase in our net income was due to increased revenue from our commercial real estate business segment and increased investment income for the year ended December 31, 2024.

**Liquidity and Capital Resources**

Our consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We discontinued our restaurant business segment in 2024 and shifted our focus to owning, operating and managing commercial real estate projects. Currently our revenue is substantially generated from the commercial real estate management business. Our business turnaround depends, in part, on our ability to successfully obtain and lease new properties. If we are not able to effectively manage, lease and acquire new properties that successfully generate revenue, we may not be able to grow and maintain our business as anticipated, and our revenue may decline and our future business, financial condition and results of operations may be materially adversely affected. There can be no assurances that future revenue or capital infusion will be sufficient to enable us to develop our business to a level where we will be profitable or continuously to generate positive cash flows.

For the year ended December 31, 2025, our revenue from the commercial real estate management business increased by approximately $0.69 million as compared to 2024, and we reported a net income of approximately $1.78 million and cash outflow from operating activities of approximately $1.78 million in 2025.

In assessing our liquidity, management monitors and analyzes our cash and cash equivalent, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of December 31, 2025, we had cash and cash equivalents of approximately $19.16 million. We also had short-term investments of approximately $14.53 million, which are highly liquid and can be converted into cash and used in our operations if needed.

Our major liabilities included accounts payable of $90,006, advances from customers of $255,383, due to related parties of $300,000, other current liabilities of $5,135,539, and current and non-current portion of operating lease liabilities of $921,524 and $2,860,197, respectively, as of December 31, 2025. Our working capital amounted to approximately $27.4 million as of December 31, 2025.

We are attempting to further improve our business profitability, generate sufficient cash flow from our operations to meet our operating needs on a timely basis, and obtain additional working capital funds through debt and equity financings in order to meet our anticipated cash requirements. We also plan to evaluate and identify suitable strategic or acquisition opportunities in order to expand our commercial real estate property management business. During the year ended December 31, 2025, our operating activities and financing activities both used cash, and our liquidity was primarily supported by net proceeds from sales of our short-term investment portfolio. Our short-term investment balance of approximately $14.53 million as of December 31, 2025 is highly liquid, and we expect to continue using this portfolio, together with cash on hand, to fund our operating and capital expenditure requirements. Going forward, we intend to improve our liquidity and capital sources through improving business profitability, generating cash flow from operations and exploring additional debt or equity financing possibilities. In order to fully implement our business plan and sustain continued growth, we may also need to raise capital from outside investors. Our expectation, therefore, is that we will seek to access the capital markets in both the U.S. and China to obtain additional funds as needed. At the present time, however, we do not have commitments of funds from any third parties. Based on the current operating plan, management believes that the above-mentioned measures collectively will provide sufficient liquidity for the Company to meet its future liquidity and capital requirement for at least 12 months from the date the audited financial statements were issued.

During the year ended December 31, 2025, our cash used in operating activities was $1,780,184, cash provided by investing activities was $6,235,605, and cash used in financing activities was $1,046,832, and the effect of prevailing exchange rates on our cash was $50,004. During the year ended December 31, 2024, our cash used in operating activities was $233,987, cash provided by investing activities was $2,781,030, and cash provided by financing activities was $0, and the negative effect of prevailing exchange rates on our cash was $508,863. During the year ended December 31, 2023, our cash used in operating activities was $564,396, cash used in investing activities was $6,067,051, and cash used in financing activities was $6,774, and the negative effect of prevailing exchange rates on our cash was $1,557,521.

Net cash used in operating activities for the year ended December 31, 2025 totaled $1,780,184. The activities were mainly comprised of a net income of $1,781,077, depreciation and amortization of $221,223, fair value change of short-term investments $10,801,316, a decrease in Operating lease liabilities of $924,186, a decrease in prepayment and other current net asset of $41,125, an increase in other current liabilities of $3,802,884, and a decrease in advances from customers of $67,256.

Net cash used in operating activities for the year ended December 31, 2024 totaled $233,987 (including cash flows of $1,762,390 provided by operating activities from our continuing operations and cash flows of $1,996,377 used in operating activities from discontinued operations). The activities were mainly comprised of a net income of $2,500,561, depreciation and amortization of $111,642, fair value change of short-term investments $6,671,948, Impairment of goodwill $325,832, an increase in Operating lease liabilities of $441,402, a decrease in prepayment and other current net asset of $1,660,998, an increase in other current liabilities of $4,420,782, and a decrease in advances from customers of $185,145.

Net cash used in operating activities for the year ended December 31, 2023 totaled $564,396 (including cash flows of $3,492,712 used in operating activities from our continuing operations and cash flows of $999,987 provided by operating activities from discontinued operations). The activities were mainly comprised of a net loss of $23,631,516, depreciation and amortization of $22,649, fair value change of short-term investments $2,644,576, inventory write-down of $69,677, stock-based compensation of 3,040,000, an increase in prepayment and other current net assets of $3,210,336, a decrease in other current liabilities of $1,234,226, and a decrease in accounts payable of $369,142.

Net cash provided by investing activities for the year ended December 31, 2025 totaled $6,235,605 from our continuing operations, primarily include purchase of property and equipment of $244,088, purchases of short-term investments of $60,393,565 and proceeds from sale of short-term investments of $66,873,258.

Net cash provided by investing activities for the year ended December 31, 2024 totaled $2,781,030 from our continuing operations, primarily include purchase of property and equipment of $1,881,370, proceeds from disposal of subsidiaries of $578,400, purchases of short-term investments of $46,777,749 and proceeds from sale of short-term investments of $50,944,982. There was no cash used in our discontinued operations during the year ended December 31, 2024.

Net cash used in investing activities for the year ended December 31, 2023 totaled $6,067,051 from our continuing operations, primarily include purchase of short-term investments of $37,066,925 and proceeds from sale of short-term investments of $31,024,365. There was no cash used in our discontinued operations during the year ended December 31, 2023.

For the year ended December 31, 2025, net cash used in financing activities from continuing operations was $1,046,832, consisting of $422,237 in repayments of short-term loans and $624,595 in payments to related parties.

For the year ended December 31, 2024, there was no cash provided by or used in financing activities.

For the year ended December 31, 2023, net cash provided by financing activities from continuing operations was $1,921,554, of which borrowing from related parties amounted to $1,928,329 and repayments to related parties of $6,774.

Our long-term future capital requirements will depend on many factors, including our level of revenue, the timing and extent of our spending to support the maintenance and growth of our operations, the expansion of our sales and the continued market acceptance of our products and projects.

We expect to incur additional costs associated with being a reporting company in the United States, primarily due to increased expenses that we incur to comply with the requirements of the Sarbanes-Oxley Act of 2002, as well as costs related to accounting and tax services, legal expenses and investor and stockholder-related expenses. These additional long-term expenses may require us to seek other sources of financing, such as additional borrowings or public or private equity or debt capital. The availability of these other sources of financing will depend upon our financial condition and results of operations as well as prevailing market conditions and may not be available on terms reasonably acceptable to us or at all.

***Regulatory Restrictions on Capital Injections***

We used proceeds from our initial public offering and subsequent offerings to fund our business. Accordingly, the following regulations regarding capital injections to foreign-invested enterprises must be followed.

*Chinese regulations relating to investments in offshore companies by Chinese residents*. SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Financing and Round-trip Investment through Offshore Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014. SAFE Circular 37 requires Chinese residents to register and update certain investments in companies incorporated outside of China with their local SAFE branch. SAFE also subsequently issued various guidance and rules regarding the implementation of SAFE Circular 37, which imposed obligations on Chinese subsidiaries of offshore companies to coordinate with and supervise any Chinese-resident beneficial owners of offshore entities in relation to the SAFE registration process.

We may not be aware of the identities of all of our beneficial owners who are Chinese residents. We do not have control over our beneficial owners and cannot assure you that all of our Chinese -resident beneficial owners will comply with SAFE Circular 37 and subsequent implementation rules. The failure of our beneficial owners who are Chinese residents to register or amend their SAFE registrations in a timely manner pursuant to SAFE Circular 37 and subsequent implementation rules, or the failure of future beneficial owners of our Company who are Chinese residents to comply with the registration procedures set forth in SAFE Circular 37 and subsequent implementation rules, may subject such beneficial owners or our Chinese subsidiaries to fines and legal sanctions, which may be substantial. Failure to register may also limit our ability to contribute additional capital to our Chinese subsidiaries and limit our Chinese subsidiaries' ability to distribute dividends to our Company. These risks may have a material adverse effect on our business, financial condition and results of operations.

China regulates loans to and direct investment in Chinese entities by offshore holding companies and there is governmental control of currency conversion. We are an offshore holding company conducting our operations in China through our wholly owned subsidiary Wenxin. As an offshore holding company, we may make loans and additional contributions to Wenxin subject to approval from government authorities.

Any loan to Wenxin, which is treated as a foreign-invested enterprise under Chinese law, is subject to Chinese regulations and foreign exchange loan registrations. In January 2003, the China State Development and Reform Commission, SAFE and Ministry of Finance jointly promulgated the Circular on the Interim Provisions on the Management of Foreign Debts, or the Circular 28, limiting the total amount of foreign debt a foreign-invested enterprise may incur to the difference between the amount of total investment approved by the Ministry of Commerce or its local counterpart for such enterprise and the amount of registered capital of such enterprise, and requiring registration of any such loans with SAFE.

In March 2015, SAFE issued the Circular Concerning the Reform of the Administration of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 19, which became effective in June 2015. SAFE Circular 19 regulates the conversion by a foreign-invested enterprise of foreign currency registered capital into RMB by restricting how the converted RMB may be used. Furthermore, SAFE promulgated a circular in June 2016, SAFE Circular 16, which further revises some clauses in the SAFE Circular 19. SAFE Circular 19 and 16 provide that the capital-account foreign exchange incomes of a domestic enterprise shall not be directly or indirectly used for expenditures that are forbidden by relevant laws and regulations, for purposes that are not included in the business scope approved by the applicable government authority, shall not be directly or indirectly used for investments in securities or for any other kind of wealth-managing investments than banks' principal-secured products unless otherwise prescribed by other laws and regulations, shall not be directly or indirectly used for issuing RMB entrusted loans (unless expressly permitted in the business scope approved by the competent governmental authorities) or repaying inter-enterprise loans (including advances by the third party) or repaying bank loans in RMB which have been sub-lent to third parties, shall not be used for granting loans to non-affiliated enterprises unless expressly permitted in the business scope and shall not be used for the construction or purchase of real estate not for self-use (except for real estate enterprises). In addition, SAFE supervises the flow and use of the RMB capital converted from foreign currency registered capital of a foreign-invested company by further focusing on ex post facto supervision and violations. These two circulars may limit our ability to use the net proceeds from this offering to invest in or acquire any other Chinese companies in China, which may adversely affect our liquidity and our ability to fund and expand our business in China.

***Capital Resources***

***As of December 31, 2025 and 2024***

The following table provides certain selected balance sheets comparisons between years ended December 31, 2025 and 2024:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | | |
|  | **2025** | **2024** |<br>**Fluctuation** |<br>**%** |
| **ASSETS** |  |  |  |  |
| Cash and cash equivalents | $19158155 | 15699562 | 3458593 | 22 |
| Short-term investments | 14531930 | 12952597 | 1579333 | 12 |
| Accounts receivable, net | 75346 | 5748 | 69598 | 1211 |
| Advanced to suppliers, net | 198401 | 37790 | 160611 | 425 |
| Prepayment and other current assets, net | 146385 | 103519 | 42866 | 41 |
| **Total current assets** | 34110217 | 28799216 | 5311001 | 18 |
| Property, plant and equipment, net | 2398192 | 2363989 | 34203 | 1 |
| Operating lease right-of-use assets | 3787265 | 2175456 | 1611809 | 74 |
| **Total non-current assets** | 6185457 | 4539445 | 1646012 | 36 |
| **Total assets** | $40295674 | $33338661 | 6957013 | 21 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |  |  |
| Accounts payable | $90006 | 122251 | (32245) | 26 |
| Deferred lease revenue | 255383 | 183173 | 72210 | 39 |
| Bank overdrafts |  | 73105 | (73105) | -100 |
| Short term loans - related parties |  | 261725 | (261725) | -100 |
| Taxes payable | 11215 | 14681 | (3466) | 24 |
| Due to related parties | 300000 | 200318 | 99682 | 50 |
| Operating lease liabilities, current | 921524 | 486121 | 435403 | 90 |
| Other current liabilities | 5135539 | 2859061 | 2276478 | 80 |
| **Total current liabilities** | 6713667 | 4200435 | 2513232 | 60 |
| Operating lease liabilities, non-current | 2860197 | 1738371 | 1121826 | 65 |
| **Total liabilities** | 9573864 | 5938806 | 3635058 | 61 |

---

We maintain cash and cash equivalents in mainland China, Hong Kong, New Zealand and U.S. on December 31, 2025 and 2024.

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| <br>**Country** | **2025** | **2024** |
| China (Mainland) | $1818139 | $1915855 |
| China (Hong Kong) | 1297551 | 63969 |
| Hong Kong (through a broker account) | 1954561 | 110502 |
| New Zealand (through a broker account) | 12869479 | 11690646 |
| U.S. | 1218425 | 1918590 |
| &nbsp;&nbsp;&nbsp;Total | $19158155 | $15699562 |

---

The majority of our cash balances at December 31, 2025 and 2024 are in form of USD and held in broker accounts in New Zealand and Hong Kong and bank accounts at financial institutions located in China. Cash held in banks in China is not insured. In 1996, the Chinese government introduced regulations relaxing restrictions on the conversion of the RMB; however, restrictions still remain, including restrictions on foreign-invested entities. Foreign-invested entities may only buy, sell or remit foreign currencies after providing valid commercial documents at only those banks authorized to conduct foreign exchanges. Furthermore, the conversion of RMB for capital account items, including direct investments and loans, is subject to China government approval. Chinese entities are required to establish and maintain separate foreign exchange accounts for capital account items. We cannot be certain Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB, especially with respect to foreign exchange transactions. Accordingly, cash on deposit in banks in China is not readily deployable by us for use outside of China.

***Cash and cash equivalents and restricted cash***

As of December 31, 2025, cash and cash equivalents were 19,158,155, compared to $15,699,562, at December 31, 2024. The components of this increase of $3,458,593 in cash and cash equivalents are reflected below.

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Net cash used in operating activities | $(1780184) | $(233987) |
| Net cash provided by investing activities | 6235605 | 2781030 |
| Net cash used in financing activities | (1046832) |  |
| Exchange rate effect on cash and restricted cash | 50004 | (508863) |
| Net cash inflow (outflow) | $3458593 | $2038180 |

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***Short-term investments***

During the years ended December 31, 2025 and 2024, the Company acquired equity securities of certain publicly listed companies through various open market transactions. The Company's investments in marketable securities are accounted for pursuant to ASC 321 and reported at their readily determinable fair value as quoted by market exchanges in the consolidated balance sheets with changes in fair value recognized in earnings. Changes in fair value include realized gain of approximately $7.47 million and unrealized income of approximately $3.33 million for the year ended December 31, 2025. Changes in fair value include realized gain of approximately $3.37 million and unrealized income of approximately $0.44 million for the year ended December 31, 2024.

***Accounts receivable***

Net accounts receivable as of December 31, 2025 were $75,346, an increase of $69,598 compared to $5,748, as of December 31, 2024. There was no allowance for credit losses recorded for the years ended December 31, 2025 and 2024, respectively.

***Due to related parties***

As of December 31, 2025, the balance of due to related parties was $300,000, an increase of $99,682 as compared to $200,318 on December 31, 2024. The balance of due to related parties represented expenses incurred by related parties in the ordinary course of business, expenses paid by related parties on behalf of the Company as well as the loans the Company obtained from related parties for working capital purpose. The loans owed to the related parties are interest free, unsecured and repayable on demand.

***Property, plant and equipment, net***

Net property, plant and equipment as of December 31, 2025 was $2,398,192, an increase of $34,203 compared to $2,363,989 as of December 31, 2024. The increase in balance of property, plant and equipment was mainly due to the leasehold improvement for office during fiscal year 2025. Depreciation expense for the years ended December 31, 2025 and 2024 was $221,223 and $111,642, respectively.

***Accounts payable***

Accounts payable represent our commercial credit offered to the suppliers, and notes payable were the bank acceptance notes to suppliers.

Accounts payable decreased by $32,245 to $90,006 as of December 31, 2025, from $122,251 as of December 31, 2024, mostly due to commercial real estate accounts payables.

 ***Other current liabilities***

Other current liabilities primarily consist of amounts payable to third-party service providers and rental security deposits payable to tenants.

Other current liabilities increased to $5,135,539 as of December 31, 2025, from $2,859,061 as of December 31, 2024, mainly due to accrued fees payable to third parties and additional rental security deposits received from tenants during the fiscal year ended December 31, 2025.

***Taxes payable***

Taxes payable represent the accrued enterprise income tax at year end.

The balance of taxes payable as of December 31, 2025 was $11,215, representing a decrease of $3,466, or 23.61%, compared with a balance of $14,681 as of December 31, 2024.

***Tabular Disclosure of Contractual Obligations***

We have certain potential commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments.

As of December 31, 2025, we had the following contractual obligations:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** |
| <br>***Contractual Obligations*** | ***Total*** | ***Less than<br> 1 year*** | ***1-3 years*** | ***3-5 years*** | ***More than<br> 5 years*** |
| &nbsp;&nbsp;&nbsp;Lease Obligations | $3781721 | 1042151 | 2479138 | 260432 | - |
| **Total** | $3781721 | $1042151 | $2479138 | $260432 | $- |

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The Company has signed 18 commercial real estate lease agreements. The remaining lease term of the Company's leases ranges from approximately 4 years to 5 years.

***Off-Balance Sheet Arrangements***

Under SEC regulations, we are required to disclose off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have:

● Any obligation under certain guarantee contracts,

● Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets,

● Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in shareholder equity in our statement of financial position, and

● Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us.

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.

***Trend Information***

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events 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.

**Critical Accounting Policies**

The discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these audited consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We evaluate our estimates on an ongoing basis, including those related to revenue recognition and income taxes. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making the judgments we make about the carrying values of our assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates.

The critical accounting policies summarized in this section are discussed in further detail in the notes to the audited consolidated financial statements appearing elsewhere in this Annual Report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

***Use of Estimates***

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for credit losses, estimates used in lease accounting and income taxes including the valuation allowance for deferred tax assets. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.

***Impairment of Long-Lived Assets and Goodwill***

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. Long-lived assets are assets that are expected to provide economic benefits over a period greater than one year and are not intended for sale in the ordinary course of business; the Company's long-lived assets include property, plant and equipment (PP&E), intangibles, and operating lease right-of-use (ROU) assets.

The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset's estimated fair value and its book value. The Company recorded impairment loss on long-lived assets other than goodwill of $0, $0 and $1,964 for the years ended December 31, 2025, 2024 and 2023, respectively.

The Company's goodwill is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. In testing for goodwill impairment, the Company compares the fair value of its reporting unit to its carrying value including the goodwill of that unit. If the carrying value, including goodwill, exceeds the reporting unit's fair value, the Company will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit's fair value. The loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. The Company recorded impairment of goodwill of 0, $325,832 and $0 for the years ended December 31, 2025, 2024 and 2023, respectively.

***Lease Commitments***

On January 1, 2019, the Company adopted Accounting Standards Update ("ASU") No. 2016-02, Leases (together with all amendments subsequently issued thereto, "ASC Topic 842"), using the modified retrospective method. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of electing this transition method, previously reported financial information has not been restated to reflect the application of the new standard to the comparative periods presented. The Company elected the package of practical expedients permitted under the transition guidance within ASC Topic 842, which among others, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheet for new or existing lease arrangements with terms of 12 months or less. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. In addition, the Company elected the land easement transition practical expedient and did not reassess whether an existing or expired land easement is a lease or contains a lease if it has not historically been accounted for as a lease.

The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company's incremental borrowing rate, on a secured basis. The lease term includes option renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives.

Payments made under operating leases are charged to the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease period. The Company does not have finance lease arrangements as of December 31, 2025 and 2024.

***Loss Contingencies***

The Company records accruals for certain of its outstanding legal proceedings or claims when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. When a loss contingency is not both probable and estimable, the Company does not record an accrued liability but discloses the nature and the amount of possible loss, if material, in the notes to the consolidated financial statements.

The Company reviews the developments in contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. The Company makes adjustments to provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves complex judgments about future events. Management is often unable to estimate the loss or a range of loss, particularly where (i) the damages sought are indeterminate, (ii) the proceedings are in the early stages, or (iii) there is a lack of clear or consistent interpretation of laws specific to the industry-specific complaints among different jurisdictions. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including eventual loss, fine, penalty or business impact, if any.

***Revenue Recognition***&nbsp;&nbsp;&nbsp;&nbsp;

*Lease revenue*

The Company recognizes lease revenue under ASC 842, *Leases*, and all the lease contracts are operating leases. The Company has elected to exclude from revenue and expenses sales taxes and other similar taxes collected from its tenants. Under the commercial real estate business lines, the Company entered into property management agreements with the property owners, pursuant to which the Company leases the commercial real estate properties (primarily office space) directly from the property owners and is obligated to make monthly lease payment to the property owners regardless of whether the leased commercial property is subsequently rented out or not to subtenants. The Company then subleases those properties to subtenants, for which it selects qualified subtenants, negotiates and establishes rental terms and pricing, collects rental payments, resolves disputes, and bears the credit risk of rental fee collection. The Company believes it serves as a principal in these arrangements and accordingly records rental fees collected from subtenants on a gross basis.

Revenue under the commercial real estate business line consists of two components:

Lease revenue represents the fixed rental fees charged to subtenants for the right to use the leased properties. This revenue is recognized on a straight-line basis over the lease term in accordance with ASC 842.

Property management fee revenue represents fees charged to subtenants for property management services, including tenant coordination, maintenance oversight, and related services. Although these fees are contractually separate from the base rent, the Company has elected the practical expedient under ASC 842 to combine the lease and non-lease components and account for the combined arrangement as a single operating lease, as the lease component is predominant. Accordingly, property management fee revenue is also recognized on a straight-line basis over the lease term consistent with the lease revenue component.

Prior to moving into the property, subtenants are generally required to provide the Company with a rental retainer equal to approximately two months of rental fees. Pursuant to the terms of the rental agreements, the retainer may be applied against the subtenant's unpaid balance of rental or other fees. For the years ended December 31, 2025 and 2024, the Company recognized total lease revenue of $1,251,259 and $563,726, respectively, from its commercial real estate property management business.

Management has concluded that the disaggregation level is the same under both the revenue standard and the segment reporting standard. Revenue under the segment reporting standard is measured on the same basis as under the revenue standard. See Note 12 for information regarding revenue disaggregation by product lines, marketing channels and geographical regions.

Contract liabilities are presented as deferred lease revenue on the consolidated balance sheets, which represents advance lease payments received from subtenants prior to the commencement of the related lease period. These amounts are recognized as lease revenue on a straight-line basis over the lease term as the Company satisfies its obligation to provide the subtenant with the right to use the leased property during the corresponding period. As of December 31, 2025 and 2024, the Company recorded contract liabilities of $255,383 and $183,173, respectively, which were presented as advances from customers on the accompanying consolidated balance sheets. During the years ended December 31, 2025, 2024 and 2023, the Company recognized $1,188,848, $512,156 and $0 of contract liabilities as revenue, respectively.

***Foreign Currency Translation***

The accompanying consolidated financial statements are presented in United States Dollar ("$"), which is the reporting currency of the Company. The functional currency of TDH Holdings, TDH HK, TDH Foods, TDH Income Corporation, Ruby21Noland LLC, HARDEES2470 LLC, Vigour Management Limited, Hengzhuo Investment Limited, and TDH Foods Limited is the United States Dollar. The functional currency of the functional currency of our subsidiaries located in China, is Renminbi ("RMB"). The functional currency of TDH Group BVBA is Euro ("€").

For the subsidiaries whose functional currencies are RMB and Euro, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income or loss. Transaction gains and losses are reflected in the consolidated statements of operations.

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purpose of preparing the consolidated financial statements were as follows (USD$1=RMB):

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| | | | | |
|:---|:---|:---|:---|:---|
| **Period Covered** | **Balance<br> Sheet<br> Date Rates** | **Balance<br> Sheet<br> Date Rates** | **Average<br> Rates** | **Average<br> Rates** |
| &nbsp;&nbsp;&nbsp;Year ended December 31, 2025 |  | 7.0288 |  | 7.1429 |
| &nbsp;&nbsp;&nbsp;Year ended December 31, 2024 |  | 7.1884 |  | 7.1217 |

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The exchange rates used to translate amounts in Euro into U.S. Dollars for the purpose of preparing the consolidated financial statements were as follows (USD$1=€):

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| | | | | |
|:---|:---|:---|:---|:---|
| **Period Covered** | **Balance<br> Sheet<br> Date Rate** | **Balance<br> Sheet<br> Date Rate** | **Average<br> Rate** | **Average<br> Rate** |
| &nbsp;&nbsp;&nbsp;Year ended December 31, 2025 |  | 0.8535 |  | 0.8822 |
| &nbsp;&nbsp;&nbsp;Year ended December 31, 2024 |  | 0.9552 |  | 0.9503 |

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***Fair Value of Financial Instruments***

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurement for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

The Company measures certain financial assets, including the investment under the measurement alternative method and equity method on other-than-temporary basis, intangible assets and fixed assets at fair value when an impairment charge is recognized.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 — Unobservable inputs which are supported by little or no market activity.

Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

For certain of the Company's financial instruments, including cash and cash equivalents, restricted cash, short-term investment, accounts receivable, advances to suppliers, prepayments and other current assets, accounts payable, advances from customers, taxes payable, bank overdrafts, short term loans and other current liabilities, the carrying amounts approximate their fair values due to the short maturities.

***Recently Issued Accounting Pronouncements***

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, that requires disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker and included within each reported measure of segment profit or loss. The standard also requires disclosure of the composition of other segment items included in the measure of segment profit or loss that are not separately disclosed. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We do not expect the adoption of this accounting standard to have an impact on our Consolidated Financial Statements but will require certain additional disclosures.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, that requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates. The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold. The amendments in this accounting standard are effective for fiscal years beginning after December 15, 2024, on a prospective basis. Early adoption and retrospective application are permitted. We do not expect the adoption of this accounting standard to have an impact on our Consolidated Financial Statements but will require certain additional disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, that requires disclosure of the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense line item on the income statement. The standard also requires a qualitative description of other amounts included in each relevant expense line item on the income statement that are not separately disclosed. In addition, entities are required to disclose the nature and amount of selling expenses. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. We do not expect the adoption of this accounting standard to have an impact on our Consolidated Financial Statements but will require certain additional disclosures.

In 2025, the FASB issued several additional Accounting Standards Updates, including those related to internal-use software, share-based consideration from customers, purchased financial assets, hedge accounting, government grants, and various codification improvements. These standards are effective in future fiscal periods, with early adoption permitted in certain cases. The Company is evaluating the applicability and potential impact of these new standards. However, it does not currently expect any material effects on its consolidated financial statements upon adoption.

**Impact of Inflation**

We do not believe the impact of inflation on our Company is material. Our operations are in China, and China's inflation rates have been relatively stable in the last three years: 0% in 2025, 0.8% in 2024 and 2.6% in 2023.

**Impact of Foreign Currency Fluctuations**

We do not believe the impact of foreign currency fluctuations on our Company is material. Regarding purchase of raw materials, we are subject to commodity price risks arising from price fluctuations in the market prices of the raw materials. We have generally been able to pass on cost increases through price adjustments. However, the ability to pass on these increases depends on market conditions influenced by the overall economic conditions in China.

Most of our oversea sales are denominated in US dollars, for which our oversea sales are exempted from the risk of foreign currency fluctuation.

We have not had any foreign currency investments hedged by currency borrowings or other hedging instruments. We manage our price risks through productivity improvements and cost-containment measures.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Directors and senior management** 

The following table sets forth our executive officers and directors, their ages and the positions held by them as of April 21, 2025:

---

| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position** |
| Dandan Liu | 38 | Chief Executive Officer, Class A Director |
| Feng Zhang | 43 | Chief Financial Officer, Class A Director |
| Caifen Zou<sup>(1) (2) (3)</sup> | 61 | Class B Director, independent |
| Xu Luo <sup>(1) (2) (3)</sup> | 34 | Class B Director, independent |
| Owens Meng <sup>(1) (2) (3)</sup> | 48 | Class C Director, independent |

---

(1) Member
of the Audit Committee.

(2) Member
of the Compensation Committee.

(3) Member
of the Nominating and Corporate Governance Committee.

*Dandan Liu* was appointed as the Company's Chief Executive Officer effective as of August 2, 2019 and Chair on September 15, 2021. Dandan Liu has served as a Class A director of the Company since February 2019. Ms. Liu founded Beijing Houxin Investments Co., Ltd. in June 2012 and served as its Chief Executive Officer and Chairman from June 2012 to July 2020. Ms. Liu's valuable entrepreneurial, management, and investment experience together with her in-depth knowledge of the Company provide her with the qualifications and skills to serve as a director of our Company.

*Feng Zhang* was appointed as the Company's Chief Financial Officer on February 19, 2020. From August 2018 to September 2019, Feng Zhang worked as Senior Accounting Manager for Beijing Longguang Energy Technology Co., Ltd. From July 2017 to July 2018, Mr. Zhang worked as Accounting Manager for Hebei Yinlong Renewable Energy Co., Ltd. From March 2015 to June 2017, Mr. Zhang worked as Audit Manager for Beijing Xinghua Certified Public Accountants Firm (Partnership). From June 2006 to February 2015, Mr. Zhang worked as Accounting Manager for Boda Instrument Group Co., Ltd. Mr. Zhang is a Certified Public Accountant and received his bachelor degree in Assets Appraisal from Hebei Agricultural University.

*Caifen Zou* has served as Senior Advisor of Shandong Renhe Guarantee Company since August 2019. From December 1993 to July 2019, Ms. Zou has served in a number of senior executive roles within CITIC Bank Weihai Branch, including senior manager of Personal Credit Department, general manager of Retail Banking Department, and deputy section chief of Accounting Department, etc. Ms. Zou received her Associate's degree in Administration Management from Shandong Normal University, and held Intermediate Accountant Qualification Certificate and Intermediate Economist Qualification Certificate in China. The Board of Directors determined that Ms. Zou should serve as our director based on her experience and expertise in accounting, management and internal controls.

*Xu Luo* is an independent director of the company. Mr. Luo has held various positions with Beijing Jingdong Lianhang Real Estate Consultants Co., Ltd since 2012 progressing from Marketing Specialist to General Manager. He currently is the General Manager, where he is responsible for the overall management and operations of the company, which position he has held since April 2023. From August 2021 through March 2023, he was the General Manager of the business division. From April 2015 through July 2021, he served as the regional director. From September 2012 to March 2015, he was a marketing specialist. The Board of Directors determined that Mr. Luo should serve as our director based on his experience in business management and real estate matters.

*Owens Meng* is an independent director. Since September 2013, Owens Meng has been an audit partner of an accounting firm registered with PCAOB in the United States. From November 2007 to September 2013, he served as chief representative of Sherb Consulting LLC Beijing Representative Office, and managing director of Sherb & Co, LLP, a mid-sized accounting firm which has audited more than 25 China-based, US publicly traded companies. From July 2003 to October 2007, Mr. Meng worked as an audit manager for Grant Thornton Beijing. Mr. Meng received his CPA permit from the state of Delaware, and is a member of China Institute of Certified Public Accountants (CICPA), and a Certified Internal Auditor of the Institute of Internal Auditors. Mr. Meng holds a Bachelor's degree in accounting and economics from Beijing Technology and Business University. Mr. Meng had served as an independent director of China Customer Relations Centers, Inc. (Nasdaq: CCRC) from September 2014 to July 2021, and has served as an independent non-executive director of YuanShengTai Dairy Farm Limited, a company listed on HongKong Stock Exchange (HKEx: 1431) since September 2018. Mr. Meng was nominated as a director because of his experience in auditing, US GAAP and compliance issues.

Under British Virgin Islands law, our directors have a duty to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association. We have the right to seek damages if a duty owed by our directors is breached. The functions and powers of our board of directors include, among others:

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

● authorizing the payment of donations to religious, charitable, public or other bodies, clubs, funds or associations as deemed advisable;

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

● executing checks, promissory notes and other negotiable instruments on behalf of the company; and maintaining or registering a register of mortgages, charges or other encumbrances of the company.

A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he or she is interested. A director must promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into. A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction.

The directors may receive such remuneration as our board of directors may determine from time to time. Each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our board of directors or committees of our board of directors or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors. Our board of directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party.

A director is not required to hold shares as a qualification to office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Compensation** 

The following table shows the annual compensation earned for the years ended December 31, 2025 and 2024 to our principal executive officers.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name and principal position** | **Year** | **Salary <br> ($)** | **Bonus <br> ($)** | **Total Paid<br> ($)** |
| Dandan Liu | 2025 | 130000<sup>(1)</sup> | 300000 | 430000 |
| &nbsp;&nbsp;&nbsp;CEO and director | 2024 | 130000<sup>(1)</sup> | 235070 | 365070 |
| Feng Zhang | 2025 | 58000<sup>(1)</sup> |  | 58000 |
| &nbsp;&nbsp;&nbsp;CFO | 2024 | 58000<sup>(1)</sup> |  | 58000 |

---

(1) Includes
$10,000 received as compensation for serving as a director.

*Compensation Committee Interlocks and Insider Participation*

None of our officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more officers serving as a member of our board of directors.

**Director Compensation**

Directors are entitled to receive compensation for their actual travel expenses for each Board meeting attended. We paid $10,000 compensation to each of our directors during each of the years ended December 31, 2025 and 2024.

**Limitation of Director and Officer Liability**

Under British Virgin Islands law, each of our directors and officers, in performing his or her functions, is required to act honestly and in good faith with a view to our best interests and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Our memorandum and articles of association provide that, to the fullest extent permitted by British Virgin Islands law or any other applicable laws, our directors will not be personally liable to us or our shareholders for any acts or omissions in the performance of their duties. Such limitation of liability does not affect the availability of equitable remedies such as injunctive relief or rescission. These provisions will not limit the liability of directors under United States federal securities laws.

We may indemnify any of our directors or anyone serving at our request as a director of another entity against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings. We may only indemnify a director if he or she acted honestly and in good faith with the view to our best interests and, in the case of criminal proceedings, the director had no reasonable cause to believe that his or her conduct was unlawful. The decision of our board of directors as to whether the director acted honestly and in good faith with a view to our best interests and as to whether the director had no reasonable cause to believe that his or her conduct was unlawful, is in the absence of fraud sufficient for the purposes of indemnification, unless a question of law is involved. The termination of any proceedings by any judgment, order, settlement, conviction or the entry of no plea does not, by itself, create a presumption that a director did not act honestly and in good faith and with a view to our best interests or that the director had reasonable cause to believe that his or her conduct was unlawful. If a director to be indemnified has been successful in defense of any proceedings referred to above, the director is entitled to be indemnified against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by the director or officer in connection with the proceedings.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors or officers under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable as a matter of United States law.

**Retirement Benefits**

As of December 31, 2025, we have contributed to the government-mandated employee welfare and retirement benefit plan and provided pension, retirement or similar benefits to its employees. The PRC regulations require us to pay the local labor administration bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The local labor administration bureau, which manages various investment funds, will take care of employee retirement, medical and other fringe benefits. We have no further commitments beyond our monthly contribution.

**Employment Agreements**

*Employment agreement with Dandan Liu, CEO*

On August 1, 2025, TDH Holdings, Inc. renewed the employment agreement with Dandan Liu to serve in the role of Chief Executive Officer for the initial period of 3 years (commencing as of August 1, 2025 and terminating on July 31, 2028), which term may be automatically renewed for another 3 years unless either party to the agreement terminates the agreement at least 60 days prior to the expiration of the term. Under the terms of this agreement, Ms. Liu's annual salary is USD 120,000 payable in 12 equal monthly installments until July 31, 2028. Ms. Liu may be eligible to receive an annual bonus in the amount of 10% of the growth in book value as of the last fiscal year end, subject to review of corporate performance goals set forth by the Compensation Committee. The Compensation Committee will have the sole discretion whether Ms. Liu is entitled to the bonus and the amount of the payment, if any. The employment agreement may be terminated by either party upon 60 days advance notice to the other party. The Company will reimburse Ms. Liu for all reasonable out of pocket expenses in connection with travel, entertainment and other expenses incurred in the performance of her duties. The agreement also contains certain confidentiality, non-disclosure and other provisions that are customary to the agreements of this nature.

*Employment agreement with Feng Zhang, CFO*

On January 4, 2024, TDH Holdings, Inc. renewed the employment agreement with Feng Zhang to serve in the role of Chief Financial Officer for the initial period of three years, (commencing as of January 4, 2024 and terminating on January 3, 2027). Under the terms of this agreement, Mr. Zhang's annual salary is USD 48,000 payable in 12 equal monthly installments. The employment agreement may be terminated by either party upon 15-day advance notice to the other party. The Company will reimburse Mr. Zhang for all reasonable out of pocket expenses in connection with travel, entertainment and other expenses incurred in the performance of his duties. The agreement also contains certain confidentiality, non-disclosure and other provisions that are customary to the agreements of this nature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Board Practices** 

*Composition of Board; Risk Oversight*

Our Board of Directors presently consists of five directors. The Board membership is divided into three classes, Class A, B and C, respectively, as nearly equal in number as the total number of directors permits. Class C directors will face re-election at our next annual meeting of shareholders and every three years thereafter. Class A directors will face re-election at our second annual meeting of shareholders and every three years thereafter. Class B directors will face re-election at our third annual meeting of shareholders and every three years thereafter.

Except as noted above, there are no family relationships between any of our executive officers and directors. Officers are elected by, and serve at the discretion of, the board of directors. Our board of directors shall hold meetings on at least a quarterly basis. As a smaller reporting company under the NASDAQ rules we are only required to maintain a board of directors comprised of at least 50% independent directors, and an audit committee of at least two members, comprised solely of independent directors who also meet the requirements of Rule 10A-3 under the Securities Exchange Act of 1934. There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unless so fixed by us in a general meeting. There are no other arrangements or understandings pursuant to which our directors are selected or nominated. Our board plays a significant role in our risk oversight. The board makes all relevant Company decisions. As such, it is important for us to have our Chief Executive Officer serve on the board as he plays key roles in the risk oversight or the Company. As a smaller reporting company with a small board of directors, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters.

*Director Independence*

Our board has reviewed the independence of our directors, applying the NASDAQ independence standards. Based on this review, the board determined that each of Caifen Zou, Xu Luo, and Owens Meng are "independent" within the meaning of the NASDAQ rules. In making this determination, our board considered the relationships that each of these non-employee directors has with us and all other facts and circumstances our board deemed relevant in determining their independence. As required under applicable NASDAQ rules, we anticipate that our independent directors will meet on a regular basis as often as necessary to fulfill their responsibilities, including at least annually in executive session without the presence of non-independent directors and management.

*Board Committees*

Currently, three committees have been established under the board: the Audit Committee, the Compensation Committee and the Nominating Committee.

The Audit Committee is responsible for overseeing the accounting and financial reporting processes of our company and audits of the financial statements of our company, including the appointment, compensation and oversight of the work of our independent auditors. The Compensation Committee of the board of directors reviews and makes recommendations to the board regarding our compensation policies for our officers and all forms of compensation and also administers our incentive compensation plans and equity-based plans (but our board retains the authority to interpret those plans). The Nominating Committee of the board is responsible for the assessment of the performance of the board, considering and making recommendations to the board with respect to the nominations or elections of directors and other governance issues. The nominating committee considers diversity of opinion and experience when nominating directors.

*Audit Committee*

The Audit Committee will be responsible for, among other matters:

● appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm;

● discussing with our independent registered public accounting firm the independence of its members from its management;

● reviewing with our independent registered public accounting firm the scope and results of their audit;

● approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;

● overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC;

● reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements;

● coordinating the oversight by our board of directors of our code of business conduct and our disclosure controls and procedures;

● establishing procedures for the confidential and/or anonymous submission of concerns regarding accounting, internal controls or auditing matters; and

● reviewing and approving related-party transactions.

Our Audit Committee currently consists of Caifen Zou, Xu Luoand Owens Meng, with Owens Meng serving as chair of the Audit Committee. Our board has affirmatively determined that each of the members of the Audit Committee meets the definition of "independent director" for purposes of serving on an Audit Committee under Rule 10A-3 of the Exchange Act and NASDAQ rules. In addition, our board has determined that Owens Meng qualifies as an "audit committee financial expert" as such term is currently defined in Item 407(d)(5) of Regulation S-K and meets the financial sophistication requirements of the NASDAQ rules.

*Compensation Committee*

The Compensation Committee will be responsible for, among other matters:

● reviewing and approving, or recommending to the board of directors to approve the compensation of our CEO and other executive officers and directors;

● reviewing key employee compensation goals, policies, plans and programs;

● administering incentive and equity-based compensation;

● reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and

● appointing and overseeing any compensation consultants or advisors.

Our Compensation Committee currently consists of Caifen Zou, Xu Luo and Owens Meng, with Xu Luo serving as chair of the Compensation Committee. Our board has affirmatively determined that each of the members of the Compensation Committee meets the definition of "independent director" for purposes of serving on Compensation Committee under NASDAQ rules.

*Nominating Committee*

The Nominating Committee will be responsible for, among other matters:

● selecting or recommending for selection candidates for directorships;

● evaluating the independence of directors and director nominees;

● reviewing and making recommendations regarding the structure and composition of our board and the board committees;

● developing and recommending to the board corporate governance principles and practices;

● reviewing and monitoring the Company's Code of Business Conduct and Ethics; and

● overseeing the evaluation of the Company's management

Our Nominating Committee currently consists of Caifen Zou, Xu Luo and Owens Meng, with Caifen Zou serving as chair of the Nominating Committee. Our board has affirmatively determined that each of the members of the Nominating Committee meets the definition of "independent director" for purposes of serving on a Nominating Committee under NASDAQ rules.

*Duties of Directors*

Under British Virgin Islands law, our directors have a duty to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association. We have the right to seek damages if a duty owed by our directors is breached. The functions and powers of our board of directors include, among others:

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

● authorizing the payment of donations to religious, charitable, public or other bodies, clubs, funds or associations as deemed advisable;

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

● executing checks, promissory notes and other negotiable instruments on behalf of the company; and maintaining or registering a register of mortgages, charges or other encumbrances of the company.

A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he or she is interested. A director must promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into. A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction.

The directors may receive such remuneration as our board of directors may determine from time to time. Each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our board of directors or committees of our board of directors or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors. Our board of directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party.

*Limitation on Liability and Other Indemnification Matters*

British Virgin Islands law does not limit the extent to which a company's memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the British Virgin Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Under our memorandum and articles of association, we may indemnify our directors, officers and liquidators against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with civil, criminal, administrative or investigative proceedings to which they are party or are threatened to be made a party by reason of their acting as our director, officer or liquidator. To be entitled to indemnification, these persons must have acted honestly and in good faith with a view to the best interest of the company and, in the case of criminal proceedings, they must have had no reasonable cause to believe their conduct was unlawful. Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors or officers under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable as a matter of United States law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Employees** 

The table below provides information as to the total number of employees at the end of the last three fiscal years. We have no contracts or collective bargaining agreements with labor unions and have never experienced work stoppages due to labor dispute. We consider our relations with our employees to be good.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2023** | **2023** | **2024** | **2024** | **2025** | **2025** |
| Number of Employees |  | 56 |  | 17 |  | 12 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Share Ownership** 

See Item 7 below.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Major shareholders** 

The following table sets forth, as of April 17, 2026 certain information regarding beneficial ownership of our shares by each person who is known by us to beneficially own more than 5% of our shares, if any. The table also identifies the share ownership of each of our directors, each of our named executive officers, and all directors and officers as a group. Except as otherwise indicated, the shareholders listed in the table have sole voting and investment powers with respect to the shares indicated. Our major shareholders do not have different voting rights than any other holder of our shares. Shares which an individual or group has a right to acquire within 60 days pursuant to the exercise or conversion of options, warrants or other similar convertible or derivative securities are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting and investment power. Except as otherwise indicated below, each beneficial owner holds voting and investment power directly. The percentage of ownership is based on 10,323,268 shares issued and outstanding as of this Annual Report. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Beijing Wenxin Co., Ltd., Room 1104, Full Tower, 9 East Third Ring Middle Road, Chaoyang District, Beijing, PRC.

---

| | | |
|:---|:---|:---|
| **Name of Beneficial Owner** | **Shares Owned** | **Percentage** |
| Dandan Liu | 2099697 | 20.3% |
| Feng Zhang |  |  |
| Caifen Zou<sup>(1)</sup> |  |  |
| Xu Luo<sup>(1)</sup> |  |  |
| Owens Meng<sup>(1)</sup> |  |  |
| **Directors & executive officers as a group (5 persons)** | **2099697** | **20.3%** |

---

(1) Independent
director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Related Party Transactions** 

The related parties with whom the Company had transactions for the years ended December 31, 2025, 2024 and 2023 consist of the following:

---

| | |
|:---|:---|
| **Name of Related Party** | **Nature of Relationship at December 31, 2025** |
| Dandan Liu | Chairman of the Board, Shareholder, Chief Executive Officer ("CEO") |
| Feng Zhang | Chief Financial Officer ("CFO") |

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---

| | |
|:---|:---|
| **Name of Related Party** | **Nature of Relationship at December 31, 2025** |
| Caifen Zou | Independent director of TDH Holding, Inc. |
| Xu Luo | Independent director of TDH Holding, Inc. |
| Owens Meng | Independent director of TDH Holding, Inc. |
| Xue Jiang | The Executive Director and Manager of QD Pet Food<br> The Executive Director and Manager of QD Food Sales |
| Kai Wang | The Executive Director and Manager of Beijing Jingshi Space Commercial Management Co., Ltd. |
| Fan Wu | The Executive Director and Manager of Beijing Ruihe Commercial Management Co., Ltd.;<br> The Executive Director and Manager of Beijing Ruihe Space Commercial Management Co., Ltd. |
| Pan Zhang | The Manager of Beijing Jingshi |
| Xiaowan Hu | Supervisor of Beijing Wenxin Information Consulting Co., Ltd. |
| Yang Liu | Supervisor of Qingdao Chihong Information Consulting Co., Ltd. |
| Yang Yang | Supervisor of Beijing Jingshi Space Business Management Co., Ltd. |
| Dayou Zhang | Supervisor of Beijing Ruihe Commercial Management Co., Ltd. |

---

*<u>Due to related parties from continuing operations</u>*

Due to related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Dandan Liu | 300000 | 200318 |
| Total | $300000 | 200318 |

---

The balance of due to related parties represents expenses paid by related parties on behalf of the Company as well as advances the Company obtained from related parties for working capital purposes. The amounts owed to the related parties are unsecured, non-interest bearing and payable on demand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Interests of Experts and Counsel** 

Not required.

**ITEM 8. FINANCIAL INFORMATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Consolidated Statements and Other Financial Information.** 

See Item 18 for our audited consolidated financial statements.

**Legal Proceedings**

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

**Dividend Policy**

The holders of shares of our common shares are entitled to dividends out of funds legally available when and as declared by our board of directors. Our board of directors has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future. Should we decide in the future to pay dividends, as a holding company, our ability to do so and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiary and other holdings and investments. In addition, the operating companies may, from time to time, be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. In the event of our liquidation, dissolution or winding up, holders of our common shares are entitled to receive, ratably, the net assets available to shareholders after payment of all creditors.

To date, none of the PRC subsidiaries has made any dividends or distributions to TDH Holdings, Inc. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future. Under British Virgin Islands law, we may only pay dividends from surplus (the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as shown in our books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business; and the realizable value of assets of our company will not be less than the sum of our total liabilities, other than deferred taxes as shown on our books of account, and our capital. If we determine to pay dividends on any of our Common Shares in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiaries, TDH HK Limited and TDH Food Limited. Current PRC regulations permit the PRC Subsidiaries to pay dividends to TDH HK Limited and TDH Food Limited only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Significant Changes** 

Except as disclosed elsewhere in this Annual Report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this Annual Report.

**ITEM 9. THE OFFER AND LISTING**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Offer and Listing Details** 

We completed our initial public offering on September 21, 2017. Our Common Shares trade under the trading symbol "PETZ" on the NASDAQ Capital Market. As of April 17, 2026, there were approximately 15 holders of record of our Common Shares. This excludes our Common Shares owned by shareholders holding Common Shares under nominee security position listings. On April 17, 2026 the last sales price of our Common Shares as reported on the NASDAQ Capital Market was $1.04 per common share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Plan of Distribution** 

Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Markets** 

Our shares have been listed on the NASDAQ Stock Market under the symbols PETZ, since September 21, 2017, following the completion of our initial public offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Selling Shareholders** 

Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Dilution** 

Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F.** **Expenses of the Issue** 

Not Applicable.

**ITEM 10. ADDITIONAL INFORMATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Share Capital** 

Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Memorandum and Articles of Association** 

The information required by Item 10.B of Form 20-F is included in the section titled "Description of Share Capital" in our Registration Statement on Form F-1 initially filed with the SEC on August 11, 2017 (File No.: 333-219896), which section is incorporated herein by reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Material Contracts** 

None

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Exchange controls** 

Under British Virgin 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Taxation** 

 

*PRC Enterprise Income Tax*

According to the Enterprise Income Tax Law of PRC (the "EIT Law"), which was promulgated on March 16, 2007, last amended in February 2017 and became effective as of January 1, 2008, the income tax for both domestic and foreign-invested enterprises is at a uniform rate of 25%. The Regulation on the Implementation of Enterprise Income Tax Law of the PRC (the "EIT Rules") was promulgated on December 6, 2007 and became effective on January 1, 2008. On April 14, 2008, the Chinese Ministry of Science and Technology, Ministry of Finance and State Administration of Taxation enacted the Administrative Measures for Certifying High and New Technology Enterprises (the "Certifying Measures"), which retroactively became effective on January 1, 2008 and was amended on January 29, 2016. Under the EIT Law and the Certifying Measures, certain qualified high-tech companies may benefit from a preferential tax rate of 15% if they own their core intellectual properties and are classified into certain industries strongly supported by the Chinese government and set forth by certain departments of the Chinese State Council The Company was subject to 25% income tax rate in 2023 and 2024. Under the EIT Law, an enterprise established outside of China with a "de facto management body" within China is considered a "resident enterprise", which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. Although the implementation rules of the EIT Law define "de facto management body" as a managing body that exercises substantive and overall management and control over the production and business, personnel, accounting books and assets of an enterprise, the only official guidance for this definition currently available is set forth in Circular 82 issued by the State Administration of Taxation, at April 22, 2009 which provides that a foreign enterprise controlled by a PRC company or a PRC company group will be classified as a "resident enterprise" with its "de facto management bodies" located within China if the following criteria are satisfied:

● the place where the senior management and core management departments that are in charge of its daily operations perform their duties is mainly located in the PRC;

● its financial and human resources decisions are made by or are subject to approval by persons or bodies in the PRC;

● its major assets, accounting books, company seals, and minutes and files of its board and shareholders' meetings are located or kept in the PRC; and

● more than half of the enterprise's directors or senior management with voting rights frequently reside in the PRC.

If we are deemed a China resident enterprise, we may be subject to the EIT at the rate of 25% on our global income, except that the dividends we receive from our Chinese subsidiaries may be exempt from the EIT to the extent such dividends are deemed dividends among qualified resident enterprises. If we are considered a resident enterprise and earn income other than dividends from our Chinese subsidiaries, a 25% EIT on our global income could significantly increase our tax burden and materially and adversely affect our cash flow and profitability.

*PRC VAT*

Pursuant to the prevailing and effective policies including Caishui [2016] No. 36 and Announcement No. 16 [2016] of the State Taxation Administration, value-added tax ("VAT") is imposed on the sale of goods, processing, repair and replacement services, services, intangible assets and immovable property, as well as the importation of goods within the territory of the People's Republic of China. For commercial real estate leasing services, VAT is calculated using either the general taxation method, under which output VAT is offset against input VAT at an applicable rate of 9%, or the simplified taxation method at a levy rate of 5%.

*People's Republic of China Taxation*

Under the EIT law and EIT Rules, both of which became effective on January 1, 2008, the income tax for both domestic and foreign-invested enterprises is at a uniform rate of 25%, unless they qualify for certain exceptions. On April 14, 2008, the Chinese Ministry of Science and Technology, Ministry of Finance and State Administration of Taxation enacted the Certifying Measures, which retroactively became effective on January 1, 2008 and was amended on January 29, 2016 provide that certain qualified high-tech companies may benefit from a preferential tax rate of 15% if they own their core intellectual properties and are classified into certain industries strongly supported by the Chinese government and set forth by certain departments of the Chinese State Council. We are a holding company incorporated in the British Virgin Islands and we gain substantial income by way of dividends from our PRC subsidiaries. The EIT Law and Rules provide that China-sourced income of foreign enterprises, such as dividends paid by a PRC Subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor's jurisdiction of incorporation has tax treaty with China that provides for a different withholding arrangement.

*British Virgin Islands Taxation*

Under the BVI Act as currently in effect, a holder of common shares who is not a resident of the British Virgin Islands is exempt from British Virgin Islands income tax on dividends paid with respect to the common shares and all holders of common shares are not liable to the British Virgin Islands for income tax on gains realized during that year on sale or disposal of such shares. The British Virgin Islands does not impose a withholding tax on dividends paid by a company incorporated or re-registered under the BVI Act. There are no capital gains, gift or inheritance taxes levied by the British Virgin Islands on companies incorporated or re-registered under the BVI Act. In addition, shares of companies incorporated or re-registered under the BVI Act are not subject to transfer taxes, stamp duties or similar charges. There is no income tax treaty or convention currently in effect between the United States and the British Virgin Islands or between China and the British Virgin Islands.

*United States Federal Income Taxation*

The following does not address the tax consequences to any particular investor or to persons in special tax situations such as:

● banks;

● financial institutions;

● insurance companies;

● regulated investment companies;

● real estate investment trusts;

● broker-dealers;

● traders that elect to mark to market;

● U.S. expatriates;

● tax-exempt entities;

● persons liable for alternative minimum tax;

● persons holding our common shares as part of a straddle, hedging, conversion or integrated transaction;

● persons that actually or constructively own 10% or more of our voting shares;

● persons who acquired our common shares pursuant to the exercise of any employee share option or otherwise as consideration; or

● persons holding our common shares through partnerships or other pass-through entities.

Prospective purchasers are urged to consult their tax advisors about the application of the U.S. Federal tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our common shares.

*Taxation of Dividends and Other Distributions on our Shares*

Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect to the common shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, to the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your common shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above. The dividends will not be eligible for the dividends-received deduction allowed in respect of dividends received from other U.S. corporations.

With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the common shares are readily tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Under U.S. Internal Revenue Service authority, our common shares will be considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States when they are listed on the NASDAQ Capital Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our common shares, including the effects of any change in law after the date of this Annual Report.

Dividends on our common shares will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our common shares will constitute "passive category income" but could, in the case of certain U.S. Holders, constitute "general category income."

*Taxation of Dispositions of Shares*

Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of shares equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the common shares for more than one year, you will be eligible for the capital gains tax rate of 20% (or lower for individuals in lower tax brackets). The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes.

*Passive Foreign Investment Company*

Based on our current operations and asset composition, we believe there is a risk that we may be treated as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our taxable year ending December 31, 2025. It is important to note that our status as a PFIC for the 2025 taxable year is a byproduct of our strong liquidity position, not our core business model. We have intentionally retained high levels of cash to capitalize on growth opportunities within the commercial property sector. While we may meet the technical definition of a PFIC for U.S. federal income tax purposes, we continue to operate as an active commercial property management firm and do not fall under the regulatory scope of the 1940 Act as an investment company. For fiscal year 2025, passive investment income exceeded 75% of gross income and cash and marketable securities exceeded 50% of total assets, which were temporary levels in connection with our high level of cash balances. Our core business is and will continue to be commercial real estate operation and management. We expect these levels will normalize for the taxable year ending December 31, 2026.

Our actual PFIC status for the taxable year ending December 31, 2026 will not be determinable until after the close of such year and, accordingly, there is no guarantee that we will not be a PFIC for such year. PFIC status is a factual determination for each taxable year which cannot be made until the close of the taxable year. A non-U.S. corporation is considered a PFIC for any taxable year if either:

● at least 75% of its gross income is passive income; or

● at least 50% of the value of our assets (based on an average of quarterly values) is attributable to assets that produce passive income (the "asset test").

We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock. We must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change. In particular, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our common shares, our PFIC status will depend in large part on the market price of our common shares. Accordingly, fluctuations in the market price of the common shares may cause us to remain a PFIC. If we are a PFIC for any year during which you hold common shares, we will continue to be treated as a PFIC for all succeeding years during which you hold common shares. However, if we cease to be a PFIC, you may avoid some of the adverse effects of the PFIC regime by making a "deemed sale" election with respect to the common shares.

Being a PFIC for any taxable year during which you hold common shares means you will be subject to special tax rules with respect to any "excess distribution" that you receive and any gain you realize from a sale or other disposition (including a pledge) of the common shares, unless you make a "mark-to-market" election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the common shares will be treated as an excess distribution. Under these special tax rules:

● the excess distribution or gain will be allocated ratably over your holding period for the common shares;

● the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income; and

● the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. The tax liability for amounts allocated to such years cannot be offset by any net operating losses for such years, and gains realized on the sale of the common shares cannot be treated as capital, even if you hold the common shares as capital assets.

A U.S. Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for the common shares, you will include in income each year an amount equal to the excess, if any, of the fair market value of the common shares as of the close of your taxable year over your adjusted basis in such common shares. You are allowed a deduction for the excess, if any, of your adjusted basis in the common shares over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains on the common shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the common shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the common shares, as well as to any loss realized on the actual sale or disposition of the common shares, to the extent that such loss does not exceed the net mark-to-market gains previously included for such common shares. Your basis in the common shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations that are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under "Taxation of Dividends and Other Distributions on our Shares" generally would not apply.

The mark-to-market election is available only for "marketable stock", which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter ("regularly traded") on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including the NASDAQ Capital Market. If the common shares are regularly traded on the NASDAQ Capital Market, the mark-to-market election would be available to you if we were to be or become a PFIC.

Alternatively, a U.S. Holder of stock in a PFIC may make a "qualified electing fund" election with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder's pro rata share of the corporation's earnings and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above. If you hold common shares in any year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 regarding distributions received on the common shares and any gain realized on the disposition of the common shares.

You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our common shares and the elections discussed above.

**<u>United States Federal Income Taxation</u>**

The following sets forth the material British Virgin Islands, Chinese and U.S. federal income tax matters related to an investment in our common shares. It is directed to U.S. Holders (as defined below) of our common shares and 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. This description does not deal with all possible tax consequences relating to an investment in our common shares, such as the tax consequences under state, local and other tax laws. The following brief description applies only to U.S. Holders (defined below) that hold common shares as capital assets and that have the U.S. dollar as their functional currency. This brief description is based on the tax laws of the United States in effect as of the date of this Annual Report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this Annual Report, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below. The brief description below of the U.S. federal income tax consequences to "U.S. Holders" will apply to you if you are a beneficial owner of shares and you are, for U.S. federal income tax purposes:

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

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

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

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

***Belgium taxation***

The current enterprise income tax rate is approximately 34%, which includes 3% additional tax, for Belgium companies. Small and medium-sized enterprises may enjoy preferential tax rate if they meet the requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F.** **Dividends and paying agents** 

Not required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**G.** **Statement by experts** 

Not required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**H.** **Documents on display** 

We file annual reports and other information with the Securities and Exchange Commission. We file annual reports on Form 20-F and submit other information under cover of Form 6-K. As a foreign private issuer, we are exempt from the proxy requirements of Section 14 of the Exchange Act and our officers, directors and principal shareholders are exempt from the insider short-swing disclosure and profit recovery rules of Section 16 of the Exchange Act. Annual reports and other information we file with the Commission may be inspected at the public reference facilities maintained by the Commission at Room 1024, 100 F. Street, N.E., Washington, D.C. 20549, and copies of all or any part thereof may be obtained from such offices upon payment of the prescribed fees. You may call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms and you can request copies of the documents upon payment of a duplicating fee, by writing to the Commission. In addition, the Commission maintains a web site that contains reports and other information regarding registrants (including us) that file electronically with the Commission which can be assessed at http://www.sec.gov.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**I.** **Subsidiary Information** 

Not required.

**ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

 ****

***Interest Rate Risk***

Our main interest rate exposure relates to bank borrowings. As of December 31, 2025, we had $0 outstanding bank loans. As of December 31 2025, we did not carry any outstanding bank loans.

As of December 31, 2025, if interest rates increased/decreased by 1%, with all other variables having remained constant, and assuming the amount of bank borrowings outstanding at the end of the year was outstanding for the entire year, profit attributable to equity owners of our company would have been $0, respectively, mainly as a result of higher/lower interest income from our cash and cash equivalents and loan receivables

As of December 31, 2024, if interest rates increased/decreased by 1%, with all other variables having remained constant, and assuming the amount of bank borrowings outstanding at the end of the year was outstanding for the entire year, profit attributable to equity owners of our company would have been $0, respectively, mainly as a result of higher/lower interest income from our cash and cash equivalents and loan receivables

***Foreign Currency Risk***

Our functional currencies are RMB, U.S. dollar and Euro, and our financial statements are presented in U.S. dollar. We mainly uses RMB in domestic transaction, U.S. dollars in transactions within the United States, and the transaction settled with Euro is immaterial. The RMB appreciated against the U.S. dollar by 2.22 % in 2025 and depreciated against the U.S. dollar by 1.49% in 2024. The change in the value of RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying change in our business or results of operation.

Currently, our assets, liabilities, revenues and costs are denominated in RMB and in U.S. dollars, our exposure to foreign exchange risk will primarily relate to those financial assets denominated in U.S. dollars. Any significant revaluation of RMB against U.S. dollar may materially affect our earnings and financial position, and the value of, and any dividends payable on, our common shares in U.S. dollars in the future.

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

With the exception of Items 12.D.3 and 12.D.4, this Item 12 is not applicable for annual reports on Form 20-F. As to Items 12.D.3 and 12.D.4, this Item 12 is not applicable, as the Company does 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**

 ****

***Disclosure Controls and Procedures***

As of December 31, 2025 (the "Evaluation Date"), the Company carried out an evaluation, under the supervision of and with the participation of management, including the Company's Chief Executive Officer and Chief Financial Officer (the "Certifying Officers"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on the foregoing, the Certifying Officers concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were not effective as of December 31, 2025.

As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. In addition, we are required to furnish a report by management on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. Currently we have not established and maintained effective disclosure controls and procedures. In addition, there are material weaknesses in our internal control over financial reporting. Specifically, the material weakness identified by our management include (i) a lack of sufficient accounting staff and resources with appropriate knowledge of generally accepted accounting principles in the United States ("U.S. GAAP") and SEC reporting and compliance requirements; and (ii) a lack of an effective review process which may lead to material audit adjustments to the financial statements. In order to address the foregoing material weakness, we have put in place additional controls, including, among others, hiring and replacing certain management team members. Our CEO has established a new management team to deal with operation management challenges of the Company, and our CFO has been working on improving the Company's financial and reporting functions. We also plan to hire more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and implement regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel. As of the date of this annual report, we have not fully addressed the above-referenced weaknesses. However, we have made progress in implementing remedial measures, specifically:

We have engaged an external consultant to assist with financial reporting and will continue to do so;

We are in the process of establishing standardized business processes and formal operating procedures, with a target completion date in 2026; and

We are strengthening our internal control and supervision mechanisms, particularly in the areas of segregation of duties, data sharing, and interdepartmental coordination and oversight.

We acknowledge that the maintenance of effective internal control over financial reporting and disclosure controls and procedures is an ongoing, continuous process that requires ongoing monitoring and enhancement. As such, there remains a reasonable possibility that similar issues (including, but not limited to, insufficient professional competence of accounting personnel, inadequacies in the financial reporting review process, or gaps in internal control mechanisms) may arise in the future. Such potential issues could result from changes in the Company's business scale, updates to regulatory requirements, personnel turnover, or other unforeseen factors. We will continue to monitor and evaluate our internal control systems on an ongoing basis, promptly implement any necessary enhancements or adjustments, and maintain rigorous supervision and training programs to mitigate such risks and ensure the continued effectiveness of our internal control over financial reporting and disclosure controls and procedures.

***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 a process designed under the supervision of our chief executive officer and chief financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purpose in accordance with U.S. generally accepted accounting principles.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the framework set forth in the report Internal Control – Integrated framework issued in 2013 by the Committee of Sponsoring Organization of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company's internal control system, including (1) the control environment, (2) risk assessment, (3) control activities, (4) information and communication and (5) monitoring.

Based on these evaluations, our management concluded that, due to the material weakness described above, our internal control over financial reporting was not effective as of December 31, 2025.

 **

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

 **

Not applicable.

***Changes in Internal Controls over Financial Reporting***

Other than the changes described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) during the period covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**ITEM 16. RESERVED**

**ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.**

Our Board of Directors has determined that Owens Meng is an audit committee financial expert as that term is defined in Item 16A(b) of Form 20-F and "independent" as that term is defined in the NASDAQ listing standards.

**ITEM 16B. CODE OF ETHICS.**

We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, and principal accounting officer. A copy of the Code of Business Conduct and Ethics is available on our website, www.tiandihui.com. The information on our corporate website is not a part of this Annual Report.

**ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES.**

The following table represents the approximate aggregate fees for services rendered by YCM CPA INC. for the periods indicated:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2025** | **2024** |
| Audit Fees | $140000 | $140000 |
| Audit Related Fees |  |  |
| Tax Fees |  |  |
| All Other Fees | - | - |
| **Total Fees** | $140000 | $140000 |

---

**Pre-Approval of Services**

Our audit committee evaluated and approved in advance the scope and cost of the engagement of an auditor before the auditor rendered its audit and non-audit services.

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

None.

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

No purchases of our securities were made by us or our affiliates in 2025.

**ITEM 16F. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.**

Not applicable.

**ITEM 16G. CORPORATE GOVERNANCE**

We are incorporated in the BVI and our corporate governance practices are governed by applicable BVI law, our memorandum and articles of association. In addition, because our common shares are listed on the NASDAQ Capital Market, we are subject to NASDAQ's corporate governance requirements.

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 BVI counsel, Ogier, has provided a letter to NASDAQ certifying that under BVI law, we are not required to follow Nasdaq rules 5635(b) and 5635(d) to seek shareholders' approval of any issuance of securities in connection with a transaction other than a public offering where such transaction involves the issuance of securities representing more than 20% of our total outstanding ordinary shares or results in a change of control of a company.

**ITEM 16H. MINE SAFETY DISCLOSURE**

Not applicable.

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

Not applicable.

**ITEM 16J. INSIDER TRADING POLICY**

We have adopted an insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees. The insider trading policy is included in our code of ethics which is attached as an exhibit to this annual report.

**ITEM 16K. CYBERSECURITY**

The Company's cybersecurity risk management program consists of:

&nbsp;&nbsp;&nbsp;&nbsp;i. An
overall strategy to develop, improve and maintain its cybersecurity processes, policies, and governance frameworks that have been integrated
into our existing risk management framework

ii Detailed set of cybersecurity policies and procedures

&nbsp;&nbsp;&nbsp;&nbsp;iii. Investment
in IT security and a cybersecurity team

&nbsp;&nbsp;&nbsp;&nbsp;iv. Engaging
external cybersecurity service providers

v Robust training plan for all its employees

&nbsp;&nbsp;&nbsp;&nbsp;vi. Governance
- Board and management oversight

The underlying control framework of the Company's cybersecurity program is based on recognized best practices and standards set by the U.S. National Institute of Standards and Technology, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover.

The Company has established policies and procedures for all key aspects of its cybersecurity program including an information security policy, password policy, incident management policy, third party security management policy, business continuity plans, cyber incident response plans and information security management system contingency plans. The Company has not engaged third-party experts to assist with assessing, identifying, and managing our cybersecurity risks.

As part of the Company's cybersecurity strategy, it continues to expand its investments in IT security, including to identify and protect critical assets, strengthen, monitor and alert its information security management system and engage with cybersecurity experts. The Company holds regular cybersecurity meetings, to assess and manage cybersecurity threats and to provide cybersecurity updates to senior management and the Board of Directors.

The Board of Directors considers cybersecurity risk as part of its risk oversight function and oversees the Company's cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks. The Board of Directors ensures allocation and prioritization of resources and overall strategic direction for cybersecurity and ensures alignment with the Company's overall strategy.

To-date, the Company is not aware of any material risks from cybersecurity threats, that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats or provide assurances that we have not experienced undetected cybersecurity incidents.

**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** |
| 2.1 | [Description of Registrant's Securities.](ea028652101ex2-1.htm) |
| 3.1 | [Memorandum and Articles of Association. (1)](http://www.sec.gov/Archives/edgar/data/1684425/000121390022032794/ea161354ex3-1_tdhholdings.htm) |
| 4.1 | [Form of Amended and Restated Warrant. (2)](http://www.sec.gov/Archives/edgar/data/1684425/000121390023057842/ea181713ex4-1_tdhholdings.htm) |
| 10.1 | [Employment Agreement between the Registrant and its CEO. (3)](http://www.sec.gov/Archives/edgar/data/1684425/000121390023032571/f20f2022ex10-1_tdhhold.htm) |
| 10.2 | [Employment Agreement between the Registrant and its CFO. (4)](http://www.sec.gov/Archives/edgar/data/1684425/000121390022022816/f20f2021ex10-2_tdhhold.htm) |
| 12.1 | [Certification of the Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended.](ea028652101ex12-1.htm) |
| 12.2 | [Certification of the Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended.](ea028652101ex12-2.htm) |
| 13.1 | [Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ea028652101ex13-1.htm) |
| 14.1 | [Code of Conduct and Ethics. (4)](http://www.sec.gov/Archives/edgar/data/1684425/000121390022022816/f20f2021ex14-1_tdhhold.htm) |
| 21.1 | [List of Subsidiaries of the Registrant.](ea028652101ex21-1.htm) |
| 99.1 | [Charter of the Audit Committee. (4)](http://www.sec.gov/Archives/edgar/data/1684425/000121390022022816/f20f2021ex99-1_tdhhold.htm) |
| 99.2 | [Charter of the Compensation Committee. (4)](http://www.sec.gov/Archives/edgar/data/1684425/000121390022022816/f20f2021ex99-2_tdhhold.htm) |
| 99.3 | [Charter of the Nominating Committee. (4)](http://www.sec.gov/Archives/edgar/data/1684425/000121390022022816/f20f2021ex99-3_tdhhold.htm) |
| 99.4 | [Press Release dated April 28, 2025.](ea028652101ex99-4.htm) |
| 97.1 | [Clawback Policy of TDH Holdings, Inc. (5)](http://www.sec.gov/Archives/edgar/data/1684425/000121390024037206/ea020462801ex97-1_tdhhold.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. |

---

(1) Filed as an exhibit to the Registrant's Current Report on Form 6-K, filed on June 14, 2022 and hereby incorporated by reference.

(2) Filed as an exhibit to the Registrant's Current Report on Form 6-K, filed on July 18, 2023 and hereby incorporated by reference.

(3) Filed
as an exhibit to the Registrant's Annual Report on Form 20-F, filed on April 25, 2023 and hereby incorporated by reference.

(4) Filed
as an exhibit to the Registrant's Annual Report on Form 20-F, filed on April 29, 2022 and hereby incorporated by reference.

(5) Filed
as an exhibit to the Registrant's Annual Report on Form 20-F, filed on April 29, 2024 and hereby incorporated by reference

**SIGNATURES**

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

---

| | | | |
|:---|:---|:---|:---|
|  | **TDH Holdings, Inc.** | **TDH Holdings, Inc.** | **TDH Holdings, Inc.** |
| April 20, 2026 | By: | /s/ *Dandan Liu* | /s/ *Dandan Liu* |
|  |  | Name: | Dandan Liu |
|  |  | Title: | Chief Executive Officer<br> (Principal Executive Officer) |
|  | **TDH Holdings, Inc.** | **TDH Holdings, Inc.** | **TDH Holdings, Inc.** |
| April 20, 2026 | By: | /s/ *Feng Zhang* | /s/ *Feng Zhang* |
|  |  | Name: | Feng Zhang |
|  |  | Title: | Chief Financial Officer<br> (Principal Financial and Accounting Officer) |

---

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
| [Report of Independent Registered Public Accounting Firm (PCAOB ID 6781)](#F_001) | F-2 |
| [Consolidated Balance Sheets as of December 31, 2025 and 2024](#F_002) | F-3 |
| [Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2025, 2024 and 2023](#F_003) | F-4 |
| [Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2025, 2024 and 2023](#F_004) | F-5 |
| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023](#F_005) | F-6 |
| [Notes to the Consolidated Financial Statements](#F_006) | F-7 – F-30 |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

![](ea028652101_img2.jpg)

To the Board of Directors and Shareholders of TDH Holdings, Inc.

***Opinion on the Financial Statements***

We have audited the accompanying consolidated balance sheets of TDH Holdings, Inc. and its subsidiaries (collectively, the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

***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) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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***

 ****

A critical audit matter is a matter arising from the current-period audit of the financial statements that is communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no such critical audit matters.

/s/ YCM CPA INC.

We have served as the Company's auditor since 2022.

PCAOB ID 6781

Irvine, California

April 20, 2026

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| **ASSETS** |  |  |
| CURRENT ASSETS: |  |  |
| Cash and cash equivalents | $19138205 | $15699562 |
| Restricted cash | 19950 |  |
| Short-term investments | 14531930 | 12952597 |
| Accounts receivable, net | 75346 | 5748 |
| Advances to suppliers, net | 198401 | 37790 |
| Prepayments and other current assets, net | 146385 | 103519 |
| &nbsp;&nbsp;&nbsp;**Total current assets** | 34110217 | 28799216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NON-CURRENT ASSETS |  |  |
| Property, plant and equipment, net | 2398192 | 2363989 |
| Operating lease right-of-use assets | 3787265 | 2175456 |
| &nbsp;&nbsp;&nbsp;**Total non-current assets** | 6185457 | 4539445 |
| **Total assets** | $40295674 | $33338661 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| CURRENT LIABILITIES: |  |  |
| Accounts payable | $90006 | $122251 |
| Deferred lease revenue | 255383 | 183173 |
| Bank overdrafts | - | 73105 |
| Short-term loans - related parties | - | 261725 |
| Taxes payable | 11215 | 14681 |
| Due to related parties | 300000 | 200318 |
| Operating lease liabilities, current | 921524 | 486121 |
| Other current liabilities | 5135539 | 2859061 |
| &nbsp;&nbsp;&nbsp;**Total current liabilities** | 6713667 | 4200435 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NON-CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities, non-current | 2860197 | 1738371 |
| &nbsp;&nbsp;&nbsp;**Total liabilities** | 9573864 | 5938806 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SHAREHOLDERS' EQUITY: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common shares ($0.02 par value; 50,000,000 shares authorized; 10,323,268 shares issued and outstanding at December 31, 2025 and 2024) | 206465 | 206465 |
| Additional paid-in capital | 51129439 | 51129439 |
| Accumulated deficit | (20620053) | (23937478) |
| Accumulated other comprehensive loss | (72820) | (95784) |
| &nbsp;&nbsp;&nbsp;**Total TDH Holdings, Inc. shareholders' equity** | 30643031 | 27302642 |
| Non-controlling interest | 78779 | 97213 |
| &nbsp;&nbsp;&nbsp;**Total shareholders' equity** | 30721810 | 27399855 |
| **Total liabilities and shareholders' equity** | $40295674 | $33338661 |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For The Years Ended December 31,** | **For The Years Ended December 31,** | **For The Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Net revenue | $1251259 | $563726 | $754 |
| Total revenue | 1251259 | 563726 | 754 |
| &nbsp;&nbsp;&nbsp;Cost of revenue | 1263000 | 325304 | 976 |
| Total cost of revenue | 1263000 | 325304 | 976 |
| **Gross profit** | (11741) | 238422 | (222) |
| &nbsp;&nbsp;&nbsp;Operating expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling expense | 49583 | - | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense | 1769395 | 1745247 | 3145280 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | - | - | 3040000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of goodwill | - | 325832 | - |
| **Total operating expenses** | 1818978 | 2071079 | 6185302 |
| **Loss from operations** | (1830719) | (1832657) | (6185524) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income (expense) | 112085 | (68858) | (14276) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (expense) | (6711077) | (2844939) | 461461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain (loss) on disposal of subsidiaries | (590528) | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment income (loss), net | 10801316 | 6671948 | (2644576) |
| **Total other income (expenses)** | 3611796 | 3758151 | (2197391) |
| **Income (loss) before income tax provision** | 1781077 | 1925494 | (8382915) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax provision | - | (182) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from continuing operations | 1781077 | 1925312 | (8382915) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from discontinued operations of Tiandihui | - | - | (15095547) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from discontinued operations of Bo Lings and Far Lings | - | 575249 | (153054) |
| **Net income (loss)** | 1781077 | 2500561 | (23631516) |
| Less: Net income (loss) attributable to non-controlling interest | (18434) | (183961) | (5344) |
| **Net income (loss) attributable to TDH Holdings, Inc.** | $1799511 | $2684522 | $(23626172) |
| **Comprehensive income (loss)** |  |  |  |
| **Net income (loss)** | $1781077 | $2500561 | $(23631516) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | 22964 | (718) | (523315) |
| **Total comprehensive income (loss)** | 1804041 | 2499843 | (24154831) |
| Less: Comprehensive income (loss) attributable to non-controlling interest | (18434) | (333106) | (5344) |
| **Comprehensive income (loss) attributable to TDH Holdings, Inc.** | $1822475 | $2832949 | $(24149487) |
| **Earnings (loss) per common share attributable to TDH Holdings, Inc.** |  |  |  |
| Basic | $0.17 | $0.26 | $(2.29) |
| Diluted | $0.17 | $0.26 | $(2.29) |
| **Weighted average common shares outstanding** |  |  |  |
| Basic | 10323268 | 10323268 | 10323268 |
| Diluted | 10323268 | 10323268 | 10323268 |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Number of<br> Shares\*** | **Common<br> Shares** | **Additional<br> Paid-in<br> Capital** | **Stock<br> Subscription<br> Receivable** | **Statutory<br> Reserves** | **Accumulated<br> Deficit** | **Accumulated<br> Other<br> Comprehensive<br> Income (Loss)** | **Total<br> Stockholders'<br> Equity<br> Attributable<br> to TDH** | **Non-<br> controlling<br> Interest** | **Total <br> Stockholders'<br> Equity** |
| **Balance, December 31, 2022** | **10323268** | $**206465** | $**48089439** | $**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -** | $**160014** | $**(28165927)** | $**428249** | $**20718240** | $**435663** | $**21153903** |
| Net loss |  |  |  |  |  | (23626172) |  | (23626172) | (5344) | (23631516) |
| Stock-based compensation expense |  |  | 3040000 |  |  |  |  | 3040000 |  | 3040000 |
| Adjustment to reflect the effect of disposal of Tiandihui and Chongaijiujiu |  |  |  |  | (160014) | 25170099 |  | 25010085 |  | 25010085 |
| Foreign currency translation adjustment | - | - | - | - | - | - | (523315) | (523315) | - | (523315) |
| **Balance, December 31, 2023** | **10323268** | $**206465** | $**51129439** | $**-** | $**-** | $**(26622000)** | $**(95066)** | $**24618838** | $**430319** | $**25049157** |
| Net income |  |  |  |  |  | 2684522 |  | 2684522 | (183961) | 2500561 |
| Foreign currency translation adjustment | - | - | - | - | - | - | (718) | (718) | (149145) | (149863) |
| **Balance, December 31, 2024** | **10323268** | $**206465** | $**51129439** | $**-** | $**-** | $**(23937478)** | $**(95784)** | $**27302642** | $**97213** | $**27399855** |
| Net income |  |  |  |  |  | 1799511 |  | 1799511 | (18434) | 1781077 |
| Adjustment to reflect the effect of disposal of BVBA |  |  |  |  |  | 1517914 |  | 1517914 |  | 1517914 |
| Foreign currency translation adjustment | - | - | - | - | - | - | **22964** | **22964** | **-** | **22964** |
| **Balance, December 31, 2025** | **10323268** | $**206465** | $**51129439** | $**-** | $**-** | $**(20620053)** | $**(72820)** | $**30643031** | $**78779** | $**30721810** |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | | |
|:---|:---|:---|:---|
|  | **For The Years Ended December 31,** | **For The Years Ended December 31,** | **For The Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Cash flows from operating activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) | $1781077 | $2500561 | $(23631516) |
| &nbsp;&nbsp;&nbsp;Less: Net income (loss) from discontinued operations | - | 575249 | (15248601) |
| &nbsp;&nbsp;&nbsp;Net income (loss) from continuing operations | 1781077 | 1925312 | (8382915) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expense | 221223 | 111642 | 22649 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value change of short-term investments, net | (10801316) | (6671948) | 2644576 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of goodwill | - | 325832 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of long-lived assets other than goodwill | - | - | 1964 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory write-down | - | - | 69677 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | - | - | 22674 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of subsidiaries | 590528 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on disposal of property, plant and equipment | - | 59009 | 37766 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of operating lease right-of-use assets | 869382 | 459251 | 2623288 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | - | - | 3040000 |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | (141066) | 114462 | 40894 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories, net | - | 8370 | 44240 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (924186) | (441402) | 691854 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | 100000 | - | 1928329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advances to suppliers, net | (157201) | (38144) | (32465) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepayments and other current assets, net | (41125) | (1660998) | (3210336) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 2847169 | 2927432 | (369142) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable - related parties | - | - | 502635 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest payable | - | 30662 | 3573 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes payable | 5191 | 6982 | (2445) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advances from customers | 67256 | 185145 | (6974) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 3802884 | 4420782 | (1234226) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities from continuing operations | (1780184) | 1762389 | (1564383) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities from discontinued operations | - | (1996377) | 999987 |
| &nbsp;&nbsp;&nbsp;**Net cash used in operating activities** | $(1780184) | $(233987) | $(564396) |
| &nbsp;&nbsp;&nbsp;**Cash flows from investing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments to acquire property and equipment | (244088) | (1881370) | (7655) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Disposal of subsidiaries | - | 578400 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash obtained from business acquisition | - | 16047 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of short-term investments | (60393565) | (46777749) | (37066925) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of short-term investments | 66873258 | 50944982 | 31024365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment in equity | - | (99280) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leasehold improvement | - | - | (16836) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) investing activities from continuing operations | 6235605 | 2781030 | (6067051) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by investing activities from discontinued operations | - | - | - |
| &nbsp;&nbsp;&nbsp;**Net cash provided by (used in) investing activities** | 6235605 | 2781030 | (6067051) |
| &nbsp;&nbsp;&nbsp;**Cash flows from financing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments to related parties | - | - | (6774) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of short-term loans | (422237) | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment to related party | (624595) | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) financing activities from continuing operations | (1046832) | - | (6774) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities from discontinued operations | - | - | - |
| &nbsp;&nbsp;&nbsp;**Net cash (used in) financing activities**  | $(1046832) | $- | $(6774) |
| &nbsp;&nbsp;&nbsp;**Effect of exchange rate changes on cash, cash equivalents and restricted cash** | 50004 | (508863) | (1557522) |
| &nbsp;&nbsp;&nbsp;**Net change in cash, cash equivalents and restricted cash** | 3458593 | 2038180 | (8195743) |
| &nbsp;&nbsp;&nbsp;**Cash, cash equivalents and restricted cash, beginning of the year** | 15699562 | 13661382 | 21857125 |
| &nbsp;&nbsp;&nbsp;**Cash, cash equivalents and restricted cash, end of the year** | $19158155 | $15699562 | $13661382 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: Cash and restricted cash of discontinued operations at the end of the period | - | - | 534777 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and restricted cash of continued operations at the end of the period | $19158155 | $15699562 | $13126605 |
| &nbsp;&nbsp;&nbsp;**Supplemental cash flow information** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest paid | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes paid | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;**Non-cash investing and financing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liabilities assumed in connection with purchase of property, plant and equipment | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable reclassified to short-term loans | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term loans settled by transferring an equity investment to the creditor | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cashless exercise of warrants | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right of use assets obtained in exchange for operating lease obligations | $2406836 | $2665894 | $- |
| &nbsp;&nbsp;&nbsp;**Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $19138205 | $15699562 | $13126605 |
| &nbsp;&nbsp;&nbsp;Restricted cash | $19950 | $- | $534777 |
| &nbsp;&nbsp;&nbsp;**Total cash, cash equivalents, and restricted cash** | $**19158155** | $**15699562** | $**13661382** |

---

**The accompanying footnotes are an integral part of these financial statements.**

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS**

TDH Holdings, Inc. ("TDH Holdings") was incorporated on September 30, 2015 under the laws of the British Virgin Islands. On November 4, 2015, TDH Holdings incorporated a wholly owned subsidiary, TDH HK Limited ("TDH HK") in Hong Kong for the purpose of being a holding company for the equity interest in Qingdao Tiandihui Foodstuffs Co., Ltd. ("Tiandihui"). On September 9, 2016, TDH Holdings incorporated TDH Petfood LLC, a Nevada limited liability company, in which TDH Holdings holds 99% equity interest. In December, 2020, TDH Holdings acquired the remaining 1% equity interest of TDH Petfood LLC with a consideration of $100. TDH Petfood LLC does not own any material assets or liabilities. TDH Petfood LLC had no active business operations since its incorporation, and it has been deregistered and dissolved in 2021. Other than cash and equity interest in TDH HK and TDH Petfood LLC, TDH Holdings has not conducted any active business operations or own any material assets or liabilities prior to March 1, 2020 and started to invest in marketable securities since March 2020. TDH HK does not conduct any operations or own any material assets or liabilities except for cash and the 100% of the equity interest of Tiandihui which it acquired on February 21, 2016.

Tiandihui was founded in Qingdao City, Shandong Province, People's Republic of China ("PRC") on April 22, 2002 as a limited liability company. As of December 31, 2022, Tiandihui had one wholly owned subsidiary: Beijing Chongai Jiujiu Cultural Communication Co., Ltd. ("Chongai Jiujiu"), which was incorporated on March 3, 2011, in Beijing City, PRC. Tiandihui and its wholly owned subsidiary are engaged in the business of development, manufacturing and sales of high quality petfood products under our own formula patents. Our products are produced at Tiandihui facility and sold to the pet owners in PRC and to the retailers and wholesalers throughout worldwide. On March 16, 2022, the People's Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors' application of bankruptcy liquidation of Tiandihui, Ltd., and it entered into bankruptcy proceedings. On December 27, 2023, the Court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed. As a result, Tiandihui has been fully disposed as of December 31, 2023.

On February 21, 2016, TDH HK entered into an equity transfer agreement with Rongfeng Cui and his wife Yanjuan Wang, the shareholders of Tiandihui at the time, to acquire 100% of the equity interests in Tiandihui ("reorganization").

On July 19, 2016, Tiandihui acquired 100% shares of Chongai Jiujiu from Rongfeng Cui and Yanjuan Wang with a consideration of $87,849 (RMB610,000). The acquisition of Chongai Jiujiu is a transaction between entities under common control. Chongai Jiujiu had immaterial operations and suffered recurring operating losses since its inception. In December 2023, the Company transferred all its ownership interests in Chongai Jiujiu to a third party. The disposition of Chongai Jiujiu did not represent a strategic shift of the Company's business due to the immateriality of its operations, accordingly, discontinued operations of Chongai Jiujiu are not included in these financial notes.

In November 2018, the Company completed the business acquisitions of TDH Group BVBA, a Belgian entity, and TDH JAPAN, a Japanese entity. TDH Group BVBA and TDH JAPAN had limited operating activities for the year ended December 31, 2020. TDH JAPAN was dissolved in February 2021. BVBA commenced bankruptcy proceedings in 2021. On May 6, 2025, the court announced that the bankruptcy liquidation of BVBA had been completed and the bankruptcy proceedings were concluded. Accordingly, BVBA was fully disposed of as of December 31, 2025.

On January 22, 2020, Qingdao Tiandihui Pet Foodstuffs Co., Ltd. ("Tiandihui Pet Foodstuffs") was incorporated in Qingdao City, PRC. Tiandihui Pet Foodstuffs has been deregistered and dissolved in April 2025.

On January 21, 2020, Qingdao Tiandihui Foodstuffs Sales Co., Ltd. ("Tiandihui Foodstuffs Sales") was incorporated in Qingdao City, PRC. Tiandihui Foodstuffs Sales is a wholly owned subsidiary of Tiandihui Pet Foodstuffs. Tiandihui Foodstuffs Sales has been deregistered and dissolved in June 2025.

On February 27, 2020, TDH Foods Limited was incorporated in Hong Kong, with the purpose of being a holding company for equity interests in Tiandihui Pet Foodstuffs. TDH Foods Limited does not conduct any operations or own any material assets or liabilities.

On August 24, 2020, TDH Holdings, Inc. acquired 100% equity interests of TDH Foods Limited. The acquisition of TDH Foods Limited and its subsidiaries is a transaction between entities under common control.

On June 4, 2021, TDH Income Corporation ("TDH Income") was incorporated in Nevada. TDH Holdings, Inc. owns a 99.99% interest in TDH Income, and in December 2021, TDH Holdings, Inc. acquired the remaining 0.01% interest in TDH Income. As a result, TDH Income became a wholly-owned subsidiary of TDH Holdings, Inc.

On June 9, 2021, Ruby21Noland LLC ("Ruby21Noland") was incorporated in Missouri. Ruby21Noland is a wholly owned subsidiary of TDH Income.

On October 31, 2021, TDH Income acquired 51% equity interests of Far Ling's Inc. and 100% equity interests of Bo Ling's Chinese Restaurant, Inc. On June 7, 2024, TDH Income sold its 51% equity interest in Far Ling's Inc. and its 100% equity interest in Bo Ling's Chinese Restaurant, Inc., to third parties. As a result, the Company discontinued its restaurant business line (see Note 4).

On January 22, 2022, Beijing Wenxin Co., Ltd. ("Beijing Wenxin") was incorporated in Beijing City, PRC.

On March 27, 2023, Qingdao Chihong Information Consulting Co., Ltd. ("Qingdao Chihong") was incorporated in Qingdao City, PRC.

In order to undertake the commercial real estate property management business, on April 30, 2024, Beijing Wenxin Co., Ltd. acquired 60% equity interests of Beijing Jingshi Commercial Management Co., Ltd. ("Beijing Jingshi") an entity with rich real estate asset management and service experience and with the service capability to manage real estate property on behalf of the property owners.

On May 14, 2024, HARDEES2470 LLC ("HARDEES2470") was incorporated in Missouri. HARDEES2470 is a wholly owned subsidiary of TDH Income.

On November 15, 2024, TDH Holdings, Inc. acquired 90% equity interests of Vigour Management Limited ("Vigour") in order to further strengthen the Company's commercial real estate property management business in the future.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name of subsidiaries** | **Date of<br> incorporation** | **Place of<br> incorporation** | **Ownership<br> percentage** | **Principal<br> activities** |
| TDH Foods limited | August 24, 2020 | Hong Kong | 100% | Investment |
| TDH HK limited | February 21, 2016 | Hong Kong | 100% | Investment |
| TDH Income Corporation | June 4, 2021 | Nevada | 100% | Investment |
| Beijing Wenxin Co., Ltd. | January 22, 2022 | Beijing, China | 100% | Investment |
| Vigour Management Limited. | November 15, 2024 | BVI | 90% | Investment |
| Ruby21Noland LLC | June 9, 2021 | Missouri | 100% | commercial real estate business |
| HARDEES2470 LLC | May 14, 2024 | Missouri | 100% | commercial real estate business |
| Hengzhuo Investment Limited | November 15, 2024 | Hong Kong | 90% | Investment |
| Beijing Ruihe Commercial Management Co., Ltd. | November 15, 2024 | Beijing, China | 90% | commercial real estate business |
| Beijing Ruihe Space Commercial Management Co., Ltd. | November 15, 2024 | Beijing, China | 90% | commercial real estate business |
| Qingdao Chihong Information Consulting Co., Ltd. | March 27, 2023 | Qingdao, China | 100% | Investment |
| Beijing Jingshi Commercial Management Co., Ltd. | April 30, 2024 | Beijing, China | 60% | commercial real estate business |
| Beijing Jingshi Space Commercial Management Co., Ltd. | April 30, 2024 | Beijing, China | 60% | commercial real estate business |

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TDH Holdings and its consolidated subsidiaries are collectively referred to herein as the "Company", "we" and "us", unless specific reference is made to an entity.

**Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of Presentation and Principles of Consolidation***

The accompanying audited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP").

This basis of accounting differs in certain material respects from that used for the preparation of the books of account of the Company, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liabilities established in the PRC ("PRC GAAP"), the accounting standards used in the places of their domicile. The accompanying consolidated financial statements reflect necessary adjustments not recorded in the books of account of the Company to present them in conformity with U.S. GAAP.

The consolidated financial statements include the accounts of the Company, its wholly-owned and majority-owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated upon consolidation. The results of subsidiaries acquired or disposed of during the respective periods are included in the consolidated statements of operations and comprehensive loss from the effective date of acquisition or up to the effective date of disposal, as appropriate. The portion of the income or loss applicable to noncontrolling interest in subsidiaries is reflected in the consolidated statements of operations and comprehensive loss.

***Discontinued operations***

On March 16, 2022, the People's Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors' application of bankruptcy liquidation of Tiandihui and it entered into bankruptcy proceedings. On December 27, 2023, the court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed. As a result, Tiandihui has been fully disposed as of December 31, 2023.

In addition, on June 7, 2024, the Company sold its 51% equity interest in Far Ling's Inc. and 100% equity interest in Bo Ling's Chinese Restaurant, Inc., to third parties. As a result, the Company discontinued its restaurant business and started to focus on owning, operating and managing commercial real estate properties in the PRC going forward.

A component of a reporting entity or a group of components of a reporting entity that are disposed or meet the criteria to be classified as held for sale, such as the management having the authority to approve the action, commits to a plan to sell the disposal group, should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. Discontinued operations are reported when a component of an entity comprising operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity is classified as held for disposal or has been disposed of, if the component either (1) represents a strategic shift or (2) have a major impact on an entity's financial results and operations. In the consolidated statements of operations and comprehensive loss, result from discontinued operations is reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis. In order to present the financial effects of the continuing operations and discontinued operations, revenues and expenses arising from intra-group transactions are eliminated except for those revenues and expenses that are considered to continue after the disposal of the discontinued operations (see Note 4).

***Reclassifications***

In connection with the discontinued operations of a business, certain prior-year amounts have been reclassified for consistency with the current-year presentation. These reclassifications had no effect on the reported results of operations. The assets and liabilities related to the discontinued operations are classified as assets/liabilities held for sale as of December 31, 2023, while results of operations related to the discontinued operations, including comparatives, were reported as losses from discontinued operations for the years ended December 31, 2024 and 2023. Certain prior-year balance sheet accounts have been reclassified to conform to the current-year presentation.

***Liquidity and Capital Resources***

The Company's consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company discontinued its restaurant business segment in 2024 and shifted its focus to owning, operating and managing commercial real estate projects. Revenue from the Company's commercial real estate segment increased by approximately $0.69 million in 2025 as compared to 2024. However, the Company's loss from continuing operations was approximately $1.83 million in 2025, and net cash used in operating activities was approximately $1.78 million. For the year ended December 31, 2025, the Company reported net income of approximately $1.78 million, which was primarily attributable to non-operating investment income; excluding such investment income, the Company would have reported a net loss for the year. Currently, the Company's revenue is substantially generated from the commercial real estate management business. The Company's business turnaround depends, in part, on its ability to successfully obtain and lease new properties. If the Company is not able to effectively manage, lease and acquire new properties that successfully generate revenue, the Company may not be able to grow and maintain its business as anticipated, and its revenue may decline and its future business, financial condition and results of operations may be materially adversely affected.

In assessing its liquidity, management monitors and analyzes the Company's cash on-hand, its ability to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments. As of December 31, 2025, the Company had total current assets of $34.11 million, primarily consisting of cash balance of approximately $19.16 million and short-term investment of approximately $14.53 million, which is highly liquid and can be used to support the Company's future capital expenditure requirement if needed.

As of December 31, 2025, the Company's total current liabilities amounted to approximately $6.71 million, primarily consisting of accrued expenses and other current liabilities of approximately $5.14 million, due to related parties of approximately $0.3 million and current portion of operating lease liabilities of $0.92 million.

As a result, the Company had approximately $27.4 million working capital as of December 31, 2025.

During the year ended December 31, 2025, the Company's operating activities and financing activities both used cash, and liquidity was primarily supported by net proceeds from its short-term investment portfolio. Net cash used in operating activities was approximately $1.78 million and net cash used in financing activities was approximately $1.05 million, while investing activities provided net cash of approximately $6.24 million, driven by net proceeds from sales of short-term investments. The Company's short-term investment balance of approximately $14.53 million as of December 31, 2025 is highly liquid, and the Company expects to continue using this portfolio, together with cash on hand, to fund its operating and capital expenditure requirements. Going forward, the Company intends to improve its liquidity through improving business profitability and generating cash flow from operations, and may also raise capital from outside investors. The Company's expectation, therefore, is that it will seek to access the capital markets in both the U.S. and China to obtain funds as needed. At the present time, however, the Company does not have commitments of funds from any third party.

The Company believes that its current cash, cash equivalents and short-term investments will be sufficient to meet its working capital needs for the next 12 months from the date the audited financial statements were issued.

***Foreign Currency Translation***

The accompanying consolidated financial statements are presented in United States Dollar ("$"), which is the reporting currency of the Company. The functional currency of TDH Holdings, TDH HK, TDH Foods, TDH Income Corporation, Ruby21Noland LLC, HARDEES2470 LLC, Vigour Management Limited, Hengzhuo Investment Limited, and TDH Foods Limited is the United States Dollar. The functional currency of the functional currency of our subsidiaries located in China, is Renminbi ("RMB"). The functional currency of TDH Group BVBA is Euro ("€").

For the subsidiaries whose functional currencies are RMB and Euro, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income or loss. Transaction gains and losses are reflected in the consolidated statements of operations.

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purpose of preparing the consolidated financial statements were as follows (USD$1=RMB):

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| | | | | |
|:---|:---|:---|:---|:---|
| **Period Covered** | **Balance<br> Sheet<br> Date Rates** | **Balance<br> Sheet<br> Date Rates** | **Average<br> Rates** | **Average<br> Rates** |
| &nbsp;&nbsp;&nbsp;Year ended December 31, 2025 |  | 7.0288 |  | 7.1429 |
| &nbsp;&nbsp;&nbsp;Year ended December 31, 2024 |  | 7.1884 |  | 7.1217 |

---

The exchange rates used to translate amounts in Euro into U.S. Dollars for the purpose of preparing the consolidated financial statements were as follows (USD$1=€):

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| | | | | |
|:---|:---|:---|:---|:---|
| **Period Covered** | **Balance<br> Sheet<br> Date Rate** | **Balance<br> Sheet<br> Date Rate** | **Average<br> Rate** | **Average<br> Rate** |
| &nbsp;&nbsp;&nbsp;Year ended December 31, 2025 |  | 0.8535 |  | 0.8822 |
| &nbsp;&nbsp;&nbsp;Year ended December 31, 2024 |  | 0.9552 |  | 0.9503 |

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***Use of Estimates***

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for credit losses, estimates use in lease accounting and income taxes including the valuation allowance for deferred tax assets. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.

***Cash, Cash Equivalents and Restricted Cash***

Cash and cash equivalents include cash on hand, cash in time deposits and highly liquid investments purchased with original maturities of three months or less. These deposits were insured per the PRC's new Deposit Insurance Regulation for up to RMB500,000 for one bank.

Restricted cash consists of bank accounts frozen due to specific litigations. The restriction on the use of such cash is imposed by the banks pursuant to court orders and remains effective until the court's freezing orders are resolved. See Note 14 for details on specific contingencies. Restricted cash is classified as a current asset on the Company's consolidated balance sheets, as all such balances are expected to be released and become unrestricted cash within 12 months from December 31, 2025, subject to the satisfaction of relevant legal procedures or court rulings.

***Short-term Investments***

During the years ended December 31, 2023, 2024 and 2025, TDH Holdings invested in equity securities of certain publicly listed companies through various open market transactions. The investments in marketable securities are managed and operated by an asset management company. Pursuant to the investment management agreement, the Manager is entitled to a performance fee equal to 25% of total realized gains for each applicable period. In addition, for the year ended December 31, 2023, 2024 and 2025, if the total return on the invested principal exceeds 20%, the Manager is entitled to an additional special bonus equal to 70% of realized gains generated above 120% of the principal invested.

For the years ended December 31, 2025, 2024 and 2023, net realized gains (losses) amounted to $10,801,316, $6,671,948 and $(2,644,576), respectively, and performance fees incurred were $6,269,787, $2,860,609 and $0, respectively.

TDH Holdings' investments in marketable securities are accounted for pursuant to ASC 321 and reported at their readily determinable fair value as quoted by market exchanges in the consolidated balance sheets with change in fair value recognized in earnings. Gains and losses on marketable securities are as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
| In millions of USD | **2025** | **2024** | **2023** |
| Net gains (losses) during the period on marketable securities<sup>(1)</sup> | $10.80 | $6.67 | $(2.64) |
| Less: Realized net gains (losses) on marketable securities | 7.47 | 6.23 | 0.44 |
| Unrealized gains (losses) on marketable securities | 3.33 | 0.44 | (3.08) |

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(1) Included in "investment income" in the accompanying consolidated statements of operations
and comprehensive loss.

***Business Combination***

In April 2024, the Company acquired a 60% equity interest of Beijing Jingshi Commercial Management Co., Ltd. In November 2024, the Company acquired a 90% equity interest of Vigour Management Limited (see Note 3).

Business combination is accounted for under the purchase method of accounting. Under the purchase method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill. Results of operations of the acquired business are included in the statement of operations from the date of acquisition.

***Non-controlling Interest***

Non-controlling interests represent minority shareholders' 40% ownership interest in Beijing Jingshi and 10% ownership interest in Vigour Management Limited as of December 31, 2025. The non-controlling interests are presented in the consolidated balance sheets separately from equity attributable to the shareholders of the Company and have been separately disclosed in the Company's consolidated statements of operations and comprehensive income to distinguish the interests from that of the Company.

***Current Expected Credit Losses***

On January 1, 2020, the Company adopted FASB Accounting Standards Update (ASU) 2016-13, *Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments* (ASC Topic 326) and its amendments using the modified retrospective approach. Results for reporting periods beginning after January 1, 2020 are presented under ASC Topic 326, while prior period amounts are not adjusted. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Rental receivables arising from the Company's operating sublease arrangements are accounted for under ASC Topic 842, *Leases*, and are excluded from the scope of ASC Topic 326 pursuant to ASC 326-20-15-3(g). The Company assesses the collectability of rental receivables at the individual tenant level at each reporting date. Given the Company's practice of collecting two to three months' rent in advance from all tenants, outstanding rental receivable balances are structurally minimal and fully covered by advance deposits held at all times. Collectability of lease payments for all active tenants is assessed as probable and no allowance has been recorded as of December 31, 2025 and 2024.

Other receivables, consisting primarily of security deposits paid to landlords, are financial assets measured at amortized cost and are within the scope of ASC Topic 326. Security deposits are assessed individually based on each landlord's creditworthiness, current conditions, and the Company's ongoing monitoring of collectability.

***Property, Plant and Equipment***

Property, plant and equipment are stated at cost less depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Maintenance, repairs and betterments, including replacement of minor items, are charged to expense; major additions to physical properties are capitalized.

Depreciation of property, plant and equipment is calculated based on their cost, less their estimated residual value, if any, using the straight-line method over their estimated useful lives. Estimated useful lives are as follows:

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| | |
|:---|:---|
| Electronic equipment | 5 - 10 years |
| Office equipment | 5 - 10 years |
| Leasehold improvement | Shorter of the lease term or estimated useful life |
| Buildings | 20 years |

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***Goodwill***

Goodwill represents the excess of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred. Goodwill is carried at cost less accumulated impairment losses. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed.

 ****

**Impairment of Long- lived Assets and Goodwill**

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. Long-lived assets are assets that are expected to provide economic benefits over a period greater than one year and are not intended for sale in the ordinary course of business; the Company's long-lived assets include property, plant and equipment (PP&E), intangibles, and operating lease right-of-use (ROU) assets. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset's estimated fair value and its book value. The Company recorded impairment loss on long-lived assets other than goodwill of $0, $0 and $1,964 for the years ended December 31, 2025, 2024 and 2023, respectively.

The Company's goodwill is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. In testing for goodwill impairment, the Company compares the fair value of its reporting unit to its carrying value including the goodwill of that unit. If the carrying value, including goodwill, exceeds the reporting unit's fair value, the Company will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit's fair value. The loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. Given the Company's net loss position, the Company recorded impairment of goodwill of $0, $325,832 and $0 for the years ended December 31, 2025, 2024 and 2023, respectively.

***Fair Value of Financial Instruments***

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurement for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

The Company measures certain financial assets, including the investment under the measurement alternative method and equity method on other-than-temporary basis, intangible assets and fixed assets at fair value when an impairment charge is recognized.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 — Unobservable inputs which are supported by little or no market activity.

Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

For certain of the Company's financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, advances to suppliers, inventories, prepayments and other current assets, accounts payable, advances from customers, taxes payable, bank overdrafts, short-term loans and other current liabilities, the carrying amounts approximate their fair values due to the short maturities. The fair value of the Company's investments in the equity securities of publicly listed companies are measured using quoted market prices.

The following table presents information about the Company's assets that are measured at fair value on a recurring basis as of December 31, 2025 and 2024 and indicates the fair value hierarchy of the valuation.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quoted<br> Prices in<br> Active<br> Markets for<br> Identical<br> Assets<br> (Level 1)** | **Significant<br> Other<br> Observation<br> Inputs<br> (Level 2)** | **Significant<br> Unobservable<br> Inputs <br> (Level 3)** | **Total<br> Balance** |
| Publicly listed equity securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;As of December 31, 2025 | $14531930 |  |  | 14531930 |
| &nbsp;&nbsp;&nbsp;As of December 31, 2024 | $12952597 |  |  | 12952597 |

---

***Lease***

On January 1, 2019, the Company adopted ASU 2016-02, *Leases* (together with all amendments subsequently issued thereto, "ASC Topic 842"), using the modified retrospective method. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of electing this transition method, previously reported financial information has not been restated to reflect the application of the new standard to the comparative periods presented. The Company elected the package of practical expedients permitted under the transition guidance within ASC Topic 842, which among others, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheet for new or existing lease arrangements with terms of 12 months or less. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. In addition, the Company elected the land easement transition practical expedient and did not reassess whether an existing or expired land easement is a lease or contains a lease if it has not historically been accounted for as a lease.

The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company's incremental borrowing rate, on a secured basis. The lease term includes option renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives.

Payments made under operating leases are charged to the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease period. The Company does not have finance lease arrangements as of December 31, 2025 and 2024. See Note 13 for further discussion.

***Earnings (Loss) per Share***

Basic earnings (loss) per common share is computed by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) attributable to common shareholders by the sum of the weighted average number of common shares outstanding and dilutive potential common shares during the period. Potentially dilutive common shares consist of common shares warrants using the treasury stock method. Common equivalent shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive. There were no diluted shares for the years ended December 31, 2025, 2024 and 2023.

***Revenue Recognition***

*Lease revenue*

The Company recognizes lease revenue under ASC 842, *Leases*, and all the lease contracts are operating leases. The Company has elected to exclude from revenue and expenses sales taxes and other similar taxes collected from its tenants. Under the commercial real estate business lines, the Company entered into property management agreements with the property owners, pursuant to which the Company leases the commercial real estate properties (primarily office space) directly from the property owners and is obligated to make monthly lease payment to the property owners regardless of whether the leased commercial property is subsequently rented out or not to subtenants. The Company then subleases those properties to subtenants, for which it selects qualified subtenants, negotiates and establishes rental terms and pricing, collects rental payments, resolves disputes, and bears the credit risk of rental fee collection. The Company believes it serves as a principal in these arrangements and accordingly records rental fees collected from subtenants on a gross basis.

Revenue under the commercial real estate business line consists of two components:

Lease revenue represents the fixed rental fees charged to subtenants for the right to use the leased properties. This revenue is recognized on a straight-line basis over the lease term in accordance with ASC 842.

Property management fee revenue represents fees charged to subtenants for property management services, including tenant coordination, maintenance oversight, and related services. Although these fees are contractually separate from the base rent, the Company has elected the practical expedient under ASC 842 to combine the lease and non-lease components and account for the combined arrangement as a single operating lease, as the lease component is predominant. Accordingly, property management fee revenue is also recognized on a straight-line basis over the lease term consistent with the lease revenue component.

Prior to moving into the property, subtenants are generally required to provide the Company with a rental retainer equal to approximately two months of rental fees. Pursuant to the terms of the rental agreements, the retainer may be applied against the subtenant's unpaid balance of rental or other fees. The rental retainer received from subtenants is recorded as a liability within other current liabilities on the consolidated balance sheets, as it represents an obligation to return the deposit upon lease termination or to apply it against any unpaid rental or other fees owed by the subtenant. The retainer is derecognized from the liability when applied to the subtenant's unpaid balance or refunded upon lease expiration. For the years ended December 31, 2025 and 2024, the Company recognized total lease revenue of $1,251,259 and $563,726, respectively, from its commercial real estate property management business.

Future lease collections generated from contracts already signed with customers for the following five years as of December 31, 2025 were as follows:

---

| | |
|:---|:---|
|  | **As of<br> December 31,<br> 2025** |
| 2026 | $1232810 |
| 2027 | 557960 |
| 2028 | 76840 |
| 2029 | - |
| 2030 and threafter | - |
| Total | $1867610 |

---

Management has concluded that the disaggregation level is the same under both the revenue standard and the segment reporting standard. Revenue under the segment reporting standard is measured on the same basis as under the revenue standard. See Note 12 for information regarding revenue disaggregation by product lines, marketing channels and geographical regions.

Contract liabilities are presented as deferred lease revenue on the consolidated balance sheets, which represents advance lease payments received from subtenants prior to the commencement of the related lease period. These amounts are recognized as lease revenue on a straight-line basis over the lease term as the Company satisfies its obligation to provide the subtenant with the right to use the leased property during the corresponding period. As of December 31, 2025 and 2024, the Company recorded contract liabilities of $255,383 and $183,173, respectively, which were presented as advances from customers on the accompanying consolidated balance sheets. During the years ended December 31, 2025, 2024 and 2023, the Company recognized $1,188,848, $512,156 and $0 of contract liabilities as revenue, respectively.

***Government Grants***

Government grants include cash subsidies as well as other subsidies received from the PRC government by the subsidiaries of the Company. Such subsidies are generally provided as incentives from the local government to encourage the expansion of local business. The government grant is recognized in the consolidated statements of operations and comprehensive loss when cash is received and the relevant performance criteria specified in the grant are met.

***Selling Expenses***

Selling expenses consist primarily of advertising, salaries and shipping and handling costs incurred during the selling activities. Advertising and transportation expenses are charged to expense as incurred.

Selling expense amounted to $49,583, $0 and $22 for the years ended December 31, 2025, 2024 and 2023, respectively.

***Income Taxes***

The Company accounts for income taxes under the provision of FASB ASC 740-10, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

***Comprehensive Income (Loss)***

ASC 220 "*Comprehensive Income*" established standards for reporting and display of comprehensive income (loss), its components and accumulated balances. Components of comprehensive income (loss) include net income (loss) and foreign currency translation adjustment. As of December 31, 2025, 2024 and 2023, the only component of accumulated other comprehensive income (loss) was foreign currency translation adjustment.

***Loss Contingencies***

The Company records accruals for certain of its outstanding legal proceedings or claims when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. When a loss contingency is not both probable and estimable, the Company does not record an accrued liability but discloses the nature and the amount of possible loss, if material, in the notes to the consolidated financial statements.

The Company reviews the developments in contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. The Company makes adjustments to provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves complex judgments about future events. Management is often unable to estimate the loss or a range of loss, particularly where (i) the damages sought are indeterminate, (ii) the proceedings are in the early stages, or (iii) there is a lack of clear or consistent interpretation of laws specific to the industry-specific complaints among different jurisdictions. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including eventual loss, fine, penalty or business impact, if any.

***Related Parties Transactions***

A related party is generally defined as (i) any person that holds 10% or more of the Company's securities and their immediate families, (ii) the Company's management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.

***Segment Reporting***

The Company uses the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company's chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company's reportable segments. The Company's chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information based on U.S. GAAP. The chief operating decision maker now reviews results analyzed by marketing channel. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment as of December 31, 2025 (see Note 12).

***Recently Issued Accounting Pronouncements Not Yet Adopted***

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, that requires disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker and included within each reported measure of segment profit or loss. The standard also requires disclosure of the composition of other segment items included in the measure of segment profit or loss that are not separately disclosed. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of this new guidance did not have a material impact on the Company's consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, that requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates. The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold. The amendments in this accounting standard are effective for fiscal years beginning after December 15, 2024, on a prospective basis. Early adoption and retrospective application are permitted. The adoption of this accounting standard did not have an impact on our Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, that requires disclosure of the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense line item on the income statement. The standard also requires a qualitative description of other amounts included in each relevant expense line item on the income statement that are not separately disclosed. In addition, entities are required to disclose the nature and amount of selling expenses. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. We do not expect the adoption of this accounting standard to have an impact on our Consolidated Financial Statements but will require certain additional disclosures.

**Note 3 – BUSINESS COMBINATION**

***Acquisition of Beijing Jingshi***

 

On April 30, 2024, the Company completed the acquisition of 60% equity interest of Beijing Jingshi Commercial Management Co., Ltd. ("Beijing Jingshi") for a total cash consideration of RMB 707,040 (approximately $99,495). Beijing Jingshi is primarily engaged in providing commercial real estate property management services to customers in the PRC.

The transaction was accounted for as a business combination using the purchase method of accounting in accordance with ASC 805-10-20. The purchase price allocation of the transaction was determined by the Company with the assistance of an independent appraisal firm based on the fair value of the assets acquired and liabilities assumed as of the acquisition date.

The following table presents the purchase price allocation to assets acquired and liabilities assumed for Beijing Jingshi as of the acquisition date. The non-controlling interest represents the fair value of the 40% equity interest not held by the Company:

---

| | |
|:---|:---|
|  | **As of<br> April 30,<br> 2024** |
| Cash and cash equivalent | $16047 |
| Prepayment and other current assets | 242197 |
| Other receivable | 73177 |
| Property and equipment, net | 317072 |
| Right-of-use operating lease assets, net | 2641830 |
| Accounts payable | (370175) |
| Taxes payable | 370 |
| Other payable | (611568) |
| Other liabilities | (19366) |
| Operating lease liabilities | (2667990) |
| Fair value of non-controlling interest | 151362 |
| Goodwill | 326538 |
| Total purchase price consideration | $99495 |

---

The goodwill is mainly attributable to the excess of the consideration paid over the fair value of the net assets acquired that cannot be recognized separately as identifiable assets under U.S. GAAP. Goodwill is not amortized and is not deductible for tax purposes. Due to operating loss of Beijing Jingshi during fiscal year 2024, goodwill of $326,538 has been fully impaired.

The fair value of the non-controlling interest in Beijing Jingshi was determined based on the purchase price allocation report prepared by an independent third-party appraiser by using discount cash flow model.

The amounts of revenue and net loss included in the Company's consolidated statement of operations from the acquisition date to December 31, 2024 are as follows:

---

| | |
|:---|:---|
|  | **From acquisition<br> date to December 31,<br> 2024** |
| **Net revenue** | $512156 |
| **Net loss** | $(131838) |

---

***Acquisition of Vigour Management Limited***

In order to strengthen the Company's commercial real estate property management business line, on November 15, 2024, the Company completed the acquisition of 90% equity interest of Vigour Management Limited ("Vigour"). Vigour is a newly formed entity in 2024 without active business operations prior to the acquisition. Total consideration for acquisition of 90% equity interest in Vigour is $900 (900 ordinary shares at $1.00 per share). The remaining 10% equity interest is held by an unrelated party, Winzone Management Limited. After the acquisition, the Company invested $2.03 million to increase the paid-in capital of Vigour. As of December 31, 2025, Vigour did not have active business operation but will be involved in commercial real estate property management going forward.

**Note 4 – DISCONTINUED OPERATIONS**

***Discontinued operation of Tiandihui in 2023***

The Company's subsidiary, Tiandihui, was mainly engaged in the development, manufacture and sale of petfood in China and other regions. On March 16, 2022, the People's Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors' application of bankruptcy liquidation of Qingdao Tiandihui Foodstuffs Co., Ltd., and it entered into bankruptcy proceedings. On December 27, 2023, the Court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed. As a result, Tiandihui has been fully disposed as of December 31, 2023 and all the material claims against Tiandihui that arose prior to the date of the completion of Tiandihui's bankruptcy proceeding were resolved.

The discontinued operation represents a strategic shift that has a major effect on the Company's operations and financial results, which trigger discontinued operations accounting in accordance with ASC 205-20-45. The results of operations related to the discontinued operations for the years ended December 31, 2023 were reported as income (loss) from discontinued operations.

Prior to the final bankruptcy property distribution plan approved by the Court on December 27, 2023, Tiandihui had short-term bank loans of $4,986,206 as of December 31, 2022, payable to several PRC financial institutions, which were also corporately or personally guaranteed. Tiandihui also pledged certain property and equipment as collateral to further guarantee these loans. As a result of the Court approved bankruptcy property distribution plan, Tiandihui's liabilities arising from the bankruptcy proceedings were fully discharged as of December 31, 2023. The Company recorded a loss from the disposition of Tiandihui in the amount of $15,095,547 for the year ended December 31, 2023.

The results of discontinued operations of Tiandihui for the years ended December 31, 2025, 2024 and 2023 are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Revenue | $- | $- | $- |
| Cost of revenues | - | - | - |
| Gross profit | - | - | - |
| Operating expenses | - | - | - |
| Loss from discontinued operations | - | - | (138263) |
| Other expense, net | - | - | (138263) |
| (Loss) income before tax | - | - | (14957284) |
| Net loss from discontinued operations | $- | $- | $(15095547) |

---

***Discontinued operation of restaurant business in 2024***

 

On June 7, 2024, pursuant to an Asset Purchase Agreement (the "<u>Asset Purchase Agreement</u>"), TDH Income sold all its assets to Flying Dragon Cuisine, LLC, a Kansas limited liability company, for $840,000. On June 7, 2024, pursuant to a Stock Purchase Agreement (the "<u>Stock Purchase Agreement"),</u> TDH Income sold its 100% equity interest in Bo Ling's Chinese Restaurant, Inc, to Richard Ng Living Trust U.D.T., 7/19/95 and Far Ling Ng Living Trust U.D.T., 7/19/95, for $150,000. As a result, the Company discontinued its restaurant business line due to high costs it was experiencing in the restaurant segment business line. Net proceeds received from disposal of the restaurant business amounted to $578,400.

The discontinued operation represents a strategic shift that has a major effect on the Company's operations and financial results, which trigger discontinued operations accounting in accordance with ASC 205-20-45. The results of operations related to the discontinued operations for the years ended December 31, 2024 and 2023 were reported as income (loss) from discontinued operations. Net income (loss) from discontinued operations of Bo Lings and Far Lings amounted to $575,249 and $(153,054) for the years ended December 31, 2024 and 2023, respectively.

The results of discontinued operations of the Company's restaurant business for the years ended December 31, 2025, 2024 and 2023 are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Revenue | $- | $1272666 | $3175055 |
| Cost of revenues | - | (885395) | (2145239) |
| Gross profit | - | 387271 | 1029816 |
| Operating expenses | - | (1094854) | (1214449) |
| Loss from discontinued operations of Far Lings and Bo Lings | - | (707583) | (184633) |
| Other income, net | - | 1282832 | 31579 |
| Income (loss) before tax | - | 575249 | (153054) |
| Net income (loss) from discontinued operations of Far Lings and Bo Lings | $- | $575249 | $(153054) |

---

**Note 5 – ACCOUNTS RECEIVABLE, NET, NET**

Net accounts receivable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | **December 31, <br> 2024** |
| Accounts receivable | $75346 | $5748 |
| Less: Allowance for credit losses | - | - |
| Accounts receivable, net | $75346 | $5748 |

---

**Note 6 – PROPERTY, PLANT AND EQUIPMENT, NET**

As of December 31, 2025 and 2024, property, plant and equipment consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Electronic equipment | $- | $5264 |
| Leasehold improvement | 708204 | 448171 |
| Buildings | 2104005 | 2104005 |
| &nbsp;&nbsp;&nbsp;Total property, plant and equipment | 2812209 | 2557440 |
| Less: Accumulated depreciation | (414017) | (193451) |
| Less: Impairment loss | - | - |
| Translation adjustments | - | - |
| &nbsp;&nbsp;&nbsp;Property, plant and equipment, net | $2398192 | $2363989 |

---

Depreciation expense for the years ended December 31, 2025, 2024 and 2023 was $221,223, $111,642 and $22,649, respectively.

**Note 7 – OTHER CURRENT LIABILITIES**

Other current liabilities mainly consist of interest payable, wages payable and other payables. Wages payable include salaries and bonuses of employees.

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Other payables | $5042459 | $2754305 |
| Interest payable | 56864 | 33917 |
| Wages payable | 21216 | 55839 |
| Accrued expenses | 15000 | 15000 |
| Total | $5135539 | $2859061 |

---

**Note 8 – RELATED PARTY TRANSACTIONS**

The related parties had transactions for the years ended December 31, 2025, 2024 and 2023 consist of the following:

---

| | |
|:---|:---|
| **Name of Related Party** | **Nature of Relationship as of December 31, 2025** |
| Dandan Liu | Chairman of the Board, Shareholder, Chief Executive Officer ("CEO") |
| Feng Zhang | Chief Financial Officer ("CFO") |
| Caifen Zou | Independent director of TDH Holding, Inc. |
| Qiu Li | Independent director of TDH Holding, Inc. |
| Owens Meng | Independent director of TDH Holding, Inc. |
| Xue Jiang | Executive Director and Manager of QD Pet Food |
| Kai Wang | Executive Director and Manager of Beijing Ruihe |
| Fan Wu | Executive Director and Manager of Beijing Ruihe Space |
| Pan Zhang | The Manager of Beijing Jingshi |
| Xiaowan Hu | Supervisor of Beijing Wenxin Information Consulting Co., Ltd. |
| Yang Liu | Supervisor of Qingdao Chihong Information Consulting Co., Ltd. |
| Yang Yang | Supervisor of Beijing Jingshi Space Business Management Co., Ltd. |
| Dayou Zhang | Supervisor of Beijing Ruihe Commercial Management Co., Ltd. |

---

*<u>Due to related parties from continuing operations</u>*

Due to related parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Dandan Liu | 300000 | 200318 |
| Total | $300000 | 200318 |

---

The balance of due to related parties represents expenses paid by related parties on behalf of the Company as well as advances the Company obtained from related parties for working capital purposes. The amounts owed to the related parties are unsecured, non-interest bearing and payable on demand.

**Note 9 – INCOME TAXES**

*British Virgin Islands ("BVI")*

Under the current laws of BVI, TDH Holdings and Vigour are not subject to tax on income or capital gain. In addition, payments of dividends by the Company to their shareholders are not subject to withholding tax in the BVI.

*Hong Kong*

The Company's subsidiaries—TDH HK, TDH Foods and Hengzhuo—were incorporated in Hong Kong and have no operating profit or tax liabilities during the period. TDH HK, TDH Foods and Hengzhuo were subject to tax at 16.5% on the assessable profits arising in or derived from Hong Kong.

*United States*

The Company's subsidiary, TDH Income, is incorporated in the State of Nevada and is subject to the United States Federal income tax at a statutory rate of 21%. On October 31, 2021, TDH Income acquired 51% equity interests of Far Ling's Inc. and 100% equity interests of Bo Ling's Chinese Restaurant, Inc. The Company's subsidiaries, Ruby21Noland and HARDEES2470 LLC, are incorporated in the State of Missouri. For the subsidiaries and entities incorporated in the United States listed above, they are subject to the United States Federal income tax at a statutory rate of 21%. However, no provision for the U.S. Federal income tax has been made as TDH Income Corporation, Ruby21Noland LLC, and HARDEES2470 LLC had immaterial taxable income in this jurisdiction for the reporting periods.

*Belgium*

The Company's subsidiary, TDH Group BVBA, is incorporated in Belgium and has no operating profit or tax liabilities during the reporting period. TDH Group BVBA is subject to tax at 29.58% on the assessable profits arising in or derived from Belgium.

*PRC*

The Company's subsidiaries incorporated in the PRC are subject to PRC Enterprise Income Tax ("EIT") on the taxable income in accordance with the relevant PRC income tax laws. On March 16, 2007, the National People's Congress enacted a new enterprise income tax law, which took effect as of January 1, 2008. The law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises.

The reconciliations of the statutory income tax rate and the Company's effective income tax rate are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| United States income tax rate | 21.00% | 21.00% | 21.00% |
| HK statutory income tax rate | 16.50% | 16.50% | 16.50% |
| PRC statutory income tax rate difference | 0.00% | 0.00% | 0.00% |
| Effect of additional deduction on R&D expense and salary for disabled workers | 0.00% | 0.00% | 0.00% |
| Effect of expenses not deductible for tax purposes | 0.00% | 0.00% | 0.00% |
| Valuation allowance recognized with respect to the loss in subsidiaries | -37.50% | -37.50% | -37.50% |
| Other | -0.00% | -0.00% | -0.00% |
| Total | -% | -% | -% |

---

*Accounting for Uncertainty in Income Taxes*

The tax authority of the PRC Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. Therefore, the Company's PRC entities' tax filings results are subject to change. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company's PRC entities' tax filings, which may lead to additional tax liabilities.

ASC 740 requires recognition and measurement of uncertain income tax positions using a "more-likely-than-not" approach. The management evaluated the Company's tax positions and concluded that no provision for uncertainty in income taxes was necessary as of December 31, 2025 and 2024.

**Note 10 – STOCKHOLDERS' EQUITY**

*<u>Common shares</u>*

In April 2021, a total of 455,000 common shares (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) were issued to four investors with cash proceeds of $2,730,000. The shares were sold without registration under the Securities Act of 1933 in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and rules promulgated under the Securities Act as sales to accredited investors. The Company's intention was to use the proceeds of this offering for working capital and general working purposes. There were no discounts or brokerage fees associated with this offering.

On September 30, 2021, the Company and certain investors entered into a securities purchase agreement in connection with a registered direct offering, pursuant to which the Company agreed to sell to the investors an aggregate of 500,000 of its common shares (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) at purchase price of $17.80 per share (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split). The registered direct Offering closed on September 30, 2021 and the Company received approximately $8.2 million net proceeds from the issuance of 500,000) common shares (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) to investors, after deducting placement agent fees and estimated offering expenses.

On November 3, 2021, the Company and certain investors entered into a securities purchase agreement in connection with a registered direct offering, pursuant to which the Company agreed to sell to the investors an aggregate of 750,000 its common shares (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) at purchase price of $12.80 per share (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split). The registered direct offering closed on November 3, 2021 and the Company received approximately $8.9 million net proceeds from the issuance of 750,000 common shares (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) to investors, after deducting placement agent fees and estimated offering expenses.

On June 14, 2022, the Company's Board approved to effect a reverse stock split of its common shares at the ratio of one-for-twenty with the market effective date of June 14, 2022. The objective of the reverse stock split was to enable the Company to regain compliance with NASDAQ Marketplace Rule 5550(a)(2) and maintain its listing on Nasdaq. As a result of the reverse stock split, each twenty common shares outstanding automatically combined and converted to one issued and outstanding common share without any action on the part of the shareholder. As a result of this stock reverse split, all common stocks issued prior to June 14, 2022 have been retrospectively restated and reflected in the consolidated financial statements.

On July 26, 2022, the Company completed a private placement of securities, and entered into a securities purchase agreement with eight accredited investors pursuant to which the Company sold to the investors an aggregate 4,000,000 of its common shares, at a price of $1.50 per share and warrants at a price of $0.01 per warrant to purchase up to an aggregate 4,000,000 of its common shares, for gross proceeds of $6,040,000 and received net proceeds of $6,017,781 after deducting fees and expenses related to the transaction. The warrants have an exercise price of $2.44 per share, and a term of two years. The warrants are immediately exercisable upon issuance and have a cashless exercise feature. The securities were sold without registration under the Securities Act of 1933 in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and rules promulgated under the Securities Act as sales to accredited investors. The Company's intention was to use the proceeds of this offering for working capital and general working purposes.

*<u>Investor warrants</u>*

In connection with the Company's registered direct offering as consummated on September 30, 2021, pursuant to the securities purchase agreement, the Company also agreed to sell to the investors warrants exercisable for an aggregate of 1,000,000 of its common shares (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split), with warrant purchase price of $0.01 per warrant. The warrants were exercisable immediately as of the date of issuance at an exercise price of $41.20 per share (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) and expired twenty-four (24) months from the date of issuance. The warrants were also be exercised on a cashless basis.

In addition, in connection with the Company's registered direct offering as consummated on November 3, 2021, pursuant to the securities purchase agreement, the Company also agreed to sell to the investors warrants exercisable for an aggregate of 1,500,000 of its common shares (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split), with warrant purchase price of $0.01 per warrant. The warrants were exercisable immediately as of the date of issuance at an exercise price of $29.40 per share (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) and expired twenty-four (24) months from the date of issuance. The warrants were also be exercised on a cashless basis.

As of December 31, 2021, 2,500,000 warrants (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) were issued and outstanding and 1,528,000 warrants (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) have been exercised on the cashless basis in exchange for 1,221,181 of the Company's common shares (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) and the Company did not receive any proceeds from the exercise of these warrants. An additional 972,000 warrants (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split) were exercised on a cashless basis in January 2022 in exchange for 1,104,587 of the Company's common shares (as adjusted for the Company's June 14, 2022 1-for-20 reverse stock split).

For the above-mentioned investor warrants, the Company could compel the exercise of the warrants if the closing price of the Company's common shares exceeded $6.00 for ten (10) consecutive trading days commencing six (6) months after issuance. The exercisability of the warrants was limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 9.99% of the Company's common shares. As of the date of this Annual Report, all investor warrants issued in the September and November 2021 registered direct offerings have been exercised and none remain outstanding.

On July 26, 2022, in connection with the Company's private placement of securities as mentioned above, in which the Company sold to the investors an aggregate 4,000,000 of its common shares, at a price of $1.50 per share and warrants at a price of $0.01 per warrant to purchase up to an aggregate 4,000,000 of its common shares, for gross proceeds of $6,040,000. The warrants have an exercise price of $2.44 per share, and with an original term of two years. The warrants were immediately exercisable upon issuance and have a cashless exercise feature. On July 11, 2023, the Company and investors agreed to extend the exercise period of the warrants to July 26, 2027. The Company recorded additional stock compensation expense of $3,040,000 for the year ended December 31, 2023 related to this modification. The warrants are classified as equity instruments in accordance with ASC 815-40, Contracts in Entity's Own Equity, as they are indexed to the Company's own common shares, do not require net cash settlement, and meet the criteria for equity classification. The Company estimates the fair value of the warrants using the Black-Scholes option pricing model; assumptions used in calculating the fair value represent management's best estimates and involve inherent uncertainties and the application of management's judgment.

The fair value of the warrants were estimated using the following assumptions:

---

| | |
|:---|:---|
|  | **July 11, <br> 2023** |
| Exercise price | $2.44 |
| Stock Price | $1.28 |
| Term (in years) | 4.04 |
| Volatility | 115.59% -166.99 |
| Risk-free interest rate | 4.52% |
| Dividend yield | 0 |

---

The following table summarizes the investor warrants activities for the years ended December 31, 2025, 2024 and 2023:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of warrants** | **Weighted Average Exercise Price** | **Weighted Average Remaining Contractual Term (years)** |
| Exercisable, December 31, 2021 | 19440000 | $32.60 | 1.75 |
| Granted | 4000000 | $2.44 | 2.00 |
| Exercised | (19440000) | $32.60 | 0.75 |
| Outstanding, December 31, 2023 | 4000000 | $2.44 | 3.57 |
| Outstanding, December 31, 2024 | 4000000 | $2.44 | 2.57 |
| Outstanding, December 31, 2025 | 4000000 | $2.44 | 1.57 |
| Exercisable, December 31, 2025 | 4000000 | $2.44 | 1.57 |

---

*<u>Statutory reserve</u>*

In accordance with the relevant laws and regulations of the PRC, the Company's PRC subsidiaries are required to set aside at least 10% of their respective after-tax net profits each year determined in accordance with PRC GAAP and if any, to fund the statutory reserve until the balance of the reserve reaches 50% of their respective registered capital. The statutory reserve is not distributable in the form of cash dividends and can be used to make up cumulative prior year losses. As of December 31, 2024, the balance of statutory reserve was $0.

**Note 11 – CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS**

*<u>Customers</u>*

For the years ended December 31, 2025, 2024 and 2023, customers accounting for 10% or more of the Company's net revenue were as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
| <br>**Customer** | **2025** | **2024** | **2023** |
| Customer A | \*% | 10.34% | \*% |
| Customer B | \*% | 10.30% | \*% |

---

**\*** Less than 10%

As of December 31, 2025, Customer C accounted for 84.59% of the Company's total accounts receivable.

*<u>Suppliers</u>*

For the years ended December 31, 2025, 2024 and 2023, suppliers accounting for 10% or more of the Company's purchase were as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
| <br>**Supplier** | **2025** | **2024** | **2023** |
| Supplier A | \*% | 29.78% | \*% |
| Supplier B | 18.41% | 24.02% | \*% |
| Supplier C | 15.77% | 23.30% | \*% |
| Supplier D | 10.79% | 17.73% | \*% |
| Supplier E | 21.82% | \*% | \*% |

---

**\*** Less than 10%

As of December 31, 2025, Supplier C's balance accounted for 93.22% of the Company's total accounts payable.

**Note 12 – SEGMENT AND REVENUE ANALYSIS**

The company is solely engaged in commercial real estate leasing operations in 2025.

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company's chief operating decision maker in order to allocate resources and assess performance of the segment.

In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker ("CODM"), or decision making group, in deciding how to allocate resources and in assessing performance. The Company uses the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company's chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company's reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different services. Based on management's assessment, the Company has determined that it has one operating segment as defined by ASC 280: commercial real estate leasing.

The disaggregated revenue data by geographical regions is set forth as following:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| China | $1188848 | $512157 | $754 |
| U.S. | 68736 | 53461 |  |
| Less: Sales tax and additional surcharge | (6325) | (1892) | - |
| Total net revenue from continuing operations | $1251259 | $563726 | $754 |

---

Our properties are concentrated in Missouri and Beijing, China.

**Note 13 – OPERATING LEASES**

On October 6, 2010, Far Ling Restaurant entered into a lease agreement with the landlord to lease the space for the restaurant for 15 years and six months, which can be renewed for 10 years. On April 4, 2022, Far Ling signed supplemental lease agreement with the landlord to modify the lease agreement, with new lease terms expired by December 31, 2026, and monthly lease payment of $20,000 starting from Jan 2022.

As a result of this change, the lease agreement has been modified, which may have significant impact on the reported ROU assets and corresponding lease liability.

A lease modification is a change to the terms and conditions of a contract resulting in a change to either the scope or consideration for a lease. This could be a change that either adds or terminates the right to use a portion or all of the underlying asset(s) or changes the lease term. If the lease modification only partially reduces the lessee's rights to the underlying asset(s), this is accounted for as a partial termination. In this scenario, the lease liability is remeasured based on the new payment terms, and the ROU asset is reduced based on either the proportionate change in the lease liability or the proportionate change in the asset.

Other lease related expenses amounted to $60,975 for repair and maintenance, $4,680 for parking, and $92,686 for water utility for the year ended December 31, 2023.

The Company discontinued the restaurant business operations in June 2024. As a result, the December 31, 2023 reported operating lease right-of-use assets, operating lease liabilities current and operating lease liabilities non-current of $571,168, $219,917 and $463,196, respectively, have been reclassified to be included in the "non-current assets held for sale associated with discontinued operation of Far Lings and Bolings", "current liabilities held for sale associated with discontinued operation of Farlings and Bolings" and "non-current liabilities held for sale associated with discontinued operation of Farlings and Bolings", respectively, as of December 31, 2023.

On April 30, 2024, the Company completed the acquisition of 60% equity interest of Beijing Jingshi Commercial Management Co., Ltd. ("Beijing Jingshi") and started to provide commercial real estate property management services to customers in the PRC. Under the commercial real estate business line, the Company entered into 18 commercial real estate property management agreements with the property owners, pursuant to which the Company leases the commercial real estate properties (primarily office space) from the property owners directly and is obligated to make monthly lease payment to the property owners. Therefore, when the Company leases the real estate property from the property owner, the Company's lease arrangement with the property owner is deemed to be an operating lease because the Company's contract with the property owners contains a lease based on the right to control the use of the identified asset and the Company serves as the lessee first, and then further rent the commercial property to the tenants to generate property management fees. Because the Company obtains the right to use underlying assets during the lease term, the Company believes that it should recognize right-of-use ("ROU") assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months.

The weighted-average remaining lease term of the Company's leases was approximately 4.34 years as of December 31, 2025. The estimated effect of lease renewal and termination options, as applicable, was included in the consolidated financial statements in current period.

The components of lease expense were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Operating lease cost | $944333 | $585683 | $212480 |
| Short-term lease costs | - | - | - |
| Total lease cost | $944333 | $585683 | $212480 |

---

Supplemental cash flow information related to leases was as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
| Operating cash flow from operating leases | $924082 | $525993 | $240000 |
| Weighted-average remaining lease term | 4.34 years | 4.74 years | 4.0 years |
| Weighted-average discount rate | 3.68% | 4.75% | 3.50% |

---

Supplemental balance sheet information related to leases was as follows:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Operating lease right-of-use assets | $3787265 | $2175456 |
| Total lease right-of-use assets | 3787265 | 2175456 |
| Operating lease liabilities, current | 921524 | 486121 |
| Operating lease liabilities, non-current | 2860197 | 1738371 |
| Total operating lease liabilities | $3781721 | $2224492 |

---

The following table summarizes the maturity of our operating lease liabilities as of December 31, 2025:

---

| | |
|:---|:---|
| 2026 | 1042151 |
| 2027 | 980113 |
| 2028 | 748703 |
| 2029 | 750322 |
| 2030 | 470564 |
| Thereafter | 102786 |
| Total | 4094639 |
| &nbsp;&nbsp;&nbsp;Less: Imputed interest | (312918) |
| Total operating lease liabilities | $3781721 |

---

**Note 14 – COMMITMENTS AND CONTINGENCIES**

*<u>COMMITMENTS</u>*

On May 6, 2025, the Court announced that the bankruptcy liquidation of BVBA had been completed and the bankruptcy proceedings were concluded. As a result, BVBA was fully disposed of as of December 31, 2025.

*<u>CONTINGENCIES</u>*

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

Since November 2019, the Company has been involved in a number of claims pending in various courts, in arbitration, or otherwise unresolved as of December 31, 2022. These claims are substantially related to non-payment of wage payables, non-payment of vendor payables and non-payment of loans and notes payables. These legal proceedings led to, among others actions, certain of the Tiandihui's bank accounts and property, plant and equipment judicially frozen by the court as of December 31, 2022 and 2021. On March 13, 2021, the land and factory buildings above the land owned by Tiandihui. were actioned by the court for $5,098,461 (RMB 33.14 million). In 2021, we paid RMB3.73 million to substantially settle the labor arbitration cases with our former employees, and certain proceeds were used to repay the bank loans. On March 16, 2022, the People's Court of Huangdao District, Qingdao City, Shandong Province made a civil ruling and announced the acceptance of creditors' application of bankruptcy liquidation of Tiandihui and it entered into bankruptcy proceedings. On December 27, 2023, the Court announced that the bankruptcy property distribution plan of Tiandihui was implemented and the bankruptcy proceedings were completed. As a result, Tiandihui has been fully disposed as of December 31, 2023, and all the material claims against Tiandihui that arose prior to the date of the completion of it bankruptcy proceedings were resolved. However, we may be subject to claims that were not discharged in the bankruptcy proceedings, if any. To the extent any pre-bankruptcy liability still remains, the ultimate resolution of such claims and other obligations may have a material adverse effect on our future operating results, profitability and financial condition.

In addition, the Company has historically incurred losses and it is uncertain whether the Company may continue to incur losses in the future. As a result of the discontinuation of the pet food business and the restaurant business as disclosed above, the Company has successfully transformed its core operations to focus on the commercial real estate business. If the Company is unable to effectively operate and manage the commercial property rental business, optimize its asset portfolio, or successfully develop new business opportunities, the Company may continue to face challenges in sustaining or improving its profitability in the future.

*<u>Specific Contingencies</u>*

(i) Pipeline Leakage Litigation: Beijing Jingshi Commercial Management Co., Ltd., a subsidiary of the Company principally engaged in commercial real estate leasing business, has been named as a defendant in a lawsuit filed by a client alleging property damage caused by pipeline leakage. In connection with this litigation, the People's Court of Chaoyang District, Beijing issued a property preservation order freezing RMB 56,725.89 (USD$8,070) in bank deposits held by Beijing Jingshi Commercial Management Co., Ltd. at China Merchants Bank Co., Ltd., Beijing Guanghua Road Branch. Such frozen funds have been reclassified as restricted cash and presented in the consolidated balance sheet, and are not included in cash and cash equivalents. On March 31, 2026, the People's Court of Chaoyang District, Beijing ordered the Company to pay compensation of RMB 54,000 (USD$7,804) to Beijing Liangquan Law Firm, and dismissed all other claims of Beijing Liangquan Law Firm.

(ii) Formaldehyde Exceedance Litigation: Beijing Jingshi Space Commercial Management Co., Ltd., a subsidiary of the Company principally engaged in commercial real estate leasing business, has been named as a defendant in a lawsuit filed by a client alleging personal injury caused by excessive formaldehyde. As of April 15, 2026, the Company has not received formal court notice, and the amount of damages claimed by the plaintiff remains unspecified. Based on currently available information, the Company's legal counsel has assessed that the likelihood of an unfavorable outcome is reasonably possible. As the claim amount has not been determined, a reasonable estimate of potential loss or the range of loss cannot be made at this time, and accordingly no accrual has been recorded. The Company will continue to monitor developments in this matter and update this disclosure as facts and circumstances change. In connection with this litigation, the People's Court of Chaoyang District, Beijing issued a property preservation order freezing RMB 83,496 (USD$11,879) in bank deposits held by Beijing Jingshi Space Commercial Management Co., Ltd. at China Merchants Bank Co., Ltd., Beijing Guanghua Road Branch. Such frozen funds have been reclassified as restricted cash and presented in the consolidated balance sheet, and are not included in cash and cash equivalents. The existence of the court's freezing order indicates that formal legal proceedings are ongoing. The Company will provide updated disclosure upon receipt of formal court notice or determination of the amount involved.

**Note 15 – Subsequent Events**

The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the dates of the balance sheets, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. The Company has analyzed its operations subsequent to December 31, 2025 to the date these audited consolidated financial statements were issued and has determined that it does not have any material events to disclose.

## Exhibit 2.1

**Exhibit 2.1**

**DESCRIPTION OF SECURITIES**

**DESCRIPTION OF CAPITAL STOCK**

The following summary of the terms of our Common Shares may not be complete and is subject to, and qualified in its entirety by reference to, the terms and provisions of our amended memorandum and articles of association. You should refer to, and read this summary together with, our amended memorandum and articles of association to review all of the terms of our Common Shares that may be important to you.

**Overview**

We were incorporated as a BVI business company under the BVI Business Companies Act, 2004 as amended, in the BVI on September 30, 2015 under the name "TDH HOLDINGS, INC." We are authorized to issue a maximum of 50,000,000 Common Shares, of US$0.02 par value each. As of the date hereof, there are 10,323,268 shares of Common Shares issued and outstanding.

**Common Shares**

*General*

All of our issued Common Shares are fully paid and non-assessable. Certificates representing the Common Shares are issued in registered form. Our shareholders who are non-residents of the British Virgin Islands may freely hold and vote their Common Shares.

*Listing*

Our Common Shares are listed on The NASDAQ Capital Market under the symbol "PETZ."

*Transfer Agent and Registrar*

The transfer agent and registrar for the Common Shares is VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY 11598.

*Distributions*

The holders of our Common Shares are entitled to such dividends as may be declared by our board of directors subject to the BVI Act.

*General meetings of shareholders*

Any director of the Company may convene meetings of the Shareholders at such times and in such manner and places within or outside the British Virgin Islands as the director considers necessary or desirable.

Upon the written request of Shareholders entitled to exercise 30 percent or more of the voting rights in respect of the matter for which the meeting is requested the directors shall convene a meeting of Shareholders.

The director convening a meeting shall give not less than 7 days' notice of a meeting of Shareholders to: (a) those Shareholders whose names on the date the notice is given appear as Shareholders in the register of members and are entitled to vote at the meeting; and (b) the other directors.

*Quorum of a meeting of shareholders*

A meeting of Shareholders is duly constituted if, at the commencement of the meeting, there are present in person or by proxy not less than one-third (1/3) of the votes of the Common Shares entitled to vote on Resolutions of Shareholders to be considered at the meeting. A quorum may comprise a single Shareholder or proxy and then such person may pass a Resolution of Shareholders and a certificate signed by such person accompanied where such person be a proxy by a copy of the proxy instrument shall constitute a valid Resolution of Shareholders.

*Voting rights* 

Any action required or permitted to be taken by the shareholders must be effected at a duly called meeting of the shareholders entitled to vote on such action or may be effected by a resolution in writing. At each meeting of shareholders, each shareholder who is present in person or by proxy (or, in the case of a shareholder other than an individual, by its duly authorized representative) will have one vote for each common share that such shareholder holds.

 

*Variation of rights*

If at any time the Common Shares are divided into different classes, the rights attached to any class may only be varied, whether or not the Company is in liquidation, with the consent in writing of or by a resolution passed at a meeting by the holders of not less than 50 percent of the issued Common Shares in that class.

Rights not varied by the issue of shares pari passu

The rights conferred upon the holders of the Shares of any class shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Common Shares ranking pari passu therewith.

*Liquidation*

If we are wound up and the assets available for distribution among our shareholders are more than sufficient to repay all amounts paid to us on account of the issue of shares immediately prior to the winding up, the excess shall be distributable pari passu among those shareholders in proportion to the amount paid up immediately prior to the winding up on the shares held by them, respectively. If we are wound up and the assets available for distribution among the shareholders as such are insufficient to repay the whole of the amounts paid to us on account of the issue of shares, those assets shall be distributed so that, to the greatest extent possible, the losses shall be borne by the shareholders in proportion to the amounts paid up immediately prior to the winding up on the shares held by them, respectively. If we are wound up, the liquidator appointed by us may, in accordance with the BVI Act, divide among our shareholders in specie or kind the whole or any part of our assets (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided and may determine how such division shall be carried out as between the shareholders or different classes of shareholders.

*Calls on common shares and forfeiture of Common Shares* 

Our board of directors may, on the terms established at the time of the issuance of such shares or as otherwise agreed, make calls upon shareholders for any amounts unpaid on their Common Shares in a notice served to such shareholders at least 14 days prior to the specified time of payment. The Common Shares that have been called upon and remain unpaid are subject to forfeiture.

*Redemption of Common Shares* 

Subject to the provisions of the BVI Act, we may issue shares on terms that are subject to redemption, at our option or at the option of the holders, on such terms and in such manner as may be determined by our memorandum and articles of association and subject to any applicable requirements imposed from time to time by, the BVI Act, the SEC, the NASDAQ Capital Market, or by any recognized stock exchange on which our securities are listed.

**DESCRIPTION OF WARRANTS**

**Warrants**

 

*Overview*

There are 4,000,000 warrants outstanding to purchase our Common Shares that were issued to investors on July 26, 2022, pursuant to private placement offering. On July 11, 2023, the Company and Investors agreed to extend the exercise period of the warrants to July 26, 2027, and issued amended and restated warrants reflecting the new exercise period (the "<u>Warrants</u>"). The Warrants allow for the investors to purchase up to 4,000,000 shares of our Common Shares.

The following is a summary of certain terms and provisions of the Warrants.

*Exercisability*

The Warrants became exercisable immediately upon issuance and are exercisable until July 26, 2027. The Warrants are exercisable, at the option of each holder, in whole, or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our Common Shares purchased upon such exercise. Each Warrant is exercisable for one share of our Common Shares (subject to adjustment, as discussed below). The Warrants also have a cashless exercise feature

 

*Exercise Price*

The exercise price of the Common Stock purchasable upon exercise of the Warrants is $2.44 per share. The exercise price and the number of shares of Common Stock issuable upon exercise of the Warrants is subject to appropriate adjustment in relation to certain events, such as dividends, splits, subdivisions, reclassifications, reorganization, consolidation or similar events affecting our Common Shares.

 

*Rights as Stockholder*

The holders of the Warrants do not have the rights or privileges of holders of our Common Shares, including any voting rights, until they exercise their Warrants.

 *Fractional Shares*

No fractional shares of Common Shares will be issued upon the exercise of the Warrants. Rather, the Company shall, round down the number of shares of Common Shares to be issued to the nearest whole number.

 

*Transferability*

 

Subject to applicable laws, the Warrants may be offered for sale, sold, transferred or assigned without our consent.

*Governing Law*

 

The Warrants are governed by New York law.

## Exhibit 12.1

**Exhibit 12.1**

**Certification**

**Pursuant to Rule 13a-14(a) of the Exchange Act**

I, Dandan Liu, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 20-F of TDH Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&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 generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&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;&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; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&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: April 20, 2026 | By: | /s/ Dandan Liu | /s/ Dandan Liu |
|  |  | Name: | Dandan Liu |
|  |  | Title: | Chief Executive Officer |
|  |  |  | (Principal Executive Officer) |

---

## Exhibit 12.2

**Exhibit 12.2**

**Certification**

**Pursuant to Rule 13a-14(a) of the Exchange Act**

I, Feng Zhang, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 20-F of TDH Holdings, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&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 generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&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;&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; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&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: April 20, 2026 | By: | /s/ Feng Zhang | /s/ Feng Zhang |
|  |  | Name: | Feng Zhang |
|  |  | Title: | Chief Financial Officer |
|  |  |  | (Principal Financial and Accounting Officer) |

---

## Exhibit 13.1

**Exhibit 13.1**

**Certification**

**Pursuant to 18 U.S.C. Section 1350**

Pursuant to U.S.C. Section 1350 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of TDH Holdings, Inc. (the "Company"), does hereby certify, to such officer's knowledge, that the Annual Report on Form 20-F for the year ended December 31, 2025 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | | |
|:---|:---|:---|:---|
|  | **TDH Holdings, Inc.** | **TDH Holdings, Inc.** | **TDH Holdings, Inc.** |
| Date: April 20, 2026 | By: | /s/ Dandan Liu | /s/ Dandan Liu |
|  |  | Name: | Dandan Liu |
|  |  | Title: | Chief Executive Officer<br> (Principal Executive Officer) |

---

---

| | | | |
|:---|:---|:---|:---|
| Date: April 20, 2026 | By: | /s/ Feng Zhang | /s/ Feng Zhang |
|  |  | Name: | Feng Zhang |
|  |  | Title: | Chief Financial Officer |

---

## Exhibit 21.1

**Exhibit 21.1**

**List of Subsidiaries**

---

| | | |
|:---|:---|:---|
| **Name** | **Place of Organization** | **Percentage of Ownership** |
| TDH HK Limited | Hong Kong | 100% |
| TDH Foods Limited | Hong Kong | 100% |
| TDH Income Corporation | Nevada | 100% |
| Vigour Management Limited | British Virgin Islands | 90% |
| Beijing Wenxin Company., Ltd. | PRC | 100% |
| Ruby21Noland LLC | Missouri | 100% |
| Hardees2470 LLC | Missouri | 100% |
| Qingdao Chihong Information Consulting Co., Ltd. | PRC | 100% |
| Beijing Jingshi Commercial Management Co., Ltd. | PRC | 60% |
| Hengzhuo Investment Limited | Hong Kong | 90% |
| Beijing Ruihe Commercial Management Co., Ltd. | PRC | 90% |
| Beijing Ruihe Space Commercial Management Co., Ltd | PRC | 90% |
| Beijing Jingshi Space Commercial Management Co., Ltd. | PRC | 60% |

---

## Exhibit 99.4

**Exhibit 99.4**

**TDH Holdings, Inc. Reports Full Year 2025 Audited Financial Results**

BEIJING, China, April 20, 2026 /PRNewswire/ -- TDH Holdings, Inc. (NASDAQ: PETZ) ("TDH" or the "Company"), a PRC-based company that is an operator and manager of commercial real estate properties, announced today its financial results for the fiscal year ended December 31, 2025.

**<u>Full Year 2025 Financial Highlights:</u>**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Twelve Months Ended December 31,** | **For the Twelve Months Ended December 31,** | **For the Twelve Months Ended December 31,** |
| *($ millions, except per share data)* | **2025** | **2024** | **% Change** |
| Revenues from continuing operations | $1.25 | $0.56 | 121.96 |
| Gross profit (loss) | $(0.01) | $0.24 | (104.92) |
| Gross profit (loss) margin | (0.94)% | 42.29% | (43.23) |
| Loss from operations | $(1.83) | $(1.83) | (0.11) |
| Operating loss margin | (146.31)% | (325.10)% | 178.79 |
| Net income (loss) attributable to common stockholders | $1.80 | $2.68 | (32.97) |
| Earnings (loss) per share - basic and diluted | $0.17 | $0.26 | (32.97 |

---

\* pp: percentage points

● Revenues from continuing operations increased by approximately 121.96% from $0.56 million in fiscal year 2024 to $1.25 million in fiscal year 2025. We have strengthened our brand image and enhanced our market competitiveness by upgrading service quality and optimizing the leasing process, among other measures. Meanwhile, we are committed to establishing long-term and stable cooperative relationships with our clients, laying a solid foundation for the sustained growth of our business. We expect revenue from our commercial real estate leasing business to maintain a growth trend in the near term.

● Gross loss from continuing operations was $0.01 million in fiscal year 2025 as compared to gross profit from continuing operations of $0.24 million in fiscal year 2024. The decrease in gross margin in 2025 was mainly due to the reclassification of agency service costs and maintenance costs directly related to the leasing business from administrative expenses to cost of revenues.

● Operating loss from continuing operations was $1.83 million for the fiscal year ended December 31, 2025, compared with $1.83 million for the same period in 2024. As a percentage of total revenues, the operating loss ratio improved significantly to approximately negative 146.31% in 2025 from negative 325.10% in 2024. The improvement in operating loss performance was primarily driven by the substantial increase in total revenues during the year.

● Net income attributable to common stockholders was $1.80 million, or an income per share of $0.17, for the fiscal year 2025 as compared to net loss of $1.80 million, or a loss per share of $0.26, for fiscal year 2024. The decrease in our net income and diluted earnings per share was primarily due to non-recurring losses recognized in connection with the disposal and liquidation of certain non-core legacy subsidiaries, partially offset by higher revenue generated from our commercial real estate management business and improved investment income during 2025.

**Full Year 2025 Financial Results**

 

*Revenues*

The Company's revenues are generated from commercial property leasing and related management services. Revenues from continuing operations increased by approximately 121.96% from $0.56 million in fiscal year 2024 to $1.25 million in fiscal year 2025, driven by the expansion of our property portfolio and improved leasing performance.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Twelve Months Ended December 31,** | **For the Twelve Months Ended December 31,** | **For the Twelve Months Ended December 31,** | **For the Twelve Months Ended December 31,** | **For the Twelve Months Ended December 31,** | **For the Twelve Months Ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **Y/Y Change** | **Y/Y Change** |
|  | **Revenues ($'000)** | **% <br> of Total** | **Revenues ($'000)** | **% <br> of Total** | **Amount ($'000)** | **%** |
| Commercial real estate business revenue | 1258 | 100.51% | 566 | 100.36% | 692 | 122.26% |
| Less: sales tax and additional surcharge | (6) | -0.51% | (2) | -0.36% | 4 | 234.3% |
| **Total** | $**1251** | **100.00%** | $**564** | **100.00%** | $**687** | **121.96%** |

---

For the year ended December 31, 2025, the Company generated all of its revenues from commercial property leasing and related property management services. We completed the discontinuation of our legacy pet food and restaurant business segments in prior periods and have since fully focused on commercial real estate leasing and property management operations. As we continue to scale our commercial real estate portfolio and enhance leasing execution, revenues from continuing operations increased by $0.69 million, or 121.96%, to $1.25 million for the year ended December 31, 2025 from $0.56 million in 2024. We expect our revenue from the commercial real estate management business will continue to grow in the near future.

*Cost of revenues*

Our cost of revenues from continuing operations is primarily comprised of lease and occupancy costs, depreciation and amortization costs, and agency service costs. Our cost of revenues from continuing operations increased by $937,696, or 288.25%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This increase was in line with the growth in revenues from our continuing operations. Our cost of revenues as a percentage of revenues was 100.94% and 57.71% for the years ended December 31, 2025 and 2024, respectively.

*Gross profit (loss) and gross profit (loss) margin*

Our gross margin from continuing operations was -0.94% for the year ended December 31, 2025, compared with a gross margin of 42.29% for the year ended December 31, 2024. The decrease in gross margin in 2025 was mainly due to the reclassification of agency service costs and maintenance costs directly related to the leasing business from administrative expenses to cost of revenues.

 

*Operating expense*

Operating expense consists of selling expenses and general and administrative expenses.

Operating expenses from our continuing operations were $1,818,978 and $2,071,079, for the years ended December 31, 2025 and 2024, respectively, a decrease of $252,101, or -12.17% in fiscal year 2025 as compared to fiscal year 2024. The ratio of operating expenses as a percentage of revenue decrease from 367.39% for the year ended December 31, 2024 to 145.37% for the year ended December 31, 2025.

Selling expense from our continuing operations was $49,583 and $0 for the years ended December 31, 2025, and 2024, respectively, an increase of $49,583 or 100%. Our selling expenses was $49,583 in 2025 as compared to $0 in 2024, mainly due to expenses incurred to expand its sales activities.

General and administrative expenses from our continuing operations were $1,769,395 and $1,745,247 for the years ended December 31, 2025 and 2024 respectively, representing an increase of $24,148, or 1.38%, in fiscal year 2025 as compared to fiscal year 2024. The main reason for the increase was mainly due to property management fees and depreciation expenses relating to additional properties.

Impairment of goodwill charge was $0 million in fiscal year 2025, as compared to $0.32 million in fiscal year 2024.

*Operating loss and operating loss margin*

Operating loss from our continuing operations was $1.83 million for fiscal year 2025, as compared to an operating loss of $1.83 million for fiscal year 2024. Our operating loss as a percentage of total revenues was approximately negative 146.31% and negative 325.10% for the years ended December 31, 2025 and 2024, respectively. The significant improvement in the operating loss margin was primarily driven by the substantial increase in revenue from our commercial real estate leasing and property management business.

*Net income (loss) and earnings (loss) per share*

Net income was $1.78 million for fiscal year 2025, compared to net income of $2.50 million for fiscal year 2024. Net income attributable to common shareholders was $1.78 million, or earnings per share of $0.17, for fiscal year 2025. This compares to net income attributable to common shareholders of $2.68 million, or earnings per share of $0.26 for fiscal year 2024. The decrease in our net income was primarily due to non-recurring losses from the liquidation of legacy non-core subsidiaries, partially offset by higher revenue from our commercial real estate property business segment and increased investment income for the year ended December 31, 2025.

**Financial Conditions**

As of December 31, 2025, the Company had cash and cash equivalents of $19.16 million, compared to $15.70 million as of December 31, 2024. Accounts receivable, net was $0.07 million as of December 31, 2025, compared to $0.01 million as of December 31, 2024. As of December 31, 2025, the Company had working capital of approximately $27.40 million, compared to $24.60 million as of December 31, 2024.

Net cash used in operating activities was $1.78 million for the fiscal year ended December 31, 2025, compared to net cash used in operating activities of $0.23 million for fiscal year 2024. Net cash provided by investing activities was $6.24 million for fiscal year 2025, compared to $2.78 million for fiscal year 2024. Net cash used in financing activities was $1.05 million for fiscal year 2025, compared to no net cash provided by or used in financing activities in fiscal year 2024.

**Liquidity** 

Our consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

Following our discontinuation of the restaurant business in June 2024, we have fully shifted our operating focus to the ownership, operation and management of commercial real estate properties. During fiscal year 2025, revenue from our commercial real estate business increased significantly to $1.25 million, representing substantial growth as compared to prior periods. Currently, substantially all of our revenue is derived from our commercial real estate property business. Our future business growth and operational stability depend, in part, on our ability to successfully onboard, lease and manage additional commercial properties.

If we are not able to effectively manage, lease and acquire new properties that generate stable rental revenue, we may not be able to grow and maintain our business as anticipated, and our revenue may decline. As a result, our future business, financial condition and results of operations may be materially adversely affected. There can be no assurances that future revenue growth or potential capital infusion will be sufficient to enable us to achieve sustained profitability or continuous positive cash flows. In assessing our liquidity, management monitors and analyzes our cash and cash equivalents, our ability to generate recurring revenue, and our operating and capital expenditure commitments.

As of December 31, 2025, we had cash and cash equivalents of approximately $19.16 million. We also had short-term investments of approximately $14.53 million, which are highly liquid and can be readily converted into cash to support our operations as needed.

As of December 31, 2025, our major liabilities included accounts payable of $0.09 million, advances from customers of $0.26 million, due to related parties of $0.30 million, current portion of operating lease liabilities of $0.92 million, and non-current portion of operating lease liabilities of $2.86 million. Our working capital amounted to approximately $27.40 million as of December 31, 2025. Based on the current operating plan, management believes that the Company's cash position, highly liquid short-term investments and improved operating cash flows collectively will provide sufficient liquidity to meet its anticipated liquidity and capital requirements for at least 12 months from the date the audited financial statements are issued.

**Notice**

Rounding amounts and percentages: Certain amounts and percentages included in this press release have been rounded for ease of presentation. Percentage figures included in this press release have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, certain percentage amounts in this press release may vary from those obtained by performing the same calculations using the figures in the financial statements. In addition, certain other amounts that appear in this press release may not sum due to rounding.

**About TDH Holdings, Inc.**

Founded in April 2002, TDH Holdings, Inc. (the "Company") (NASDAQ: PETZ), a PRC-based company that is an owner, operator and manager of commercial real estate properties. More information about the Company can be found at www.tiandihui.com.

 ****

***Forward-Looking Statements***

*This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Specifically, the Company's statements regarding, among others, its growth and business outlook, the excepted revenue growth from the Company's commercial real estate management business and the Company's ability to execute on its business plan, are forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development; general risks affecting the commercial real estate industry (including, without limitation, the inability to enter into or renew leases on favorable terms, changes in client preferences and space utilization, dependence on clients' financial condition, and competition from other developers, owners and operators of real estate); changes in technology; economic conditions; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and the United States and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.* 

**For more information, please contact:**

Feng Zhang, CFO

Email: tdhpets@163.com

Phone: +86 183-1102-1983

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| **ASSETS** |  |  |
| CURRENT ASSETS: |  |  |
| Cash and cash equivalents | $19138205 | $15699562 |
| Restricted cash | 19950 |  |
| Short-term investments | 14531930 | 12952597 |
| Accounts receivable, net | 75346 | 5748 |
| Advances to suppliers, net | 198401 | 37790 |
| Prepayments and other current assets, net | 146385 | 103519 |
| &nbsp;&nbsp;&nbsp;**Total current assets** | 34110217 | 28799216 |
| NON-CURRENT ASSETS |  |  |
| Property, plant and equipment, net | 2398192 | 2363989 |
| Operating lease right-of-use assets | 3787265 | 2175456 |
| &nbsp;&nbsp;&nbsp;**Total non-current assets** | 6185457 | 4539445 |
| **Total assets** | $40295674 | $33338661 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| CURRENT LIABILITIES: |  |  |
| Accounts payable | $90006 | $122251 |
| Deferred lease revenue | 255383 | 183173 |
| Bank overdrafts |  | 73105 |
| Short-term loans - related parties |  | 261725 |
| Taxes payable | 11215 | 14681 |
| Due to related parties | 300000 | 200318 |
| Operating lease liabilities, current | 921524 | 486121 |
| Other current liabilities | 5135539 | 2859061 |
| &nbsp;&nbsp;&nbsp;**Total current liabilities** | 6713667 | 4200435 |
| NON-CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities, non-current | 2860197 | 1738371 |
| &nbsp;&nbsp;&nbsp;**Total liabilities** | 9573864 | 5938806 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SHAREHOLDERS' EQUITY: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common shares ($0.02 par value; 50,000,000 shares authorized; 10,323,268 shares issued and outstanding at December 31, 2025 and 2024) | 206465 | 206465 |
| Additional paid-in capital | 51129439 | 51129439 |
| Accumulated deficit | (20620053) | (23937478) |
| Accumulated other comprehensive loss | (72820) | (95784) |
| &nbsp;&nbsp;&nbsp;**Total TDH Holdings, Inc. shareholders' equity** | 30643031 | 27302642 |
| Non-controlling interest | 78779 | 97213 |
| &nbsp;&nbsp;&nbsp;**Total shareholders' equity** | 30721810 | 27399855 |
| **Total liabilities and shareholders' equity** | $40295674 | $33338661 |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For The Years Ended December 31,** | **For The Years Ended December 31,** | **For The Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Net revenue | $1251259 | $563726 | $754 |
| Total revenue | 1251259 | 563726 | 754 |
| &nbsp;&nbsp;&nbsp;Cost of revenue | 1263000 | 325304 | 976 |
| Total cost of revenue | 1263000 | 325304 | 976 |
| **Gross profit** | (11741) | 238422 | (222) |
| &nbsp;&nbsp;&nbsp;Operating expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling expense | 49583 |  | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense | 1769395 | 1745247 | 3145280 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 3040000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of goodwill | - | 325832 | - |
| **Total operating expenses** | 1818978 | 2071079 | 6185302 |
| **Loss from operations** | (1830719) | (1832657) | (6185524) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income (expense) | 112085 | (68858) | (14276) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (expense) | (6711077) | (2844939) | 461461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain (loss) on disposal of subsidiaries | (590528) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment income (loss), net | 10801316 | 6671948 | (2644576) |
| **Total other income (expenses)** | 3611796 | 3758151 | (2197391) |
| **Income (loss) before income tax provision** | 1781077 | 1925494 | (8382915) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax provision | - | (182) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from continuing operations | 1781077 | 1925312 | (8382915) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from discontinued operations of Tiandihui | - | - | (15095547) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from discontinued operations of Bo Lings and Far Lings | - | 575249 | (153054) |
| **Net income (loss)** | 1781077 | 2500561 | (23631516) |
| Less: Net income (loss) attributable to non-controlling interest | (18434) | (183961) | (5344) |
| **Net income (loss) attributable to TDH Holdings, Inc.** | $1799511 | $2684522 | $(23626172) |
| **Comprehensive income (loss)** |  |  |  |
| **Net income (loss)** | $1781077 | $2500561 | $(23631516) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | 22964 | (718) | (523315) |
| **Total comprehensive income (loss)** | 1804041 | 2499843 | (24154831) |
| Less: Comprehensive income (loss) attributable to non-controlling interest | (18434) | (333106) | (5344) |
| **Comprehensive income (loss) attributable to TDH Holdings, Inc.** | $1822475 | $2832949 | $(24149487) |
| **Earnings (loss) per common share attributable to TDH Holdings, Inc.** |  |  |  |
| Basic | $0.17 | $0.26 | $(2.29) |
| Diluted | $0.17 | $0.26 | $(2.29) |
| **Weighted average common shares outstanding** |  |  |  |
| Basic | 10323268 | 10323268 | 10323268 |
| Diluted | 10323268 | 10323268 | 10323268 |

---

**The accompanying notes are an integral part of these consolidated financial statements.**

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Number of<br> Shares\*** | **Common<br> Shares** | **Additional<br> Paid-in<br> Capital** | **Stock<br> Subscription<br> Receivable** | **Statutory<br> Reserves** | **Accumulated<br> Deficit** | **Accumulated<br> Other<br> Comprehensive<br> Income (Loss)** | **Total<br> Stockholders'<br> Equity<br> Attributable<br> to TDH** | **Non-<br> controlling<br> Interest** | **Total <br> Stockholders'<br> Equity** |
| **Balance, December 31, 2022** | **10323268** | $**206465** | $**48089439** | $**-** | $**160014** | $**(28165927)** | $**428249** | $**20718240** | $**435663** | $**21153903** |
| Net loss |  |  |  |  |  | (23626172) |  | (23626172) | (5344) | (23631516) |
| Stock-based compensation expense |  |  | 3040000 |  |  |  |  | 3040000 |  | 3040000 |
| Adjustment to reflect the effect of disposal of Tiandihui and Chongaijiujiu |  |  |  |  | (160014) | 25170099 |  | 25010085 |  | 25010085 |
| Foreign currency translation adjustment | - | - | - | - | - | - | (523315) | (523315) | - | (523315) |
| **Balance, December 31, 2023** | **10323268** | $**206465** | $**51129439** | $**-** | $**-** | $**(26622000)** | $**(95066)** | $**24618838** | $**430319** | $**25049157** |
| Net income |  |  |  |  |  | 2684522 |  | 2684522 | (183961) | 2500561 |
| Foreign currency translation adjustment | - | - | - | - | - | - | (718) | (718) | (149145) | (149863) |
| **Balance, December 31, 2024** | **10323268** | $**206465** | $**51129439** | $**-** | $**-** | $**(23937478)** | $**(95784)** | $**27302642** | $**97213** | $**27399855** |
| Net income |  |  |  |  |  | 1799511 |  | 1799511 | (18434) | 1781077 |
| Adjustment to reflect the effect of disposal of BVBA |  |  |  |  |  | 1517914 |  | 1517914 |  | 1517914 |
| Foreign currency translation adjustment | - | - | - | - | - | - | **22964** | **22964** | **-** | **22964** |
| **Balance, December 31, 2025** | **10323268** | $**206465** | $**51129439** | $**-** | $**-** | $**(20620053)** | $**(72820)** | $**30643031** | $**78779** | $**30721810** |

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**The accompanying notes are an integral part of these consolidated financial statements.**

**TDH HOLDINGS, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

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| | | | |
|:---|:---|:---|:---|
|  | **For The Years Ended December 31,** | **For The Years Ended December 31,** | **For The Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Cash flows from operating activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) | $1781077 | $2500561 | $(23631516) |
| &nbsp;&nbsp;&nbsp;Less: Net income (loss) from discontinued operations |  | 575249 | (15248601) |
| &nbsp;&nbsp;&nbsp;Net income (loss) from continuing operations | 1781077 | 1925312 | (8382915) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expense | 221223 | 111642 | 22649 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value change of short-term investments, net | (10801316) | (6671948) | 2644576 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of goodwill |  | 325832 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of long-lived assets other than goodwill |  |  | 1964 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory write-down |  |  | 69677 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful accounts |  |  | 22674 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of subsidiaries | 590528 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on disposal of property, plant and equipment |  | 59009 | 37766 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of operating lease right-of-use assets | 869382 | 459251 | 2623288 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation |  |  | 3040000 |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | (141066) | 114462 | 40894 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories, net |  | 8370 | 44240 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (924186) | (441402) | 691854 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | 100000 |  | 1928329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advances to suppliers, net | (157201) | (38144) | (32465) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepayments and other current assets, net | (41125) | (1660998) | (3210336) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 2847169 | 2927432 | (369142) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable - related parties |  |  | 502635 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest payable |  | 30662 | 3573 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes payable | 5191 | 6982 | (2445) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advances from customers | 67256 | 185145 | (6974) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 3802884 | 4420782 | (1234226) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities from continuing operations | (1780184) | 1762389 | (1564383) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities from discontinued operations | - | (1996377) | 999987 |
| &nbsp;&nbsp;&nbsp;**Net cash used in operating activities** | $(1780184) | $(233987) | $(564396) |
| &nbsp;&nbsp;&nbsp;**Cash flows from investing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments to acquire property and equipment | (244088) | (1881370) | (7655) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Disposal of subsidiaries |  | 578400 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash obtained from business acquisition |  | 16047 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of short-term investments | (60393565) | (46777749) | (37066925) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of short-term investments | 66873258 | 50944982 | 31024365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment in equity |  | (99280) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leasehold improvement | - | - | (16836) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) investing activities from continuing operations | 6235605 | 2781030 | (6067051) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by investing activities from discontinued operations | - | - | - |
| &nbsp;&nbsp;&nbsp;**Net cash provided by (used in) investing activities** | 6235605 | 2781030 | (6067051) |
| &nbsp;&nbsp;&nbsp;**Cash flows from financing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments to related parties |  |  | (6774) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of short-term loans | (422237) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment to related party | (624595) | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) financing activities from continuing operations | (1046832) | - | (6774) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities from discontinued operations | - | - | - |
| &nbsp;&nbsp;&nbsp;**Net cash (used in) financing activities** | $(1046832) | $- | $(6774) |
| &nbsp;&nbsp;&nbsp;**Effect of exchange rate changes on cash, cash equivalents and restricted cash** | 50004 | (508863) | (1557522) |
| &nbsp;&nbsp;&nbsp;**Net change in cash, cash equivalents and restricted cash** | 3458593 | 2038180 | (8195743) |
| &nbsp;&nbsp;&nbsp;**Cash, cash equivalents and restricted cash, beginning of the year** | 15699562 | 13661382 | 21857125 |
| &nbsp;&nbsp;&nbsp;**Cash, cash equivalents and restricted cash, end of the year** | $19158155 | $15699562 | $13661382 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: Cash and restricted cash of discontinued operations at the end of the period | - | - | 534777 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and restricted cash of continued operations at the end of the period | $19158155 | $15699562 | $13126605 |
| &nbsp;&nbsp;&nbsp;**Supplemental cash flow information** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest paid | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes paid | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;**Non-cash investing and financing activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liabilities assumed in connection with purchase of property, plant and equipment | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable reclassified to short-term loans | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term loans settled by transferring an equity investment to the creditor | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cashless exercise of warrants | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right of use assets obtained in exchange for operating lease obligations | $2406836 | $2665894 | $- |
| &nbsp;&nbsp;&nbsp;**Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $19138205 | $15699562 | $13126605 |
| &nbsp;&nbsp;&nbsp;Restricted cash | $19950 | $- | $534777 |
| &nbsp;&nbsp;&nbsp;**Total cash, cash equivalents, and restricted cash** | $**19158155** | $**15699562** | $**13661382** |

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**The accompanying footnotes are an integral part of these financial statements.**