# EDGAR Filing Document

**Accession Number:** 0001841209
**File Stem:** 0001829126-26-002773
**Filing Date:** 2026-3
**Character Count:** 621612
**Document Hash:** 6583a5e3c6d62aca202cafccfa2fd63c
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001829126-26-002773.hdr.sgml**: 20260327

**ACCESSION NUMBER**: 0001829126-26-002773

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 110

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260327

**DATE AS OF CHANGE**: 20260327

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** MicroCloud Hologram Inc.
- **CENTRAL INDEX KEY:** 0001841209
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40519
- **FILM NUMBER:** 26804141

**BUSINESS ADDRESS:**
- **STREET 1:** 100 PARK AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10017
- **BUSINESS PHONE:** 2125993322

**MAIL ADDRESS:**
- **STREET 1:** 100 PARK AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10017

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Golden Path Acquisition Corp
- **DATE OF NAME CHANGE:** 20210120

?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**

**Date of event requiring this shell company report ________**

**For the transition period from ________ to ________**

**Commission file number** <u>001-40519</u>

**MicroCloud Hologram Inc.**

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

**Not Applicable**

(Translation of Registrant's name into English)

**Cayman Islands**

(Jurisdiction of incorporation or organization)

**Room 302, Building A, Zhong Ke Na Neng Building, Yue Xing Sixth Road, Nanshan District, Shenzhen, People's Republic of China 518000**

(Address of principal executive offices)

**Guohui Kang, Chief Executive Officer**

**<u>kang@mcvrar.com</u>**

**Tel: +86 (0755) 2291 2036**

**Room 302, Building A, Zhong Ke Na Neng Building, Yue Xing Sixth Road, Nanshan District, Shenzhen, People's Republic of China 518000**

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

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

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading symbol(s)** | **Name of each exchange on which registered** |
| Class A Ordinary share, $0.8 par value | HOLO | The Nasdaq Stock Market LLC |
| Warrants to purchase ordinary shares | HOLOW | The Nasdaq Stock Market LLC |

---

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**

[**Table of Contents**](#toc)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: As of December 31, 2025, there were 22,512,360 Class A Ordinary shares issued and outstanding, with a par value of US$0.8 per share. This number reflects the 40-to-1 Share Consolidation that took effect on April 21, 2025.

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 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, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Emerging growth company ☒

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

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

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

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

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

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

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

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

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING

THE PAST FIVE YEARS)

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

[**Table of Contents**](#toc)

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  | **Page** |
| [INTRODUCTORY NOTE](#a_001a) | ii |
| [FORWARD-LOOKING STATEMENTS](#a_001) | iii |
| [PART I](#a_003) | 1 |
| [ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#a_004) | 1 |
| [ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE](#a_005) | 1 |
| [ITEM 3. KEY INFORMATION](#a_006) | 1 |
| [ITEM 4. INFORMATION ON THE COMPANY](#a_007) | 41 |
| [ITEM 4A. UNRESOLVED STAFF COMMENTS](#a_008) | 65 |
| [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](#a_009) | 65 |
| [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](#a_010) | 76 |
| [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](#a_011) | 83 |
| [ITEM 8. FINANCIAL INFORMATION](#a_012) | 84 |
| [ITEM 9. THE OFFER AND LISTING](#a_013) | 85 |
| [ITEM 10. ADDITIONAL INFORMATION](#a_014) | 85 |
| [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#a_015) | 94 |
| [ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](#a_016) | 95 |
| [PART II](#a_017) | 96 |
| [ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES](#a_018) | 96 |
| [ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](#a_019) | 96 |
| [ITEM 15. CONTROLS AND PROCEDURES](#a_020) | 97 |
| [ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT](#a_021) | 99 |
| [ITEM 16B. CODE OF ETHICS](#a_022) | 99 |
| [ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES](#a_023) | 99 |
| [ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES](#a_024) | 100 |
| [ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS](#a_025) | 100 |
| [ITEM 16F. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT](#a_026) | 100 |
| [ITEM 16G. CORPORATE GOVERNANCE](#a_027) | 100 |
| [ITEM 16H. MINE SAFETY DISCLOSURE](#a_028) | 100 |
| [ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](#a_029) | 100 |
| [ITEM 16J. INSIDER TRADING POLICIES](#a_030) | 100 |
| [ITEM 16K. CYBERSECURITY](#a_031) | 101 |
| [PART III](#a_032) | 102 |
| [ITEM 17. FINANCIAL STATEMENTS](#a_033) | 102 |
| [ITEM 18. FINANCIAL STATEMENTS](#a_034) | 102 |
| [ITEM 19. EXHIBITS](#a_035) | 102 |
| [SIGNATURES](#a_036) | 104 |

---

i

[**Table of Contents**](#toc)

**INTRODUCTION**

Except where the context otherwise requires and for purposes of this annual report only:

● unless otherwise noted, all references to years are to the calendar years from January 1 to December 31 and references to our fiscal year or years are to the fiscal year or years ended December 31.

● " CAC" refers to the Cyberspace Administration of China.

● " China" or the " PRC", in each case, refers to the People's Republic of China, including Hong Kong, Macau and Taiwan. The term " Chinese" has a correlative meaning for the purpose of this annual report. When used in the case of laws and regulations, of " China" or " the PRC", it refers to only such laws and regulations of mainland China.

● " Company" refers to MicroCloud Hologram Inc. (f/k/a Golden Path Acquisition Corporation), a Cayman Islands exempted company.

● "Class A Ordinary shares" are to our Class A Ordinary shares, par value US$0.8 per share.

● "Class B Ordinary shares" are to our Class B Ordinary shares, par value US$0.8 per share.

● " CSRC" refers to the China Securities Regulatory Commission.

● " EIT" refers to enterprise income tax.

● " PRC law(s) and regulation(s)" refers to the laws and regulations of mainland China.

● " MIIT" refers to the Ministry of Industry and Information Technology of China.

● "GAAP" refers to the generally accepted accounting principles in the United States;

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

● "MOFCOM" are to the Ministry of Commerce of the People's Republic of China;

● " RMB"refer to the legal currency of mainland China.

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

● " U.S. GAAP" refers to generally accepted accounting principles in the United States.

● "HOLO", "MicroCloud","we", "us", "our company", "the company", "our", or similar terms used in this annual report refer to MicroCloud Hologram Inc., a Cayman Islands exempted company, including its wholly-owned and majority-owned subsidiaries and, in the context of describing our operations and consolidated financial information.

This annual report on Form 20-F includes our audited consolidated financial statements for the fiscal years ended December 31, 2025, 2024, and 2023. In this annual report, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in United States dollars. These dollar references are based on the exchange rate of RMB to United States dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of United States dollars which may result in an increase or decrease in the amount of our obligations and the value of our assets.

This annual report contains translations of certain RMB amounts into U.S. dollars at specified rates. Unless otherwise stated, the following exchange rates are used in this annual report:

---

| | | | |
|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** |
| <br>**US$ Exchange Rate** | **2023** | **2024** | **2025** |
| At the end of the year - RMB | RMB7.0827 to $1.00 | RMB7.1884 to $1.00 | RMB7.0288 to $1.00 |
| Average rate for the year - RMB | RMB7.0467 to $1.00 | RMB7.1217 to $1.00 | RMB7.1429 to $1.00 |

---

ii

[**Table of Contents**](#toc)

**FORWARD-LOOKING STATEMENTS**

This annual report on Form 20-F contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. All statements other than statements of historical facts in this annual report are forward-looking statements. In some cases, these forward-looking statements can be identified by words and phrases such as "may," "should," "intend," "predict," "potential," "continue," "will," "expect," "anticipate," "estimate," "plan," "believe," "is /are likely to" or the negative form of these words and phrases or other comparable expressions. The forward-looking statements included in this annual report relate to, among others:

● our goals and strategies;

● our future prospects and market acceptance of our products and services;

● our future business development, financial condition and results of operations;

● expected changes in our revenue, costs or expenditures;

● anticipated cash needs and its needs for additional financing;

● growth of and competition trends in our industry;

● our ability to successfully integrate acquisitions;

● our expectations regarding demand for, and market acceptance of, our products;

● expectations with respect to the success of our research and development efforts;

● expectations regarding our growth rates, growth plans and strategies;

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

● relevant government policies and regulations relating to our business and industry;

● PRC laws, regulations and policies, including those applicable;

● competition landscape in China's holographic digitalization technology service industry;

● assumptions underlying or related to any of the foregoing.

These forward-looking statements involve various risks, assumptions and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our expectations.

The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. All forward-looking statements included herein attributable to us or other parties or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section and under the heading "Risk Factors" below. Except to the extent required by applicable laws and regulations, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

iii

[**Table of Contents**](#toc)

**PART I**

---

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

---

Not applicable.

---

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

---

Not applicable.

---

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

---

**Our Holding Company Structure**

MicroCloud Hologram Inc. (formerly known as Golden Path Acquisition Corporation) ("Golden Path" or "the Company"), a Cayman Islands exempted company, entered into the Merger Agreement dated September 10, 2021 (as amended on August 5, 2022 and August 10, 2022), by and among Golden Path, Golden Path Merger Sub, a Cayman Islands exempted company incorporated for the purpose of effectuating the business combination, and MC Hologram Inc.("MC"), a Cayman Islands exempted company.

Pursuant to the Merger Agreement, MC merged with the Golden Path Merger Sub and survive the merger and continue as the surviving company and a wholly owned subsidiary of Golden Path and continue its business operations (the "Merger", and, collectively with the other transactions described in the Merger Agreement, the "Business Combination").

Our Class A Ordinary shares and Public Warrants are listed on the Nasdaq Stock Market LLC ("NASDAQ") under the trading symbols "HOLO" and "HOLOW" respectively.

MicroCloud is not an operating company, but a holding company incorporated in the Cayman Islands. MicroCloud operates its business through its subsidiaries in the PRC in which it owns equity interests.

The following diagram illustrates our corporate structure as of December 31, 2025, including our major subsidiaries.

![](img_001.jpg)

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

We conduct our business primarily through our subsidiaries in China. Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our consolidated affiliated Chinese entities have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our holding company, our subsidiaries in China. However, given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by government authorities, we cannot assure you that we have obtained all the permits or licenses required for conducting our business in China. We may be required to obtain additional licenses, permits, filings or approvals for our functions and services in the future. For more detailed information, see "Item 3. Key Information — D. Risk Factors — Risk Factors Relating to Our Business and Industry."

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, 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 February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, or, collectively, the Trial Measures, which came into effect on March 31, 2023. According to the Trial Measures, domestic companies in the Chinese mainland that directly or indirectly offer or list their securities in an overseas market are required to file with the CSRC. In addition, an overseas-listed company must also submit the filing with respect to its follow-on offerings, issuance of convertible corporate bonds and exchangeable bonds, and other equivalent offering activities, within a specific time frame requested under the Trial Measures. Therefore, we will be required to file with the CSRC for our overseas offering of equity and equity linked securities in the future within the applicable scope of the Trial Measures. For more detailed information, see "Item 3. Key Information — D. Risk Factors — Risk Factors Relating to Doing Business in China."

**The Holding Foreign Companies Accountable Act**

The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states that if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC will prohibit our Ordinary shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On December 2, 2021, the SEC adopted final amendments to its rules implementing the HFCA Act. Such final rules establish procedures that the SEC will follow in (i) determining whether a registrant is a "Commission-Identified Issuer" (a registrant identified by the SEC as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction) and (ii) prohibiting the trading of an issuer that is a Commission-Identified Issuer for three consecutive years under the HFCA Act. The SEC began identifying Commission-Identified Issuers for the fiscal years beginning after December 18, 2020. A Commission-Identified Issuer is required to comply with the submission and disclosure requirements in the annual report for each year in which it was identified.

As of the date of this annual report, we have not been, and do not expect to be identified by the SEC under the HFCA Act. However, whether the PCAOB will continue to conduct inspections and investigations completely to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor's control including positions taken by authorities of the PRC.

On December 16, 2021, the PCAOB issued its determination that the PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, and the PCAOB included in the report of its determination a list of the accounting firms that are headquartered in the PRC or Hong Kong. This list does not include our auditor, Assentsure PAC.

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On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the "Statement of Protocol") with the CSRC and the Ministry of Finance of China ("MOF"). The terms of the Statement of Protocol would grant the PCAOB complete access to audit work papers and other information so that it may inspect and investigate PCAOB-registered accounting firms headquartered in mainland China and Hong Kong.

On December 15, 2022, the PCAOB announced that it has secured complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate the previous 2021 determination report to the contrary. On December 29, 2022, a legislation entitled "Consolidated Appropriations Act, 2023" (the "Consolidated Appropriations Act") was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two. As a result of the Consolidated Appropriations Act, the HFCA Act now also applies if the PCAOB's inability to inspect or investigate the relevant accounting firm is due to a position taken by an authority in any foreign jurisdiction. The denying jurisdiction does not need to be where the accounting firm is located. Our current auditor, Assentsure PAC, as an auditor of the company that is 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. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit our auditor to provide audit documentations located in China to the PCAOB for inspection or investigation, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors' audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate, then such lack of inspection could cause our securities to be delisted from the stock exchange.The delisting of our Ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment."

The PCAOB is required under the HFCA Act to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong, among other jurisdictions. The possibility of being a "Commission-Identified Issuer" and risk of delisting could continue to adversely affect the trading price of our securities. Should the PCAOB again encounter impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction, the PCAOB will make determinations under the HFCA Act as and when appropriate.

**Cash and Asset Flows through Our Organization**

The Company is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries in China. As a result, the Company's ability to pay dividends depends upon dividends paid by our subsidiaries in China. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.

We are permitted under PRC laws and regulations as an offshore holding company to provide fundings to our wholly foreign-owned subsidiary in China only through loans or capital contributions, subject to the record-filing and registration with government authorities and limit on the amount of loans. Subject to satisfaction of the applicable government registration requirements, we may extend inter-company loans to our wholly foreign-owned subsidiaries in China or make additional capital contributions to the wholly foreign-owned subsidiaries to fund their capital expenditures or working capital. If we provide fundings to our wholly foreign-owned subsidiaries through loans, the total amount of such loans may not exceed the difference between the entity's total investment as registered with the foreign investment authorities and our registered capital. Such loans must also be registered with SAFE (as defined herein) or their local branches. For more detailed information and risks associated with a transfer of funds by the Company to our PRC subsidiaries in the form of a loan or capital injection, please refer to our Annual Report on 20-F in the section "Risk Factors — Risk Factors Relating to Doing Business in China."

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**A.** **[Reserved]** 

**B.** **CAPITALIZATION AND INDEBTEDNESS** 

Not applicable.

**C.** **REASONS FOR THE OFFER AND USE OF PROCEEDS** 

Not applicable.

**D.** **RISK FACTORS** 

*You should carefully consider the risks and uncertainties described below, together with all the other information in this Annual Report on Form 20-F including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the related notes. If any of the following risks actually occurs (or if any of those discussed elsewhere in this Annual Report on Form 20-F occurs), our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. Unless otherwise indicated, references to our business being seriously harmed in these risk factors will include harm to our business, reputation, financial condition, results of operations, revenue, and future prospects. In that event, the market price of our Ordinary shares could decline, and you could lose part or all of your investment.*

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**Risk Factors Relating to Our Business and Industry**

***The holographic technology service industry is developing rapidly and affected by continuous technological changes, with the risk that we cannot continue to make the correct strategic investment and develop new products to meet customer needs.***

The holographic service industry develops rapidly, and our success depends on our ability to continuously develop and implement services and solutions that predict and respond to rapid and ongoing changes in holographic technology and the industry, and to continuously provide services that meet the changing needs of customers. If we do not invest enough in new technologies, or if we do not make the right strategic investments to address these developments and drive innovation, our competitive advantages may be negatively impacted. To maintain and enhance our current competitive position, we need to continuously introduce new solutions and services to meet customers' needs.

Research and development of new technologies and solutions require substantial investments of human resources and capital. However, there is no guarantee that our research and development will be successful, or that we could achieve the excepted return on our human resources and capital investments. While we intend to invest substantial resources to remain on the forefront of technological development, continuing changes in holographic technology and the markets, including the ADAS and autonomous driving industries, LiDAR and holographic digital twin technology service industries, could adversely affect adoption of holographic technology and/or our products, either generally or for particular applications. Our future success will depend upon our ability to develop and introduce a variety of new capabilities and innovations to our existing product offerings, as well as the ability to introduce a variety of new product offerings, to address the changing needs of the markets. If we are unable to devote adequate resources to develop products or cannot otherwise successfully develop products or system configurations that meet customer requirements on a timely basis or that remain competitive with technological alternatives, our products could lose market share, our revenue may decline, and our business and prospects may be adversely affected.

In addition, our success to date has been based on the delivery of holography-centered software and hardware solutions to research and development programs in which developers are investing substantial capital to develop new systems. Our continued success relies on the success of the research and development phase of these customers as they expand into commercialized projects. For example, with respect to our holographic ADAS segment, most of our automotive customers are just beginning on the path to commercialization, as large-scale commercialization of the autonomous driving industry is yet to start. As holographic technology reaches the stage of large-scale commercialization, we will be required to develop and deliver holography-centered software and hardware solutions at price points that enable wider and ultimately mass-market adoption. In addition, the delays in introducing products and innovations, and the failure to choose correctly among technical alternatives or the failure to offer innovative products or configurations at competitive prices may cause existing and potential customers to purchase our competitors' products or turn to alternative technologies.

***Our competitive position and results of operations could be harmed if we do not compete effectively.***

The holographic service market is characterized by intense competition, new industry standards, limited barriers to entry, disruptive technology developments, short product life cycles, customer price sensitivity and frequent product introductions (including alternatives with limited functionality available at lower costs or free of charge). Any of these factors could create downward pressure on pricing and profitability and could adversely affect our ability to retain current customers or attract new customers. Our future success will depend on the ability to continuously enhance and integrate our existing products and services, introduce new products and services in a timely and cost-effective manner, meet changing customer expectations and needs, extend our core technology into new applications, and anticipate emerging standards, business models, software delivery methods and other technological developments.

Furthermore, some of our current and potential competitors enjoy competitive advantages such as greater financial, technical, sales, marketing and other resources, broader brand awareness, and access to larger customer bases. As a result of these advantages, potential and current customers might select the products and services of our competitors, which may cause a loss of market share to us.

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***Adverse conditions in the related industries, such as the automotive industry, or the global economy in general could have adverse effects on our results of operations.***

Our business is dependent, in large part on, and directly affected by, business cycles and other factors affecting the related industries, such as the automobile industry, and the global economy in general. Automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences, changes in interest rates and credit availability, consumer confidence, fuel costs, fuel availability, environmental impact, governmental incentives and regulatory requirements, and political volatility, especially in energy-producing countries and growth markets. In addition, automotive production and sales can be affected by our automotive customers' ability to continue operating in response to challenging economic conditions and in response to labor relations issues, regulatory requirements, trade agreements and other factors. The volume of automotive production in China has fluctuated, sometimes significantly, from year to year, and we expect such fluctuations to give rise to fluctuations in the demand for our products. In addition, adverse conditions in the global economy in general could also adversely affect the results of operations of our customers. Any significant adverse changes in the results of operations of our customers could in turn have material adverse effects on our business, results of operations and financial position.

***The market adoption of LiDAR, especially holographic LiDAR technology, is uncertain. If market adoption of LiDAR does not continue to develop, or develops more slowly than we expect, our business will be adversely affected.***

Our holographic LiDAR-based ADAS solutions can be applied to different use cases across end markets. Despite the fact that the automotive industry has engaged in considerable effort to research and test LiDAR products for ADAS and autonomous driving applications, the application of LiDAR products, especially holographic LiDAR products, in commercially available vehicles has been generally limited. We continually study emerging and competing sensing technologies and methodologies and we may add new sensing technologies to address LiDAR's relative deficiencies in detecting colors and low reflectivity objects and performing in extreme weather conditions. However, LiDAR products remain relatively new, and it is possible that other sensing modalities, or a new disruptive modality based on new or existing technology, including a combination of different technologies, will achieve acceptance or leadership in the ADAS and autonomous driving industries. Even if LiDAR products are used in initial generations of autonomous driving technology and certain ADAS products, we cannot guarantee that LiDAR products will be designed into or included in subsequent generations of such commercialized technology.

Market growth potentials for ADAS or autonomous vehicles is difficult to predict, by the time mass market adoption of autonomous vehicle technology is achieved, we expect competition among providers of sensing technology based on LiDAR and other modalities to increase substantially. If commercialization of LiDAR products is not successful, or not as successful as we or the market expect, or if other sensing modalities gain acceptance by market participants and regulators by the time autonomous vehicle technology achieves mass market adoption, our business, results of operations, and financial condition will be materially and adversely affected.

We are investing in and pursuing market opportunities outside of the automotive markets, including but not limited to industrial and security robots, mapping applications for topography and surveying, and smart city initiatives. We believe that our future revenue growth, if any, will depend in part on our ability to expand within new markets such as these and to enter new markets as they emerge. Each of these markets presents distinct risks and, in many cases, requires us to address the particular requirements of that market. Addressing these requirements can be time-consuming and costly. The market for LiDAR technology outside of automotive applications is relatively new, rapidly developing and unproven in many markets or industries. Many of our customers outside of the automotive industry are still in the testing and development phases, and we cannot be certain that they will commercialize products or systems with our LiDAR products or at all. We cannot be certain that LiDAR will be sold into these markets, or any market outside of the automotive market, at scale. If LiDAR technology does not achieve commercial success outside of the automotive industry, or if the market develops at a pace slower than we expect, our business, results of operation and financial condition will be materially and adversely affected.

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***Our results of operations could materially suffer in the event of insufficient pricing to enable us to meet profitability expectations.***

If we are not able to obtain sufficient pricing for our services and solutions, our revenues and profitability could materially suffer. The rates we are able to charge for services and solutions are affected by a number of factors, including:

● general economic and political conditions;

● the competitive environment in our industry;

● market price of our service and products provided;

● our bargaining power when entering into a contract with customers;

● our customers' preferences and desire to reduce their costs; and

● our ability to accurately estimate, monitor and manage our contract revenues, costs of sales, profit margins and cash flows over the full contract period.

In addition, our profitability with respect to services and solutions for new technologies may be different when compared to the profitability of our current business, due to factors such as the use of alternative pricing, the mix of work and the number of service providers, among others.

The competitive environment in the holographic technology services industry and related industries in the PRC affects our ability to obtain favorable pricing in a number of ways, any of which could materially and adversely affect our results of operations. The less we are able to differentiate and/or clearly convey the value of our services and solutions, the more likely that price will become the driving factor in selecting a service provider. In addition, the introduction of new services or products by competitors could reduce our ability to obtain favorable pricing for the services or products that we offer. Competitors may be willing, at times, to price contracts lower than us in an effort to enter new markets or increase market share. Further, if competitors develop and implement methodologies that yield greater efficiency and productivity, they may be better positioned to offer similar services at lower prices. As such, failure to adopt a sufficient pricing policy or adjust our pricing policy in a timely and effective manner could adversely and materially affect our competitive position in the industry, which could adversely and materially affect our operations and financial conditions.

***We expect to incur substantial research and development costs and devote significant resources to identifying and commercializing new products, which could significantly reduce our profitability, and there is no guarantee that such efforts would eventually generate revenue for us.***

Our future growth depends on penetrating new markets, adapting existing technologies and products to new applications and customer requirements, and introducing new services and products that achieve market acceptance. We plan to incur substantial and potentially increasing, research and development costs as part of our efforts to design, develop, manufacture, and commercialize new products and enhance existing products. Because we account for research and development as an operating expense, these expenditures will adversely affect our results of operations in the future. Further, the performance of holographic LiDAR depends on software and hardware solutions involving the integration of automotive integrated circuit (IC), holographic image processing and algorithm software. Production of these complex components may require extremely high cost, which may reduce our profit margins or increase our losses.

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***We may need to raise additional capital in the future in order to execute our business plan, which may not be available on terms acceptable to us, or at all.***

In the future, we may require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and we may determine to engage in equity or debt financings, or to enter into credit facilities for other reasons. In order to further business relationships with current or potential customers and partners, we may issue equity or equity-linked securities to such current or potential customers or partners. We may not be able to timely secure additional debt or equity financing on favorable terms, or at all. If we raise additional funds through the issuance of equity or convertible debt or other equity-linked securities or if we issue equity or equity-linked securities to current or potential customers to further business relationships, our existing shareholders could experience significant dilution. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we are unable to obtain adequate financing or financing on terms satisfactory to us, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.

***Market share of our holographic LiDAR products will be materially adversely affected if such products are not adopted by the automotive original equipment manufacturers (OEMs) or their supplier for ADAS applications.***

The OEMs and their suppliers have been developing applications in the autonomous driving and ADAS industries over the years. These OEMs manufacturers and suppliers perform extensive testing or identification processes before ordering a large number of LiDAR products, as such products would function as part of a larger system or platform and must comply with certain other specifications. In the future, we may spend a lot of time and resources to have our products selected by automotive OEMs and their suppliers, which is called "design win." In terms of autonomous driving and ADAS technology, a design win means that our holographic LiDAR products have been selected for use in specific models. If our products are not selected by the OEMs or their suppliers for one model, or if our products are not successful on that model, it is unlikely to be deployed on other models of that OEM. If we fail to win a large number of models from one or more automotive OEMs or their suppliers, our business will be materially adversely affected.

***We have material customer concentration, with a limited number of customers accounting for a material portion of our revenues for the years ended December 31, 2024 and 2025.***

For the year ended December 31, 2025, our five largest customers in aggregate accounted for approximately 48.9% of our revenues, and our largest customer accounted for approximately 17.1% of our revenues. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. It is not possible for us to predict the future level of demand for our products and services that will be generated by these customers, or to predict the future demand for the products and services of these customers in the end-user marketplace. In addition, revenues from these customers may fluctuate from time to time, which may be affected by market conditions or other factors, some of which may be outside of our control. Further, we may not be able to maintain and solidify our relationships with these major customers on commercially reasonable terms, or at all. As such, any declines in revenues from our major customers could have an adverse effect on our business, results of operations and financial condition.

***We and our subsidiaries depend on a limited number of vendors for a significant portion of our purchase which may result in heightened concentration risk.***

We and our subsidiaries also conduct business with a limited number of vendors. For the years ended December 31, 2024 and 2025, 32.0% and 52.0% of our total purchases were from two and three vendors, respectively.

Our financial results could be materially and adversely affected if any one supplier fails to fulfill our contractual obligations, or if we are unable to find other suppliers to provide the same level of supplies. In addition, we cannot assure you that performance by third-party vendors will be satisfactory, and if they under-perform, it will have a material adverse effect on the cash flows or profitability of our business.

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***The period of time from a "design win" to implementation is long, and we are subject to the risks of cancellation or postponement of the contract or unsuccessful implementation***

Prospective customers, including those in the automotive industry, generally must make significant commitments of resources to test and validate our products and confirm that they can integrate with other technologies before including them in any particular system, product or model. The development cycles of our products with new customers varies widely depending on the application, market, customer and the complexity of the product. In the automotive market, for example, this development cycle can be five to seven or more years. The development cycle in certain other markets can be months to one or two years. These development cycles result in our investment of resources prior to realizing any revenue from the commercialization. Further, we are subject to the risk that customers cancel or postpone implementation of our technology, as well as that we will not be able to integrate our technology successfully into a larger system with other sensing modalities. Further, our revenue could be less than forecasted if the system, product or vehicle model that includes our LiDAR products is unsuccessful, including for reasons unrelated to our technology. Long development cycles and product cancellations or postponements may adversely affect our business, results of operations and financial condition.

***The complexity of our products could result in unforeseen delays or expenses from undetected defects, errors or bugs in hardware or software which could reduce the market adoption of our new products, damage our reputation with current or prospective customers, result in product returns or expose us to product liability and other claims and adversely affect our operating costs.***

Our products are highly technical and very complex and require high standards to manufacture. These products have in the past and will likely in the future experience defects, errors or bugs at various stages of development. We may be unable to timely release new products, manufacture existing products, correct problems that have arisen or correct such problems to our customers' satisfaction. Additionally, undetected errors, defects or security vulnerabilities, especially as new products are introduced or as new versions are released, could result in (i) serious injury to the end users of technology incorporating our products, or those in the surrounding area, (ii) customers never being able to commercialize technology incorporating our products, and (iii) litigation against us, negative publicity and other consequences. These risks are particularly prevalent in the highly competitive autonomous driving and ADAS markets. Some errors or defects in our products may only be discovered after they have been tested, commercialized and deployed by customers. If that is the case, we may incur significant additional development costs and product recall, repair or replacement costs. Furthermore, we could also experience higher levels of product returns in such cases, which could adversely affect our financial results. These problems may also result in claims against us by our customers or others. Our reputation or brand may be damaged as a result of these problems, and customers may be reluctant to buy our products, which could adversely affect our ability to retain existing customers and attract new customers.

***Failure in cost control may negatively impact the market adoption and profitability of our products.***

Our production output depends on our ability to produce and/or procure certain key components and raw materials at an acceptable price. If we fail to reduce or control costs to be incurred thereof, we might not be able to price our products competitively, which in turn may reduce the market adoption rate of our products. In addition, failure in cost control may also result in material adverse effects on our profitability. As such, our results of operations and financial position will be adversely affected.

***Continued pricing pressures may result in low profitability, or even losses to us.***

Automotive OEMs possess significant leverage over their suppliers, including us, because the automotive component supply industry is highly competitive and has a high fixed cost base. Accordingly, we expect to be subject to substantial continuing pressure from automotive OEMs and their suppliers to reduce the price of our products. It is possible that pricing pressures could intensify beyond our expectations as automotive OEMs pursue restructuring, consolidation and cost-cutting initiatives. If we are unable to generate sufficient production cost savings in the future to offset price reductions, our profitability would be adversely affected.

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***We have a limited operating history, and we may not be able to sustain rapid growth, effectively manage growth or implement business strategies.***

We have a limited operating history. Although we have experienced significant growth since launching our business, our historical performance results and growth rate may not be indicative of our future performance. We may not be able to achieve similar results or grow at the same rate as we have in the past. To keep pace with the development of the holographic technology service industry in the PRC, we may need to adjust and upgrade our product and service offerings or modify our business model. These adjustments may not achieve expected results and may have a material and adverse impact on our financial conditions and results of operations.

In addition, our rapid growth and expansion have placed, and is expected to continue to place, a significant strain on our management and resources. There is no assurance that our future growth will be sustained at a similar rate or at all. We believe that our revenue, expenses and operating results may vary from period to period in response to a variety of factors beyond our control, which primarily include general economic conditions, emergencies and changes in policies, laws and regulations that may affect our business operations and our ability to monitor costs. In addition, our ability to develop new sources of revenues, diversify monetization methods, attract and retain customers, continue developing innovative technologies, increase brand awareness, expand into new market segments, and adjust to the rapidly changing regulatory environment in the PRC, will also affect our future growth to a great extent. Therefore, our historical results are not predictive of our future financial performance.

***If we fail to attract, retain and engage appropriately-skilled personnel, including senior management and technology professionals, our business may be harmed.***

Our future success depends on the retention of highly skilled executives and employees. Competition for well-qualified and skilled employees is intense. Our future success also depends on the continuing ability to attract, develop, motivate and retain highly qualified and skilled employees, including, in particular, software engineers, LiDAR scientists and holographic technology professionals. Our continued ability to compete effectively depends on the ability to attract new employees and to retain and motivate existing employees. If any member of our senior management team or other key employees leave, our ability to successfully operate the business and execute the business strategy could be adversely affected. We may also have to incur significant costs in identifying, hiring, training and retaining replacements of departing employees.

***Our business depends substantially on the market recognition of our brand, and negative media coverage could adversely affect our business.***

We believe that enhancing our brand and extending our customer base are cornerstones to sustaining our competitive advantages. Negative publicity about us and our business, shareholders, affiliates, directors, officers, and other employees, as well as the industry in which we operate, could be devastating and could materially and adversely affect the public perception of our brand, and in turn, reduce the sales of our products and services. Negative publicity concerning our company could be related to a wide variety of matters, including:

● alleged misconduct or other improper activities committed by our shareholders, affiliates, directors, officers and other employees;

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

● user complaints about the quality of our products and services;

● copyright or patent infringements involving us and contents offered on our platforms; and

● governmental and regulatory investigations or penalties resulting from our failure to comply with applicable laws and regulations.

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In addition to traditional media, there has been an increasing use of social media platforms and similar devices in China, including instant messaging applications, social media websites and other forms of internet-based communications that provide individuals with access to a broad audience of users and other interested persons. The availability of information on instant messaging applications and social media platforms is virtually immediate as its impact without affording us an opportunity for redress or correction. The opportunity for dissemination of information, including inaccurate information, is seemingly limitless and readily available. Information concerning us, shareholders, directors, officers and employees may be posted on such platforms at any time. Risks associated with any such negative publicity or incorrect information cannot be eliminated entirely or mitigated, and may materially harm our reputation, business, financial condition and results of operations.

***Failure to maintain, protect, and enhance our brand or to enforce our intellectual property rights may damage the results of our business and operations.***

We believe that the protection of trade secrets, patents, trademarks and domain names is key to our success. In particular, we must maintain, protect, and strengthen our intellectual property rights related to our holographic technical services. Our intellectual property is essential to expanding the population of individuals and corporate users as well as increasing their trust in our services. We are committed to protecting our intellectual property rights in accordance with PRC laws and relevant agreements. We usually enter into confidentiality agreements with our employees to restrict the access, disclosure, and use of our proprietary information. However, we cannot guarantee that the contractual arrangements and other measures taken by us are sufficient to prevent the theft of our proprietary information, to prevent competitors from independently developing similar technologies, or to prevent any attempt to imitate it. Preventing unauthorized use of our intellectual property is difficult and costly, and the measures we take may not be enough to prevent intellectual property theft. If we sue for enforcing intellectual property, the litigation may result in huge costs and dispersion of our management and financial resources. Failure to protect our intellectual property rights may have a significant adverse impact on our business, financial position and operating performance.

***We may be vulnerable to intellectual property infringement charges filed by other companies.***

Although we developed and owns the core intellectual properties, the interpretation of PRC intellectual property laws and intellectual property standards are constantly evolving and may be uncertain. As a result, there might be litigations based on allegations of infringement, misappropriation or other violations of intellectual property rights. our defense of intellectual property rights claims brought against us or our customers, suppliers and channel partners, with or without merit, could be time-consuming, expensive to litigate or settle, divert management resources and attention and force us to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments. An adverse determination also could invalidate our intellectual property rights and adversely affect our ability to offer our products to our customers and may require that we procure or develop substitute products that do not infringe, which could require significant effort and expense. A claim that our products infringe a third party's intellectual property rights, even if untrue, could adversely affect our relationships with our customers, may deter future customers from purchasing our products and could expose us to costly litigation and settlement expenses. Any of these events could adversely affect our business, operating results, financial condition and prospects.

***We may not be able to protect our source code from copying if there is an unauthorized disclosure.***

Source code, the detailed program commands for our middleware and software programs and solutions, is critical to our business. Although we license portions of our application and operating system source code to several licensees, we take significant measures to protect the secrecy of large portions of our source code. If our source code leaks, we might lose future trade secret protection for that code. It may then become easier for third parties to compete with us by copying functionality, which could adversely affect our results of operations.

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***Third parties may register trademarks or domain names or purchase internet search engine keywords that are similar to our trademarks, brand or websites, or misappropriate our data and copy our platform, all of which could cause confusion to our users, divert online customers away from our products and services or harm our reputation.***

To divert potential customers from us to such competitors' or third parties' websites or platforms, competitors and other third parties may purchase (i) trademarks that are similar to our trademarks and (ii) keywords that are confusingly similar to our brand or websites in internet search engine advertising programs and in the header and text of the resulting sponsored links or advertisements in order to divert our potential customers to such competitors' or third parties' websites or platforms. Preventing such unauthorized use is inherently difficult. If we are unable to prevent such unauthorized use, competitors and other third parties may continue to drive potential customers away from our platform to competing, irrelevant or potentially offensive platform, which could harm our reputation and cause us to lose revenue.

***Our business is highly dependent on the proper functioning and improvement of our information technology systems and infrastructure. Our business and operating results may be harmed by service disruptions, or by our failure to timely and effectively scale up and adjust our existing technology and infrastructure.***

Our business depends on the continuous and reliable operation of our information technology ("IT") systems. Our IT systems are vulnerable to damage or interruption as a result of fires, floods, earthquakes, power losses, telecommunications failures, undetected errors in software, computer viruses, hacking and other attempts to harm our IT systems. Disruptions, failures, unscheduled service interruptions or a decrease in connection speeds could damage our reputation and cause our customers and end-users to migrate to our competitors' platforms. If we experience frequent or constant service disruptions, whether caused by failures of our own IT systems or those of third-party service providers, then our user experience may be negatively affected, which in turn may have a material and adverse effect on our reputation and business. We may not be successful in minimizing the frequency or duration of service interruptions. As the number of our end-users increases and more user data are generated on our platform, we may be required to expand and adjust technology and infrastructure to continue to reliably store and process content.

***Our operations depend on the performance of the Internet infrastructure and fixed telecommunications networks in China, which may experience unexpected system failure, interruption, inadequacy or security breaches.***

Almost all access to the Internet in China is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology, or the MIIT. Moreover, we primarily rely on a limited number of telecommunication service providers to provide us with data communications capacity through local telecommunications lines and Internet data centers to host our servers. We have limited access to alternative networks or services in the event of disruptions, failures or other problems with China's Internet infrastructure or the fixed telecommunications networks provided by telecommunication service providers. Web traffic in China has experienced significant growth during the past few years. Effective bandwidth and server storage at Internet data centers in large cities such as Beijing and Shenzhen are scarce. With the expansion of our business, we may be required to upgrade technology and infrastructure to keep up with the increasing traffic on our platform. We cannot assure you that the Internet infrastructure and the fixed telecommunications networks in China will be able to support the demands associated with the continued growth in Internet usage. If we cannot increase our capacity to deliver online services, then we may not be able to expand our customer base, and the adoption of our services may be hindered, which could adversely impact our business and profitability.

In addition, we have no control over the costs of the services provided by telecommunication service providers. If the prices we pay for telecommunications and Internet services rise significantly, our results of operations may be materially and adversely affected. Furthermore, if Internet access fees or other charges to Internet users increase, some users may be prevented from accessing the mobile Internet and thus cause the growth of mobile Internet users to decelerate. Such deceleration may adversely affect our ability to continue to expand our user base.

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***We use third-party services and technologies in connection with our business, and any disruption to the provision of these services and technologies to us could result in adverse publicity and a slowdown in the growth of our users, which could materially and adversely affect our business, financial condition and results of operations.***

Our business partially depends on services provided by, and relationships with, various third parties. Some third-party software we use in our operations is currently publicly available and free of charge. If the owner of any such software decides to charge users or no longer makes the software publicly available, then we may need to incur significant costs to obtain licensing, find replacement software or develop it on our own. If we are unable to obtain licensing, find or develop replacement software at a reasonable cost, or at all, our business and operations may be adversely affected.

We exercise no control over the third parties with whom we have business arrangements. If such third parties increase their prices, fail to provide their services effectively, terminate their service or agreements or discontinue their relationships with us, then we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, financial condition and results of operations.

***We have limited, and in some cases, no insurance coverage, which could expose us to significant costs and business disruption.***

We maintain highly limited insurance coverage, and in some instances, may have no insurance coverage at all for various aspects of our business operations. For example, we do not carry, or may not carry, general business liability, product liability, or business disruption insurance for our operations in China. To the extent we do maintain any policies, such as standard employee benefits or personal accident insurance, such coverage is strictly limited in terms of amount, scope, and benefit.

Any uninsured or underinsured business disruption, litigation, legal proceedings, or natural disasters such as epidemics, pandemics, or earthquakes could result in substantial costs and the diversion of our management's attention. If we are held liable for uninsured losses, or if claims exceed the limits of any insurance coverage we might possess, our business, financial condition, and results of operations may be materially and adversely affected.

***We may be subject to claims, disputes or legal proceedings in the ordinary course of our business. If the outcome of these proceedings is unfavorable to us, then our business, results of operations and financial condition could be adversely affected.***

We may be subject to claims, disputes, or legal proceedings in the ordinary course of our business from time to time, which could adversely affect our business, results of operations and financial condition. We may receive formal and informal inquiries from governmental authorities and regulators regarding our compliance with applicable laws and regulations, many of which are evolving and subject to interpretation. Claims arising out of actual or alleged violations of laws could be asserted against us by our employees, customers, media partners, competitors, governmental entities in civil or criminal investigations and proceedings or other third parties. These claims could be asserted under a variety of laws, including but not limited to advertising laws, Internet information services laws, intellectual property laws, unfair competition laws, data protection and privacy laws, labor and employment laws, securities laws, real estate laws, tort laws, contract laws, property laws and employee benefit laws. We may also be subject to lawsuits due to actions by our media partners or advertising customers. In addition, some of our service agreements contain certain indemnity provisions requiring us to indemnify our customers for certain non-compliance, intellectual property infringement, personal injury and death claims. Our indemnity obligations may adversely affect our cash flow, operating results and financial conditions.

There can be no guarantee that we will be successful in defending itself in legal and arbitration actions or in asserting our rights under various laws. If the outcome of these proceedings is unfavorable to us, then our business, results of operations and financial conditions could be adversely affected. Even if we are successful in our attempt to defend itself in legal and arbitration actions or to assert our rights under various laws, enforcing our rights against the various parties involved may be expensive, time-consuming and ultimately futile. These actions may expose us to negative publicity, substantial monetary damages and legal defense costs, injunctive relief, and criminal and civil fines and penalties, including but not limited to suspension or revocation of our licenses to conduct business.

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***Our management has limited experience in operating a public company and the requirements of being a public company may strain our resources, divert management's attention and affect the ability to attract and retain qualified board members and officers.***

Our executive officers have limited experience in the management of a publicly traded company. Our management team may not successfully or effectively manage our transition to a U.S. public company that will be subject to significant regulatory oversight and reporting obligations under U.S. federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and our growth, which could harm our business, prospects and results of operations. We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources.

***We may be materially and adversely affected by the complexity, uncertainties and changes in the PRC laws and regulations governing Internet-related industries and companies.***

The PRC government extensively regulates the Internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the Internet industry. These Internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainty. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violations of applicable laws and regulations. Issues, risks and uncertainties relating to PRC regulations of the Internet business include, but are not limited to, the following:

● there are uncertainties relating to the regulation of the Internet business in China, including evolving licensing practices and the requirement for real-name registrations. Our PRC subsidiaries may be required to hold certain permits, licenses or operations, we may not be able to timely obtain or maintain all the required licenses or approvals, permits, or to complete filing, registration or other formalities necessary for our present or future operations, and we may not be able to renew certain permits or licenses or renew certain filing or registration or other formalities.

● the evolving PRC regulatory system for the Internet industry may lead to the establishment of new regulatory agencies. For example, in May 2011, the State Council announced the establishment of a new department, the State Internet Information Office. The primary role of this new agency is to facilitate the policy-making and legislative development in this field to direct and coordinate with the relevant departments in connection with online content administration and to deal with cross-ministry regulatory matters in relation to the Internet industry. We are unable to determine what policies this new agency or any new agencies to be established in the future may have or how they may interpret existing laws, regulations and policies and how they may affect us. Further, new laws, regulations or policies may be promulgated or announced that will regulate Internet activities. If these new laws, regulations or policies are promulgated, additional licenses may be required for our operations. If our operations do not comply with these new regulations after they become effective, or if we fail to obtain any licenses required under these new laws and regulations, we could be subject to penalties, and our business could be disrupted.

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The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating to the Internet industry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, Internet businesses in China, including our business. There are also risks that we may be found to violate the existing or future laws and regulations given the uncertainty and complexity of China's regulation of Internet business.

***Our business may be exposed to Internet data, and we are required to comply with PRC laws and regulations relating to cyber security. These laws and regulations could create unexpected costs, subject us to enforcement actions for compliance failures, or restrict portions of our business or cause us to change our data practices or business model.***

Our business exposed to a large quantity of data. We face risks inherent in handling and protecting large volume of data. including:

● protecting the data in and hosted on our system, including against attacks on our system by outside parties or fraudulent behavior or improper use by our employees;

● addressing concerns related to privacy and sharing, safety, security and other factors; and

● complying with applicable laws, rules and regulations relating to the collection, use, storage, transfer, disclosure and security of personal information, including any requests from regulatory and government authorities relating to this data.

Governments around the world, including the PRC government, have enacted or are considering legislation related to online businesses. There may be an increase in legislation and regulation related to the collection and use of anonymous internet user data and unique device identifiers, such as IP address or mobile unique device identifiers, and other data protection and privacy regulation. The PRC regulatory and enforcement regime with regard to data security and data protection is evolving. All these laws and regulations may result in additional expenses and any non-compliance may subject us to negative publicity which could harm our reputation and negatively affect the trading price of our Ordinary shares. There are also uncertainties with respect to how these laws will be implemented in practice. PRC regulators have been increasingly focused on regulation in the areas of data security and data protection. We expect that these areas will receive greater attention and focus from regulators, as well as attract continued or greater public scrutiny and attention going forward, which could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, we could become subject to penalties, fines, suspension of business and revocation of required licenses, and our reputation and results of operations could be materially and adversely affected. In addition, regulatory authorities around the world have recently adopted or are considering a number of legislative and regulatory proposals concerning data protection. These legislative and regulatory proposals, if adopted, and the uncertain interpretations and application thereof could, in addition to the possibility of fines, result in an order requiring us to change our data practices, which could have an adverse effect on our business and results of operations.

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**Risks Factors Relating to Finance and Accounting**

***We had previously identified certain material weaknesses which may continue to cause our failure to maintain an effective system of internal control over financial reporting and may result in material misstatements of the consolidated financial statements or cause us to fail to meet our periodic reporting obligations.***

In the course of auditing our consolidated financial statements for the years ended December 31, 2024 and 2025, we had identified certain material weaknesses in our internal control over financial reporting in accordance with the standards established by the Public Company Accounting Oversight Board of the United States ("PCAOB"). As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a "material weakness" is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

We did not maintain an effective control environment. Specifically, We lacked sufficient resources regarding financial reporting and accounting personnel with an understanding of U.S. GAAP, in particular, to address complex U.S. GAAP technical accounting issues, related disclosures in accordance with U.S. GAAP, and financial reporting requirements set forth by the SEC. To address this material weakness, we had implemented and will continue to implement a number of remediation measures to address the material weaknesses, including: (i) hired personnel with U.S. GAAP relevant experience and necessary expertise to strengthen our financial reporting function and to design and implement necessary controls to remediate the material weakness; (ii) designed and implemented controls to ensure completeness and accuracy of data relevant to the accounting and financial reporting of complex transactions;

We kept devoting significant effort and resources to the remediation and improvement of the weakness as aforementioned. As of the date of this Annual Report, we did not incur material costs related to the measures undertaken to address the two weaknesses. However, we may incur additional operating cost as we further proceed with such measures.

After the consummation of the Business Combination, MC became a part of Golden Path (currently known as MicroCloud Hologram Inc.), a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to include a report of management on our internal control over financial reporting and that our independent registered public accounting firm attest to and report on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F or Form 10-K. For fiscal year ended December 31, 2025, we are exempted from such requirement since we qualify as an "emerging growth company" pursuant to the JOBS Act and are eligible to take advantage of certain exemptions, including the aforementioned one. We may not be exempted in the future, and our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which such internal controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation. We will continue the process to implement the remedial measures, there is no assurance that such measures will fully remedy any identified deficiency, or that additional material weaknesses in our controls and procedures will not be identified in the future.

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During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, it could suffer material misstatements in our financial statements and fail to meet reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our Ordinary shares.

Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we listed, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

***We may be required to record a significant charge to earnings when we reassess our goodwill or amortizable intangible assets.***

We are required under U.S. GAAP to test for goodwill impairment annually or when an event occurs or circumstances change in a manner that could indicate that the goodwill might be impaired. We are also required to review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our amortizable intangible assets may not be recoverable include a decline in stock price and market capitalization and slower or declining growth rates in our industry, or a divestment from prior acquisitions of asset. We may be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined.

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**Risk Factors Relating to Doing Business in China**

***Adverse changes in China's economic, political or social conditions, laws, regulations or government policies could have a material adverse effect on our business, financial condition and results of operations.***

Substantially all of our revenues are generally sourced from Mainland China through the operating companies in China. Accordingly, our results of operations, financial condition and prospects are influenced by economic, political and legal developments in China. Economic reforms begun in the late 1970s have resulted in significant economic growth. However, any economic reform policies or measures in China may from time to time be modified or revised. 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. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China's economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While the PRC economy has experienced significant growth in the past 30 years, growth has been uneven across different regions and among different economic sectors. The Chinese government has implemented measures to encourage economic growth and guide the allocation of the resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations.

Although the PRC economy has grown significantly in the past decade, that growth may not continue, as evidenced by the slowing of the growth of the PRC economy since 2012. Any adverse changes in economic conditions in China, in the policies of the PRC government or in the laws and regulations in China could have a material adverse effect on specific industries or the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect our competitive position.

***A severe or prolonged downturn in the PRC or global economy and political tensions between the United States and China could materially and adversely affect our business and our financial condition.***

The global macroeconomic environment is facing challenges, including the end of quantitative easing by the U.S. Federal Reserve, the economic slowdown in the Eurozone since 2014 and uncertainties over the impact of Brexit. The Chinese economy has shown slower growth compared to the previous decade since 2012 and the trend may continue. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world's leading economies, including the United States and China. There have been concerns over unrest and terrorist threats in the Middle East, Europe and Africa, which have resulted in market volatility.

If we plan to expand our business internationally and engage in cross - border business in the future, any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for our products and services, impact our competitive position, or prevent us from conducting business in certain countries. If new tariffs, legislation, or regulations are implemented, or if existing trade agreements are renegotiated, such changes could adversely affect our business, financial condition, and results of operations. In particular, the international economic relations between the United States and China have long been in a state of flux. Back in 2018, the U.S. government started to impose tariffs on a series of Chinese imports, alleging unfair trade practices. China responded in kind, leading to months of reciprocal actions. Then, on January 15, 2020, the United States and China entered into the Economic and Trade Agreement Between the United States of America and the People's Republic of China as a phase - one trade deal, which became effective on February 14, 2020. This agreement brought a certain degree of stability to the bilateral trade relations for a while. However, the situation has changed recently. On March 3, 2025 (Eastern Time in the US), the US government announced an additional 10% tariff on all Chinese goods imported into the US, citing fentanyl concerns. In response, effective from March 10, 2025, China, with the approval of the State Council, imposed additional tariffs on certain products imported from the US. Specifically, a 15% tariff is imposed on chicken, wheat, corn, and cotton, and a 10% tariff is imposed on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables, and dairy products. Although the direct impact of the current international trade tension, and any further escalation, on the holographic technology industry in China remains uncertain, the negative impact on general economic, political, and social conditions may still adversely affect our business, financial condition, and results of operations.

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Furthermore, as part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular China's, significant developments have occurred regarding the Holding Foreign Companies Accountable Act (HFCA Act). On December 18, 2020, the former U.S. President Donald J. Trump signed the HFCA Act into law. It required the SEC to propose rules within 90 days after its enactment to prohibit securities of any registrant from being listed on any of the U.S. securities exchanges or traded "over the counter" if the auditor of the registrant's financial statements is not subject to the PCAOB inspection for three consecutive years after the law becomes effective. In 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. These rules applied to registrants the SEC identified as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate (commission - identified issuers). Commission - identified issuers were required to submit documentation to the SEC establishing that, if true, it is not owned or controlled by a governmental entity in the public accounting firm's foreign jurisdiction. They also had to provide certain additional disclosures in their annual reports. Notably, on December 15, 2022, the PCAOB announced it received "complete access to inspect and investigate" audit firms in China and Hong Kong. This development was a significant step as it potentially averted the delisting of hundreds of Chinese public companies from U.S. exchanges. This access was a result of an agreement reached between the PCAOB and Chinese regulators on a new access framework. More recently, in early 2025, there has been a resurgence of attention around the Act. Some U.S. lawmakers have been discussing potential supplementary measures related to the HFCA Act, aiming to further tighten the scrutiny on foreign companies, especially those from China. Although no new legislation has been formally passed as of yet, these discussions have already caused jitters in the market of Chinese - based companies listed in the United States. For instance, certain bills in the proposal stage suggest shortening the grace period for non - compliant companies or increasing the scope of information disclosure, which, if implemented, could have a material impact on the operations and market standing of these companies. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy and the political tensions between the United States and China may materially and adversely affect our business, financial condition, results of operations and prospects.

***The recent joint statement by the SEC and the PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies, including companies based in China, upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.***

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

On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable 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 the 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 Holding Foreign Companies Accountable Act. On December 18, 2020, the Holding Foreign Companies Accountable Act was signed into law. On December 23, 2022, the Accelerating Holding Foreign Companies Accountable Act, or the AHFCAA, was enacted, which amended the HFCAA by reducing the aforementioned inspection period from three to two consecutive years, thus reducing the time period before our securities may be prohibited from trading or delisted if our auditor is unable to meet the PCAOB inspection requirement.

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As of March 24, 2021, the SEC adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the Holding Foreign Companies Accountable Act. On November 5, 2021, the SEC approved the PCAOB Rule 6100, which will establish a framework for the PCAOB's determinations under the HFCA Act that the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by an authority in that jurisdiction. On December 2, 2021, the SEC adopted final amendments implementing congressionally mandated submission and disclosure requirements of the Holding Foreign Companies Accountable Act.

In 2022, many Chinese companies listed in the U.S., were temporarily identified by the SEC as "Commission - Identified Issuers" under the HFCA Act due to the PCAOB's inability to fully inspect or investigate their auditors' work papers. In August 2022, China and the U.S. reached an audit supervision cooperation agreement, which bridged the differences in audit supervision between the two sides, allowing the U.S. to obtain audit work papers through the cooperation channel and temporarily eliminating the crisis of mass delisting of Chinese concept stocks.

In early 2025, the U.S. issued the "America First" Investment Policy Memorandum, strengthening legal tools to review the listing compliance of Chinese companies. The SEC passed an interim final amendment, requiring foreign companies listed in the U.S. to disclose whether they are controlled by a government.

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.

Our auditor is registered with the PCAOB and is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor's compliance with the applicable professional standards. Our auditor, Assentsure PAC, is headquartered in Singapore. Therefore, our auditor is subject to the Determination announced by the PCAOB on December 16, 2021. Moreover, the PCAOB currently has access to inspect the audit workpapers of our PRC subsidiaries or any PRC - based subsidiary. Notwithstanding the foregoing, in the future, if there is any regulatory change or steps taken by the PRC regulators that do not permit Assentsure PAC to provide audit documentation located in China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the Determination so that we are 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 trading on the national exchange and trading on "over - the - counter" markets, may be prohibited under the HFCA Act. However, in the event the PRC authorities would further strengthen regulations over auditing work of Chinese companies listed on the U.S. stock exchanges, which would prohibit our current auditor to perform work in China, then we would need to change our auditor and the audit workpapers prepared by our new auditor may not be inspected by the PCAOB without the approval of the PRC authorities, in which case the PCAOB may not be able to fully evaluate the audit or the auditors' quality control procedures. Furthermore, due to the recent developments in connection with the implementation of the Holding Foreign Companies Accountable Act, we cannot assure you whether the SEC, Nasdaq or other regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. The requirement in the HFCA Act that the PCAOB be permitted to inspect the issuer's public accounting firm within three years (now reduced to two years under AHFCAA), may result in the delisting of us in the future if the PCAOB is unable to inspect our accounting firm at such future time.

***Uncertainties in the promulgation, interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.***

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the promulgation of new rules and explanations and interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties.

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In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Specifically, rules and regulations in China can change quickly with little advance notice.

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

***We may subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection.***

We may subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. In particular, there are numerous laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions.

We expect to obtain information about various aspects of our customers' and end users' operations as well as regarding our employees and third parties. We also maintain information about various aspects of our customers' operations as well as regarding our employees. The integrity and protection of our customers, employees 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 during the course of performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the Standing Committee of the PRC National People's Congress 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 main legal basis for privacy and personal information infringement claims under the Chinese civil laws. PRC regulators, including the Cyberspace Administration of China, MIIT, and the Ministry of Public Security have been increasingly focused on regulation in the areas of data security and data protection. The PRC regulatory requirements regarding cybersecurity are constantly evolving. For instance, various regulatory bodies in China, including the Cyberspace Administration of China, the Ministry of Public Security and the 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. According to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security.

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In November 2016, the Standing Committee of China's National People's Congress passed China's first Cybersecurity Law ("CSL"), which became effective in June 2017. The CSL is the first PRC law that systematically lays out the regulatory requirements on cybersecurity and data protection, subjecting many previously under-regulated or unregulated activities in cyberspace to government scrutiny. The legal consequences of violation of the CSL include penalties of warning, confiscation of illegal income, suspension of related business, winding up for rectification, shutting down the websites, and revocation of business license or relevant permits. In April 2020, the Cyberspace Administration of China and certain other PRC regulatory authorities promulgated the Cybersecurity Review Measures, which became effective in June 2020. Pursuant to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. On July 10, 2021, the Cyberspace Administration of China issued a revised draft of the Measures for Cybersecurity Review for public comments ("Draft Measures"), which required that, in addition to "operator of critical information infrastructure," any "data processor" carrying out data processing activities that affect or may affect national security should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. The Cyberspace Administration of China has said that under the proposed rules companies holding data on more than 1,000,000 users must now apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be "affected, controlled, and maliciously exploited by foreign governments." The cybersecurity review will also investigate the potential national security risks from overseas IPOs. We do not know what regulations will be adopted or how such regulations will affect us and our listing on Nasdaq. In the event that the Cyberspace Administration of China determines that we are subject to these regulations, we may be required to delist from Nasdaq and we may be subject to fines and penalties.

Recently, the Cyberspace Administration of China has taken action against several Chinese internet companies in connection with their initial public offerings on U.S. securities exchanges, for alleged national security risks and improper collection and use of the personal information of Chinese data subjects. According to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Measures on Cybersecurity Review, which are aimed at "preventing national data security risks, maintaining national security and safeguarding public interests." On June 10, 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect on September 1, 2021. The Data Security Law also sets forth the data security protection obligations for entities and individuals handling personal data, including that no entity or individual may acquire such data by stealing or other illegal means, and the collection and use of such data should not exceed the necessary limits the costs of compliance with, and other burdens imposed by, CSL and any other cybersecurity and related laws may limit the use and adoption of our products and services and could have an adverse impact on our business.

The PRC Internet Information Office has issued the Measures for Cybersecurity Review (Revised Draft for Comments), pursuant to which it is unclear at the present time how widespread the cybersecurity review requirement and the enforcement action will be and what effect they will have on the hologram technology sector generally and we in particular. China's regulators may impose penalties for non-compliance ranging from fines or suspension of operations, and this could lead to our delisting from the U.S. stock market. Further, if the Measures for Cybersecurity Review to be enacted in the future will mandate clearance of cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties as to whether such clearance can be timely obtained, or at all.

After the new PRC Data Security Law was enacted in September 2021, we became not subject to the cybersecurity review by the CAC for this offering, given that: (i) our products and services are offered not directly to individual users but through our business customers; (ii) we do not possess a large amount of personal information in our business operations; and (iii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities. However, there remains uncertainty as to how the Draft Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Draft Measures. If any such new laws, regulations, rules, or implementation and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us.

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As of the date of this Annual Report, we have not been informed by any relevant Chinese government authorities that we are identified as or considered a "critical information infrastructure operator" or "data processing operator." We are also not aware of any requirement that we should file for a cybersecurity review, nor have we received any inquiry, notice, warning, sanction in such respect or any regulatory objections to this offering. However, in anticipation of the strengthened implementation of cybersecurity laws and regulations, there can be no assurance that we will not be deemed as a critical information infrastructure operator or data processing operator under the Chinese cybersecurity laws and regulations in the future, or that the draft measures will not be further amended or other laws or regulations will not be promulgated to subject us to the cybersecurity review or other compliance requirements. In such case, we may face challenges in addressing such enhanced regulatory requirements.

On August 20, 2021, the Standing Committee of the NPC approved the Personal Information Protection Law ("PIPL"), which became effective on November 1, 2021. The PIPL regulates collection of personal identifiable information and seeks to address the issue of algorithmic discrimination. Companies in violation of the PIPL may be subject to warnings and admonishments, forced corrections, confiscation of corresponding income, suspension of related services, and fines. We offer our holographic digital twin technology resource library services mainly to corporate clients and has limited interactions with individual end-users, which means our potential access or exposure to customers' personal identifiable information is limited. However, in the event we inadvertently access or become exposed to customers' personal identifiable information, through our holographic digital twin technology resource library services which access or store customer' personal identifiable information, then we may face heightened exposure to the PIPL.

On September 30, 2024, the Regulations on Network Data Security was promulgated and came into force as from January 1, 2025. The enacted version required that if a network data processor carries out network data processing activities that affects or may affect national security, it shall conduct a national security review in accordance with relevant state regulations, and emphasized special protection of important data. Important data refers to data in a specific field, a specific group, a specific region, or of a certain precision and scale, which, once tampered with, damaged, leaked, or illegally accessed or illegally utilized, may directly jeopardize national security, economic operation, social stability, public health and safety.

We cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws. In the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty, we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could materially and adversely affect our business, financial condition, and results of operations.

***If our equity ownership is challenged by the PRC authorities, it may have a significant adverse impact on our operating results and your investment value.***

We are not an operating company, but a holding company incorporated in the Cayman Islands, and our business is carried out by our subsidiaries. The MOFCOM and NDRC promulgated the Special Administrative Measures for the Access of Foreign Investment (Negative List) (2021 Version) (the "2021 Negative List") on December 27, 2021, which became effective on January 1, 2022. The 2021 Negative List was replaced by the Special Administrative Measures for the Access of Foreign Investment (Negative List) (2024 Version) on September 8, 2024. The 2024 version was approved at the 10th executive meeting of the National Development and Reform Commission on April 8, 2024, and was reviewed and approved by the State Council executive meeting on August 19, 2024. It came into effect on November 1, 2024. The 2024 Negative List serves as the main basis for the MOFCOM to manage and supervise foreign investments. Because those industries not set out on the 2024 Negative List shall be classified as industries permitted for foreign investment and none of our businesses are on the 2024 Negative List, the operations of us and our subsidiaries fall within the MOFCOM permitted activities and are not subject to restrictions to foreign investments or equity ownership. Therefore, we are able to conduct our business through our wholly owned PRC subsidiaries without being subject to the restrictions imposed by the foreign investment laws and regulations of the PRC. However, it is uncertain whether the relevant PRC government authority would reach the same assessment as us, that we operate solely in permitted industries, or whether such assessment will be changed in the future. If this assessment is questioned by the relevant PRC government authority, it may lead to a material adverse impact on our business operations and the value of your investment. Based on the opinions of our understanding of the current PRC law, our current organizational structure is effective and the ownership structure of the PRC subsidiaries complies with the current PRC law and will comply with the current PRC law immediately after the Merger. However, there is uncertainty as to this conclusion as we cannot assure you that relevant PRC governmental agencies would reach the same conclusion as we do.

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***You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management based on foreign laws.***

We are a company incorporated under the laws of the Cayman Islands, we conduct substantially all of our operations in China, and substantially all of our assets are located in China. In addition, all our senior executive officers reside within China for a significant portion of the time and most are PRC nationals. As a result, it may be difficult for our shareholders to effect service of process upon us or those persons inside China. In addition, China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such regulatory cooperation with the securities regulatory authorities in the Unities States have not been efficient in the absence of mutual and practical cooperation mechanism.

According to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas parties. See also "*Risk Factors—Risk Factors Relating to an Investment in Our* Ordinary shares*—You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.*"

***Under the PRC enterprise income tax law, we may be classified as a "PRC resident enterprise", which could result in unfavorable tax consequences to we and our 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 that became effective on January 1, 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. On April 22, 2009, the State Administration of Taxation, or the SAT, issued the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprise on the Basis of De Facto Management Bodies, or SAT Circular 82, which provides certain specific criteria for determining whether the "*de facto* management body" of a PRC-controlled enterprise that is incorporated offshore is located in China. Further to SAT Circular 82, on August 3, 2011, the SAT issued the Administrative Measures of Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, which became effective on September 1, 2011, to provide more guidance on the implementation of SAT Circular 82.

According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered a PRC tax resident enterprise by virtue of having its "*de facto* management body" in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following conditions are met: (a) the senior management and core management departments in charge of its daily operations function have their presence mainly in the PRC; (b) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (c) 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 (d) not less than half of the enterprise's directors or senior management with voting rights habitually reside in the PRC. SAT Bulletin 45 further clarifies the resident status determination, post-determination administration as well as competent tax authorities.

Although SAT Circular 82 and SAT Bulletin 45 only apply to offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise group instead of those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect SAT's general position on how the term "*de facto* management body" could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.

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We believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes even if the standards for "*de facto* management body" prescribed in the SAT Circular 82 are applicable to us. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "*de facto* management body." If the PRC tax authorities determine that we or any of our subsidiaries outside of China is a PRC resident enterprise for enterprise income tax purposes, we may be subject to PRC enterprise income on our worldwide income at the rate of 25%, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations.

Although dividends paid by one PRC tax resident to another PRC tax resident should qualify as "tax-exempt income" under the enterprise income tax law, we cannot assure you that dividends by our PRC subsidiaries to our Cayman Islands holding company will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax on dividends, and the PRC tax authorities have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes.

Non-PRC resident holders of our Ordinary shares may also be subject to PRC withholding tax on dividends paid by us and PRC tax on gains realized on the sale or other disposition of Ordinary shares, if such income is sourced from within the PRC. The tax would be imposed at the rate of 10% in the case of non-PRC resident enterprise holders and 20% in the case of non-PRC resident individual holders. In the case of dividends, we would be required to withhold the tax at source. Any PRC tax liability may be reduced under applicable tax treaties or similar arrangements. Although our holding company is incorporated in the Cayman Islands, it remains unclear whether dividends received and gains realized by our non-PRC resident holders of our Ordinary shares will be regarded as income from sources within the PRC if we are classified as a PRC resident enterprise. Any such tax will reduce the returns on your investment in our Ordinary shares.

We cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains and impose tax return filing and withholding or tax payment obligations with respect to any internal restructuring, and our PRC subsidiaries may be requested to assist in the filing. Any PRC tax imposed on a transfer of our shares not through a public stock exchange, or any adjustment of such gains would cause us to incur additional costs and may have a negative impact on the value of your investment in us.

***We may not be able to obtain certain benefits under relevant tax treaties on dividends paid by our PRC subsidiaries to us through our Hong Kong subsidiaries.***

We are an exempted company with limited liability, used as holding company, incorporated under the laws of the Cayman Islands and as such relies on dividends and other distributions on equity from our PRC subsidiaries, as paid to us through our Hong Kong subsidiaries, to satisfy part of our liquidity requirements. Pursuant to the PRC Enterprise Income Tax Law, a withholding tax rate of 10% currently applies to dividends paid by a PRC "resident enterprise" to a foreign enterprise investor, unless any such foreign investor's jurisdiction of incorporation has a tax treaty with China that provides for preferential tax treatment. Pursuant to the Arrangement between the 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, and Circular 81 issued by the State Administration of Taxation, such withholding tax rate may be lowered to 5% if the PRC enterprise is at least 25% held by a Hong Kong enterprise throughout the 12 months prior to distribution of the dividends and is determined by the relevant PRC tax authority to have satisfied other requirements. Furthermore, under the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties, which became effective in August 2015, the non-resident enterprises shall determine whether they are qualified for preferential tax treatment under the tax treaties and file relevant reports and materials with the tax authorities. There are also other conditions for benefiting from the reduced withholding tax rate according to other relevant tax rules and regulations. We cannot assure you that our determination regarding our Hong Kong subsidiaries' qualification to benefit from the preferential tax treatment will not be challenged by the relevant PRC tax authority or that we will be able to complete the necessary filings with the relevant PRC tax authority and benefit from the preferential withholding tax rate of 5% under the Double Taxation Avoidance Arrangement with respect to dividends to be paid by our PRC subsidiaries to our Hong Kong subsidiaries.

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***Our PRC subsidiaries may face uncertainties relating to special preferential income tax rate in connection with PRC high and new technology enterprise and tax exempt status.***

Two of our subsidiaries, Shanghai Mengyun and Shenzhen Bowei have received the High and New Technology Enterprise Certification. Shanghai Mengyun obtained the "high-tech enterprise" tax status in October 2017 and further renewed in December 2023, which reduced its statutory income tax rate to 15% from January 2017 to December 2026.Shenzhen Bowei obtained the "high-tech enterprise" tax status in December 2021, which reduced its statutory income tax rate to 15% from January 2021 and further renewed in December 2024, which reduced its statutory income tax rate to 15% from January 2021to December 2026. Under PRC laws, Shanghai Mengyun and Shenzhen Bowei shall satisfy all the conditions stipulated under the Administrative Measures for Recognition of High and New Technology Enterprises and relevant guidance, including relevant financial, research and development thresholds, manufacturing and otherwise requirements during the three-year period. We cannot assure that Shanghai Mengyun and Shenzhen Bowei may maintain the High and New Technology Enterprise Certification during the next three-year period and such preferential income tax treatment could be revoked if Shanghai Mengyun and Shenzhen Bowei are deemed unqualified to receive such tax benefits. There is also no guarantee that Shanghai Mengyun and Shenzhen Bowei will receive a new High and New Technology Enterprise Certification upon expiration of the three-year preferential treatment period. Accordingly, our financial condition and operation may be adversely affected due to such changes.

On April 2, 2021, MOF and SAT further jointly issued Cai Shui 2021 No. 12, which clarified that from January 1, 2022 to December 31, 2022, eligible small enterprises whose RMB 1,000,000 of annual taxable income is eligible for an extra 50% reduction base on Cai Shui 2019 No. 13 (i.e., effective rate is 2.5%). On March 14, 2022, MOF and SAT further jointly issued Cai Shui 2022 No. 13, which clarified that from January 1, 2022 to December 31, 2022, eligible small enterprises whose income between RMB 1,000,000 and RMB 3,000,000 is eligible for an extra 50% reduction base on Cai Shui 2019 No. 13 (i.e., effective rate is 5%). On March 27, 2023, MOF and SAT further jointly issued Cai Shui 2023 No. 6,This clarified that from January 1, 2023 to December 31, 2027, eligible small enterprises whose RMB 1,000,000 of annual taxable income is shall be included in the taxable income amount at a reduced rate of 25%, and the enterprise income tax shall be paid at a tax rate of 20% (i.e., effective rate is 5%). From January 1, 2022 to December 31, 2027, and the income between RMB 1,000,000 and RMB 3,000,000 is shall be included in the taxable income amount at a reduced rate of 25%, and the enterprise income tax shall be paid at a tax rate of 20% (i.e., effective rate is 5%). For the years ended December 31, 2023, 2024 and 2025, Beijing Xihuiyun, Shenzhen Haiyun, Haiyun Xingchen, Shenzhen Yushian, HaiYun Zhichuang, Yichang Jiyue, Beijing Jiyue and Shanghai Kuosou were eligible to employ this policy.

To the extent that we are unable to obtain similar above preferential rates in the future such that our current effective tax rate is not indicative of future results. As a result, the tax laws in the countries in which we and our affiliates do business could change on a prospective or retroactive basis, and any such changes could adversely affect us and our affiliates.

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

We face uncertainties regarding the reporting on and consequences of previous private equity financing transactions involving the transfer and exchange of shares in us by non-resident investors. In February 2015, the SAT issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or SAT Bulletin 7, as amended in 2017. Pursuant to this bulletin, an "indirect transfer" of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. According to SAT Bulletin 7, "PRC taxable assets" include assets attributed to an establishment in China,

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immovable properties located in China, and equity investments in PRC resident enterprises, in respect of which gains from their transfer by a direct holder, being a non-PRC resident enterprise, would be subject to PRC enterprise income taxes. When determining whether there is a "reasonable commercial purpose" of the transaction arrangement, features to be taken into consideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consist of direct or indirect investment in China or if its income mainly derives from China; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model and organizational structure; the replicability of the transaction by direct transfer of PRC taxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similar arrangements. In respect of an indirect offshore transfer of assets of a PRC establishment, the resulting gain is to be included with the enterprise income tax filing of the PRC establishment or place of business being transferred, and would consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immovable properties located in China or to equity investments in a PRC resident enterprise, which is not related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax of 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. SAT Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a transaction through a public stock exchange.

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

***If the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.***

In China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature. Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The chops of our PRC subsidiaries are generally held securely by personnel designated or approved by us in accordance with our internal control procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do so. In addition, if the chops are misused by unauthorized persons, we could experience disruption to our normal business operations. we may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations.

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***Implementation of labor laws and regulations in China may adversely affect our business and results of operations.***

Pursuant to the labor contract law that took effect in January 2008, its implementation rules that took effect in September 2008 and its amendment that took effect in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees' probation and unilaterally terminating labor contracts. Due to lack of detailed interpretative rules and uniform implementation practices and broad discretion of the local competent authorities, it is uncertain as to how the labor contract law and its implementation rules will affect our current employment policies and practices. Our employment policies and practices may violate the labor contract law or its implementation rules, and we may thus be subject to related penalties, fines or legal fees. Compliance with the labor contract law and its implementation rules may increase our operating expenses, in particular our personnel expenses. In the event that we decide to terminate some of our employees or otherwise changes our employment or labor practices, the labor contract law and its implementation rules may also limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations. According to the Social Insurance Law and the Regulations on the Management of Housing Fund, employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance and maternity insurance and housing funds, and the employers must, together with their employees or separately, pay the social insurance premiums and housing funds for such employees.

As the interpretation and implementation of these laws and regulations are still evolving, we cannot assure you that our employment practice will at all times be deemed in full compliance with labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation to our employees and our business, financial condition and results of operations could be materially and adversely affected.

Further, labor disputes, work stoppages or slowdowns at our operations or any of our third-party service providers could significantly disrupt daily operation or our expansion plans and have a material adverse effect on our business.

***The M&A Rules and certain other PRC regulations may make it more difficult for us to pursue growth through acquisitions.***

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 some other regulations and rules concerning mergers and acquisitions established complex procedures and requirements for acquisition of Chinese companies by foreign investors, including requirements in some instances that the Ministry of Commerce of the PRC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise.

Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the National People's Congress, which became effective in 2008 and was sdignificanly amended effective Augst 2022, requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the State Administration for Market Regulation (SAMR) before they can be completed. The 2022 amendments to the Anti-Monopoly Law granted SAMR the authority to review transactions that fall below the statutory turnover thresholds if there is evidence that the transaction may restrict competition, and substantially increased the penalties for failing to notify SAMR prior to closing. In January 2024, the State Council further revised the turnover thresholds that trigger a mandatory merger control filing.

In addition, the Measures for the Security Review of Foreign Investment, jointly issued by the National Development and Reform Commission (NDRC) and MOFCOM, which became effective on January 18, 2021 specify that foreign investments in military or national defense-related areas, or foreign investments through which foreign investors may acquire "actual control" over domestic enterprises in critical sectors are subject to strict review by a dedicated working mechanism led by the NDRC and MOFCOM. The rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement.

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In the future, we may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the requirements of the above-mentioned regulations and other rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the Ministry of Commerce, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share. Furthermore, according to the M&A Rules, if a PRC entity or individual plans to merger or acquire its related PRC entity through an overseas company legitimately incorporated or controlled by such entity or individual, such a merger and acquisition will be subject to examination and approval by the Ministry of Commerce. The application and interpretations of M&A Rules are still uncertain, and there is possibility that the PRC regulators may promulgate new rules or explanations requiring that we obtain approval of the Ministry of Commerce for our completed or ongoing mergers and acquisitions. There is no assurance that we can obtain such approval from the Ministry of Commerce for our mergers and acquisitions, and if we fail to obtain those approvals, we may be required to suspend the acquisition and be subject to penalties. Any uncertainties regarding such approval requirements could have a material adverse effect on our business, results of operations and corporate structure.

***The approval of the China Securities Regulatory Commission may be required in connection with our offerings under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be able to obtain such approval.***

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the "Trial Measures"), along with five supporting guidelines, which took effect on March 31, 2023. The Trial Measures establish a new comprehensive filing-based regime to regulate both direct and indirect overseas offerings and listings by PRC domestic companies. This framework effectively supersedes the uncertainties previously surrounding the 2006 M&A Rules regarding offshore listings.

Under the Trial Measures, an overseas offering and listing by a company that operates its business primarily in China through its PRC subsidiaries, such as our company, is deemed an "indirect overseas offering" and is strictly subject to the filing requirements with the CSRC. Because our securities were already listed on Nasdaq prior to the effective date of the Trial Measures, we were not required to retroactively file with the CSRC for our initial listing. However, the Trial Measures explicitly mandate that an overseas-listed company must submit a filing to the CSRC with respect to any future offshore securities offerings. This includes follow-on offerings, secondary equity offerings, and the issuance of convertible corporate bonds or exchangeable bonds. Under the current guidelines, we will be required to submit the requisite filing materials to the CSRC within three working days after the completion of any such future offering. We cannot assure you that we will be able to complete these required CSRC filings in a timely manner, or at all. If we fail to comply with the filing requirements of the Trial Measures for our future capital-raising activities, or if we are found to have concealed material facts or falsified application materials, we may be subject to severe penalties from the CSRC or other PRC regulatory authorities. These penalties include fines ranging from RMB 1 million to RMB 10 million for the company, and additional fines ranging from RMB 500,000 to RMB 5 million for our controlling shareholders, actual controllers, and directly responsible executive officers.

The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt our offerings, limiting our operating privileges in the PRC, or restricting the repatriation of the proceeds from future offerings into the PRC. Such events could significantly hinder our ability to raise capital and could have a material and adverse effect on our business, financial condition, results of operations, and the trading price of our Ordinary shares.

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***PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries' ability to increase their registered capital or distribute profits to us or otherwise expose us to liability and penalties under PRC law.***

The State Administration of Foreign Exchange ("SAFE") promulgated the Circular on Relevant Issues Relating to PRC Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 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. Subsequently, SAFE promulgated the Notice on Further Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment, or SAFE Circular 13, which took effect in June 2015. Under SAFE Circular 13, the authority to handle foreign exchange registration for direct investment, including the registration under SAFE Circular 37, was delegated from local SAFE branches to qualified local banks, while SAFE and its branches exercise indirect supervision over the registration process through the banks.

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 residents or entities, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions.

SAFE Circular 37 is issued to replace the Circular on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments through Overseas Special Purpose Vehicles. If our shareholders who are PRC residents or entities do not complete their registration with the local SAFE branches, our PRC subsidiaries may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiaries. Moreover, failure to comply with SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

However, we may not be informed of the identities of all the PRC residents or entities holding direct or indirect interest of us, nor can we compel our shareholders to comply with the requirements of SAFE Circular 37. Although our shareholders who are PRC residents or entities have complied with SAFE Circular 37, we cannot assure you that all of our shareholders who are PRC residents or entities will in the future make or obtain any applicable registrations or approvals required by, SAFE Circular 37. Failure by such shareholders to comply with SAFE Circular 37, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries' ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects.

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

Any transfer of funds by us to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, is subject to approval by or registration or filing with relevant governmental authorities in China. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions to our PRC subsidiaries are subject to the approval of or filing with the Ministry of Commerce in its local branches and registration with a local bank authorized by SAFE. In addition, (i) any foreign loan

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procured by our PRC subsidiaries is required to be registered with SAFE or its local branches or filed with SAFE in its information system; and (ii) our PRC subsidiaries may not procure loans which exceed the difference between their total investment amount and registered capital or, as an alternative, only procure loans subject to the calculation approach and limitation as provided in the People's Bank of China Notice No. 9 ("PBOC Notice No. 9"). Any medium- or long-term loan to be provided by us to our PRC-based subsidiaries must be registered with the National Development and Reform Commission and SAFE or its local branches. We may not be able to obtain these government approvals or complete such registrations on a timely basis, if at all, with respect to future capital contributions or foreign loans by us to our PRC subsidiaries. If we fail to receive such approvals or complete such registration or filing, our ability to use the proceeds we receive from our offshore financing activities and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and ability to fund and expand our business. There is, in effect, no statutory limit on the amount of capital contribution that we can make to our PRC subsidiaries. This is because there is no statutory limit on the amount of registered capital for our PRC subsidiaries, and we are allowed to make capital contributions to our PRC subsidiaries by subscribing for their initial registered capital and increased registered capital, provided that the PRC subsidiaries complete the relevant filing and registration procedures.

With respect to loans to our PRC subsidiaries by us, (i) if the PRC subsidiaries adopt the traditional foreign exchange administration mechanism, or the Current Foreign Debt Mechanism, the outstanding amount of the loans shall not exceed the difference between the total investment and the registered capital of the PRC subsidiaries; and (ii) if the PRC subsidiaries adopt the foreign exchange administration mechanism as provided in Notice of the People's Bank of China on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing, or the PBOC Notice No. 9, the risk-weighted outstanding amount of the loans, which shall be calculated based on the formula provided in PBOC Notice No. 9, shall not exceed 200% of the net asset of the PRC subsidiaries. According to the PBOC Notice No. 9, after a transition period of one year since the promulgation of PBOC Notice No. 9, the PBOC and SAFE will determine the cross-border financing administration mechanism for the foreign-invested enterprises after evaluating the overall implementation of PBOC Notice No. 9. It is uncertain which mechanism will be adopted by the PBOC and SAFE in the future and what statutory limits will be imposed on us when providing loans to our PRC subsidiaries. Currently, our PRC subsidiaries have the flexibility to choose between the Current Foreign Debt Mechanism and the Notice No. 9 Foreign Debt Mechanism. However, if a more stringent foreign debt mechanism becomes mandatory, our ability to provide loans to our PRC subsidiaries or our consolidated affiliated entities may be significantly limited, which may adversely affect our business, financial condition, and results of operations.

The Circular on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-Invested Enterprises, or SAFE Circular 19, effective as of June 1, 2015, as amended by Circular of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement under the Capital Account, or SAFE Circular 16, effective on June 9, 2016, allows FIEs to settle their foreign exchange capital at their discretion, but continues to prohibit FIEs from using the Renminbi fund converted from their foreign exchange capitals for expenditure beyond their business scopes, and also prohibit FIEs from using such Renminbi fund to provide loans to persons other than affiliates unless otherwise permitted under our business scope. As a result, we are required to apply Renminbi funds converted from the net proceeds we received from our offshore financing activities within the business scopes of our PRC subsidiaries. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to use Renminbi converted from the net proceeds from our offshore financing activities to fund the establishment of new entities in China by our PRC subsidiaries, to invest in or acquire any other PRC companies through our PRC subsidiaries, or to establish new consolidated subsidiary in China, which may adversely affect our business, financial condition, and results of operations.

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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 liquidity requirements, conduct business and pay dividends to holders of our Ordinary shares.***

We are a holding company incorporated in the Cayman Islands. We rely on dividends from our PRC subsidiaries, such as the funds necessary to pay dividends and other cash distributions to our shareholders, including holders of our Ordinary shares, and service any debt we may incur. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated after-tax profits upon satisfaction of relevant statutory condition and procedures, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of our registered capital. 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, which may restrict our ability to satisfy our liquidity requirements.

In addition, the Enterprise Income Tax Law of the PRC, or the PRC EIT Law, and its implementation rules provide that withholding tax rate of 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.

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

The value of the Renminbi against the U.S. dollar and other currencies is affected by changes in China's political and economic conditions and China's foreign exchange policies, among other things. In 2005, the PRC government changed its decades-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system and we cannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.

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

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China may be used to pay dividends to us. However, approval from or registration with appropriate 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 loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries and consolidated affiliated entities to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi.

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In light of the flood of capital outflows of China in 2016 due to the weakening Renminbi, the PRC government has imposed more restrictive foreign exchange policies and stepped-up scrutiny of major outbound capital movement including overseas direct investment. More restrictions and substantial vetting process are put in place by SAFE to regulate cross-border transactions falling under the capital account. If any of our shareholders regulated by such policies fail to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, we may be subject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.

***Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.***

Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. In the meantime, our directors, executive officers and other employees who are PRC citizens or who are non-PRC residents residing in the PRC for a continuous period of not less than one year, subject to limited exceptions, and who have been granted incentive share awards by us, may follow the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, or 2012 SAFE notices, promulgated by the SAFE in 2012. Pursuant to the 2012 SAFE notices, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. our executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one year and who have been granted options are subject to these regulations. Failure to complete the SAFE registrations may subject them to fines, and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries and limit our PRC subsidiaries' ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers, and employees under PRC law.

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

***Our leased property interests may be defective and our rights to lease the properties affected by such defects may be challenged, which could adversely affect our business.***

According to the PRC Land Administration Law, land in urban districts is owned by the state. The owner of a property built on state-owned land must possess the proper land and property title certificate to demonstrate that it is the owner of the premises and that it has the right to enter into lease contracts with the tenants or to authorize a third party to sublease the premises. Some of the landlords of our leased locations have failed to provide the title certificates to us. Our rights to lease the premises may be interrupted or adversely affected if our landlords are not the property owners and the actual property owners should appear.

In addition, the title certificate usually records the approved use of the state-owned land by the government and the property owner is obligated to follow the approved use requirement when making use of the property. In the case of failure to utilize the property in accordance with the approved use, the land administration authorities may order the tenant to cease utilizing the premises or even invalidate the contract between the landlord and the tenant. If our use of the leased premises is not in full compliance with the approved use of the land, we may be unable to continue to use the property, which may cause disruption to our business.

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

The PRC 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 taxation, environmental regulations, land use rights, property and other matters. The central data security, anti-monopoly policies or local PRC governments may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in the PRC or particular regions thereof, and could require us to divest itself of any interest we then hold in Chinese properties.

The PRC government has recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could require us to seek permission from PRC authorities to continue to operate our business, which may adversely affect our business, financial condition and results of operations. Furthermore, recent statements made by the PRC government have indicated an intent to increase the government's oversight and control over offerings of companies with significant operations in China that are to be conducted in foreign markets, as well as foreign investment in China-based companies like us. Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer ordinary shares to the investors, and could cause the value of our shares to significantly decline or become worthless.

Additionally, on July 6, 2021, 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 Strictly Cracking Down on Illegal Securities Activities, or the Opinions, which emphasized the need to strengthen administration over illegal securities activities and supervision of overseas listings by China-based companies. The Opinions proposed promoting regulatory systems to deal with risks facing China-based overseas-listed companies, and provided that the State Council will revise provisions regarding the overseas issuance and listing of shares by companies limited by shares and will clarify the duties of domestic regulatory authorities. However, the Opinions did not provide detailed rules and regulations. As a result, uncertainties remain regarding the interpretation and implementation of the Opinions.

As such, we and our PRC subsidiaries' business segments may be subject to various government and regulatory interference in the provinces in which they operate. We and our PRC subsidiaries could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. We and our PRC subsidiaries may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.

Furthermore, it is uncertain when and whether we will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although we are currently not required to obtain permission from any of the PRC federal or local government to obtain such permission and has not received any denial to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry.

Given the PRC government's significant oversight and discretion over the conduct of our business, the PRC government may intervene or influence our operations at any time, which could result in a material change in our operations and/or the value of our Ordinary shares. Also, given recent statements by the PRC government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China- based issuers, that any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

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**Risk Factors Relating to an Investment in our Ordinary shares**

***You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.***

We are an exempted company incorporated under the laws of the Cayman Islands. our corporate affairs are governed by our second amended and restated memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standings to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (save for our second amended and restated memorandum and articles of association, register of mortgages and charges and any special resolutions of our shareholders) or to obtain copies of lists of shareholders of these companies. our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, users of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

***Certain judgments obtained against us by our shareholders may not be enforceable.***

We are a company incorporated under the laws of the Cayman Islands. We conduct most of our operations in China and substantially all of our operations outside of the United States. Most of our assets are located in China, and substantially all of our assets are located outside of the United States. In addition, most of our senior executive officers reside within China for a significant portion of the time and most are PRC nationals. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. See also "*Risk Factors—Risk Factors Relating to Doing Business in China—You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management based on foreign laws.*"

***Our share price may be volatile and could decline substantially.***

The trading prices of our Ordinary shares are likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation in the market prices or the underperformance or deteriorating financial results of companies based in China that have listed their securities in the United States in recent years. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial decline in their trading prices. The trading performances of other PRC companies' securities after their offerings may affect the attitudes of investors toward PRC companies listed in the United States, which consequently may impact the trading performance of our Ordinary shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of other PRC companies may also negatively affect the attitudes of investors towards PRC companies in general. In addition, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material adverse effect on the market price of our shares. In addition to the above factors, the price and trading volume of our Ordinary shares may be highly volatile due to multiple factors, including the following:

● actual or anticipated variations in the financial results and prospects of us or other companies in the holographic technology services industry;

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● changes in financial estimates by research analysts;

● changes in the market valuations of other companies we compete with;

● announcements by us or our competitors of new services and solutions, expansions, investments, acquisitions, strategic partnerships or joint ventures;

● mergers or other business combinations involving us;

● additions and departures of key personnel and senior management;

● changes in accounting principles;

● the passage of legislation or other developments affecting us or our industry;

● the trading volume of our Ordinary shares in the public market;

● the release of lockup, escrow or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;

● potential litigation or regulatory investigations;

● changes in economic conditions, including fluctuations in global and Chinese economies;

● financial market conditions;

● natural disasters, terrorist acts, acts of war or periods of civil unrest; and

● the realization of some or all of the risks described in this section.

In addition, the stock markets have experienced significant price and trading volume fluctuations from time to time, and the market prices of the equity securities of retailers have been extremely volatile and are sometimes subject to sharp price and trading volume changes. These broad market fluctuations may materially and adversely affect the market price of our Ordinary shares.

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

We currently intend to retain future earnings, if any, to finance the further development and expansion of our business and does not intend to pay cash dividends in the foreseeable future. Any future determinations to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our board of directors deems relevant.

***We may be subject to securities litigation, which is expensive and could divert management attention.***

The market price of our Ordinary shares may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert management's attention from other business concerns, which could seriously harm our business.

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***The sale or availability for sale of substantial amounts ordinary shares could adversely affect our market price.***

Sales of substantial amounts of the Ordinary Share in the public market, or the perception that these sales could occur, could adversely affect the market price of our Ordinary shares and could materially impair our ability to raise capital through equity offerings in the future. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other holders or the availability of these securities for future sale will have on the market price of our Ordinary shares.

***If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us or our business, our Ordinary shares price and trading volume could decline.***

The trading market for our Ordinary shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on us. If no securities or industry analysts commence coverage of us, the trading price for our Ordinary shares would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our securities or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us, demand for our Ordinary shares could decrease, which might cause our ordinary share price and trading volume to decline.

***We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.***

We will have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration. If and when the warrants become redeemable by us, we may exercise the redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force holders to (i) exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) sell the warrants at the then-current market price when the holder might otherwise wish to hold onto such warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of the warrants. None of the private placement warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees.

In addition, we may redeem your warrants after they become exercisable for a number of shares of our Ordinary shares determined based on the redemption date and the fair market value of our Ordinary shares. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the warrants are "out-of-the- money," in which case you would lose any potential embedded value from a subsequent increase in the value of our Ordinary shares had your warrants remained outstanding.

***If we cannot satisfy, or continue to satisfy, the requirements and rules of Nasdaq, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.***

In order to maintain our listing on Nasdaq, we will be required to comply with certain rules of Nasdaq, including those regarding minimum shareholders' equity, minimum share price, minimum market value of publicly held shares, 300 round lot shareholders and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of Nasdaq, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy Nasdaq criteria for maintaining our listing, our securities could be subject to delisting.

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Furthermore, on January 17, 2025, the SEC officially approved the proposed amendments to Nasdaq's Rule 5810 and 5815. These amendments have significantly revised the compliance period regulations. Under the previous rules, if a company's stock price was continuously below $1 for 30 trading days, it would be given an automatic 180 - day compliance period (the "first compliance period"). If it failed to regain compliance within this period, it might be granted an additional 180 - day compliance period (the "second compliance period"). If still not compliant, it could appeal to the Nasdaq Hearing Panel, and during the appeal, the stock could still be traded on the main board.

However, the new rules stipulate that if a company fails to restore compliance by the end of the second compliance period, its securities will be automatically suspended from trading on Nasdaq, even if it is in the process of appealing to the panel. During the appeal waiting period, these securities will be traded on the over - the - counter (OTC) market instead. If the appeal is approved by the hearing panel, the company may be given an additional maximum of 180 - day grace period to restore stock price compliance. But within this grace period, the company must meet the condition of maintaining a stock price above $1 for at least 10 days to regain its Nasdaq listing status. Also, for companies that have carried out a reverse stock split (i.e., share consolidation) in the past year and still fail to meet the minimum trading stock price requirement, they will no longer be entitled to any compliance period, and Nasdaq will immediately issue a delisting decision.

If Nasdaq does not list our securities, or subsequently delists our securities from trading, we could face significant consequences, including:

● a limited availability for market quotations for our securities;

● reduced liquidity with respect to our securities;

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

● limited amount of news and analyst coverage; and

● a decreased ability to issue additional securities or obtain additional financing in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as "covered securities." our Ordinary shares are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.

***We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.***

We are an emerging growth company within the meaning of the Securities Act, as modified by the JOBS Act. A company is considered an emerging growth company if its annual gross revenue in the most recent fiscal year is less than $1.235 billion and it has not sold common stock securities under a registration statement as of December 8, 2011. We may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes - Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We could remain an emerging growth company for up to five years from the date of our IPO, although circumstances could cause us to lose that status earlier. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

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Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non - emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used. In addition, according to the JOBS Act, an emerging growth company is required to submit profit and loss statements from the previous 2 years, rather than the previous 3 years as under current law, when submitting registration statements to the SEC.

***We will continue to incur increased costs as a result of being a public company, particularly after we cease to qualify as an "emerging growth company."***

The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies. As a company with less than $1.235 billion in revenues for its last fiscal year, we qualify as an "emerging growth company" pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. After we are no longer an "emerging growth company", we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC. For example, as a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

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In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in the market price of that company's securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, it may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

***We may be or become a PFIC, which could result in adverse U.S. federal income tax consequences to U.S. Holders.***

If we are deemed a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder of our ordinary shares, rights or warrants, the U.S. holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Depending upon the value of our assets, which is determined in part by the market value of our ordinary shares, and the nature of our assets and income over time, we could be classified as a PFIC for our current taxable year or in the future. Because PFIC status is a factual determination made annually after the close of each taxable year, there cannot be any assurance that we will not be classified as a PFIC for our current taxable year or any subsequent taxable year.

Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year. Moreover, if we determine that we are a PFIC for any taxable year, we will endeavor to provide to a U.S. holder such information as the Internal Revenue Service ("IRS") may require, including a PFIC annual information statement, in order to enable the U.S. holder to make and maintain a "qualified electing fund" election, but there can be no assurance that we will timely provide such required information, and such election would be unavailable with respect to our warrants in all cases. U.S. holders are urged to consult their own tax advisors regarding the possible application of the PFIC rules to holders of our Ordinary shares, rights and warrants.

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

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**A.** **HISTORY AND DEVELOPMENT OF OUR COMPANY** 

MicroCloud Hologram Inc. (formerly known as Golden Path Acquisition Corporation), incorporated in Cayman Island on May 9, 2018, it entered into the Merger Agreement dated September 10, 2021 (as amended on August 5, 2022 and August 10, 2022), by and among Golden Path, Golden Path Merger Sub, a Cayman Islands exempted company incorporated for the purpose of effectuating the business combination, and MC Hologram Inc.("MC"), a Cayman Islands exempted company.

Pursuant to the Merger Agreement, MC merged with the Golden Path Merger Sub and survive the merger and continue as the surviving company and a wholly owned subsidiary of Golden Path and continue its business operations (the "Merger", and, collectively with the other transactions described in the Merger Agreement, the "Business Combination").

On September 16, 2022, in accordance with the Merger Agreement, the closing of the Business Combination (the "Closing") occurred, pursuant to which Golden Path issued 44,554,455 ordinary shares to MC shareholders. As a result of the consummation of the Business Combination, MC became a wholly owned subsidiary of Golden Path which changed its name to MicroCloud Hologram Inc.

On September 19, 2022, the ordinary shares and public warrants outstanding upon the Closing began trading on the NASDAQ under the symbols "HOLO" and "HOLOW," respectively.

On September 30, 2023, we disposed of all our equity interests in Shenzhen Tianyuemeng and Shenzhen Youshi.

On February 26, 2024, Shenzhen Haiyun established Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") under the law of PRC. On March 1, 2024, Haiyun Xingchen acquired Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue"), which engaged in advertising service.

In May 2024, Horgos Weiyi Software Technology Co., Ltd and Horgos BroadVision Technology Co., Ltd. dissolved.

On March 18, 2025, MC established a fully owned subsidiary HaiYun Group Investment Ltd. ("HaiYun Group") in British Virgin Islands.

On May 7, 2025, HaiYun Group established a fully owned subsidiary HaiCloud Technology Inc.("HaiCloud Inc") in Cayman Islands. On August 11, 2025, HaiYun Group owned 65% equity of HaiCloud Inc as the result of the equity structure adjustment of HaiCloud Inc.

On May 27, 2025, HaiCloud Inc established a fully owned subsidiary HaiCloud Technology Limited. ("HaiCloud Ltd") in Hong Kong.

On June 27, 2025, HaiCloud Ltd established a wholly-owned subsidiary ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang").

On July 3, 2025, Haiyun Xingchen acquired 100% equity of Shanghai Kuosou Technology Ltd ("Shanghai Kuosou").

On September 30, 2025, we disposed of all our equity interests in Yichang Ji Yue and BeiJing Ji Yue.

Our principal executive office is located at Room 302, Building A, Zhong Ke Na Neng Building, Yue Xing Sixth Road, Nanshan District, Shenzhen, People's Republic of China. Our registered office address in the Cayman Islands is located at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Information contained on, or that can be accessed through, our website (ir.mcholo.com) does not constitute a part of this report and is not incorporated by reference herein. Our agent for service of process in the United States is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19715.

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We are subject to the periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year. Copies of reports and other information, when so filed with the SEC, can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the Commission at 1-800-SEC-0330. SEC maintains a website (*http://www.sec.gov*), which contains reports, proxy and information statements, and other information regarding us that are filed electronically with the SEC.

**B.** **BUSINESS OVERVIEW** 

We are committed to providing leading holographic technology services to our customers worldwide. Our holographic technology services include high-precision holographic light detection and ranging ("LiDAR") solutions, based on holographic technology, exclusive holographic LiDAR point cloud algorithms architecture design, breakthrough technical holographic imaging solutions, holographic LiDAR sensor chip design and holographic vehicle intelligent vision technology to service customers that provide reliable holographic advanced driver assistance systems ("ADAS"). We also provide holographic digital twin technology services for customers and have built a proprietary holographic digital twin technology resource library. Our holographic digital twin technology resource library captures shapes and objects in 3D holographic form by utilizing a combination of our holographic digital twin software, digital content, spatial data-driven data science, holographic digital cloud algorithm, and holographic 3D capture technology. Our holographic digital twin technology and resource library have the potential to become the new norm for the digital twin augmented physical world in the near future.

We provide a broad range of holographic technology services in the holographic industry. Our holographic solutions and technology services are capable of meeting the complex and multi-faceted holographic technology needs of our customers.

Our cutting-edge holographic LiDAR system is used in ADAS, allowing equipped automobiles and other vehicles to capture high-resolution 3D holograms and achieve ultra-long detection distance. Our holographic LiDAR solutions allow the automotive industry to break free from bulky mechanical rotating scanning systems and traditional sensors to solid-state LiDAR sensor with more components and smaller dimensions that can meet the demanding performance, safety, and cost requirements of our customers.

Our holographic ADAS provides a rich and safe set of autonomous control programs for vehicles. The point cloud algorithm for holographic LiDAR can detect and track obstacles, thereby avoiding and mitigating automotive collisions with both moving and static objects, including pedestrians and other vulnerable road obstacles and vehicles. By predicting and monitoring collision, our holographic LiDAR system calculates effective collusion mitigation plans by comparing the trajectory of an object with the trajectory of the moving vehicle to identify and avoid emergency situations while providing optimal comfort and safety to the driver. Due to its effectiveness, our holographic ADAS are being deployed at an increasing rate in the automotive industry.

As automakers and leading mobile and technology companies seek comprehensive digital perceptual solutions to accelerate and scale production for their autonomous driving programs, we believe that our holographic LiDAR can take advantage of this market trend to achieve excellent solutions for mass production of large-scale autonomous driving programs and vehicles.

Moreover, we are aligned to the rapid development of the Internet of Things, machine learning, and artificial intelligence ("AI"). Our holographic LiDAR solution is not only applicable to the field of intelligent vehicles but also applicable to robots, unmanned aerial vehicles ("UAVs"), advanced security systems, intelligent city development, industrial automation, environment, and mapping.

Our holographic digital twin technology resource library is built upon extensive holographic data modelling, simulation and bionics technology, culminating in a comprehensive holographic digital twin resource library which holographic developers and designers count on. Our digital twin resource library integrates holographic bionics and simulation digital models, as well as various holographic software technologies about holographic spatial positioning, dynamic capture, holographic image synthesis, which are open to all our users. We also provide customized holographic digital twin technology integration services for enterprise customers with unique commercial demands.

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With each technological advancement and product iteration, we continue to lay a solid foundation for increased competitiveness and long-term strategic development. We aim to continually provide customers with high-quality holographic technology services by dedicating significant resources to research and development in advanced holographic technology so as to achieve steady growth of revenue and improvement of market share for the benefit of shareholders.

**Competitive Strengths**

We believe that the following competitive strengths contribute to our success and differentiate us from our competitors:

***Leading holographic technology service provider with proprietary technology protected by comprehensive intellectual property rights***

We are one of the leading holographic digitalization technology service providers in China in terms of total revenue and the number of total intellectual property rights, which allows us to stay in the forefront of customers' demands.

***Scalability culminating from broad and diverse customer base and alignment with stable strategic relationships with major industry participants***

As one of the first companies on the market to enter into the rapidly evolving holographic technology industry, we are capable of taking advantage of our mature holographic technology service scheme to further reduce the overall costs of holographic technology services to our customers and to realize the large-scale application of holographic technology service. We have continuously invested in holographic technology, talented personnel, and marketing, which enables us to build up a solid brand image among our customers and seize a considerable market share. We have also established exceptional marketing channels and rich resources to attract and interact with both upstream and downstream industry participants. Rooted in deep understanding of local market dynamics, our accurate marketing positioning and corresponding marketing capacity have conceived a strong brand and expanded the coverage of our channels, further securing our market position.

***Strong R&D capabilities with leading innovations in the holographic technology services industry***

We believe that we are well-positioned to capture the growth of China's holographic technology industry. We intend to strengthen and further secure our market leading position by reinforcing R&D development to continuously drive innovation in holographic technology, including innovations in holographic LiDAR technology, intelligent holographic vision, and holographic digital twin technology.

***Leading holographic technology professionals led by an experienced and visionary management team***

We have a seasoned management team that is well experienced in China's information technology industry. With a focus on research and development, operation and management, and human resources, the team is led by Mr. Guohui Kang, who has been serving as our director and chief executive officer since September 2022, and supported by an exceptional research and development team members. Our core staff generally have many years of working experience in areas such as computer, software, computer graphic processing, data algorithm, and neural networks. Staying at the forefront of technological development and focusing on R&D, we retain a stable team of exceedingly qualified professionals specialized in holographic technology service, holographic LiDAR application, and holographic digital twin technology.

***Strong culture and values driving the sustainable and healthy environment***

We adhere to our corporate culture and values to nourish a sustainable corporate environment and attract talented team members. Our slogan is "customer oriented — nurture cooperation — win-win achieved." We also believe that customers' demands determine the corporate strategy and development orientation, and innovation drives core competencies. Guided by such values, we have successfully built up strong and long-term relationships with our customers and continuously optimized our talent pool and the comprehensive quality of our team members, all of which have contributed to our sustainable and rapid development.

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**Our Growth Strategies**

We plan to implement the following strategies to achieve our mission and further grow our market position:

***We will continue to expend significant resources in the research and development of holographic technology***

Research and development of in-demand technology combined with sustained output and continuous innovation sets the foundation of our market competitiveness. We endeavor to strengthen our market-leading position by further increasing investments in research and development, retaining talented individuals in the field of holographic technology, holographic LiDAR systems, and computer image processing for the purpose of expanding the range of proprietary technology and IP rights. More specifically, we are focused on developing our autonomous driving, 5G, AI, and machine learning technologies for the purpose of building a rich product line, and innovative and technologically leading services. To align with the development of the holographic ADAS industry, we aim to provide strong support for businesses in the field of autonomous driving. Our development report in ADAS includes hardware, software, and solutions upgraded by way of continuously developing new iterations of ADAS products and services through stepping up efforts in research and development.

***We plan to promote the implementation of holographic technology in broader mass market***

While holography continues to proliferate, we believe the holographic LiDAR market remains underpenetrated both in China and globally. Based on holographic technology services, we will seize the opportunity of the development of the internet information technology industry in the new era and give full play to our leading advantages in talents, technology, and in-depth cooperation with industry partners and customers. Our holographic technology solutions could not only upgrade traditional industries, but also be implemented in newly emerging industries due to our deeply rooted understanding of technological transformation. Specifically, we will promote the wide application and development of holographic technology services in automotive electronics, digital twin and other fields and help the intelligent upgrading of related industries to realize the sustainable, rapid, and healthy development of our business.

***We will continue to cooperate closely with the upstream and downstream of the industry chain***

Focusing on organic business growth, we will pay close attention to the demand for new technology throughout the industries in which we operate. Through the long-term and close cooperative relationship established with the partners in the industry chain, we seek to develop and deploy new technology ahead of customers' demands so that we can quickly synergize with both upstream and downstream industry partners to identify and devise solutions to potential opportunities at an early stage, and jointly solve key hurdles along the process so that the new technological solutions can be commercialized in the shortest time possible.

***We will continue to develop and cultivate talented individuals***

We have always regarded our talented team members as our most valuable resource. As a key driver to enterprise development, we have established an effective personnel training system and will continue to improve and upgrade such system to enhance its effectiveness. We will continue to build and promote core competencies of our employees through internal training, internal competition, external communication, and other effective means. In addition, we will seek to establish and test more effective incentive mechanisms, to actively create a working environment conducive to the development of our personnel, and to improve the cohesion and centripetal force of our employees, corporate culture, and business philosophy, so as to attract and retain more competitive talents.

**Technology**

We have developed powerful, cutting-edge holographic technologies.

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***Holographic Digital Technology***

Holography refers to the expression of all information of things. The advantage of holography lies in the expression of holographic space. It is another carrier of information in society. Holographic display technology is different from other traditional 3D display technologies in that it does not rely on any external devices like 3D glasses and helmets. Comparatively speaking, holographic display technology has the advantages of unlimited viewing angle, omni-directional viewing and no difference from the real object, and it can also interact with holographic imaging in-depth, which is a new breakthrough in touch sensing interaction and meets the goal of natural reality and three-dimensional visual effect.

Holographic digital technology is the combination of computer technology, holographic technology, and electronic imaging technology. It records holograms through electronic components and realizes real-time image processing. At the same time, the digital image can be quantitatively analyzed by computer, the intensity and phase distribution of the image can be obtained by calculation, and the superposition of multiple holograms can be simulated, so that the recording and reproduction of holograms can be truly digitized.

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As communication technology enters the 5G era, the rapid development and popularization of cloud computing, big data, AI, and other technologies have promoted the development of holographic digital technology. we believe that holographic digital technology will become the technical foundation of the next generation of the Internet. We believe that the next generation of Internet will be holographic space Internet and hopes that through our continuous attempts and breakthroughs in holographic technology, we can lay a foundation for wide adoption by the mass market.

We believe that the combination of holographic technology and digitization is of great significance in promoting the development of social economy and culture. With the development of technology, the application of holographic digital technology is becoming more market oriented. For example, in the automotive field, the holographic digital technology is applied to the navigation, and the navigation is projected on the front window, so that the driver can clearly know the route without bending his head, which greatly improves the driving safety. The application in the medical field is also of great practical significance. The use of holographic digital technology can record the vibration and deformation of organs in the human body in a three-dimensional way, which can be measured by the interference fringes on the hologram. The second exposure technology of holographic LiDAR can also analyze the changes of human organs, so as to find out the location and size of lesions. For example, the use of holographic digital technology can detect the location of malignant tumors and contribute to the early diagnosis and treatment of cancer. Because of the non-destructive property of digital hologram, it is considered to be the best method to detect human internal organs. Of course, digital hologram technology is also widely used in clinical examination. In addition, in the field of aerospace, holographic digital technology also has broad application prospects, such as the use of holographic digital technology can simulate the real outer space for real perception training, which brings great significance to the training of astronauts.

With the continuous expansion of the application field of holographic digital technology, we believe that in the future, holographic digital technology will become an irreplaceable part of society.

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***Holographic LiDAR Technology***

LiDAR is a combination of laser, global positioning system ("GPS") and inertial navigation system ("INS") technology and is used to obtain point cloud data and generate accurate digital three-dimensional model. Laser itself has a very accurate ranging capability and its ranging accuracy can reach several centimeters. In addition to the laser itself, the accuracy of LiDAR system also depends on the synchronization of laser, GPS, and inertial measurement unit ("IMU"). Holographic LiDAR is an active measurement device that detects the precise distance between the object and the sensor by emitting a laser beam, including a transmitting unit, a receiving unit, a scanning unit and a data processing unit. The distance is determined by measuring the time difference and phase difference of the laser signal, and the angle is measured by horizontal scanning. According to these two parameters, a two-dimensional polar coordinate system is established, and then the three-dimensional height information is obtained by different pitch angle signals.

With the development of commercial GPS and IMU, it has been widely used to obtain high-precision data from mobile platforms (such as automobiles) through LiDAR. LiDAR scanning can obtain point cloud data, which can be used to create 3D computer-aided design ("CAD") models for manufacturing parts, quality inspection, diversified vision, cartoon production, 3D drawing, and mass communication tool applications. In addition, it can be used in the construction of digital 3D City, 3D terrain acquisition, 3D cultural relic reconstruction, cadastral survey, power inventory and other industries that need surveying and mapping modelling.

***Holographic Intelligent Vision Technology***

Holographic intelligent vision refers to the machine vision that uses camera and computer to simulate human vision to recognize, track and measure the target, and to further process the image through recognition and analysis, so that the computer processing becomes more suitable for human eyes to observe or transmit to the instrument for detection. Holographic intelligent vision plays an important role in the establishment of artificial intelligence system to obtain "information" from images or multidimensional data.

Holographic intelligent vision is the science of using computers to imitate human visual systems, which enables computer with the ability to extract, process, understand and analyze images and image sequences similar to human beings, and realize the perception and recognition of the three-dimensional scene of the objective world.

In the fields of autopilot, robot, intelligent medical and so on, it is necessary to extract information from the visual signal by holographic intelligent vision technology and carry out high-precision processing. Holographic intelligent vision technology used in holographic technology service includes holographic face recognition, holographic object, and scene recognition.

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***Holographic SDK Technology***

Holographic SDK technology can collect holographic data through tactile feedback information, force feedback information and the movement of the observed object. The holographic virtual space is constructed by scene map switching, scene building and 3D geographic information; Holographic digital content editing is carried out by means of dynamic image processing, graphic display, and rectification. Through the control system of animation glare system, dynamic glare effect and dynamic conversion, the holographic digital effect is produced, and the holographic virtual digital control function is realized by light field dynamic fusion control system and holographic digital display software.

Our holographic SDK services include holographic data acquisition, holographic virtual space construction, holographic digital content editing, holographic digital effect production and holographic virtual digital control module, which can meet the current market demand for holographic software technology application, software development and other aspects. We will also continue to develop new functions according to the needs of customers to enrich the holographic SDK library.

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**Research and Development**

We have a very outstanding R&D team responsible for the design and development of high-quality holographic products and services. They are experienced in holographic basic technology and hardware development. The professional background of the research and development team covers a wide range of aspects, including computer, software, computer graphic processing, data algorithm, and neural networks. Such extensive and in-depth working experience empowers the team's services such as digital graphic lightweight, algorithm, data intelligence and image synthesis. We have focused on and will continue to focus on investment in our technology system.

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We are committed to continuously strengthening and updating our information technology infrastructure and compatible hardware according to our annual development plan and based upon our assessment of market demand. The process of our self-development research and development is as follows: (1) research and development personnel raise new ideas for research and development based on the market situation and customers' needs to complete the investigation report and decision analysis; (2) project approval and formulate product research and development plan; (3) development of product technology; (4) product testing and review; (5) launching of new product; and (6) promotion and application of the new product.

**Intellectual Property**

Intellectual property rights are critical to our success and competitiveness. We rely on a combination of patent, copyright, trademark, and trade secret laws and restrictions on disclosure to protect our intellectual property rights. As of December 31, 2025, we owned:

● Trademarks: 6 registered trademarks in the PRC;

● Patents: 133 patents in the PRC, mainly involving virtual vision imaging, motion capture, image acquisition and other related technologies;

● Layout design of integrated circuit: 22 items in the PRC;

● Software copyrights: 412 works of software copyrights in the PRC;

In addition to the foregoing protections, we generally control access to and use of our proprietary and other confidential information through the use of internal and external controls. For example, we adopt and maintain relevant policies safeguarding our intellectual property rights through establishing an intellectual property management organization and specifying personnel for intellectual property protection, strengthening special training on intellectual property rights for employees, and establishing an intellectual property management system.

**Competition**

There are many other companies addressing various aspects/verticals of the holographic basic technology service market in China. Our competitors are mainly holographic software providers, holographic content service providers, and participants in the holographic intelligent electronics field and the holographic intelligent vision field.

We compete in an emerging and competitive industry for the following factors:

● quality of the basic holographic technology;

● richness and compatibility of high-quality holographic content;

● strength and reputation of brand;

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● ability to enhance existing services to meet user preferences and needs;

● capability to continuously expand customer base; and

● ability to compete effectively with competitors.

We believe we offer a higher performance product, and we are capable to compete favorably and increase our market share. Our ability to remain competitive bases upon the quality of our holographic content, the ability to innovate and rapidly respond to customer needs, as well as the capability of acquiring complementary technologies, products and businesses to enhance the features and functionality of our applications.

**Seasonality**

We do not experience substantial seasonal fluctuations in our revenues and results of operations.

**Sales and Marketing**

We have formed a business model of "excellent technology research and development team + well experienced sales team." A professional sales team, paired with advanced technology, enables us to maintain an advantageous position in the competition. We are dedicated to deepening our relationship with existing customers, develop relationships with new and potential customers, and on exploring untapped business opportunities. At the same time, we also emphasize on brand building and will establish a strong reputation and brand image by continuously producing high-quality technology services and contents.

**Customers**

We have provided holographic technology services for thousands of customers and have accumulated rich customer resources and diverse customer base in the industry. We work closely with government agencies, automotive electronics manufacturers, and software/content developers, etc. At present, we have a relatively well-established and comprehensive holographic technology service chain.

We have provided holographic technology services for numerous well-known and prestigious enterprises in the real estate, automobile, life insurance industries and so on. Customers usually enter into framework service agreements with us, based upon which we will provide holographic technology services and receive corresponding product and service fees in return from the customers. We maintain a diverse customer base, for the years ended 31 December 2024 and 31 December 2025, 25.9% and 32.3% of our total revenue came from two and two customers, respectively.

We believe that our continuous attraction to and ability to retain large and medium-sized enterprise customers depends on our ability to meet their disparate needs as well as complex in-house deployment and integration needs. We also leverage our comprehensive business portfolio to serve small and medium enterprises, aiming to improve customer satisfaction and expand cross selling and up selling opportunities.

**Suppliers**

We have a diverse base of suppliers who view us as integral partners in the supply chain. We have strong relationships with our suppliers due to our market position, substantial purchasing scale, national footprint and rich customer resources. We believe we are one of the largest volume customers for many of our suppliers, leading to favorable purchasing arrangements regarding product availability, payment terms and pricing. Our size and scale, supplier relationships, and technical knowledge of products and services enable us to receive favorable treatment. Our largest single supplier represented 20.7% of expenditures in fiscal 2025, and our top ten suppliers represented 78.1% of total product expenditures during the same period. We strategically conduct business with our top suppliers in order to optimize our scale advantages, but we also have the flexibility to source the majority of our purchase from a number of alternate suppliers when necessary.

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**Employees**

As of December 31, 2025, we had 74 full-time employees, and we did not have part-time employees. All our employees are based in China.

The following table sets forth the number of our employees as of December 31, 2025:

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| | |
|:---|:---|
| **Function** | **full-time<br> employees** |
| Research and Development | 37 |
| Business and Marketing | 25 |
| Administrative, Human Resources, and Finance | 12 |
| **Total** | 74 |

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Under the PRC law, we participate in various employee social security plans organized by municipal and provincial government for our PRC-based full-time employees, including pension unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance, and housing fund. We are required under PRC law to pay specified percentages of the salaries, bonuses, and certain allowances to the employee benefit plans for our PRC-based full-time employees on a monthly basis, with the maximum amount determined by the local governments in China.

We sign labor contracts and standard confidentiality and non-compete agreements with our key employees. We believe that we maintain a good working relationship with our employees with no labor disputes. None of our employees are represented by labor unions.

**Facilities**

Our headquarters are located in Room 302, Building A, Zhong Ke Na Neng Building, Yue Xing Sixth Road, Nanshan District, Shenzhen, People's Republic of China 518000. We believe that our existing facilities are adequate for our current requirements and that additional space can be obtained on commercially reasonable terms to meet our future needs.

**Insurance**

We do not maintain insurance policies that cover damage to our Information Technology systems. We also do not maintain business interruption insurance or general third-party liability insurance, nor do we maintain product liability insurance or key-man insurance. We consider our insurance coverage to be in line with that of other companies in the same industry of similar size in China.

**Regulations**

We are subject to a variety of PRC laws, rules and regulations across a number of aspects of our business. The following is a summary of the principal PRC laws and regulations relating to our business and operations within the territory of the PRC.

**Regulation on Foreign Investment Restrictions**

Investment activities in the PRC by foreign investors are principally steered by a comprehensive regulatory framework. Central to this are the Catalog of Industries for Encouraging Foreign Investment (the Encouraging Catalog) and the Special Administrative Measures (Negative List) for Foreign Investment Access (the Negative List). These are promulgated and periodically updated by the Ministry of Commerce (MOFCOM) and the National Development and Reform Commission (NDRC), in harmony with the Foreign Investment Law and its implementation rules and ancillary regulations.

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The Encouraging Catalog, designed to stimulate and channel foreign investment, has undergone several revisions. For instance, in 2022, an updated version was released, expanding opportunities in sectors such as advanced manufacturing, modern services, and high-tech. This was followed by indications in 2024 that further revisions were in the pipeline, aiming to add more entries in areas such as energy conservation and environmental protection, as well as encourage investment in the central, western, and northeastern regions.

The Negative List, on the other hand, clearly demarcates sectors where foreign investment is subject to specific conditions or outright prohibited. The MOFCOM and NDRC issued the Special Administrative Measures for the Access of Foreign Investment (Negative List) (2024 Version) (the "2024 Negative List") on September 8, 2024, which took effect on November 1, 2024. This replaced the 2021 version, streamlining and updating the restrictions to align with current economic and strategic objectives.

Collectively, the Encouraging Catalog and the Negative List form the cornerstone of the foreign investment framework in China, classifying businesses into three distinct categories in relation to foreign investments: "encouraged", "restricted", and "prohibited". Industries not enumerated in the Encouraging Catalog or the Negative List generally fall into a fourth category, "permitted", unless otherwise restricted by other PRC laws.

**Regulations on Infringement upon Intellectual Property Rights via Internet**

The Civil Code of the People's Republic of China, which was adopted by the National People's Congress on May 28, 2020 and became effective on January 1, 2021, provides that (i) network users and network service providers shall assume tort liability if they infringe upon another person's civil rights and interests through the network. Where it is otherwise prescribed in law, such provisions shall prevail; (ii) where a network user commits any tortious act through network services, the right holder shall have the right to notify the network service provider to take necessary action such as deletion, block or disconnection. The notice shall include preliminary evidence of the infringement and the real identity information of the right holder. After receiving the notice, the network service provider shall promptly forward the notice to the relevant network user and take necessary measures in light of the preliminary evidence of infringement and the type of service; if the network service provider fails to take necessary action after being notified, it shall assume joint and several liability with the network user with regard to the aggravated part of the damage. If the network user or network service provider is damaged due to wrong notice, the right holder shall assume tort liability. Where it is otherwise prescribed in law, such provisions shall prevail; (iii) Where a network service provider knows or should have known that a network user is infringing upon another person's civil rights and interests through its network service but fails to take necessary action, it shall assume joint and several liability with the network user.

**Regulation on Intellectual Property Rights**

The PRC has adopted comprehensive legislation governing intellectual property rights, including patents, trademarks, copyrights and domain names.

***Patents***

Pursuant to the PRC Patent Law, most recently amended on December 27, 2008, and its implementation rules, most recently amended on January 9, 2010, patents in China fall into three categories: invention, utility model and design. An invention patent is granted to a new technical solution proposed in respect of a product or method or an improvement of a product or method. A utility model is granted to a new technical solution that is practicable for application and proposed in respect of the shape, structure or a combination of both of a product. A design patent is granted to the new design of a certain product in shape, pattern or a combination of both and in color, shape and pattern combinations aesthetically suitable for industrial application. Under the PRC Patent Law, the term of patent protection starts from the date of application. Patents relating to invention are effective for twenty years, and utility models and designs are effective for ten years from the date of application. The PRC Patent Law adopts the principle of "first-to-file" system, which provides 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. Existing patents can become

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narrowed, invalid or unenforceable due to a variety of grounds, including lack of novelty, creativity, and deficiencies in patent application. In China, a patent must have novelty, creativity and practical applicability. Under the PRC Patent Law, novelty means that before a patent application is filed, no identical invention or utility model has been publicly disclosed in any publication in China or overseas or has been publicly used or made known to the public by any other means, whether in or outside of China, nor has any other person filed with the patent authority an application that describes an identical invention or utility model and is recorded in patent application documents or patent documents published after the filing date. Creativity means that, compared with existing technology, an invention has prominent substantial features and represents notable progress, and a utility model has substantial features and represents any progress. Practical applicability means an invention or utility model can be manufactured or used and may produce positive results. Patents in China are filed with the State Intellectual Property Office, or SIPO. Normally, the SIPO publishes an application for an invention patent within 18 months after the filing date, which may be shortened at the request of applicant. The applicant must apply to the SIPO for a substantive examination within three years from the date of application. Article 20 of the PRC Patent Law provides that, for an invention or utility model completed in China, any applicant (not just Chinese companies and individuals), before filing a patent application outside of China, must first submit it to the SIPO for a confidential examination. Failure to comply with this requirement will result in the denial of any Chinese patent for the relevant invention. This added requirement of confidential examination by the SIPO has raised concerns by foreign companies who conduct research and development activities in China or outsource research and development activities to service providers in China.

***Patent Enforcement***

Unauthorized use of patents without consent from owners of patents, forgery of the patents belonging to other persons, or engagement in other patent infringement acts, will subject the infringers to infringement liability. Serious offences such as forgery of patents may be subject to criminal penalties. When a dispute arises out of infringement of the patent owner's patent right, Chinese law requires that the parties first attempt to settle the dispute through mutual consultation. However, if the dispute cannot be settled through mutual consultation, the patent owner, or an interested party who believes the patent is being infringed, may either file a civil legal suit or file an administrative complaint with the relevant patent administration authority. A Chinese court may issue a preliminary injunction upon the patent owner's or an interested party's request before instituting any legal proceedings or during the proceedings. Damages for infringement are calculated as the loss suffered by the patent holder arising from the infringement, and if the loss suffered by the patent holder arising from the infringement cannot be determined, the damages for infringement shall be calculated as the benefit gained by the infringer from the infringement. If it is difficult to ascertain damages in this manner, damages may be determined by using a reasonable multiple of the license fee under a contractual license. Statutory damages may be awarded in the circumstances where the damages cannot be determined by the above mentioned calculation standards. The damage calculation methods shall be applied in the aforementioned order. Generally, the patent owner has the burden of proving that the patent is being infringed. However, if the owner of an invention patent for manufacturing process of a new product alleges infringement of its patent, the alleged infringer has the burden of proof.

***Trademark Law***

The PRC Trademark Law and its implementation rules protect registered trademarks. The PRC Trademark Office of State Administration of Industry and Commerce is responsible for the registration and administration of trademarks throughout the PRC. The Trademark Law has adopted a "first-to-file" principle with respect to trademark registration. In addition, pursuant to the PRC Trademark Law, counterfeit or unauthorized production of the label of another person's registered trademark, or sale of any label that is counterfeited or produced without authorization will be deemed as an infringement to the exclusive right to use a registered trademark. The infringing party will be ordered to stop the infringement immediately, a fine may be imposed and the counterfeit goods will be confiscated. The infringing party may also be held liable for the right holder's damages, which will be equal to the gains obtained by the infringing party or the losses suffered by the right holder as a result of the infringement, including reasonable expenses incurred by the right holder for stopping the infringement. If the gains or losses are difficult to determine, the court may render a judgment awarding damages of no more than RMB 3 million.

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***Software Copyright Law***

On September 7, 1990, Standing Committee of the National People's Congress promulgated The Copyright Law of the PRC or the Copyright Law, which was amended on October 27, 2001 and April 1, 2010. The Copyright Law provides that Chinese citizens, legal persons, or other organizations shall, whether published or not, enjoy copyright in their works, which include, among others, works of literature, art, natural science, social science, engineering technology and computer software.

*The Computer Software Copyright Registration Measures* or the Software Copyright Measures promulgated by the National Copyright Administration on April 6, 1992, which was amended on February 20, 2002, regulate registrations of software copyright, exclusive licensing contracts for software copyright and transfer contracts. The National Copyright Administration of China shall be the competent authority for the nationwide administration of software copyright registration and the Copyright Protection Centre of China (the "CPCC"), is designated as the software registration authority. The CPCC shall grant registration certificates to the Computer Software Copyrights applicants which conforms to the provisions of both the Software Copyright Measures and the Computer Software Protection Regulations (Revised in 2013).

***Regulation on Domain Name***

The domain names are protected under the Administrative Measures for Internet Domain Names promulgated by MIIT on August 24, 2017, the effective date of which was November 1, 2017. 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 CNNIC, is responsible for the daily administration of CN domain names and Chinese domain names. On September 25, 2002, CNNIC promulgated the Implementation Rules of Registration of Domain Name, or the CNNIC Rules, which was renewed on June 5, 2009 and May 29, 2012, respectively. Pursuant to the Administrative Measures on the Internet Domain Names and the CNNIC Rules, 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. In the event of a domain name dispute, the disputed parties may lodge a complaint to the designated domain name dispute resolution institution to trigger the domain name dispute resolution procedure in accordance with the CNNIC Measures on Resolution of the Top Level Domains Disputes, file a suit to the People's Court or initiate an arbitration procedure.

**Regulations on Marketing Business**

The Advertising Law of the PRC (the "Advertising Law"), which took effect on February 1, 1995 and was last amended on October 26, 2018, regulates contents of advertisements, codes of conduct for advertisers, and the supervision and administration of the advertising industry. It also stipulates that advertisers, advertising operators, and advertisement publishers shall abide by the Advertising Law and other laws and regulations, be honest and trustworthy, and compete in a fair manner in the advertising business.

According to the Advertising Law, if advertising operators know or should have known the content of the advertisements is false or deceptive but still provide advertising design, production and agency services in connection with the advertisement, they might be subject to penalties, including confiscation of revenue and fines, and the competent PRC authority may suspend or revoke their business licenses.

The Interim Measures for the Administration of Internet Advertising (the "Interim Measures on Internet Advertising"), which took effect on September 1, 2016, regulate advertising activities conducted via the internet. According to the Interim Measures on Internet Advertising, advertisements published or distributed via the internet shall not interfere with users' normal use of the internet. For example, advertisements published on web page pop-up windows or in others forms shall be clearly marked with a "close" sign to ensure a "Click to close". No entity or individual may induce users to click on the contents of an advertisement through deception. An internet advertisement publisher or advertising operator shall establish and maintain an acceptable registration, examination and file management system for its advertisers; examine, verify and record the identity information of each advertiser. The Interim Measures on Internet Advertising also require internet advertisement publishers and advertising operators to verify related supporting documents, check the contents of the advertisement and prohibits them from designing, producing, providing services or publishing any advertisement if the content and supporting documents do not match each other or the documentary evidence thereof are insufficient.

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**Regulations on Information Security and Privacy Protection**

Internet content in the PRC is regulated and restricted from a state security standpoint. The Standing Committee of the National People's Congress (the **"SCNPC"**) enacted the Decisions on the Maintenance of Internet Security, which took effect on December 28, 2000 and was last amended on August 27, 2009, to subject persons to criminal liabilities in the PRC for any attempt to (i) gain improper entry to a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe intellectual property rights. The Administration Measures on the Security Protection of Computer Information Network with International Connections, which took effect on December 30, 1997 and was last amended on January 8, 2011, prohibit using the internet in ways which, among others, result in a leakage of state secrets or a spread of socially destabilizing content. The Provisions on the Technical Measures for the Protection of the Security of the Internet, which was promulgated by the MPS and took effect on March 1, 2006, require internet service providers to take proper measures including anti-virus, data back-up and other related measures, to keep records of certain information about its users (including users registration information, log-in and log-out time, IP address, content and time of posts by users) for at least 60 days, and to detect illegal information, stop transmission of such information, and keep relevant records. If an internet information service provider violates these measures, the MPS and the local security bureaus may revoke its operating license and shut down its website. In accordance with the Circular of the Ministry of Public Security, the State Secrecy Bureau, the State Cipher Code Administration and The Information Office of the State Council on Printing and Distributing the Administrative Measures for the Graded Protection of Information Security which took effect on June 22, 2007, the security protection grade of an information system may be classified into the five grades. To newly build an information system of Grade II or above, its operator or user shall, within 30 days after it is put into operation, handle the record-filing procedures at the local public security organ at the level of municipality divided into districts or above of its locality.

On December 28, 2012, the SCNPC promulgated the Decision on Strengthening Network Information Protection to enhance the legal protection of information security and privacy on the internet. On July 16, 2013, the MIIT promulgated the Provisions on Protection of Personal Information of Telecommunication and Internet Users, which took effect on September 1, 2013, to regulate the collection and use of users' personal information in the provision of telecommunication services and internet information services in PRC and the personal information includes a user's name, birth date, identification card number, address, phone number, account number, password and other information that can be used for identifying a user and time and place the user uses the aforementioned service. Telecommunication business operators and internet service providers are required to establish its own rules for collecting and use of user's information and cannot collect or use users' information without users' consent. Telecommunication business operators and internet service providers are prohibited from disclosing, tampering with, damaging, selling or illegally providing others with, collected personal information. Several Provisions on Regulation of the Market Order of Internet Information Service, which took effect on March 15, 2012, stipulate that without the consent of users, internet information service providers shall not collect information relevant to the users that can lead to the recognition of the identity of the users independently or in combination with other information, nor shall they provide personal information of users to others, unless otherwise provided by laws and administrative regulations.

In accordance with the Cyber Security Law of the PRC, which took effect on June 1, 2017, network operators shall comply with relevant laws and regulations and fulfill their obligations to safeguard security of the network when conducting business and providing services. Those who provide services through networks shall take technical measures and other necessary measures pursuant to laws, regulations and compulsory national requirements to safeguard the safe and stable operation of the networks, respond to network security incidents effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality and usability of network data, and the network operator shall not collect the personal information irrelevant to the services it provides or collect or use the personal information in violation of the provisions of laws or agreements between both parties, and network operators of key information infrastructure shall store within the territory of the PRC all the personal information and important data collected and produced within the territory of the PRC. The purchase of network products and services that may affect national security shall be subject to national cyber security review. The Measures for

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Cybersecurity Review, which took effect on June 1, 2020, provide for more detailed rules regarding cyber security review requirements. Pursuant to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. On July 10, 2021, the Cyberspace Administration of China issued a revised draft of the Measures for Cybersecurity Review for public comments ("Draft Measures"), which required that, in addition to "operator of critical information infrastructure," any "data processor" carrying out data processing activities that affect or may affect national security should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. The Cyberspace Administration of China has said that under the proposed rules companies holding data on more than 1,000,000 users must now apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be "affected, controlled, and maliciously exploited by foreign governments." The cybersecurity review will also investigate the potential national security risks from overseas IPOs.

On September 30, 2024, the Regulations on Network Data Security was promulgated and came into force as from January 1, 2025. The enacted version required that if a network data processor carries out network data processing activities that affects or may affect national security, it shall conduct a national security review in accordance with relevant state regulations, and emphasized special protection of important data. Important data refers to data in a specific field, a specific group, a specific region, or of a certain precision and scale, which, once tampered with, damaged, leaked, or illegally accessed or illegally utilized, may directly jeopardize national security, economic operation, social stability, public health and safety.

On May 8, 2017, the Supreme People's Court and the Supreme People's Procuratorate released the Interpretations of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement of Citizens' Personal Information (the **"Interpretations"**), which took effect on June 1, 2017. The Interpretations clarify several concepts regarding the crime of "infringement of citizens' personal information" stipulated by Article 253A of the Criminal Law of the People's Republic of China, including "citizen's personal information", "provision", and "unlawful acquisition". Also, the Interpretations specify the standards for determining "serious circumstances" and "particularly serious circumstances" of this crime.

On June 10, 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which will take effect on September 1, 2021. The Data Security Law also sets forth the data security protection obligations for entities and individuals handling personal data, including that no entity or individual may acquire such data by stealing or other illegal means, and the collection and use of such data should not exceed the necessary limits.

On August 20, 2021, the Standing Committee of the NPC approved the Personal Information Protection Law ("PIPL"), which will become effective on November 1, 2021. The PIPL curbs collection of personal identifiable information and seeks to address the issue of algorithmic discrimination. Violations of the PIPL may result in warnings and forced corrections, confiscation of corresponding income, suspension of related services, and fines.

**Regulations on Employment and Social Welfare**

***Labor Contract Law***

The *Labor Contract Law of the PRC*, or the Labor Contract Law, which was promulgated on January 1, 2008 and amended on December 28, 2012, is primarily aimed at regulating rights and obligations of employer and employee relationships, including the establishment, performance and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts shall be concluded in writing if labor relationships are to be or have been established between employers and the employees. Employers are prohibited from forcing employees to work above certain time limit and employers shall pay employees for overtime work in accordance to national regulations. In addition, employee wages shall be no lower than local standards on minimum wages and shall be paid to employees timely.

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***Social Insurance and Housing Fund***

As required under the *Regulation of Insurance for Labor Injury* implemented on January 1, 2004 and amended in 2010, the *Provisional Measures for Maternity Insurance of Employees of Corporations* implemented on January 1, 1995, the *Decisions on the Establishment of a Unified Program for Old-Aged Pension Insurance of the State Council* issued on July 16, 1997, the *Decisions on the Establishment of the Medical Insurance Program for Urban Workers of the State Council* promulgated on December 14, 1998, the *Unemployment Insurance Measures* promulgated on January 22, 1999 and the *Social Insurance Law of the PRC* implemented on July 1, 2011, employers are required to provide their employees in the PRC with welfare benefits covering pension insurance, unemployment insurance, maternity insurance, labor injury insurance and medical insurance.

In accordance with the *Regulations on the Management of Housing Fund* which was promulgated by the State Council in 1999 and amended in 2002, employers must register at the designated administrative centers and open bank accounts for depositing employees' housing funds. Employer and employee are also required to pay and deposit housing funds, with an amount no less than 5% of the monthly average salary of the employee in the preceding year in full and on time. See "Risk Factors — Risks Related to Doing Business in China — The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and results of operations."

***Employee Stock Incentive Plan***

Pursuant to the *Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company*, or Circular 7, which was issued by the SAFE on February 15, 2012, employees, directors, supervisors, and other senior management who participate in any stock incentive plan of a publicly-listed overseas company and who are PRC citizens or non-PRC citizens residing in China for a continuous period of no less than one year, subject to a few exceptions, are required to register with SAFE through a qualified domestic agent, which may be a PRC subsidiary of such overseas listed company, and complete certain other procedures. In addition, the SAT has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, employees working in the PRC who exercise stock options or are granted restricted shares will be subject to PRC individual income tax. The PRC subsidiaries of an overseas listed company are required to file documents related to employee stock options and restricted shares with relevant tax authorities and to withhold individual income taxes of employees who exercise their stock option or purchase restricted shares. If the employees fail to pay or the PRC subsidiaries fail to withhold income tax in accordance with relevant laws and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC governmental authorities.

**Regulations on Taxation**

**Corporate Income Tax**

In accordance with the EIT Law, which took effect on January 1, 2008 and was last amended on December 29, 2018 and the Implementation Regulation for the Enterprise Income Tax Law of the PRC which took effect on January 1, 2008 and was last amended on April 23, 2019 (collectively, the **"EIT Laws"**), taxpayers consist of resident enterprises and non-resident enterprises. Resident enterprises are defined as enterprises that are established in China in accordance with the PRC laws, or that are established in accordance with the laws of foreign countries (or regions) but whose actual or de facto control entity is within the PRC. Non-resident enterprises are defined as enterprises that are set up in accordance with the laws of foreign countries (or regions) and whose actual administration is conducted outside the PRC, but (i) have entities or premises in China, or (ii) have no entities or premises in China but have income generated from China. According to the EIT Laws, foreign-invested enterprises in the PRC are subject to corporate income tax at a uniform rate of 25%. For a non-resident enterprise having no office or establishment inside China, or for a non-resident enterprise whose incomes have no actual connection to its institution or establishment inside China, a withholding tax of 10% will be levied for the income derived from China.

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The Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies promulgated by the SAT and last amended on December 29, 2017 sets out the standards and procedures for determining whether the "de facto management body" of an enterprise registered outside of the PRC and controlled by PRC enterprises or PRC enterprise groups is located within the PRC.

In accordance with the EIT Laws, a high-tech enterprise which has independent intellectual property rights and complies with the rules of corporate income tax and other relevant laws and regulations enjoys a reduced corporate income tax rate of 15%. The specific standards and procedures for the management of identification of high-tech enterprises are stipulated in the Measures for the Administration of the Certification of High-tech Enterprises which were jointly issued by the Ministry of Science and Technology, the MOF and the SAT on April 14, 2008, took retroactive effect on January 1, 2008 and were amended on January 29, 2016, took retroactive effect on January 1, 2016.

**Dividend Tax**

Pursuant to the EIT Laws, income from equity investment between qualified PRC resident enterprises such as dividends and bonuses, which refers to investment income derived by a resident enterprise from its direct investment in another resident enterprise, is tax-exempt.

In addition, pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income which took effect in the PRC on January 1, 2007, the PRC resident enterprise which distributes dividends to its Hong Kong shareholders should pay income tax according to the PRC law. However, if the beneficiary of the dividends is a Hong Kong resident enterprise, which directly holds no less than 25% equity interests of the aforesaid enterprise (i.e. the dividend distributor), the tax levied shall be 5% of the distributed dividends.

Pursuant to the Circular of the State Administration of Taxation on Relevant Issues relating to the Implementation of Dividend Clauses in Tax Agreements which took effect on February 20, 2009, all of the following requirements shall be satisfied in order to enjoy the preferential tax rates provided under the tax agreements: (i) the tax resident that receives dividends should be a company as provided in the tax agreement; (ii) the equity interests and voting shares of the PRC resident company directly owned by the tax resident reach the percentages specified in the tax agreement; and (iii) the equity interests of the Chinese resident company directly owned by such tax resident at any time during the twelve months prior to receiving the dividends reach a percentage specified in the tax agreement. On February 3, 2018, the SAT issued the Notice on Certain Issues regarding Beneficial Owner in Tax Treaties which took effect on April 1, 2018 provides clearer guidelines and adopts comprehensive assessment approaches when determining whether a company can be qualified as Beneficial Owner, so as to enjoy the preferential tax rate on dividends.

Pursuant to Notice on Widening the Applicable Scope of the Policy of Temporary Exemption of Withholding Taxes on the Direct Investment Made by Overseas Investors with Distributed Profits which took effect on January 1, 2018, where the profits distributed by a resident enterprise within the territory of China to an overseas investor are directly invested in an investment project which is not in the prohibited category and is in conformity with the specified conditions, the project shall be governed by the deferred tax payment policy and be temporarily exempt from withholding income tax.

**VAT**

According to the Provisional Regulations on Value-added Tax of the PRC which took effect on January 1, 1994 and was last amended on November 19, 2017, and the Provisional Implementation Rules of the Provisional Regulations on Value-added Tax of the PRC which was last amended on October 28, 2011 and subsequently enforced on November 1, 2011, all enterprises and individuals that engage in the sale of goods, the provision of processing, repair and replacement services, and the importation of goods within the territory of the PRC shall pay VAT. According to the Circular on Comprehensively Promoting the Pilot Program of the Collection of VAT in Lieu of Business Tax, which took effect on May 1, 2016, the pilot practice of levying VAT in lieu of business tax was extended nationwide to the sale of services, intangible assets or property.

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According to the Circular of the Ministry of Finance (the **"MOF"**) and SAT on Adjusting Value-added Tax Rates which took effect on May 1, 2018, where a taxpayer engages in a taxable sales activity for the VAT purpose or imports goods, the previous applicable 17% and 11% tax rates are adjusted to be 16% and 10% respectively, and are further adjusted to be 13% and 9% respectively in accordance with the Announcement of the MOF, the SAT and the General Administration of Customs on Deepening the Policies Related to Value-Added Tax Reform which took effect on April 1, 2019.

**Urban Maintenance and Construction Tax as well as Education Surtax**

In accordance with the Provisional Provisions on the Collection of Educational Surtax, which was last amended on January 8, 2011, all entities and individuals who pay consumption tax, VAT and business tax shall also be required to pay educational surtax. The educational surtax rate is 3% of the amount of VAT, business tax and consumption tax actually paid by each entity or individual, and the educational surtax shall be paid simultaneously with VAT, business tax and consumption tax. In accordance with the Provisional Regulations on Urban Maintenance and Construction Tax of the PRC which was last amended on January 8, 2011 and Circular of the State Administration of Taxation on Issues Concerning the Collection of the Urban Maintenance and Construction Tax, which took effect on March 12, 1994, any entity or individual liable to consumption tax, VAT and business tax shall also be required to pay urban maintenance and construction tax. Payment of urban maintenance and construction tax shall be based on the consumption tax, VAT and business tax which a taxpayer actually pays and shall be made simultaneously when the latter are paid. The rates of urban maintenance and construction tax shall be 7%, 5% and 1% for a taxpayer in a city, in a county town or town and in a place other than a city, county town or town respectively.

***Tax on Indirect Transfer***

On February 3, 2015, the SAT issued the Circular on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or SAT Circular 7. Pursuant to SAT Circular 7, an "indirect transfer" of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises, may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. When determining whether there is a "reasonable commercial purpose" of the transaction arrangement, features to be taken into consideration include, inter alia, whether the main value of the equity interest of the relevant offshore enterprise derives directly or indirectly from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consist of direct or indirect investment in China or if its income is mainly derived from China; and whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure. According to SAT Circular 7, where the payor fails to withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicable tax will subject the transferor to default interest. SAT Circular 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired on a public stock exchange. On October 17, 2017, the SAT issued the Circular on Issues of Tax Withholding regarding Non-PRC Resident Enterprise Income Tax, or SAT Circular 37, which further elaborates the relevant implemental rules regarding the calculation, reporting and payment obligations of the withholding tax by the non-resident enterprises. Nonetheless, there remain uncertainties as to the interpretation and application of SAT Circular 7. SAT Circular 7 may be determined by the tax authorities to be applicable to our offshore transactions or sale of our shares or those of our offshore subsidiaries where non-resident enterprises, being the transferors, were involved.

**Regulation on Foreign Exchange**

In accordance with the Foreign Exchange Administrative Regulations of the PRC which was last amended on August 5, 2008, Renminbi is generally freely convertible for payments of current account items, such as trade and service-related foreign exchange transactions and dividend payments, but are not freely convertible for capital account items, such as capital transfer, direct investment, investment in securities, derivative products or loans unless prior approval/registration of the SAFE is obtained.

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In accordance with the Administration Rule on the Settlement and Sale of and Payment in Foreign Exchange, which took effect on July 1, 1996, a foreign invested enterprise is allowed to process the settlement and sale of and payment in foreign exchange for capital account items after submitting valid commercial documents and getting approval from the SAFE. According to the Circular 13, which took effect on June 1, 2015, certain of the aforementioned approval rights of the SAFE are authorized to designated banks.

Pursuant to the Circular 19 which took effect on June 1, 2015, and the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Administrative Provisions on Capital Account Foreign Exchange Settlement which took effect on June 9, 2016, whose main business is investment, are allowed to make equity investment in PRC using the Renminbi funds converted from its registered capital. Meanwhile, the use of such Renminbi funds converted cannot be:

● directly or indirectly used for the payment beyond the business scope of the enterprises or any payment prohibited by national laws and regulations;

● unless otherwise provided by laws and regulations, directly or indirectly used or investment in securities or other financial products investment (except the bank capital-protection products);

● granting loans to non-related enterprises unless permitted under the scope of business; or

● for construction or purchase of real estate not for self-use, save for real estate enterprises.

In October 2019, the SAFE released the Notice on Further Promoting the Facilitation of Cross-border Trade and Investment, which, among others, cancelled the restrictions on the domestic equity investment by non-investment foreign-funded enterprises with their capital funds and non-investment foreign-funded enterprises are allowed to make domestic equity investment with their capital funds in accordance with the law on the premise that the existing special administrative measures (Negative List) for foreign investment access are not violated and the projects invested thereby in China are true and legitimate.

In addition, foreign invested enterprises are allowed to settle foreign exchange capitals on a discretionary basis; the foreign invested enterprises may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital account for which the relevant foreign exchange bureau has confirmed monetary contribution rights and interests (or for which the bank has registered the account-crediting of monetary contribution). For the time being, foreign invested enterprises are allowed to settle 100% of their foreign exchange capitals on a discretionary basis. The SAFE may adjust the foregoing percentage as appropriate based on prevailing international balance of payments.

In accordance with the Circular 37 which took effect on July 4, 2014, a "special purpose vehicle" means an overseas enterprise directly established or indirectly controlled by a domestic resident (including domestic institutions and domestic individual residents) for the purpose of engaging in investment and financing with the domestic enterprise assets or interests he legally holds, or with the overseas assets or interests he legally holds. Domestic residents establishing or taking control of a special purpose vehicle abroad which makes round-trip investments in PRC are required to file foreign exchange registration with the local foreign exchange bureau. According to the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies, the initial foreign exchange registration for establishing or taking control of a special purpose company by domestic residents can be filed with a designated bank, instead of the local foreign exchange bureau.

Pursuant to the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification (the **"Circular 3"**) which took effect on January 26, 2017, 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 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.

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**Regulation on Foreign Exchange Registration of Offshore Investment by PRC Residents**

On July 4, 2014, SAFE issued the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, and its implementation guidelines. Pursuant to SAFE Circular 37 and its implementation guidelines, PRC residents (including PRC institutions and individuals) must register with local branches of SAFE in connection with their direct or indirect offshore investment in an overseas special purpose vehicle, or SPV, directly established or indirectly controlled by PRC residents for the purposes of offshore investment and financing with their legally owned assets or interests in domestic enterprises, or their legally owned offshore assets or interests. Such PRC residents are also required to amend their registrations with SAFE when there is a change to the basic information of the SPV, such as changes of a PRC resident individual shareholder, the name or operating period of the SPV, or when there is a significant change to the SPV, such as changes of the PRC individual resident's increase or decrease of its capital contribution in the SPV, or any share transfer or exchange, merger, division of the SPV. Failure to comply with the registration procedures set forth in the Circular 37 may result in restrictions being imposed on the foreign exchange activities of the relevant onshore company, including the payment of dividends and other distributions to its offshore parent or affiliate, the capital inflow from the offshore entities and settlement of foreign exchange capital, and may also subject relevant onshore company or PRC residents to penalties under PRC foreign exchange administration regulations.

**Regulation on Dividend Distributions**

The principal regulations governing distribution of dividends paid by wholly foreign-owned enterprises include:

● Company Law of the PRC (1993), as amended in 1999, 2004, 2005 and 2013;

● Foreign Investment Enterprise Law of the PRC (1986), as amended in 2000 and 2016; and

● Administrative Rules under the Foreign Investment Enterprise Law (1990), as amended in 2001 and 2014.

Under these laws and regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise in China is required to set aside at least 10.0% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50.0% of its registered capital. These reserves are not distributable as cash dividends. The foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds. A PRC company is not permitted to distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year.

**Regulation on Overseas Listings**

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the "Trial Measures") and five supporting guidelines, which took effect on March 31, 2023. The Trial Measures established a comprehensive filing-based regulatory regime for both direct and indirect overseas offerings and listings by PRC domestic companies.

Under the Trial Measures, an overseas offering and listing by a company that operates its business primarily in China through its PRC subsidiaries, such as our company, is deemed an "indirect overseas offering" and is subject to the filing requirements with the CSRC. Because our securities were already listed on Nasdaq prior to the effective date of the Trial Measures, we were not required to retroactively file with the CSRC for our initial listing. However, the Trial Measures explicitly mandate that an overseas-listed company must submit a filing to the CSRC with respect to any future offshore securities offerings, including follow-on offerings, secondary equity offerings, and the issuance of convertible corporate bonds or exchangeable bonds. We will be required to submit the requisite filing materials to the CSRC within three working days after the completion of any such future offering. If a domestic company fails to complete the filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company will be subject to administrative penalties such as warnings, fines, suspension of relevant business or operations, and revocation of licenses and permits, and its controlling shareholders, actual controllers, directors, supervisors, and senior executives may also be subject to administrative penalties.

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On December 19, 2020, the NDRC and the Ministry of Commerce jointly promulgated the Measures for the Security Review for Foreign Investment, effective on January 18, 2021, setting forth provisions concerning the security review mechanism on foreign investment, including the types of investments subject to review, scopes of review and procedures, among others. The Office of the Working Mechanism of the Security Review of Foreign Investment will lead the task together with the Ministry of Commerce. Foreign investor or relevant parties in China must declare the security review to the aforesaid office prior to the investments in, among other industries, important cultural products and services, important information technology and internet products and services, important financial services, key technologies, and other important fields relating to national security and obtaining control in the target enterprise.

On December 24, 2021, the CSRC released the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), which requires that, among other things, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures and report relevant information with the CSRC. If a domestic company fails to complete the filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company will be subject to administrative penalties such as warnings, fines, suspension of relevant business or operations, and revocation of licenses and permits, and its controlling shareholders, actual controllers, directors, supervisors, and senior executives may also be subject to administrative penalties such as warnings and fines. On the same day, the CSRC also issued the Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for comments) which, among others, sets forth the standards in determination of an indirect overseas listing by a domestic company, the responsible filing persons, and the procedures for the filing. The period for which the CSRC solicits comments on these two drafts ended on January 23, 2022. On February 17, 2023, the CSRC promulgated a new set of regulations that consists of the Trial Administrative Measures for Overseas Securities Offering and Listing by Domestic Companies (the "Trial Measures") and five supporting guidelines, which had become effective on March 31, 2023.

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

Loans made by foreign investors as shareholders in foreign invested enterprises established in China are considered to be foreign debts and are mainly regulated by the Regulation of the People's Republic of China on Foreign Exchange Administration, the Interim Provisions on the Management of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions, the Detailed Rules for the Implementation of Provisional Regulations on Statistics and Supervision of External Debt, and the Administrative Measures for Registration of Foreign Debts. Pursuant to these regulations and rules, a shareholder loan in the form of foreign debt made to a PRC entity does not require the prior approval of SAFE, but such foreign debt must be registered with and recorded by SAFE or its local branches within 15 business days after entering into the foreign debt contract. Under these regulations and rules, the balance of the foreign debts of a foreign invested enterprise shall not exceed the difference between the total investment and the registered capital of the foreign invested enterprise, or Total Investment and Registered Capital Balance.

The Interim Provisions of the State Administration for Industry and Commerce on the Ratio of the Registered Capital to the Total Investment of a Sino-Foreign Equity Joint Venture Enterprise was promulgated by SAIC on February 17, 1987 and effective on March 1, 1987. According to these provisions, with respect to a sino-foreign equity join venture, the registered capital shall be (i) no less than seven-tenths of its total investment, if the total investment is US$3 million or under US$3 million; (ii) no less than one-half of its total investment, if the total investment is ranging from US$3 million to US$10 million (including US$10 million), provided that the registered capital shall not be less than US$2.1 million if the total investment is less than US$4.2 million; (iii) no less than two-fifths of its total investment, if the total investment is ranging from US$10 million to US$30 million (including US$30 million), provided that the registered capital shall not be less than US$5 million if the total investment is less than US$12.5 million; and (iv) no less than one-third of its total investment, if the total investment exceeds US$30 million, provided that the registered capital shall not be less than US$12 million if the total investment is less than US$36 million.

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The Notice of the People's Bank of China on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing, or PBOC Notice No. 9, issued by the PBOC on January 12, 2017, provides that within a transition period of one year from January 12, 2017, the foreign invested enterprises may adopt the currently valid foreign debt management mechanism, or Current Foreign Debt Mechanism, or the mechanism as provided in PBOC Notice No. 9, or Notice No. 9 Foreign Debt Mechanism, at their own discretion. PBOC Notice No. 9 provides that enterprises may conduct independent cross-border financing in RMB or foreign currencies as required. According to the PBOC Notice No. 9, the outstanding cross-border financing of an enterprise (the outstanding balance drawn, here and below) shall be calculated using a risk-weighted approach, or Risk-Weighted Approach, and shall not exceed the specified upper limit, namely: risk-weighted outstanding cross-border financing ≤ the upper limit of risk-weighted outstanding cross-border financing. Risk-weighted outstanding cross-border financing = (c) outstanding amount of RMB and foreign currency denominated cross-border financing x maturity risk conversion factor x type risk conversion factor +© outstanding foreign currency denominated cross-border financing x exchange rate risk conversion factor. Maturity risk conversion factor shall be 1 for medium- and long-term cross-border financing with a term of more than one year and 1.5 for short-term cross-border financing with a term of less than one year. Type risk conversion factor shall be 1 for on-balance-sheet financing and 1 for off-balance-sheet financing (contingent liabilities) for the time being. Exchange rate risk conversion factor shall be 0.5. The PBOC Notice No. 9 further provides that the upper limit of risk-weighted outstanding cross-border financing for enterprises shall be 200% of its net assets, or Net Asset Limits. Enterprises shall file with SAFE in its capital item information system after entering into a cross-border financing agreement, but no later than three business days before making a withdrawal.

Based on the foregoing, if we provide funding to our wholly foreign owned subsidiaries through shareholder loans, the balance of such loans shall not exceed the Total Investment and Registered Capital Balance and we will need to register such loans with SAFE or its local branches in the event that the Current Foreign Debt Mechanism applies, or the balance of such loans shall be subject to the Risk-Weighted Approach and the Net Asset Limits and we will need to file the loans with SAFE in its information system in the event that the Notice No. 9 Mechanism applies. Under the PBOC Notice No. 9, after a transition period of one year from January 11, 2017, the PBOC and SAFE will determine the cross-border financing administration mechanism for the foreign-invested enterprises after evaluating the overall implementation of PBOC Notice No. 9. As of the date hereof, neither the PBOC nor SAFE has promulgated and made public any further rules, regulations, notices or circulars in this regard. It is uncertain which mechanism will be adopted by the PBOC and SAFE in the future and what statutory limits will be imposed on us when providing loans to our PRC subsidiaries.

**Regulations Relating to Anti - Monopoly, Anti - Corruption and Anti - Bribery**

In relation to anti - monopoly regulations, on August 30, 2007, the Anti - Monopoly Law was promulgated by the Standing Committee of the National People's Congress (SCNPC). It was amended on June 24, 2022, with the amendment becoming effective on August 1, 2022. This law stipulates the regulation of market monopoly. The Anti - Monopoly Law prohibits business operators from concluding monopoly agreements, abusing a dominant market position, and engaging in undertakings concentration that has or may have an effect of excluding or limiting market competition. The newly revised Anti - Monopoly Law proposes an increase in the fines on business operators liable for illegal concentration: "no more than ten percent of the preceding year's sales revenue of the business operators if the concentration of business operators has or may have an effect of excluding or limiting competition, or a fine of up to RMB5 million if the concentration of business operators does not have an effect of excluding or limiting competition." Furthermore, the relevant authority may require business operators to declare when there is evidence that the resulting concentration has or may have the effect of eliminating or restricting competition, even if the level of such concentration does not reach the filing threshold. If the business operators fail to make a declaration, the relevant authority will conduct an investigation according to law. Furthermore, in January 2024, the State Council promulgated the Provisions on the Thresholds for Declaring Concentration of Business Operators, which significantly raised the global and domestic turnover thresholds that trigger a mandatory pre-closing merger control filing with SAMR.

Turning to anti - corruption and anti - bribery regulations, pursuant to the Anti - Unfair Competition Law of the PRC promulgated by the SCNPC on September 1, 1993 and last amended on April 23, 2019, a business operator shall not resort to bribery to seek a transaction opportunity or competitive advantage by offering money, goods, or by any other means to (i) any employee of the counterparty in a transaction, (ii) any entity or individual entrusted by the counterparty in a transaction to handle relevant affairs, or (iii) any other entity or individual that takes advantage of powers or influence to influence a transaction. A business operator may expressly offer a discount to the counterparty or pay commissions to the intermediaries of a transaction in the course of transaction activities, which shall be properly recorded in both parties' accounting books. Any commercial bribery committed by an employee of a given business operator will be deemed conduct of such business operator unless evidence shows that such act is not related to such business operator's efforts in seeking a transaction opportunity or competitive advantage.

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**Regulations related to business registration in Hong Kong**

Turning to the regulations in Hong Kong, our Hong Kong subsidiary, which is an investment holding company, is subject to regulations related to business registration in Hong Kong. The Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong) requires every person carrying on any business to make an application to the Commissioner of Inland Revenue in the prescribed manner for the registration of that business within one month after the commencement of business. The Commissioner of Inland Revenue must register each business for which a business registration application is made and, as soon as practicable after the prescribed business registration fee and levy are paid, issue a business registration certificate or a branch registration certificate for the relevant business or the relevant branch, as the case may be. Any person who fails to apply for business registration shall be guilty of an offence and shall be liable to a fine of HK$5,000 and to imprisonment for 1 year.

Except for the business registration certificate to be issued under the Business Registration Ordinance, we are not required to obtain any industry - specific license, permit, authorization or qualification for our Hong Kong subsidiary.

**C.** **ORGANIZATIONAL STRUCTURE** 

The following diagram illustrates our corporate structure as of December 31, 2025.

![](img_005.jpg)

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**Reverse Stock Split** 

MicroCloud Hologram Inc., listed on NASDAQ under ticker "HOLO", faced a minimum bid - price requirement and executed its reverse stock split.

On February 2, 2024, at 9:00 AM EST, the first 1 - for - 10 reverse stock split took effect. The initial authorized share capital of $50,000, split into 500,000,000 shares at $0.0001 par value each, became $50,000 divided into 50,000,000 shares at $0.001 par value each. No fractional shares were issued, and warrant terms were adjusted. Immediately after, the company increased its share capital from $50,000 (50,000,000 shares at $0.001 each) to $500,000 (500,000,000 shares at $0.001 each) by adding 450,000,000 shares.

At the September 27, 2024 AGM, the second reverse stock split (Share Consolidation) was approved. The share structure changed FROM US$500,000 divided into 500,000,000 shares of a nominal or par value of US$0.001 each TO US$500,000 divided into 25,000,000 shares of a nominal or par value of US$0.02 each (the "Consolidated Ordinary Shares"). In this 20 - for - 1 split, the authorized share capital then increased from $500,000 (25,000,000 shares) to $10,000,000 (500,000,000 shares) via issuing 475,000,000 additional shares. A dual - class structure was established: outstanding shares as Class A with 1 vote per share, having 379,455,801 unissued Class A shares, and 100,000,000 unissued Class B shares with 20 votes per share. Ultimately, the $10,000,000 authorized share capital comprised 400,000,000 Class A and 100,000,000 Class B shares, each at $0.02 par value. Class A shares continued trading on NASDAQ as "HOLO" with a new CUSIP number from October 9, 2024. No fractional shares were issued during the Share Consolidation, and the 20 - for - 1 split adjusted warrant terms.

On March 24, 2025, in an Extraordinary General Meeting of the Shareholders, Company shareholders approved the proposed 1-for-40 reverse share split and increase of authorized share capital. April 21, 2025 is the effective date for the 1-for-40 reverse share split, As the result of the 1-for-40 reverse share split, the authorized share capital of the Company changed from US$10,000,000 divided into 500,000,000 shares comprising (i) 400,000,000 Class A Shares, and (ii) 100,000,000 Class B Shares to US$10,000,000 divided into 12,500,000 shares comprising (i) 10,000,000 Consolidated Class A Shares, and (ii) 2,500,000 Consolidated Class B Shares. Following the Share Consolidation, the authorized share capital of the Company increased from US$10,000,000 divided into 12,500,000 shares comprising (i) 10,000,000 Consolidated Class A Shares, and (ii) 2,500,000 Consolidated Class B Shares to US$400,000,000 divided into 500,000,000 shares comprising (i) 400,000,000 Consolidated Class A Shares by the creation of an additional 390,000,000 Consolidated Class A Shares, and (ii) 100,000,000 Consolidated Class B Shares by the creation of an additional 97,500,000 Consolidated Class B Shares.

*Company's Warrant to Purchase Ordinary Shares*

Following each Reverse Share Split, the number of Class A Ordinary Shares issuable upon exercise of each outstanding public warrant was decreased proportionally to reflect the reduction in issued and outstanding Class A Ordinary Shares. The exercise price of the warrants was adjusted (rounded to the nearest cent). The adjustment is made by multiplying the exercise price immediately prior to the adjustment by a fraction. The numerator of this fraction is the number of Class A Ordinary Shares purchasable upon exercise of the warrants immediately prior to the adjustment, and the denominator is the number of Class A Ordinary Shares so purchasable immediately after the adjustment. with a proportionate adjustment downwards to the shares underlying the warrants, as further described in section 4.2 of the Warrant Agreement. The Exercise Price adjustment was made pursuant to section 4.3.1 of the Warrant Agreement.

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**D.** **PROPERTY, PLANT AND EQUIPMENT** 

Our headquarters is located in Shenzhen, China. We currently lease approximately 1328.31 square meters of office space in the aggregate. We believe our existing facilities are adequate for our current requirements and that additional space can be obtained on commercially reasonable terms to meet our future requirements.

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

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Not applicable.

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

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*The following discussion and analysis should be read in conjunction with our consolidated financial statements, which have been prepared in accordance with GAAP, included elsewhere in this Annual Report. This discussion contains forward-looking statement that involves risks and uncertainties. Our actual results and timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Item 3.D. Risk Factors" and elsewhere in this annual report.*

**A.** **Operating Results** 

**Overview**

We generate revenues primarily through (i) sales of product related to holographic solutions services, which include LiDAR and other holographic technology hardware products, licensing and content products, and technology development service, and (ii) services related to holographic technology services, which include holographic technology advertising, software development kit ("SDK") service, and promotion services.

Our total revenues were RMB 203.5 million, RMB 290.3 million and RMB 403.7 million (USD 56.5 million) for the year ended December 31, 2023, 2024 and 2025, respectively. We recorded a net loss of RMB 81.6 million, RMB 64.2 million and RMB 50.2 million (USD 7.0 million) for the years ended December 31, 2023, 2024 and 2025 respectively.

**Key Factors Affecting Results of Operations**

Our results of operations are affected by the factors discussed below.

*Our ability to increase the number of customers and average revenue for Holographic technology services*

Our ability to increase our revenues and enhance our profitability will depend on our ability to continue to increase our customer base and revenue per customer for our Holographic technology services. To achieve this, we strive to increase our marketing efforts and to enhance the quality and capabilities of our technologies.

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*Investment in technology and talent*

Research and development of in-demand technology combined with sustained output and continuous innovation sets the foundation of our market competitiveness. We endeavor to strengthen our market-leading position by further increasing investments in research and development, retaining talented individuals in the field of holographic technology, holographic LiDAR systems, and computer image processing for the purpose of expanding the range of proprietary technology and IP rights. More specifically, we are focused on developing our autonomous driving, 5G, AI, and machine learning technologies for the purpose of building a rich product line, and innovative and technologically leading services. To align with the development of the holographic ADAS industry, we aim to provide strong support for businesses in the field of autonomous driving. Our development report in ADAS includes hardware, software, and solutions upgraded by way of continuously developing new iterations of ADAS products and services through stepping up efforts in research and development. To achieve this end, we intend to further expand research and development capabilities and efforts in holographic digital twin services, software, and holographic content resource library. Our research and development expenses were approximately RMB 78.7 million, RMB 174.4 million and RMB 57.0 million (USD 8.0 million) for the years ended December 31, 2023, 2024 and 2025, respectively.

*Our ability to pursue strategic opportunities for growth*

We intend to continually pursue strategic acquisitions and investments in selective technologies and businesses to enhance our technology capabilities. We believe that a solid acquisition and investment strategy may be critical for us to accelerate our growth and strengthen its competitive position in the future. our ability to identify and execute strategic acquisitions and investments will likely affect our operating results over time.

*Our ability to expand its application fields and to diversify its customer base*

Currently, the primary source of our revenue is derived from providing holographic technology, hardware products and holographic solutions for enterprises in the manufacturing and Internet industries. With increasing awareness and acceptance of this holographic technology, we expect that more applications will be identified to magnify the value of this technology, such as the industry of the Internet, finance, local government, and manufacturing industries that have strong demand for data empowerment. Expand the scenario application of holographic services. Our ability to expand its application fields and diversify its customer base may affect our operating results in the future.

**Key Components of Our Results of Operations**

***Revenues***

Effective January 1, 2019, we adopted ASC 606, Revenue from Contracts with Customers ("Topic 606"), applying the modified retrospective method to all contracts that were not completed as of January 1, 2019. Results for the years ended December 31, 2023, 2024 and 2025 are presented under Topic 606. Based on the requirements of ASC Topic 606, revenue is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services.

We generate revenues primarily through (i) sales of product related to holographic solutions services, which include LiDAR and other holographic technology hardware products, licensing and content products, and technology development service, and (ii) services related to holographic technology services, which include holographic technology advertising, software development kit ("SDK") service, and promotion services.

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Our breakdown of revenues for the years ended December 31, 2023, 2024, and 2025, respectively, is summarized below:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **USD** |
| Revenues |  |  |  |  |
| Holographic solutions | 68345506 | 128892235 | 199259020 | 27896095 |
| Holographic technology service | 135202499 | 161405749 | 204427203 | 28619637 |
| Total revenue | **203548005** | **290297984** | **403686223** | **56515732** |

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***Cost of Revenues***

Our breakdown of the cost of revenues for the years ended December 31, 2023, 2024, and 2025, respectively, is summarized below:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **USD** |
| Cost of revenues |  |  |  |  |
| Holographic solutions | 59562014 | 106682488 | 160434849 | 22460744 |
| Holographic technology service | 69734292 | 118169173 | 157374663 | 22032321 |
| Total cost of revenues | 129296306 | 224851661 | 317809512 | 44493065 |

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***Selling expenses***

Our selling expenses consist primarily of (i) compensation for selling personnel and (ii) travel expenses for its sales representatives.

***General and administrative expenses.***

Our general and administrative expenses consist primarily of (i) compensation for its management and administrative personnel, (ii) expenses in connection with its operation supporting functions such as legal, accounting, consulting and other professional service fees, and (iii) office rental, depreciation, and other administrative related expenses.

***Research and Development Expenses***

Our research and development expenses include salaries and other compensation-related expenses to our research and product development personnel, outsourced subcontractors, as well as office rental, depreciation, and related expenses for our research and product development team.

**Results of Operations**

***Revenues***

We generate revenues primarily through (i) sales of product related to holographic solutions services, which include LiDAR and other holographic technology hardware products, licensing and content products, and technology development service, and (ii) services related to holographic technology services, which include holographic technology advertising, software development kit ("SDK") service, and promotion services.

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Our breakdown of revenues for the years ended December 31, 2023, 2024, and 2025, respectively, is summarized below:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2023** | **2023** | **2024** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Revenues: |  |  |  |  |  |  |
| Holographic solutions | 68345506 | 34% | 128892235 | 44% | 199259020 | 49% |
| Holographic technology service | 135202499 | 66% | 161405749 | 56% | 204427203 | 51% |
| Total revenues | **203548005** | 100% | **290297984** | 100% | **403686223** | 100% |

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***Holographic solutions Revenues***

Our holographic solutions revenues were RMB 199.3 million (USD27.9 million) for 2025, compared to RMB128.9 million and RMB 68.3 million, respectively, for 2024 and 2023.

Our holographic solutions revenues increased by approximately RMB 60.5 million from approximately RMB 68.3 million for the year ended December 31, 2023 to approximately RMB 128.9million for the year ended December 31, 2024. an increase of 88.6%. The increase was mainly due to the impact of market changes on the demand for our services, as well as the increased demand from customers for holographic solutions.

The revenues of our holographic solutions, which increased by approximately RMB 70.4million, increase of 54.6%, from approximately RMB 128.9 million for the year ended December 31, 2024, compared to approximately RMB 199.3million (USD 27.9 million) for the year ended December 31, 2025. The reason for the increase in revenue is the expanded demand from customers for holographic solutions.

***Holographic technology services Revenues***

Our holographic technology services revenues was RMB 204.4 million (USD28.6 million) for 2025, compared to RMB 161.4million and RMB 135.2million, respectively, for 2024 and 2023.

Our holographic technology services revenue increased by approximately RMB 26.2 million, or 19.4%, from approximately RMB 135.2 million for the year ended December 31, 2023, to approximately RMB 161.4 million for the year ended December 31, 2024. This increase was mainly attributed to the overall market environment of internet advertising, namely the increase in customer demand.

Our holographic technology services revenue increased by approximately RMB 43.0 million, or 26.7%, from approximately RMB161.4 million for the year ended December 31, 2024, to approximately RMB204.4million (USD 28.6 million) for the year ended December 31, 2025. This increase was mainly attributed to the business merger of Shanghai Kuo Sou in 2025, which had led to an upward trend in revenue.

***Ability to retain and attract customers***

The Company's management team monitors the number of total customers, number of new customers, number of high paying customers, and customer retention rate as indicators of the growth and condition of the Company's overall business. As to performance metrics, the number of high paying customers reflects the quality of the Company's earnings. The retention rate reflects the Company's service quality, customer loyalty to our services, and the sustainability of the Company's business growth. If the number of new customers, high paying customers, and retention rate fall, the Company may need to re-evaluate its business strategy or evaluate its service efficiency. The quantitative information in number of customers and retention rate provides investors with information to evaluate the Company revenue growth, revenue quality, and concentration risk on a periodic basis. This information also provides investors insights on how the Company measures and monitors its performance.

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The Company's total customers were 119 and 142, respectively for the years ended December 31, 2023 and 2024, representing a19.3% increase, of which 102 are new customers. The increase in the number of customers led to a grow in total revenue.Total customers were 142 and 128, respectively for the year ended December 31, 2024 and 2025, representing a 9.9% decrease, of which 70 are new customers. Due to by vigorously tapping into the potential of existing customers and increasing the proportion of high-value customers, the total revenue has shown a trend of growth.

The Company considers customers with or over RMB 0.5 million revenue as high paying customers. The numbers of high payment customers are 42 and 69, respectively for the years ended December 31, 2023 and 2024, representing 96.1% and 96.6% of total revenue for each period and a 43.4% increase. The number of high-paying customers both are 69, for the year ended December 31, 2024 and 2025, representing 96.6% and 97.8% of total revenue for each period and a 40.7% increase. the Company's overall customer retention rates are 24% and 34% respectively for the years ended December 31, 2023 and 2024. Retention rates of high paying customer are 29% and 43% respectively for the same period. Retention rates of the Company's top 10 customers are 50% and 30% respectively for the years ended December 31, 2023, and 2024, respectively. Retention rates of the Company's top 20 customers are 55% and 20% for the years ended December 31, 2023, and 2024, respectively.

The Company's overall customer retention rates are 34% and 41% respectively for the year ended December 31, 2024 and 2025. Retention rates of high paying customer are 43% and 41% respectively for the same period. Retention rates of the Company's top 10 customers both are 30% for the year ended December 31, 2024 and 2025. Retention rates of the Company's top 20 customers are 20% and 40% for the year ended December 31, 2024 and 2025, respectively. Retention rate is calculated by first counting the number of customers at the beginning of the period (denominator) and the number of old customers during measurement period (numerator), then dividing the numerator by the denominator. Old customers repeating customer who keeps loyalty to the company's services throughout the measurement periods and calculated as number of total customers at the end of measurement period minus new customers obtained during the measurement period. Customers counted for the purpose of calculating retention rate are based on those that were customers at any point during the period. the Company's total customers decrease from 142 for the year ended December 31, 2024 to 128 for year ended December 31, 2025. The decrease is due to the company actively carried out a customer structure adjustment. Strategically, it abandoned some low-value customers and simultaneously enhanced the business penetration rate of its core major clients. Although the total number of customers slightly decreased, the retention quality of core customers and the average revenue per customer significantly improved, thereby driving a positive growth in total revenue.

The Company's overall customer retention rates are 34% and 41%, for the year ended December 31, 2024 and 2025. This is due to the enhancement of core customer loyalty and the substantial improvement in customer experience. Through deepening business cooperation, improving service quality, and proactive customer success intervention, the company helped core customers achieve greater value, thereby increasing the customers' willingness to renew their contracts.

The table below summarizes the Company's key performance metrics as discussed above.

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| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2023** | **2024** | **2025** |
| Total Customers | 119 | 142 | 128 |
| New Customers | 76 | 102 | 70 |
| High Paying Customers | 42 | 69 | 69 |
| Customer Retention Rate | 24% | 34% | 41% |
| High Paying Customer Retention Rate | 29% | 43% | 41% |
| Top 10 Retention Rate | 50% | 30% | 30% |
| Top 20 Retention Rate | 55% | 20% | 40% |

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***Cost of Revenues***

Our breakdown of cost of revenues for the years ended December 31, 2023, 2024 and 2025, respectively, is summarized below:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2023** | **2023** | **2024** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Cost of revenues: |  |  |  |  |  |  |
| Holographic solutions | 59562014 | 46% | 106682488 | 47% | 160434849 | 50% |
| Holographic technology service | 69734292 | 54% | 118169173 | 53% | 157374663 | 50% |
| Total cost of revenues | 129296306 | 100% | 224851661 | 100% | 317809512 | 100% |

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*Cost of Holographic Solutions Revenues* 

Cost of holographic solutions revenues was RMB 160.4 million (USD 22.5 million) for 2025, compared to RMB 106.7 million and RMB 59.6 million, respectively, for 2024 and 2023.

Our cost of revenues for holographic solutions increased by approximately RMB 47.1 million, or 79.1%, from approximately RMB 59.6 million for the year ended December 31, 2023, to approximately RMB 106.7 million for the year ended December 31, 2024.

Our cost of revenues for holographic solutions increased by approximately RMB 53.8 million, representing a 50.4% growth. The amount grew from approximately RMB 106.7 million for the year ended December 31, 2024, to approximately RMB 160.4 million (USD 22.5 million) for the year ended December 31, 2025. The increase in the cost of revenue is mainly due to increased customer demand. The associated costs related to producing and delivering those holographic solutions also increased, ultimately leading to the observed increased in the cost of revenues.

*Cost of Holographic Technology Service Revenues* 

Cost of holographic technology service revenues was RMB 157.4 (USD 22.0 million) million for 2025, compared to RMB 118.2 million and RMB 69.7 million, respectively, for 2024 and 2023.

Our cost of revenues for services was approximately RMB 69.7 million for the year ended December 31, 2023 compared to approximately RMB 118.2 million for the year ended December 31, 2024.

Our cost of revenues for services increased by approximately RMB 39.2 million, representing a 33.2% growth. The amount grew from approximately RMB 118.2 million for the year ended December 31, 2024, to approximately RMB 157.4 million (USD 22.0 million) for the year ended December 31, 2025. This significant increase was mainly attributable to the business combination of Shanghai Kuo Sou in 2025. As a result of this merger, we expanded our business scope and capabilities, which in turn led to a substantial uptick in our holographic advertisement service activities. This expansion in service activities directly contributed to the rise in our cost of revenues, as more resources were required to support the increased volume of work, such as higher costs for creating and delivering holographic ads, and enhanced marketing efforts to promote these services in the market.

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|:---|:---|:---|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2023** | **2023** | **2024** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Operating expenses: |  |  |  |  |  |  |
| Selling expenses | 6692316 | 4% | 3526803 | 2% | 2694728 | 3% |
| General and administrative expenses | 65354201 | 43% | 23252517 | 11% | 19238109 | 23% |
| Research and development expenses | 78655572 | 52% | 174394747 | 86% | 56960830 | 69% |
| Allowance for expected credit losses | 857713 | 1% | 2492478 | 1% | 4378701 | 5% |
| Change in fair value of warrant liabilities | (372961) | -% | (62543) | -% | - | -% |
| Total operating expenses | 151186841 | 100% | 203604002 | 100% | 83272368 | 100% |

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**Selling Expenses**

Selling expenses were RMB 2.7 million (USD 0.4 million) for 2025, compared to RMB 3.5 million and RMB 6.7million, respectively, for 2024 and 2023.

The selling expenses decreased by approximately RMB 3.2 million, representing a decline of 47.3%, from around RMB 6.7 million for the year ended December 31, 2023, to approximately RMB 3.5 million for the year ended December 31, 2024. The reason for the reduction is that the company cut down on advertising and promotion expenses in 2024.

The selling expenses decreased by approximately RMB 0.8 million, representing a decline of 23.6%, from around RMB 3.5 million for the year ended December 31, 2024, to approximately RMB 2.7 million (USD 0.4 million) for the year ended December 31, 2025. The reason for the reduction is that the company cut down on advertising and promotion expenses in 2025.

**General and administrative expenses**

General and administrative expenses were RMB 19.2 million (USD 2.7 million) for 2025, compared to RMB 23.3 million and RMB 65.4 million, respectively, for 2024 and 2023.

General and administrative expenses decreased by approximately RMB 42.1 million, reflecting a substantial 64.4% decline. The amount dropped from approximately RMB 65.4 million in the year ended December 31, 2023, to roughly RMB 23.3 million in the year ended December 31, 2024. The reason for the reduction is that the company implemented employee equity incentive plan in 2023.

General and administrative expenses decreased by approximately RMB 4.0 million, reflecting a substantial 17.3% decline. The amount dropped from approximately RMB 23.3 million in the year ended December 31, 2024, to roughly RMB 19.2 million (USD 2.7 million) in the year ended December 31, 2025. The reason for the reduction is that the company incurred lower service fees in 2025.

**Research and development expenses**

Research and development expenses were RMB 57.0 million (USD 8.0 million) for 2025, compared to RMB 174.4 million and RMB 78.7 million, respectively, for 2024 and 2023.

Research and development expenses increased from RMB 78.7million for the year ended December 31, 2023 to approximately RMB 174.4 million for the year ended December 31, 2024, an increase of approximately RMB 95.7 million, or approximately 121.7%. The increase was primarily due to the continued research and development activities focused on enhancing our holographic LiDAR technology, holographic algorithm architecture, holographic digital twin technology and image processing technology, intelligent hardware technology, and holographic intelligent vision technology to create novel service and product offerings in 2024.

Research and development expenses decreased from RMB 174.4 million for the year ended December 31, 2024 to approximately RMB 57.0 million (USD 8.0 million) for the year ended December 31, 2025, a decrease of approximately RMB 117.4 million, or approximately 67.3%. The decrease was primarily due to the company's comprehensive review and optimization of its research and development projects in 2025. Some projects with uncertain market prospects were terminated, thereby reducing the corresponding research and development investment.

**Allowance for expected credit losses**

Allowance for expected credit losses was RMB 4.4 million (USD 0.6 million) for 2025, compared to RMB 2.5 million and RMB 0.9 million, respectively, for 2024 and 2023.

**Finance income, net**

Finance income was RMB 44.4 million (USD 6.2 million) for 2025, compared to RMB 23.3 million and RMB 3.4million, respectively, for 2024 and 2023 which consisted primarily of interest earned from our cash and cash equivalents.

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**Investment gain/(loss)**

Investment loss was RMB 98.4 million (USD 13.8 million) for 2025, compared to investment gain of RMB 42.3 million and nil, respectively, for 2024 and 2023. The decrease is from loss recognized from the fair value change in short-term investments in 2025.

**(Loss) gain on disposal of subsidiaries**

Gain on disposal of subsidiaries was RMB 0.3 million (USD 43,591) for 2025, compared to RMB 5.9 million and loss on disposal of subsidiaries of RMB 15.3 million, respectively, for 2024 and 2023.

**Other Income, net**

Other income was RMB 0.9 million (USD 0.1 million) for 2025, compared to RMB 5.0 million and RMB 3.1 million, respectively, for 2024 and 2023.

**Income tax credit (expense)**

Income tax expense was nil for 2025, compared to RMB 2.5 million and income tax credit of RMB 4.1 million, respectively, for 2024 and 2023. Based on the management's expectation, the deferred tax asset is probably not able to be realized as a tax benefit for future periods due to the expected loss. Therefore, the deferred income tax assets decreased to zero and the income tax expense increased by RMB 2.9 million in 2024.

**Net loss**

As a result of the combination of factors discussed above, we had a net loss of RMB 50.2 million (USD 7.0 million) for 2025, compared to RMB 64.2 million and RMB 81.6 million, respectively, for 2024 and 2023.

**B.** **LIQUIDITY AND CAPITAL RESOURCES** 

As of December 31, 2025, we had cash and short-term investments of approximately RMB 2,742.5 million (USD 390.2 million). Our working capital was approximately RMB 2,693.7 million (USD 383.2 million) as of December 31, 2025. In our opinion, our working capital is sufficient for our present requirements. In assessing our liquidity, we monitor and analysis our cash on-hand and our operating and capital expenditure commitments. To date, we have financed our working capital requirements through cash flow generated from operations, debt and equity financings.

We are subject to risks and uncertainties frequently encountered by early-stage companies including, but not limited to, the uncertainty of successfully developing products, securing certain contracts, building a customer base, successfully executing business and marketing strategies, and hiring appropriate personnel.

To date, we have been funded primarily by cash flow generated from operations, interest-free advances by from our shareholders prior to the closing of the Business Combination, and the net proceeds we received through the Business Combination. Failure to generate sufficient revenues, achieve planned gross margins and operating profitability, control operating costs, or secure additional funding may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results, financial condition, and ability to achieve our intended business objectives.

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The following table summarizes the key components of our cash flows for the years ended December 31, 2023, 2024, and 2025.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **USD** |
| Net cash (used in) provided by operating activities | (27738609) | (98619387) | 56371190 | 7891917 |
| Net cash used in investing activities | (1374615) | (682981811) | (285557644) | (40653353) |
| Net cash provided by financing activities | 2204176 | 1506897224 | 1239925789 | 176410199 |
| Effect of exchange rate change on cash and cash equivalents | 1826601 | 136872 | (18820901) | 162862 |
| Net change in cash and cash equivalents | (25082447) | 725432898 | 991918434 | 143811625 |
| Cash and cash equivalents, beginning of year | 151119985 | 126037538 | 851470436 | 118450620 |
| Cash and cash equivalents, end of year | 126037538 | 851470436 | 1843388870 | 262262245 |

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*Operating activities*

Net cash provided by operating activities was approximately RMB 56.4 million (USD 7.9 million) for the year ended December 31, 2025, as compared to net cash used in operating activities of approximately RMB 98.6 million for the year ended December 31, 2024 and RMB 27.7 million for the year ended December 31, 2023.

Net cash provided by operating activities was approximately RMB 56.4 million (USD 7.9 million) for the year ended December 31, 2025, derived mainly from net loss of approximately RMB 50.2 million (USD 7.0 million) adjusted by the decrease from short-term investments of approximately RMB 98.4 million (USD 13.8million) and allowance for expected credit losses of RMB 4.4 million (USD 0.6 million), and net changes in our operating assets and liabilities, principally comprising of an increase of approximately RMB 8.2 million (USD 1.1 million) in accounts receivable, an increase of approximately RMB 12.8 million (USD 1.8 million) in accounts payable.

We recorded net cash used in operating activities of RMB 98.6 million for the year ended December 31, 2024. The difference between our net loss of RMB 64.2 million and the net cash used in operating activities was primarily due to (i) an adjustment of RMB 33.1 million in non-cash items, which mainly consisted of gain from short-term investments of RMB 42.3 million, deferred tax expense of RMB 2.9 million, allowance for expected credit losses of RMB 2.5 million and stock compensation expense of RMB 1.0 million (ii) an increase of accounts receivable of RMB 16.1 million, and (iii) an decrease of prepayments and other current assets of RMB5.2 million, and was partially offset by an increase of accounts payable of RMB 12.1 million and other payables and accrued liabilities of RMB 1.4 million.

We recorded net cash used in operating activities of RMB 27.7 million for the year ended December 31, 2023. The difference between our net loss of RMB 81.6 million and the net cash used in operating activities was primarily due to (i) an adjustment of RMB 57.8 million in non-cash items, which mainly consisted of depreciation and amortization of RMB 7.2 million, deferred tax benefits of RMB 4.0 million and Stock compensation expense of RMB 32.2 million, impairment loss for goodwill of RMB 21.2 million (ii) an decrease of accounts receivable of RMB 70.8 million, and (iii) an increase of prepayments and other current assets of RMB 8.7 million, and was partially offset by an decrease of accounts payable of RMB 59.9 million and other payables and accrued liabilities of RMB 4.5 million.

*Investing activities*

Net cash used in investing activities were approximately RMB 285.6 million (USD 40.7 million) for the year ended December 31, 2025, as compared to net cash used in investing activities approximately RMB 683.0 million for the year ended December 31, 2024 and approximately RMB 1.4 million for the year ended December 31, 2023.

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Net cash used in investing activities was approximately RMB 285.6 million (USD 40.7 million) for the year ended December 31, 2025, primarily due to the purchases of short-term investments of approximately RMB 5,855.0 million (USD 833.0 million) and redemption of short-term investments of approximately RMB 5,557.7 million (USD 790.7 million).

Net cash used in investing activities was RMB 683.0 million for the year ended December 31, 2024, primarily due to purchase approximately RMB 683.0 million of short-term investments.

Net cash used in investing activities was RMB 1.4 million for the year ended December 31, 2023, primarily due to purchase of property and equipment of RMB 0.8 million and investments in unconsolidated entities of RMB 0.6 million.

*Financing activities*

Net cash provided by financing activities was approximately RMB 1,239.9 million (USD 176.4 million) for the year ended December 31, 2025, approximately RMB 1,506.9 million for the year ended December 31, 2024, and approximately RMB 2.2 million for the year ended December 31, 2023.

Net cash provided by financing activities was approximately RMB 1,239.9 million (USD 176.4 million) for the year ended December 31, 2025, which was primarily derived from proceeds of approximately RMB 1,241.6 million (USD 176.6 million) from convertible bonds, proceeds of approximately RMB 4.3 million (USD 0.6 million) from bank loans, partially net off by a repayment of bank loans of approximately RMB 5.9 million (USD 0.8 million).

Net cash provided by financing activities for the year ended December 31, 2024 was RMB 1,506.9 million, primarily due to the cash received from convertible promissory note of RMB 1,504.5 million.

Net cash provided by financing activities for the year ended December 31, 2023 was RMB 2.2 million, primarily due to proceeds of third-party loan of RMB 9.9 million. Cash inflow was offset by the repayments of third-party loan of RMB 7.4 million and repayments to related parties of RMB 0.4 million.

**Commitments and Contingencies**

In the normal course of business, we are subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations and tax matters. In accordance with ASC No. 450-20, "Loss Contingencies", we will record accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

**Holding Company Structure**

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

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**Off-Balance Sheet Arrangements**

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

**Contractual Obligations**

As of December 31, 2025, the future minimum payments under certain of our contractual obligations were as follows:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Payments Due In** | **Payments Due In** | **Payments Due In** | **Payments Due In** | **Payments Due In** |
|  | **Total** | **Less than<br>1 year** | **1 – 2 years** | **2 – 3 years** | **Thereafter** |
|  | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
| Contractual obligations |  |  |  |  |  |
| Operating leases obligations | 1180653 | 1180653 |  |  |  |
| Total | 1180653 | 1180653 |  |  |  |

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**Inflation**

Inflation does not materially affect our business or the results of our operations.

**Seasonality**

Seasonality does not materially affect our business or the results of our operations.

**C.** **RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.** 

We have focused on and will continue to focus on investment in our technology system. Our research and development expenses were approximately RMB 78.7 million, RMB 174.4 million and RMB 57.0 million (USD 8.0 million) for the years ended December 31, 2023, 2024 and 2025, respectively.

We believe that a core element of the competitiveness of the holographic AR industry is research and development related to technology development, and we rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. For details of our intellectual property portfolio, please refer to Item 4 B. Business Overview — Intellectual Property".

**D.** **TREND INFORMATION** 

Other than as disclosed in the foregoing disclosures and elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2025 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity or capital resources, or that would cause our disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

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**E.** **CRITICAL ACCOUNTING ESTIMATES** 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements included elsewhere in this report, we believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.

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

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**A.** **DIRECTORS AND SENIOR MANAGEMENT** 

The following table sets forth certain information regarding our executive officers and members of the Company's board of directors (the "Board of Directors") as of the date of this Annual Report:

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Age** | **Position** | **Served From** |
| Wei Peng | 42 | Chairman of the Board of Directors | September 2022 |
| Guohui Kang | 49 | Director, Chief Executive Officer | September 2022 |
| Bei Zhen | 37 | Chief Financial Officer | September 2022 |
| Belief Bi<sup>(1)(2)(3)</sup> | 40 | Independent Director | February 2023 |
| Maggie Wang<sup>(1)(2)(3)</sup> | 43 | Independent Director | February 2023 |
| Han Qin<sup>(1)(2)(3)</sup> | 42 | Independent Director | September 2022 |

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Note:

(1) Member of the compensation committee.

(2) Member of the nominating committee.

(3) Member of the audit committee.

There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any of our directors or members of senior management were selected.

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**Biographical Information**

***Wei Peng*** has been serving as our Chairman of the Board of Directors since September 2022. From 2021, Ms. Peng has served as a director of MC. Prior to joining MC. From 2015 to 2021, she has been serving as supervisor for Lvxun Network Technology Co., Ltd. and has concurrently served as a director of Enwei Quantum Capital Investment Co., Ltd. since 2006 to 2015, she has also served as a director of Softcloud Digital Software Co., Ltd. Ms. Peng graduated from the Beijing Normal University majoring in computer science in 2005.

***Guohui Kang*** has been serving as our Chief Executive Officer and director since September 2022. From 2016, Mr. Kang has served as the chief executive officer of Shanghai Mengyun Holographic Technology Co., Ltd. He served as the general manager of Haotian Investment Co., Ltd. from 2011 to 2016. From 2002 to 2010, he served as the sales manager and director of Shenzhen Qixin Technology Co., Ltd. From 1999 to 2002, he was the refrigeration system design engineer in Guangdong Midea Group. Mr. Kang graduated from Wuhan University of Technology in 1999.

***Bei Zhen*** has been serving as our Chief Financial Officer since September 2022. In October 2019, she founded Shenzhen Aixi Culture Communication Co., Ltd. and served as the chief executive officer. From December 2015 to October 2019, she served as the director of the Corporate Finance Department in Sun Hung Kai Financial Group. From April 2012 to December 2015, she worked in the Fund Department of Shenzhen Innovation Investment Group Co., Ltd. From July 2011 to February 2012, she served as assistant to the chief executive officer of the Global Asset Management Department of HSBC. Ms. Zhen obtained a master's degree in accounting and finance from the University of Bristol in February 2012 and a bachelor's degree in financial economics from the University of Leicester in July 2010.

***Belief Bi*** has been serving as our independent director since February 2023. Mr. Bi has extensive experience in the operation, legal and compliance areas of U.S. public companies. Prior to joining our Company, Mr. Belief Bi has served as the president of Beijing Zhixing Classroom Education Consulting Co., Ltd. since June 2017. Between 2015 and 2017, he served as the vice president in Beijing Shengyuan Fengheng Venture Capital Co., Ltd. and the executive secretary in Dianjing Smart Industry Alliance. Prior to that, Mr. Bi worked as an assistant president in Ninetowns Group (Nasdaq: NINE) from 2013 to 2015, where he was responsible for the agricultural e-commerce and real estate segments of the company. Mr. Bi received a bachelor of law degree from China University of Political Science and Law in 2010.

***Maggie Wang*** has been serving as our independent director since February 2023. Ms. Wang has extensive experience in financial accounting, internal control and risk management. Ms. Wang has over 16 years of experience in the financial services industry in Asia. Further, she has direct oversight on specific risk management functions such as financial and insurance product control, assets and liabilities management and customer risk management. Prior to joining our Company, Ms. Maggie Wang has served as the regional director and treasurer of Prudential HK Limited since 2013. Between 2006 and 2012, she served as the chief accountant in Wall Street English since 2006. Ms. Wang is a Chartered Financial Analyst, an Associate Financial Planner and a Registered Financial Planner in US. Ms. Wang received a bachelor's degree from the University of Guangzhou and an MBA degree from Jinan University.

***Han Qin*** has been serving as our independent director since February 2023. Ms. Qin served as an independent director of China Trends Holdings Limited from 2020 to 2021. She has been the investment director and executive director in Rider Family Office since 2018. From April 2018 to February 2020, she served as the investment director in Shenzhen Zhongxiang Capital Management Co., Ltd. From May 2014 to March 2016, she served as the director, assistant president and joint founder in Asia Fortune Media Group Limited. From July 2005 to September 2007, she served as the director of department of planning in China Major Bridge Engineering Co., Ltd. Ms. Qin obtained a Doctor of Philosophy degree in industrial and manufacturing systems engineering from the University of Hong Kong in May 2014, a master's degree in management science and engineering from the Wuhan University in June 2009, and a bachelor's degree in engineering management in June 2005.

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**B.** **COMPENSATION** 

**Compensation**

In 2025, we paid an aggregate cash compensation of approximately RMB702,858 (USD 98,400) to our directors and executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers. Our PRC subsidiaries are required by law to make contributions equal to certain percentages of each employee's salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.

**Employment Agreements and Indemnification Agreements**

We have entered into employment agreements with each of our executive officers for a specified time period providing that the agreements are terminable for cause at any time. The terms of these agreements are substantially similar to each other. A senior executive officer may terminate his or her employment at any time by 30-day prior written notice. We may terminate the executive officer's employment for cause, at any time, without advance notice or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties.

Each executive officer has agreed to hold in strict confidence and not to use, except for the benefit of our company, any proprietary information, technical data, trade secrets and know-how of our company or the confidential or proprietary information of any third party, including our subsidiaries and our clients, received by our company. Each of these executive officers has also agreed to be bound by noncompetition and non-solicitation restrictions during the term of his or her employment and typically following the last date of employment.

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

**C.** **BOARD PRACTICES** 

Our board of directors consists of 5 directors, Guohui Kang and Wei Peng, Belief Bi, Maggie Wang, and Han Qin. A director is not required to hold any shares in our company to qualify to serve as a director. The Corporate Governance Rules of the Nasdaq generally require that a majority of an issuer's board of directors must consist of independent directors. Each director holds office for the term fixed by the resolution of the directors appointing such director.

A director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with our company is required to declare the nature of his or her interest at a meeting of our directors. A general notice given to the directors by any director to the effect that he or she is a member of any specified company or firm and is to be regarded as interested in any contract or transaction which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made or transaction so consummated. Subject to the Nasdaq rules and disqualification by the chairman of the relevant board meeting, a director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he/she may be interested therein and if he/she does so, his/her vote shall be counted and he/she may be counted in the quorum at any meeting of the directors at which any such contract or proposed contract or arrangement is considered. Our board of directors may exercise all of the powers of our company to borrow money, to mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and to issue debentures, debenture stock or other securities whenever money is borrowed or as security for any debt, liability or obligation of our company or of any third party.

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**Committees of Our Board of Directors**

Our board of directors has established an audit committee, a compensation committee, and a nominating committee. The composition and responsibilities of each of these committees of our board of directors are described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. Our board of directors may have or establish other committees as it deems necessary or appropriate from time to time.

***Audit Committee***

Our Audit Committee consists of Mr. Belief Bi, Ms. Maggie Wang, and Ms. Han Qin. We have determined that each of them satisfies the "independence" requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq and meet the independence standards under Rule 10A-3 under the Exchange Act, as amended. We have also determined that Ms. Maggie Wang qualifies as an "audit committee financial expert." The chair of our Audit Committee is Ms. Maggie Wang. The Audit Committee oversees our accounting and financial reporting processes and the audits of our financial statements. The Audit Committee is responsible for, among other things:

● establishing clear hiring policies for employees or former employees of the independent auditors;

● reviewing and recommending to our Board of Directors for approval, the appointment, re-appointment or removal of the independent auditor, after considering our annual performance evaluation of the independent auditor;

● approving the remuneration and terms of engagement of the independent auditor and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors at least annually;

● obtaining a written report from our independent auditor describing matters relating to our independence and quality control procedures;

● reviewing with the independent registered public accounting firm any audit problems or difficulties and management's response;

● discussing with our independent auditor, among other things, the audits of the financial statements, including whether any material information should be disclosed, issues regarding accounting and auditing principles and practices;

● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;

● reviewing and recommending the financial statements for inclusion within our quarterly earnings releases and to our Board of Directors for inclusion in our annual reports;

● discussing the annual audited financial statements with management and the independent registered public accounting firm;

● reviewing policies with respect to risk assessment and risk management;

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

● periodically reviewing and reassessing the adequacy of the committee charter;

● approving annual audit plans, and undertaking an annual performance evaluation of the internal audit function;

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● establishing and overseeing procedures for the handling of complaints and whistleblowing;

● meeting separately and periodically with management, the internal auditors and the independent registered public accounting firm;

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

● reporting periodically to our Board of Directors; and

● such other matters that are specifically delegated to our audit committee by our Board of Directors from time to time.

***Nominating and Corporate Governance Committee***

Our Nominating Committee consists of Mr. Belief Bi, Ms. Maggie Wang and Ms. Han Qin. We have determined that each of them satisfies the "independence" requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq and meet the independence standards under Rule 10A-3 under the Exchange Act, as amended. The Nominating Committee is responsible for overseeing the selection of persons to be nominated to serve on our Board of Directors. The Nominating Committee considers persons identified by its members, management, stockholders, investment bankers and others.

The guidelines for selecting nominees, which are specified in the Nominating Committee Charter, generally provide that persons to be nominated:

● should have demonstrated notable or significant achievements in business, education or public service;

● should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and

● should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders.

The Nominating Committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person's candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by stockholders and other persons.

***Compensation Committee***

Our Compensation Committee consists of Mr. Belief Bi, Ms. Maggie Wang, and Ms. Han Qin. We have determined that each of them satisfies the "independence" requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq and meet the independence standards under Rule 10A-3 under the Exchange Act, as amended. The chair of our compensation committee is Ms. Han Qin. The principal functions of the compensation committee include:

● reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer's compensation, evaluating our Chief Executive Officer's performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer's based on such evaluation;

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● reviewing and approving the compensation of all of our other officers;

● reviewing our executive compensation policies and plans;

● implementing and administering our incentive compensation equity-based remuneration plans;

● assisting management in complying with our proxy statement and annual report disclosure requirements;

● approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;

● producing a report on executive compensation to be included in our annual proxy statement; and

● reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

The compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by the Nasdaq and the SEC.

**Family Relationships**

No family relationships existed among any of our directors or executive officers.

**Code of Ethics**

We have adopted a "Code of Ethics" as defined by regulations promulgated under the Securities Act of 1933, as amended, and the Exchange Act that applies to all of our directors and employees, including our principal executive officer, principal financial officer and principal accounting officer.

**Section 16(A) Beneficial Ownership Reporting Compliance**

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on our review of Forms 3, 4 and 5, and any amendments thereto, furnished to us or written representations that no Form 5 was required, we believe that during the fiscal year ended December 31, 2025, all filing requirements applicable to our executive officers and directors under the Exchange Act were met in a timely manner.

**D.** **EMPLOYEES** 

The following table sets forth the number of our employees as of December 31, 2025:

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| | |
|:---|:---|
| **Function** | **Number of**<br> **full-time employees** |
| Research and Development | 37 |
| Business and Marketing | 25 |
| Administrative, Human Resources and Finance | 12 |
| **Total** | 74 |

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Under PRC law, we participate in various employee social security plans that are organized by municipal and provincial governments for our PRC-based full-time employees, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing fund. We are required under PRC law to make contributions monthly to employee benefit plans for our PRC-based full-time employees at specified percentages of the salaries, bonuses and certain allowances of such employees, up to a maximum amount specified by the local governments in China.

We enter into labor contracts and standard confidentiality and intellectual property agreements with our key employees. We believe that we maintain a good working relationship with our employees, and we have not experienced any labor disputes. None of our employees are represented by labor unions.

**E.** **SHARE OWNERSHIP** 

The table below sets forth information, as of December 31, 2025, with respect to the beneficial ownership of our Ordinary shares by: (a) each named executive officer, each of our directors and executive officers as a group; and (b) each person known to us to own beneficially more than 5% of our Ordinary shares (by number and by voting power).

Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them. Information with respect to beneficial ownership has been furnished by each director, officer, or beneficial owner of 5% or more of our Ordinary shares.

Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Ordinary Shares underlying options, warrants, or convertible securities are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person.

The calculations in the table below are based on 22,512,360 Class A ordinary shares and 400,000 Class B Ordinary Shares par value $0.8 per share, outstanding as of December 31, 2025.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class A Ordinary shares** | **Class A Ordinary shares** | **Class B Ordinary shares** | **Class B Ordinary shares** | **Voting Power\*\*** |
| <br>**Name and Address of Beneficial Owner** | **Number** | **%\*\*** | **Number** | **%\*\*** | **(%** |
| ***Executive Officers and Directors*** |  |  |  |  |  |
| Guohui Kang<sup>(1)</sup> | 632 | \* |  |  | \* |
| Bei Zhen |  |  |  |  |  |
| Wei Peng<sup>(2)</sup> | 1037 | \* |  |  | \* |
| Belief Bi |  |  |  |  |  |
| Han Qin |  |  |  |  |  |
| Maggie Wang |  |  |  |  |  |
| All Executive Officers and Directors as a group | 1669 |  |  |  |  |
| ***5% Shareholders*** |  |  |  |  |  |
| Tiger Initiative Investment Ltd | 114479 | \* | 250000 | 62.5% | 16.76% |
| Lucky Monkey Holding Limited | 91415 | \* | 150000 | 37.5% | 10.13% |

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Note:

\* Indicates beneficial ownership of less than 1%.

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\*\* For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our outstanding Class A Ordinary Shares and Class B Ordinary Shares voting together as a single class. Each holder of Class A Ordinary shares is entitled to one vote per share. Each holder of Class B Ordinary Shares is entitled to 20 votes per share. Class A Ordinary shares and Class B Ordinary Shares vote together as a single class on all matters submitted to a vote of our shareholders. Our Class A and Class B Ordinary Shares are not convertible.

(1) Import & Export Guojin Development Co., Ltd is the record holder of our Ordinary shares. Guohui Kang, as the sole director and sole shareholder of Import & Export Guojin Development Co., Ltd, has voting and investment discretion over these shares and therefore may be deemed to beneficially own such shares.

(2) Best Road Holdings Limited is the record holder of our Ordinary shares. Wei Peng, as the sole director and sole shareholder of Best Road Holdings Limited, has voting and investment discretion over these shares and therefore may be deemed to beneficially own such shares.

**F.** **DISCLOSURE OF A REGISTRANT'S ACTION TO RECOVER ERRONEOUSLY AWARDED COMPENSATION** 

Not applicable. During the fiscal year ended December 31, 2025, we were not required to prepare an accounting restatement that required recovery of erroneously awarded compensation pursuant to our compensation recovery policy. Furthermore, there was no outstanding balance as of the end of the last completed fiscal year of erroneously awarded compensation to be recovered from the application of the policy to a prior restatement.

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

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**A.** **MAJOR SHAREHOLDERS** 

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

**B.** **RELATED PARTY TRANSACTIONS** 

**Contractual Arrangements**

See "Item 4. Information on the Company — C. Organizational Structure."

**Employment Agreements**

See "Item 6. Directors, Senior Management and Employees — 6.B. Compensation — Employment Agreements."

**C.** **INTERESTS OF EXPERTS AND COUNSEL** 

None.

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

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**A.** **CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION** 

Our audited consolidated financial statements are set forth beginning on page F-1, which can be found after Item 19.

**Legal Proceedings**

The Company, along with its shareholder Joyous JD Limited, has initiated litigation in the New York Supreme Court New York County against Greenland Asset Management Corporation, the sponsor of the pre-business combination company, Golden Path Acquisition Corporation ("Sponsor").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Joyous JD Limited is seeking damages in connection with the Sponsor ' s breach of certain investment agreements which was executed by and between the Sponsor and Joyous JD Limited;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Company is seeking damages in connection with the Sponsor ' s noncompliant misuse of Form S-4 in registering shares during the course of the business combination, which resulted in a forced withdrawal of the Form S-4. The Company has commenced lawsuit seeking damages.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Greenland Asset Management initiated a countersuit against the Company in response to the Company ' s lawsuit.

Due to uncertainty over the process and outcome of the lawsuit, the final ruling of the Court shall prevail.

**Dividend Information**

We currently have no plan to declare or pay any dividends in the near future on our Ordinary shares, as we currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Our board of directors has discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

We are a holding company incorporated in the Cayman Islands. We rely principally on dividends from our PRC subsidiaries for our cash requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See "Item 3. Key Information — 3.D. Risk Factors — Risk Related to Doing Business in China — Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment."

**B.** **SIGNIFICANT CHANGES** 

Except as otherwise disclosed in this report, we have not experienced any significant changes since the date of the annual financial statements included herein.

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

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**A.** **OFFER AND LISTING DETAILS** 

Our Class A Ordinary shares and warrants is listed on the Nasdaq Capital Market under the symbols "HOLO" and "HOLOW" respectively.

**B.** **Plan of Distribution** 

Not applicable.

**C.** **Markets** 

See "Item 9A - Offer and Listing Details" above.

**D.** **Selling Shareholders** 

Not applicable.

**E.** **Dilution** 

Not applicable.

**F.** **Expenses of the Issue** 

Not applicable.

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

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**A.** **Share Capital** 

Not applicable.

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

We are a Cayman Islands company and our affairs are governed by our second amended and restated memorandum and articles of association, as amended from time to time and the Companies Law of the Cayman Islands and the common law of the Cayman Islands.

A copy of the Second Amended Articles of Association is attached hereto as Exhibit 3.1 and are incorporated herein by reference.

**C.** **MATERIAL CONTRACTS** 

Other than transactions and contracts that are described under "Item 4. Information on the Company" and Item 7 "Major Shareholders and Related Party Transactions" or elsewhere in this annual report, we have not entered into any material contracts outside the ordinary course of our business within the two years immediately preceding the date of this annual report.

**D.** **EXCHANGE CONTROLS** 

Please see "Item 4. Information on the Company — B. Business Overview — Regulations — Regulation on Foreign Exchange" and "Item 4. Information on the Company — B. Business Overview — Regulations — Regulation on Dividend Distributions."

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**E.** **TAXATION** 

**Cayman Islands Taxation**

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Company levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within, the jurisdiction of the Cayman Islands. There are no exchange control regulations or currency restrictions in the Cayman Islands.

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

**PRC Taxation**

Income Tax and Withholding Tax

In March 2007, the National People's Congress of China enacted the Enterprise Income Tax Law, or EIT Law, which became effective on January 1, 2008 (as amended in December 2018). The EIT Law provides that enterprises organized under the laws of jurisdictions outside China with their "de facto management bodies" located within China may be considered PRC resident enterprises and therefore subject to EIT at the rate of 25% on their worldwide income. The Implementing Rules of the EIT Law further defines the term "de facto management body" as the management body that exercises substantial and overall management and control over the business, personnel, accounts and properties of an enterprise.

In April 2009, the SAT issued the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, known as Circular 82, which provides certain specific criteria for determining whether the "de facto management body" of a PRC-controlled enterprise that is incorporated offshore is deemed to be located in China. Although Circular 82 only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not offshore enterprises controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT's general position on how the "de facto management body" test should be applied in determining the tax resident status of all offshore enterprises.

According to SAT Notice 82, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a "de facto management body" in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (i) the places where senior management and senior management departments that are responsible for daily production, operation and management of the enterprise perform their duties are mainly located within the territory of China; (ii) financial decisions (such as money borrowing, lending, financing and financial risk management) and personnel decisions (such as appointment, dismissal and salary and wages) are decided or need to be decided by organizations or persons located within the territory of China; (iii) main property, accounting books, corporate seal, the board of directors and files of the minutes of shareholders' meetings of the enterprise are located or preserved within the territory of China; and (iv) one half (or more) of the directors or senior management staff having the right to vote habitually reside within the territory of China.

The Administrative Measures for Enterprise Income Tax of Chinese-Controlled Overseas Incorporated Resident Enterprises (Trial Version), or Bulletin 45, further clarifies certain issues related to the determination of tax resident status. Bulletin 45 also specifies that when provided with a resident Chinese-controlled, offshore-incorporated enterprise's copy of its recognition of residential status, a payer does not need to withhold a 10% income tax when paying certain PRC-source income, such as dividends, interest and royalties to such Chinese-controlled offshore-incorporated enterprise.

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We believe that our Cayman Islands holding company, MicroCloud is not a PRC resident enterprise for PRC tax purposes. MicroCloud is a company incorporated outside China. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside China. As such, we do not believe that our company meets all of the conditions above or is a PRC resident enterprise for PRC tax purposes. For the same reasons, we believe our other entities outside China are not PRC resident enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body." There can be no assurance that the PRC government will ultimately take a view that is consistent with our position and there is a risk that the PRC tax authorities may deem our company as a PRC resident enterprise since a substantial majority of the members of our management team are located in China, in which case we would be subject to the EIT at the rate of 25% on worldwide income. If the PRC tax authorities determine that our Cayman Islands holding company is a "resident enterprise" for EIT purposes, a number of unfavorable PRC tax consequences could follow.

One example is a 10% withholding tax would be imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived by our non-PRC enterprise shareholders from transferring our Ordinary shares. It is unclear whether, if we are considered a PRC resident enterprise, holders of our Ordinary shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas.

According to the Announcement of SAT on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or Circular 7, which was promulgated by the SAT and became effective on February 3, 2015, if a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by transfer of the equity interests of an offshore holding company (other than a purchase and sale of shares issued by a PRC resident enterprise in the public securities market) without a reasonable commercial purpose, PRC tax authorities have the power to reassess the nature of the transaction and the indirect equity transfer may be treated as a direct transfer. As a result, the gain derived from such transfer, which means the equity transfer price less the cost of equity, will be subject to PRC withholding tax at a rate of up to 10%.

Under the terms of Circular 7, a transfer which meets all of the following circumstances shall be directly deemed as having no reasonable commercial purposes if:

● over 75% of the value of the equity interests of the offshore holding company are directly or indirectly derived from PRC taxable properties;

● at any time during the year before the indirect transfer, over 90% of the total properties of the offshore holding company are investments within PRC territories, or in the year before the indirect transfer, over 90% of the offshore holding company's revenue is directly or indirectly derived from PRC territories;

● the function performed and risks assumed by the offshore holding company are insufficient to substantiate its corporate existence; or

● the foreign income tax imposed on the indirect transfer is lower than the PRC tax imposed on the direct transfer of the PRC taxable properties.

On October 17, 2017, the SAT issued the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or Circular 37, which took effect on December 1, 2017. Circular 37 purports to provide further clarifications by setting forth the definitions of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of the withholding amount and the date on which the withholding obligation arises.

Specifically, Circular 37 provides that where the transfer income subject to withholding at source is derived by a non-PRC resident enterprise in instalments, the instalments may first be treated as recovery of costs of previous investments. Upon recovery of all costs, the tax amount to be withheld must then be computed and withheld.

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There is uncertainty as to the application of Circular 7 and Circular 37. Circular 7 and Circular 37 may be determined by the PRC tax authorities to be applicable to transfers of our shares that involve non-resident investors, if any of such transactions were determined by the tax authorities to lack a reasonable commercial purpose.

As a result, we and our non-resident investors in such transactions may become at risk of being taxed under Circular 7 and Circular 37, and we may be required to comply with Circular 7 and Circular 37 or to establish that we should not be taxed under the general anti-avoidance rule of the EIT Law. This process may be costly and have a material adverse effect on our financial condition and results of operations.

Value-added Tax

Under the Circular on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax to Replace Business Tax, or Circular 36, which was promulgated by the Ministry of Finance and the SAT on March 23, 2016 and became effective on May 1, 2016, entities and individuals engaging in the sale of services, intangible assets or fixed assets within the territory of the PRC are required to pay value added tax, or VAT, instead of business tax.

According to the Circular 36, our PRC subsidiaries are subject to VAT, at a rate of 6% to 17% on proceeds received from customers and are entitled to a refund for VAT already paid or borne on the goods purchased by it and utilized in the production of goods or provisions of services that have generated the gross sales proceeds.

According to the Circular of the Ministry of Finance and the SAT on Adjusting Value-added Tax Rates, promulgated on April 4, 2018 and effective since May 1, 2018, where a taxpayer engages in a taxable sales activity for the value-added tax purpose or imports goods, the previous applicable 17% tax rates are lowered to 16%.

According to the Circular on Policies to Deepen Value-added Tax Reform, promulgated on March 20, 2019 and effective since April 1, 2019, where a taxpayer engages in a taxable sales activity for the value-added tax purpose or imports goods, the previous applicable 16% and 10% tax rates are lowered to 13% and 9% respectively.

**Material U.S. Federal Income Tax**

The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our Ordinary shares by a U.S. Holder (as defined below) that acquires our ordinary shares in this offering and holds our Ordinary shares as "capital assets" (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service, or the IRS, with respect to any U.S. federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, Medicare, and alternative minimum tax considerations, any withholding or information reporting requirements, or any state, local and non-U.S. tax considerations relating to the ownership or disposition of our ordinary shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:

● banks and other financial institutions;

● insurance companies;

● pension plans;

● cooperatives;

● regulated investment companies;

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● real estate investment trusts;

● broker-dealers;

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

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

● governments or agencies or instrumentalities thereof;

● tax-exempt entities (including private foundations);

● holders who acquired our ordinary shares pursuant to the exercise of any employee share option or otherwise as compensation;

● investors that will hold our ordinary shares as part of a straddle, hedging, conversion or other integrated transaction for U.S. federal income tax purposes;

● persons holding their Ordinary Shares in connection with a trade or business outside the United States;

● persons that actually or constructively own 10% or more of our voting power or value (including by reason of owning our ordinary shares);

● investors required to accelerate the recognition of any item of gross income with respect to their Ordinary Shares as a result of such income being recognized on an applicable financial statement;

● investors that have a functional currency other than the U.S. dollar;

● partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding Ordinary Shares through such entities, all of whom may be subject to tax rules that differ significantly from those discussed below.

The discussion set forth below is addressed only to U.S. Holders that purchase Ordinary Shares in this offering. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. federal income 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 ordinary shares.

General

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

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

● a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) 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.

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

Passive Foreign Investment Company ("PFIC")

A non-U.S. corporation is considered a PFIC, as defined in Section 1297(a) of the US Internal Revenue Code, for any taxable year if either:

● at least 75% of its gross income for such taxable year is passive income; or

● at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the "asset test").

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. 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. In determining the value and composition of our assets for purposes of the PFIC asset test, (1) our current cash and short-term investment balances will generally be considered to be held for the production of passive income and (2) the value of our assets must be determined based on the market value of our Ordinary shares from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets (including our high levels of cash and short-term investments reported as of December 31, 2025)) on any particular quarterly testing date for purposes of the asset test.

Based on the significant amount of cash and short-term investments held on our balance sheet, there is a material risk that we may be treated as a PFIC under the current PFIC rules. We must make a separate determination each year as to whether we are a PFIC and there can be no assurance with respect to our status as a PFIC for our current or any future taxable year. Given our current liquidity position,. it is possible that, for our current taxable year or for any subsequent taxable year, more than 50% of our assets may be assets held for the production of passive income. We will make this determination following the end of any particular tax year. In addition, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our ordinary shares and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our Ordinary shares and the amount of cash we raise in this offering. Accordingly, fluctuations in the market price of the Class A Ordinary Share may cause us to be a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition of our income and assets will be affected by how, and how quickly, we utilize our existing cash. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our Ordinary shares from time to time and the amount of cash we raise in this offering) that may not be within our control. If we are a PFIC for any year during which you hold Ordinary Shares, we will continue to be treated as a PFIC for all succeeding years during which you hold Ordinary Shares. If we cease to be a PFIC and you did not previously make a timely "mark-to-market" election as described below, however, you may avoid some of the adverse effects of the PFIC regime by making a "purging election" (as described below) with respect to the Class A Ordinary Share.

If we are a PFIC for your taxable year(s) during which you hold Ordinary Shares, 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 Class A Ordinary Share, 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 Class A Ordinary Share 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 Class A Ordinary Share;

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

● the amount allocated to each of your other taxable year(s) 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 years prior to the year of disposition or "excess distribution" cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Class A Ordinary Share cannot be treated as capital, even if you hold the Class A Ordinary Share as capital assets.

A U.S. Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election under Section 1296 of the US Internal Revenue Code for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for first taxable year which you hold (or are deemed to hold) Ordinary Shares and for which we are determined to be a PFIC, you will include in your income each year an amount equal to the excess, if any, of the fair market value of the Class A Ordinary Share as of the close of such taxable year over your adjusted basis in such Ordinary Shares, which excess will be treated as ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the Class A Ordinary Share over their fair market value as of the close of the taxable year. Such ordinary loss, however, is allowable only to the extent of any net mark-to-market gains on the Class A Ordinary Share 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 Class A Ordinary Share, are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of the Class A Ordinary Share, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Ordinary Shares. Your basis in the Class A Ordinary Share 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 which 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 Ordinary 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 Nasdaq. If the Class A Ordinary Share are regularly traded on Nasdaq and if you are a holder of Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC.

Alternatively, a U.S. Holder of stock in a PFIC may make a "qualified electing fund" election under Section 1295(b) of the US Internal Revenue Code 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. The qualified electing fund election, however, 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. If you hold Ordinary Shares in any taxable year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such Ordinary Shares, including regarding distributions received on the Class A Ordinary Share and any gain realized on the disposition of the Class A Ordinary Share.

If you do not make a timely "mark-to-market" election (as described above), and if we were a PFIC at any time during the period you hold our Ordinary shares, then such Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a "purging election" for the year we cease to be a PFIC. A "purging election" creates a deemed sale of such Ordinary Shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Class A Ordinary Share on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your ordinary shares for tax purposes.

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IRC Section 1014(a) provides for a step-up in basis to the fair market value for our Ordinary shares when inherited from a decedent that was previously a holder of our Ordinary shares. However, if we are determined to be a PFIC and a decedent that was a U.S. Holder did not make either a timely qualified electing fund election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) our Ordinary shares, or a mark-to-market election and ownership of those Ordinary Shares are inherited, a special provision in IRC Section 1291(e) provides that the new U.S. Holder's basis should be reduced by an amount equal to the Section 1014 basis minus the decedent's adjusted basis just before death. As such if we are determined to be a PFIC at any time prior to a decedent's passing, the PFIC rules will cause any new U.S. Holder that inherits our Ordinary shares from a U.S. Holder to not get a step-up in basis under Section 1014 and instead will receive a carryover basis in those Ordinary Shares.

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

Taxation of Dividends and Other Distributions on our Ordinary shares

Subject to the PFIC rules discussed above, the gross amount of distributions made by us to you with respect to the Class A Ordinary Share (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, the dividends will not be eligible for the dividends-received deduction allowed to corporations 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 Class A Ordinary Share 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 PFIC for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Because there is not income tax treaty between the United States and the Cayman Islands, clause (1) above can be satisfied only if the Class A Ordinary Share are readily tradable on an established securities market in the United States. Under U.S. Internal Revenue Service authority, Ordinary Shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on certain exchanges, which presently include the NYSE and the Nasdaq Stock Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our ordinary shares, including the effects of any change in law after the date of this report.

Dividends 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 ordinary shares will constitute "passive category income" but could, in the case of certain U.S. Holders, constitute "general category income."

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 ordinary 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.

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Taxation of Dispositions of Ordinary 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 a share 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 Class A Ordinary Share. 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 Class A Ordinary Share for more than one year, you will generally be eligible for reduced tax rates. 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 which will generally limit the availability of foreign tax credits.

Information Reporting and Backup Withholding

Dividend payments with respect to our Ordinary shares and proceeds from the sale, exchange or redemption of our Ordinary shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding under Section 3406 of the US Internal Revenue Code with at a current flat rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

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

Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our ordinary shares, subject to certain exceptions (including an exception for Ordinary Shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Ordinary Shares.

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

Not applicable.

**G.** **Statement By Experts** 

Not applicable.

**H.** **Documents on Display** 

We are subject to the periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year. Copies of reports and other information, when so filed with the SEC, can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the Commission at 1-800-SEC-0330. The SEC also maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

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**I.** **Subsidiary Information** 

Not applicable.

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

Not applicable.

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

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***Credit Risk***

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. In China, the insurance coverage of each bank is RMB 500,000 (approximately USD 71,136). As of December 31, 2025, cash balance of RMB 475,986,987(USD 67,719,524) was deposited with financial institutions located in China, of which RMB 471,979,770(USD 67,149,410) was subject to credit risk. The Hong Kong Deposit Protection Board pays compensation up to a limit of HKD 800,000 (approximately USD 102,802) if the bank with which an individual/a company hold its eligible deposit fails. As of December 31, 2025, cash balance of RMB 976,055,908(USD 138,865,227) was maintained at financial institutions in Hong Kong, of which RMB 970,871,007(USD 138,127,562) was subject to credit risk. In the US, the insurance coverage of each bank is USD 250,000. As of December 31, 2025, cash balance of USD 2,205,499 (RMB 15,502,008) was deposited with a financial institution located in US, of which USD 1,705,096 (RMB 11,984,777) was subject to credit risk. In Singapore, Singapore Deposit Insurance Corporation Limited (SDIC) provides the insurance coverage of each bank is SGD 100,000 (USD 77,661). As of December 31, 2025, cash balance of RMB 375,843,966 (USD 53,471,996) was deposited with financial institutions located in Singapore, of which RMB 374,752,246 (USD 53,316,675) was subject to credit risk. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. A majority of our expense transactions are denominated in RMB and a significant portion of our and our subsidiaries' assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the PBOC. Remittances in currencies other than RMB by us in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

To the extent that we need to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, if we decide to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to us.

***Foreign Exchange Risk***

While our reporting currency is the RMB, we have several operating entities' functional currency is HK dollar and two operating entities' functional currency is USD. As a result, we are exposed to foreign exchange risk as our results of operations may be affected by fluctuations in the exchange rate among HK dollar, USD and RMB. If the RMB appreciates against the HK dollar and USD, the value of our HKD or USD revenues, earnings and assets as expressed in our RMB financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to the foreign exchange risks.

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

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**A.** **Debt Securities** 

Not Applicable.

**B.** **Warrants and Rights** 

Not Applicable.

**C.** **Other Securities** 

Not applicable.

**D.** **American Depositary Shares** 

Not applicable.

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**PART II**

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

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None.

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

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**A.** **Material Modifications to the Instruments Defining the Rights of Security Holders** 

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

**B.** **Material Modifications to the Rights of Registered Securities by Issuing or Modifying any other Class of Securities** 

On September 27, 2024, MicroCloud Hologram Inc. (the "Company") convened its 2024 Annual General Meeting of Shareholders (the "AGM"). At the AGM, shareholders approved a special resolution to establish a Dual-Class Structure and adopt a Second Amended and Restated Memorandum and Articles of Association. The key changes include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Reclassification of Shares: All issued and outstanding Consolidated Ordinary Shares were re-designated as Class A Ordinary Shares with a par value of US$0.02 per share, retaining one vote per share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Authorized Share Capital Adjustment:

379,455,801 authorized but unissued Consolidated Ordinary Shares were converted to Class A Ordinary Shares.

100,000,000 authorized but unissued Consolidated Ordinary Shares were re-designated as Class B Ordinary Shares with a par value of US$0.02 per share, each carrying 20 votes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Post-Adjustment Capital Structure: The authorized share capital was revised from US$10,000,000 divided into 500,000,000 Consolidated Ordinary Shares to US$10,000,000 divided into 400,000,000 Class A Ordinary Shares and 100,000,000 Class B Ordinary Shares.

The Second Amended and Restated Memorandum and Articles of Association formalized these structural changes, including the Dual-Class Structure and capital reclassification.

Following the Variation of Share Capital, the Class A Ordinary Shares continued to trade on Nasdaq under the symbol "HOLO" and began trading on a split-adjusted basis on October 9, 2024. The new CUSIP for the Class A Ordinary Shares was assigned as G55032 16 6.

**C.** **Withdrawal or Substitution of a Material Amount of the Assets Securing any Registered Securities** 

Not applicable.

**D.** **Change of Trustees or Paying Agents for any Registered Securities** 

Not applicable.

**E.** **Use of Proceeds** 

On September 28, 2023, our Registration Statement on Form F-3 (File No. 333-274650) was declared effective by the SEC. The Registration Statement registered a shelf offering of up to $100,000,000 worth of additional securities, including Ordinary shares, preferred shares, debt securities, warrants, rights, and units. Additionally, we registered up to 287,500 Ordinary Shares underlying previously-issued Warrants related to the initial public offering of Golden Path Acquisition Corporation (renamed MicroCloud Hologram Inc. after our business combination). Through this first Form F-3 offering, we received proceeds of approximately US$89.7 million from the issuance of our securities.

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On May 28, 2024, our Registration Statement on Form F - 3 (File No. 333 - 279753) was declared effective by the SEC. In the Registration Statement, we registered a shelf offering of up to US$300,000,000 worth of our Ordinary shares, preferred shares, debt securities, warrants, rights, and units. Through this second Form F - 3 offering, as of December 31, 2024, we received proceeds of approximately US$119.6 million.

Pursuant to prospectus supplements that makes a part of the Registration Statement dated January 6, 2025, January 21, 2025, February 18, 2025, April 23, 2025 and June 5, 2025, the Company sold convertible notes in the aggregate amount of US$184 million convertible into our class A ordinary shares. The terms of the offerings are incorporated by reference to the Company's report of foreign private issuer on 6-K furnished to the SEC on January 6, 2025, January 21, 2025, February 18, 2025, April 23, 2025 and June 5, 2025. The net proceeds to the Company were approximately US$169.28 million.

On February 2025, the Company received US$7.36 million as certain investors converted their Convertible Promissory Notes into our class B ordinary shares.

On July 15, 2025, the Company filed a shelf registration statement (the "Registration Statement") with the Securities and Exchange Commission on Form F-3 (Registration No. 333-288691), which registration statement became effective on July 23, 2025. The shelf offering of this F-3 is an aggregate offering price of up to US$300,000,000. As of December 31, 2025, we have not made any takedowns to this filed F-3.

Our current allocation strategy for the proceeds from securities sales prioritizes working capital augmentation and general corporate requirements. While no specific commitments have been made, a portion of these funds may be earmarked for strategic investments in businesses, assets, or technologies that align with our operational objectives.

The deployment schedule and distribution of these proceeds will be influenced by multiple variables, including cash flow generated from operations, business expansion velocity, and market conditions. As such, substantial flexibility will be retained in determining both the timing and allocation of these funds. Although no formal agreements have been entered into as of the reporting date, acquisitions, joint ventures, or other transformative transactions remain potential uses for a portion of the proceeds.

As of the date of this report, there is no change in the information on the use of proceeds from the offering.

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

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**Disclosure Controls and Procedures**

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

Based upon that evaluation, our management has concluded that, due to the outstanding material weaknesses described below, as of December 31, 2025, our disclosure controls and procedures were not effective in ensuring that the information required to be disclosed by us in the reports that we file and furnish under the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

The Company maintains disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Company's management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company's management, with the participation of its chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this annual report. Based on this evaluation, its principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this annual report.

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

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025. The assessment was based on criteria established in the framework Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management determined that, as of December 31, 2025, we did not maintain effective internal control over financial reporting due to the material weaknesses in internal control over financial reporting identified below.

**Internal Control over Financial Reporting**

As defined in standards established by the PCAOB, a "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in auditing our consolidated financial statements for the fiscal years ended December 31, 2024 and December 31, 2025, our management identified a material weakness:

We lacked sufficient resources regarding financial reporting and accounting personnel with understanding of U.S. GAAP, in particular, to address complex U.S. GAAP technical accounting issues, related disclosures in accordance with U.S. GAAP and financial reporting requirements set forth by the SEC.

To the date of this annual report, our management had implemented and will continue to implement a number of remediation measures to address the material weakness, we hired personnel with U.S. GAAP relevant experience and necessary expertise to strengthen our financial reporting function and to design and implement necessary controls to remediate the material weakness;

Although management has taken above remedial steps, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded that these controls are operating effectively. Further, our independent registered accounting firm has not performed a new audit of our internal control over financial reporting and we cannot give assurances that the measures we have thus far taken to remediate the aforementioned material weaknesses were sufficient or that they will prevent future material weaknesses. As management continues to evaluate and work to improve our internal control over financial reporting, we may determine it necessary to take additional measures or modify the remediation measures we have taken to date.

We will continue to monitor our control measures to prevent the occurrence of major risks and ensure the effectiveness of financial reporting.

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

As a company with less than US$1.235 billion in revenue for our last fiscal year, we qualify as an "emerging growth company" pursuant to the JOBS Act, and are eligible to take advantage of certain exemptions from various reporting and financial disclosure requirements that are applicable to other public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, related to the assessment of the effectiveness of the emerging growth company's internal control over financial reporting.

**Changes in internal control over financial reporting**

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

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

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Our board of directors has determined that Maggie Wang, an independent director and the chairman of our audit committee, qualifies as an audit committee financial expert within the meaning of SEC rules and possesses financial sophistication under the standards set forth under Rule 5605(c) of the Nasdaq Marketplace Rules. Our board of directors has also determined that Ms. Maggie Wang satisfies the "independence" requirement of Rule 10A-3 under the Exchange Act of 1934, as amended, and Rule 5605(a)(2) of the Nasdaq Marketplace Rules.

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

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We have adopted a written code of business conduct and ethics that applies to all of our employees, officers and directors, including our principal executive officer, principal financial officer and principal accounting officer. A copy of our "Code of Business Conduct and Ethics" is included as exhibit 14 to this Annual Report.

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

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The following table sets forth the aggregate fees by the categories specified below in connection with certain professional services rendered by our current principal accounting firm, AssentSure PAC for the years ended December 31, 2024 and 2025, respectively. We did not pay any other fees to our auditors during the periods indicated below.

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|:---|:---|:---|
|  | **For the<br> Years Ended<br> December 31,** | **For the<br> Years Ended<br> December 31,** |
|  | **2024** | **2025** |
|  | **USD** | **USD** |
| Audit Fees | 280000 | 288000 |
| Audit-Related Fees |  |  |
| Tax Fees |  |  |
| All other fees | - | - |
| Total | 280000 | 288000 |

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**Audit Fees** — This category includes the audit of our annual financial statements and services that are normally provided by the independent auditors in connection with engagements for those fiscal years.

**Audit-Related Fees** — This category consists of assurance and related services by the independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under "Audit Fees".

The policy of our audit committee is to pre-approve all audit provided by AssentSure PAC, including audit services and audit-related services as described above, other than those for de minimis services which are approved by the Audit Committee prior to the completion of the audit.

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

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Not applicable.

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

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Not applicable.

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| **ITEM 16F.** | **CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT** |

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Previous disclosed in the Company's 8-K furnished to the SEC on March 17, 2023.

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

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As a Cayman Islands exempted company listed on Nasdaq Stock Market, we are subject to the Nasdaq corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. The following summarizes some significant ways in which our corporate governance practices differ from those followed by domestic companies under the listing standards of the Nasdaq:

Pursuant to the home country rule exemptions set forth under Nasdaq Listing Rule 5615, we have elected to be exempt from the requirement under Nasdaq Listing Rule 5635 to obtain shareholder approval for the issuance of 20% or more of our outstanding ordinary shares. Nasdaq Listing Rule 5635 requires each issuer to obtain shareholder approval prior to certain dilutive events, including a transaction other than a public offering involving the sale of 20% or more of the issuer's common shares outstanding prior to the transaction for less than the greater of book or market value of the stock. As a foreign private issuer, however, we may adopt the practices of our home country, the Cayman Island, which do not require shareholder approval for issuance of securities in connection with acquisitions.

Except for the foregoing, there are no material differences in our corporate governance practices from those of U.S. domestic companies under the listing standards of the Nasdaq.

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

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Not applicable.

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

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Not applicable.

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

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As of December 31, 2025, the Company has not yet formally adopted a standalone written insider trading policy governing the purchase, sale, and other dispositions of the Company's securities by directors, officers, and employees. The Company is currently in the process of evaluating and drafting a comprehensive policy that aligns with its post-Business Combination operational structure and Nasdaq listing requirements.

Notwithstanding the absence of a formal written policy, our directors and executive officers are aware of their obligations under U.S. federal securities laws, including Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit the trading of securities while in possession of material non-public information. We intend to adopt and file a formal insider trading policy as an exhibit to our future periodic reports once it has been reviewed and approved by our Board of Directors.

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| **ITEM 16K.** | **CYBERSECURITY** |

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Risk Management and Strategy

We have implemented comprehensive cybersecurity risk assessment procedures to ensure effectiveness in cybersecurity management, strategy and governance and reporting cybersecurity risks. We have also integrated cybersecurity risk management into our overall enterprise risk management system.

We strive to manage cybersecurity risks and protect sensitive information through various means, such as technical safeguards, procedural requirements, an intensive program of monitoring on our corporate network, frequent testing of aspects of our security posture internally and with outside vendors, a robust incident response program and regular cybersecurity awareness training for employees. Our IT department regularly monitors the performance of our platforms, apps and infrastructure to enable us to respond quickly to potential problems, including potential cybersecurity threats.

As of the date of this annual report, we have not experienced any material cybersecurity incidents or identified any material cybersecurity threats that have affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition.

Governance

Our board of directors is responsible for overseeing the cybersecurity risk management and be informed on risks from cybersecurity threats. The principal officer in charge of the cybersecurity matters, who has experience as cybersecurity officer in large technology companies and extensive knowledge and skills in security product development, security risk management and security compliance, are responsible for discussing material cybersecurity incidents or threats with specific constituencies before sign-off, ensuring thorough review of information and disclosures. This involves our disclosure committee (comprising of the principal accounting officer or the head of financial reporting, the head of the legal department, the principal investor relations officer, the principal officer in charge of cybersecurity matters, and appropriate business unit heads of our company, as adjusted from time to time by the then incumbent committee members), as a whole, and other members of senior management and external legal counsel, to the extent appropriate. The chief financial officer, and the principal officer in charge of the cybersecurity matters are also responsible for assessing, identifying and managing material risks from cybersecurity threats to our company and monitoring the prevention, detection, mitigation and remediation of material cybersecurity incident, maintaining oversight of the disclosure in Form 6-K for material cybersecurity incidents (if any) and meeting with our board of directors (i) in connection with each quarterly earnings release, update the status of any material cybersecurity incidents or material risks from cybersecurity threats to the Company, if any, and the relevant disclosure issues and (ii) in connection with each annual report, present the disclosure concerning cybersecurity matters in Form 20-F, along with a report highlighting particular disclosure issues, if any, and hold a Q&A session. Our board of directors is responsible for maintaining oversight of the disclosure related to cybersecurity matters in the periodic reports of our company.

[**Table of Contents**](#toc)

**PART III**

---

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

---

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

---

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

---

Our consolidated financial statements are included at the end of this annual report.

---

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

---

**Index to Exhibits**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| <br>**Exhibit No.** | <br>**Description** | **Form** | **Exhibit** | **Filing Date** |
| 1.1 | [The companies act (as revised) of the cayman islands company limited by shares second amended and restated memorandum and articles of association of Microcloud hologram inc. (adopted by a special resolution passed on september 27, 2024)](https://www.sec.gov/Archives/edgar/data/1841209/000182912625001963/microcloud_ex1-1.htm) | 20-F | 1.1 | March 21, 2025 |
| 2.1 | [Business combination and Merger Agreement dated as of September 10, 2021 by and among MC Hologram, Inc., Golden Path Acquisition Corporation and Golden Path Merger Sub Corporation](http://www.sec.gov/Archives/edgar/data/1841209/000182912621009924/goldenpathacq_ex2-1.htm) | 8-K | 2.1 | September 13, 2021 |
| 2.2 | [First Amendment to the Business Combination and Merger Agreement dated as of August 5, 2022](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex2-2.htm) | 8-K | 2.2 | September 22, 2022 |
| 2.3 | [Second Amendment to the Business Combination and Merger Agreement dated as of August 10, 2022](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex2-3.htm) | 8-K | 2.3 | September 22, 2022 |
| 2.5\* | [Description of Warrants](microcloud_ex2-5.htm) |  |  |  |
| 3.1 | [MicroCloud Hologram Inc. Amended and Restated Articles of Incorporation](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex3-1.htm) | 8-K | 3.1 | September 22, 2022 |
| 4.1 | [Specimen Ordinary Share Certificate](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex4-1.htm) | 8-K | 4.1 | September 22, 2022 |
| 4.2 | [Specimen Warrant Certificate](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex4-2.htm) | 8-K | 4.2 | September 22, 2022 |
| 4.3 | [Warrant Agreement between VStock Transfer LLC and Golden Path Acquisition Corporation](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex4-3.htm) | 8-K | 4.3 | September 22, 2022 |
| 4.4 | [Form 6-K furnished to the SEC on February 9, 2024, reporting the results of the Company's reverse stock split.](https://www.sec.gov/Archives/edgar/data/1841209/000182912624000849/microcloud_6k.htm) | 6-K | 4.4 | February 9, 2024 |
| 4.5\* | [Description of securities](microcloud_ex4-5.htm) |  |  |  |
| 4.6 | [The Results of the Second Extraordinary Meeting of the Shareholders in 2024](https://www.sec.gov/Archives/edgar/data/1841209/000182912624006640/microcloudholo_ex99-1.htm) | 6-K | 99.1 | October 3, 2024 |
| 8.1\* | [List of Subsidiaries](microcloud_ex8-1.htm) |  |  |  |
| 10.1 | [Form of Lock-Up Agreement](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex10-1.htm) | 8-K | 10.1 | September 22, 2022 |
| 10.2 | [Form of Indemnification Agreement](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex10-2.htm) | 8-K | 10.2 | September 22, 2022 |
| 10.3 | [Form of Registration Rights Agreement](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex10-3.htm) | 8-K | 10.3 | September 22, 2022 |
| 10.4 | [Form of Non-Competition and Non-Solicitation Agreements](https://www.sec.gov/Archives/edgar/data/1841209/000182912622017079/microcloudholo_ex10-4.htm) | 8-K | 10.4 | September 22, 2022 |
| 10.5 | [Form of Employment Agreement between the Registrant and each of its executive directors and officers](http://www.sec.gov/Archives/edgar/data/1841209/000182912623002018/microcloud_ex10-5.htm) | 10-K | 10.5 | March 14, 2023 |
| 10.6 | [Form of Director Offer Letter between the Registrant and each of its independent directors](http://www.sec.gov/Archives/edgar/data/1841209/000182912623002018/microcloud_ex10-6.htm) | 10-K | 10.6 | March 14, 2023 |

---

[**Table of Contents**](#toc)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| <br>**Exhibit No.** | <br>**Description** | **Form** | **Exhibit** | **Filing Date** |
| 12.1\* | [Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](microcloud_ex12-1.htm) |  |  |  |
| 12.2\* | [Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](microcloud_ex12-2.htm) |  |  |  |
| 13.1\*\* | [Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](microcloud_ex13-1.htm) |  |  |  |
| 13.2\*\* | [Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](microcloud_ex13-2.htm) |  |  |  |
| 15.1\* | [Consent of Assentsure PAC](microcloud_ex15-1.htm) |  |  |  |
| 97.1 | [Clawback Policy](https://www.sec.gov/Archives/edgar/data/1841209/000182912625001963/microcloud_ex97-1.htm) | 20-F | 97.1 | March 21, 2025 |
| 101.INS\* | XBRL Instance Document. |  |  |  |
| 101.SCH\* | XBRL Taxonomy Extension Schema Document. |  |  |  |
| 101.CAL\* | XBRL Taxonomy Extension Calculation Linkbase Document. |  |  |  |
| 101.DEF\* | XBRL Taxonomy Extension Definition Linkbase Document. |  |  |  |
| 101.LAB\* | XBRL Taxonomy Extension Labels Linkbase Document. |  |  |  |
| 101.PRE\* | XBRL Taxonomy Extension Presentation Linkbase Document. |  |  |  |
| 104\* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |  |  |  |

---

\* Filed with this annual report on Form 20-F.

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

[**Table of Contents**](#toc)

**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.

---

| | | |
|:---|:---|:---|
| **MicroCloud Hologram Inc.**  | **MicroCloud Hologram Inc.**  | **MicroCloud Hologram Inc.**  |
| By: | /s/ Guohui Kang | /s/ Guohui Kang |
|  | Name: | Guohui Kang |
|  | Title: | Chief Executive Officer |

---

Date: March 27, 2026

[**Table of Contents**](#toc)

**MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES**

**INDEX TO FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
| [Report of Independent Registered Public Accounting Firm (PCAOB ID: 6783)](#b_001) | F-2 |
| [Consolidated Balance Sheets](#b_002) | F-3 |
| [Consolidated Statements of Operations and Comprehensive Income (Loss)](#b_003) | F-4 |
| [Consolidated Statements of Stockholders' Equity](#b_004) | F-5 |
| [Consolidated Statements of Cash Flows](#b_005) | F-6 |
| [Notes to Consolidated Financial Statements](#b_006) | F-7 |

---

[**Table of Contents**](#toc)

**Report of Independent Registered Public Accounting Firm**

To the Shareholders and the Board of Directors of

MicroCloud Hologram Inc.

***Opinion on the Financial Statements***

We have audited the accompanying consolidated balance sheets of MicroCloud Hologram Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income (loss), 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 present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows 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) (the "PCAOB") and are required to be independent with respect to the Company in accordance with the United States federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Assentsure PAC

Singapore, March 27, 2026

PCAOB ID number: 6783

We have served as the Company's auditor since 2022.

[**Table of Contents**](#toc)

**MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,**<br>**2024** | **December 31,**<br>**2025** | **December 31,**<br>**2025** |
|  | **RMB** | **RMB** | **USD** |
| ASSETS |  |  |  |
| CURRENT ASSETS |  |  |  |
| Cash and cash equivalents | 851470436 | 1843388870 | 262262245 |
| Short-term investments | 725664686 | 899151784 | 127923939 |
| Notes receivable |  | 3638300 | 517627 |
| Accounts receivable, net | 23471365 | 22156134 | 3152193 |
| Prepayments and other current assets | 9671579 | 7968373 | 1133675 |
| Inventories, net | 765683 | 117743 | 16752 |
| Total current assets | 1611043749 | 2776421204 | 395006431 |
| NON-CURRENT ASSETS |  |  |  |
| Property and equipment, net | 583801 | 491567 | 69936 |
| Investments in unconsolidated entities | 600000 | 600000 | 85363 |
| Right-of-use assets, net | 2349563 | 1186167 | 168758 |
| Prepayment and deposits, net | 320098 | - | - |
| Total non-current assets | 3853462 | 2277734 | 324057 |
| Total assets | 1614897211 | 2778698938 | 395330488 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |
| CURRENT LIABILITIES |  |  |  |
| Accounts payable | 13405894 | 20872743 | 2969603 |
| Contract liabilities | 2950665 | 5483268 | 780114 |
| Other payables and accrued liabilities | 7653197 | 6143858 | 874098 |
| Operating lease liabilities - current | 1445223 | 1145435 | 162963 |
| Loan payable | 5269000 | 3627557 | 516099 |
| Taxes payable | 147597 | 229059 | 32589 |
| Convertible bonds | - | 45265472 | 6440000 |
| Total current liabilities | 30871576 | 82767392 | 11775466 |
| NON-CURRENT LIABILITIES |  |  |  |
| Operating lease liabilities - non-current | 1037221 | - | - |
| Total non-current liabilities | 1037221 | - | - |
| Total liabilities | 31908797 | 82767392 | 11775466 |
| COMMITMENTS AND CONTINGENCIES (Note 19) |  |  |  |
| SHAREHOLDERS' EQUITY |  |  |  |
| Class A Ordinary shares, $0.8 par value; 400,000,000 shares authorized, 1,362,583 shares and 22,512,360 shares issued and outstanding as of December 31, 2024, and December 31, 2025\* | 7835503 | 126720005 | 18009896 |
| Class B Ordinary shares, $0.8 par value; 100,000,000 shares authorized, nil shares and 400,000 shares issued and outstanding as of December 31, 2024, and December 31, 2025\* |  | 2290752 | 320000 |
| Additional paid-in capital | 1783988461 | 2859114967 | 402491075 |
| Accumulated deficit | (209744309) | (265992349) | (37356062) |
| Statutory reserves | 2564446 | 2552776 | 363188 |
| Accumulated other comprehensive loss | (832436) | (33928456) | (1009168) |
| Total MICROCLOUD HOLOGRAM INC. shareholders' equity | 1583811665 | 2690757695 | 382818929 |
| NON-CONTROLLING INTERESTS | (823251) | 5173851 | 736093 |
| Total shareholders' equity | 1582988414 | 2695931546 | 383555022 |
| Total liabilities and shareholders' equity | 1614897211 | 2778698938 | 395330488 |

---

\* The shares and per share information are presented on a retroactive basis to reflect the Share Consolidation and the reclassification of Class A and Class B ordinary shares (Note 17).

The accompanying notes are an integral part of these consolidated financial statements.

[**Table of Contents**](#toc)

**MICROCLOUD HOLOGRAM 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,** | **For the Years Ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **USD** |
| OPERATING REVENUES |  |  |  |  |
| Products | 22401569 | 7903228 | 9948882 | 1392835 |
| Services | 181146436 | 282394756 | 393737341 | 55122897 |
| Total operating revenues | 203548005 | 290297984 | 403686223 | 56515732 |
| COST OF REVENUES | (129296306) | (224851661) | (317809512) | (44493065) |
| GROSS PROFIT | 74251699 | 65446323 | 85876711 | 12022667 |
| OPERATING EXPENSES |  |  |  |  |
| Selling expenses | (6692316) | (3526803) | (2694728) | (377260) |
| General and administrative expenses | (65354201) | (23252517) | (19238109) | (2693319) |
| Research and development expenses | (78655572) | (174394747) | (56960830) | (7974468) |
| Allowance for expected credit losses | (857713) | (2492478) | (4378701) | (613014) |
| Change in fair value of warrant liability | 372961 | 62543 | - | - |
| Total operating expenses | (151186841) | (203604002) | (83272368) | (11658061) |
| (Loss)/Profit from operations | (76935142) | (138157679) | 2604343 | 364606 |
| OTHER INCOME (EXPENSE) |  |  |  |  |
| Finance income, net | 3363084 | 23250360 | 44374333 | 6212369 |
| Investment gain(loss) |  | 42298644 | (98351630) | (13769146) |
| (Loss) gain on disposal of subsidiaries | (15278949) | 5904530 | 311369 | 43591 |
| Other income, net | 3124103 | 5010560 | 887982 | 124317 |
| Total other income (expenses), net | (8791762) | 76464094 | (52777946) | (7388869) |
| Loss before income taxes | (85726904) | (61693585) | (50173603) | (7024263) |
| Income tax credit (expense) | 4138906 | (2538650) | - | - |
| Net loss | (81587998) | (64232235) | (50173603) | (7024263) |
| Less: Net (loss) gain attributable to non-controlling interests | (205725) | (909447) | 2540154 | 355619 |
| NET LOSS ATTRIBUTABLE TO MICROCLOUD HOLOGRAM INC. ORDINARY SHAREHOLDERS | (81382273) | (63322788) | (52713757) | (7379882) |
| OTHER COMPREHENSIVE INCOME |  |  |  |  |
| Foreign currency translation adjustment | 1817059 | 533030 | (33096020) | (4633415) |
| COMPREHENSIVE LOSS | (79770939) | (63699205) | (83269623) | (11657678) |
| Less: Comprehensive (loss) gain attributable to non-controlling interests | (205725) | (909447) | 2540154 | 355619 |
| COMPREHENSIVE LOSS ATTRIBUTABLE TO MICROCLOUD HOLOGRAM INC. | (79565214) | (62789758) | (85809777) | (12013297) |
| WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES\* |  |  |  |  |
| Basic and diluted | 6552 | 319503 | 13176414 | 13176414 |
| LOSS PER SHARE\* |  |  |  |  |
| Basic and diluted | (12420.98) | (198.19) | (4.00) | (0.56) |

---

\* The shares and per share information are presented on a retroactive basis to reflect the Share Consolidation and the reclassification of Class A and Class B ordinary shares (Note 17).

The accompanying notes are an integral part of these consolidated financial statements.

[**Table of Contents**](#toc)

**MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Class A** | **Class A** | **Class B** | **Class B** | | | | | | | |
|  | **ordinary shares** | **ordinary shares** | **ordinary shares** | **ordinary shares** | | | | | | | |
|  | **Shares\*** | **Amount** | **Shares\*** | **Amount** | **Additional**<br>**paid-in**<br>**capital** | <br>**Statutory**<br>**reserves** | <br>**Accumulated**<br>**deficit** | **Other**<br>**comprehensive**<br>**income** | **Non-**<br>**controlling**<br>**interests** | **Total**<br>**Shareholders'**<br>**Equity** | **Total**<br>**Shareholders'**<br>**Equity** |
|  |  | **RMB** |  | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **USD** |
| BALANCE, December 31, 2022 | 6351 | 36144 | - | - | 254138709 | 11110699 | (65500622) | (3182525) | 291921 | 196894326 | 28546995 |
| &nbsp;&nbsp;&nbsp;Net loss |  |  |  |  |  |  | (81382273) |  | (205725) | (81587998) | (11578184) |
| &nbsp;&nbsp;&nbsp;Statutory reserves |  |  |  |  |  | 26956 | (26956) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Issuance of common stock to employees in employee benefit plans | 1075 | 6174 |  |  | 32158261 |  |  |  |  | 32164435 | 4480600 |
| &nbsp;&nbsp;&nbsp;Disposal of subsidiaries |  |  |  |  |  | (8084879) |  |  |  | (8084879) | (1770955) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation | - | - | - | - | - | - | - | 1817059 | - | 1817059 | 257860 |
| BALANCE, December 31, 2023 | 7426 | 42318 | - | - | 286296970 | 3052776 | (146909851) | (1365466) | 86196 | 141202943 | 19936316 |
| &nbsp;&nbsp;&nbsp;Net loss |  |  |  |  |  |  | (63322788) |  | (909447) | (64232235) | (9019227) |
| &nbsp;&nbsp;&nbsp;Statutory reserves |  |  |  |  |  | 11670 | (11670) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Disposal of subsidiaries |  |  |  |  |  | (500000) | 500000 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Issuance of common stock to employees | 45 | 255 |  |  | 952300 |  |  |  |  | 952555 | 134280 |
| &nbsp;&nbsp;&nbsp;Shares converted from convertible promissory note | 1355112 | 7792930 |  |  | 1496739191 |  |  |  |  | 1504532121 | 209300000 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation | - | - | - | - | - | - | - | 533030 | - | 533030 | (137077) |
| BALANCE, December 31, 2024 | 1362583 | 7835503 | - | - | 1783988461 | 2564446 | (209744309) | (832436) | (823251) | 1582988414 | 220214292 |
| &nbsp;&nbsp;&nbsp;Net loss |  |  |  |  |  |  | (52713757) |  | 2540154 | (50173603) | (7024263) |
| &nbsp;&nbsp;&nbsp;Disposal of subsidiaries |  |  |  |  |  | (11670) | 11670 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Shares converted from convertible promissory note | 21149777 | 118884502 | 400000 | 2290752 | 1075126506 |  |  |  |  | 1196301760 | 170200000 |
| &nbsp;&nbsp;&nbsp;Increase in non-controlling interest from disposal of subsidiary |  |  |  |  |  |  | (313629) |  | 313629 |  |  |
| &nbsp;&nbsp;&nbsp;Increase in non-controlling interest from subsidiary equity issuance |  |  |  |  |  |  | (2882909) |  | 2882909 |  |  |
| &nbsp;&nbsp;&nbsp;Increase in non-controlling interest from acquisition of subsidiary |  |  |  |  |  |  | (349415) |  | 349415 |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation | - | - | - | - | - | - | - | (33096020) | (89005) | (33185025) | 164993 |
| BALANCE, December 31, 2025 | 22512360 | 126720005 | 400000 | 2290752 | 2859114967 | 2552776 | (265992349) | (33928456) | 5173851 | 2695931546 | 383555022 |

---

\* The shares and per share information are presented on a retroactive basis to reflect the Share Consolidation and the reclassification of Class A and Class B ordinary shares (Note 17).

The accompanying notes are an integral part of these consolidated financial statements.

[**Table of Contents**](#toc)

**MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **USD** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |
| Net loss | (81587998) | (64232235) | (50173603) | (7024263) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 6161834 | 818541 | 206650 | 28931 |
| &nbsp;&nbsp;&nbsp;Amortization of operating lease right-of-use assets | 1075834 | 1136310 | 1480382 | 207252 |
| &nbsp;&nbsp;&nbsp;Allowance (reversal) for expected credit losses | (274155) | 2492478 | 4378701 | 613014 |
| &nbsp;&nbsp;&nbsp;Deferred tax (benefits) expense | (4038047) | 2931528 |  |  |
| &nbsp;&nbsp;&nbsp;Allowance (reversal) for inventory reserve |  | 674467 | (175229) | (24532) |
| &nbsp;&nbsp;&nbsp;(Gain) loss from short-term investments |  | (42298644) | 98351630 | 13769146 |
| &nbsp;&nbsp;&nbsp;Loss on disposal fixed assets |  | 207719 |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of warrant liabilities | (372961) | (62200) |  |  |
| &nbsp;&nbsp;&nbsp;Stock compensation expense | 32164435 | 952556 |  |  |
| &nbsp;&nbsp;&nbsp;Impairment loss for intangible assets | 3854547 |  |  |  |
| &nbsp;&nbsp;&nbsp;Impairment loss for goodwill | 21155897 |  |  |  |
| &nbsp;&nbsp;&nbsp;Gain on disposal of subsidiaries | (1900379) |  | (311369) | (43591) |
| Change in operating assets and liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Notes receivable |  |  | (3638300) | (509359) |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 70783791 | (16121016) | (8190325) | (1146639) |
| &nbsp;&nbsp;&nbsp;Prepayment and other current assets | (8706708) | 5204527 | (321928) | (45070) |
| &nbsp;&nbsp;&nbsp;Inventories | 384038 | (66239) | 823169 | 115243 |
| &nbsp;&nbsp;&nbsp;Prepayments and deposits | 106536 | (9630) | 320098 | 44813 |
| &nbsp;&nbsp;&nbsp;Accounts payable | (59893927) | 12091524 | 12848156 | 1798731 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | (1049831) | (1136202) | (1652760) | (231385) |
| &nbsp;&nbsp;&nbsp;Contract liabilities | (1173186) | 719813 | 1583467 | 221684 |
| &nbsp;&nbsp;&nbsp;Other payables and accrued liabilities | (4451683) | (1444673) | 739355 | 103509 |
| &nbsp;&nbsp;&nbsp;Taxes payable | 23354 | (478011) | 103096 | 14433 |
| Net cash (used in) provided by operating activities | (27738609) | (98619387) | 56371190 | 7891917 |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |
| Purchases of property and equipment | (774615) | (11927) | (99894) | (13985) |
| Investments in unconsolidated entities | (600000) |  |  |  |
| Proceeds from acquisition of subsidiary, net of cash acquired |  |  | 1229304 | 172102 |
| Proceeds from disposal of subsidiary, net of cash disposed |  |  | (484202) | (67788) |
| Purchases of short-term investments |  | (682969884) | (5854990400) | (833000000) |
| Redemption of short-term investments |  |  | 5557748169 | 790710814 |
| Proceeds from sales and redemption from short-term investments | - | - | 11039379 | 1545504 |
| Net cash used in investing activities | (1374615) | (682981811) | (285557644) | (40653353) |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |
| Cash received from convertible promissory note |  | 1504532120 | 1241567232 | 176640000 |
| Repayments from related parties | 60280 |  |  |  |
| Repayments to related parties | (350000) |  |  |  |
| Repayments of bank loans | (7406104) | (7093896) | (5919000) | (828655) |
| Proceeds from bank loans | 9900000 | 9459000 | 4277557 | 598854 |
| Net cash provided by financing activities | 2204176 | 1506897224 | 1239925789 | 176410199 |
| EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS | 1826601 | 136872 | (18820901) | 162862 |
| CHANGE IN CASH AND CASH EQUIVALENTS | (25082447) | 725432898 | 991918434 | 143811625 |
| CASH AND CASH EQUIVALENTS, beginning of year | 151119985 | 126037538 | 851470436 | 118450620 |
| CASH AND CASH EQUIVALENTS, end of year | 126037538 | 851470436 | 1843388870 | 262262245 |
| SUPPLEMENTAL CASH FLOW INFORMATION: |  |  |  |  |
| Cash paid for income taxes | - | 1268 | 10742 | 1504 |
| Cash paid for interest | 26442 | 120249 | 155290 | 21740 |
| NON-CASH INVESTING AND FINANCING ACTIVITIES: |  |  |  |  |
| Convertible bonds exercise the right of conversion |  | (1504532120) | (1196301760) | (170200000) |
| Initial recognition of right-of-use assets and lease liabilities | 932174 | 497182 | 341371 | 47792 |

---

The accompanying notes are an integral part of these consolidated financial statements.

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**MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 1 — Nature of business and organization**

MicroCloud Hologram Inc. (formerly known as Golden Path Acquisition Corporation) ("Golden Path" or "the Company"), a Cayman Islands exempted company, is a leading holographic digitalization technology service provider in China, which is committed to providing first-class holographic technology services to the customers worldwide.

MC Hologram Inc. ("MC") is a holding company incorporated on November 10, 2020, under the laws of the Cayman Islands. The Company has no substantive operations other than holding all of the outstanding share capital of Quantum Edge HK Limited ("Mengyun HK"), which was established in Hong Kong on November 25, 2020. Mengyun HK is also a holding company holding all of the outstanding equity of Beijing Xihuiyun Technology Co., Ltd ("Beijing Xihuiyun") which was established on May 11, 2021 under the law of the People's Republic of China ("PRC" or "China").

<u>Reorganization</u>

On September 10, 2021, MC completed a reorganization of entities under common control of its then existing shareholders, who collectively owned majority of the equity interests of MC. MC, Mengyun HK and Beijing Xihuiyun were established as the holding companies of Shanghai Mengyun Holographic Technology Co., Ltd. ("Shanghai Mengyun"). All of these entities are under common control as the same group of shareholders held more than 50% of the voting ownership interest of each entity which results in the consolidation of Shanghai Mengyun and its subsidiaries which have been accounted for as a reorganization of entities under common control at carrying value.

After the reorganization, MC owns 100% equity interests of Mengyun HK, Mengyun HK owns 100% equity interests of Beijing Xihuiyun. Mengyun HK and Beijing Xihuiyun together own 100% equity interest of Shanghai Mengyun. The consolidation of the Company and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the consolidated financial statements.

The Company, through its wholly owned subsidiaries, are mainly engaged in holographic technology: (1) Holographic solutions, and (2) Holographic technology service. The majority of Company's business activities are carried out in Shenzhen, China.

As of December 31, 2025, there are 17 subsidiaries under the consolidation of MicroCloud Hologram Inc. ("MicroCloud").

In March 2016, Shanghai Mengyun established wholly owned subsidiaries Shenzhen Mengyun Holographic Technology Co., Ltd. ("Shenzhen Mengyun") and Mcloudvr Software Network Technology Co., Limited ("Mcloudvr Software"). Shenzhen Mengyun established Horgos Weiyi Software Technology Co., Ltd. ("Horgos Weiyi") on September 6, 2016 and Shenzhen Yunao Hongxiang Technology Co., Ltd. ("Shenzhen Yunao") on December 3, 2021. Shenzhen Mengyun and subsidiaries engaged in holographic integrated entertainment solutions.

On June 26, 2017, Shanghai Mengyun acquired Shenzhen Qianhaiyoushi Technology Co., Ltd. ("Qianhai Youshi") and Qianhai Youshi's subsidiary Kashgar Youshi Information Technology Co., Ltd. ("Kashgar Youshi"). Qianhai Youshi established wholly owned subsidiaries Horgos Youshi Information Technology Co., Ltd. ("Horgos Youshi") in November 2020 and acquired Shenzhen Yijia Network Technology Co., Ltd. ("Yijia Network") in July 2020. Qianhai Youshi and subsidiaries are mainly engaged in holographic content sales and SDK software services.

On July 1, 2020, Shenzhen Mengyun acquired Shenzhen Bowei BroadVision Technology Co., Ltd. ("Shenzhen Bowei"), Shenzhen Bowei established wholly owned subsidiaries Horgos BroadVision Technology Co., Ltd. ("Horgos Bowei") and Broadvision Intelligence (Hong Kong), Ltd. ("Broadvision HK") in November 2020. Shenzhen Bowei and subsidiaries are mainly engaged in holographic printed circuit board assembly ("PCBA") solutions.

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On October 1, 2020, Shenzhen Mengyun acquired Shenzhen Tianyuemeng Technology Co., Ltd. ("Shenzhen Tianyuemeng"). Shenzhen Tianyuemeng established Horgos Tianyuemeng Technology Co., Ltd. ("Horgos Tianyuemeng") in October 2020 and Horgos Tianyuemeng Technology Co., Ltd.-Shenzhen Branch ("Horgos Tianyuemeng-SZ") in March 2021, which was later dissolved on December 10, 2021. Shenzhen Tianyuemeng and subsidiary engaged in holographic advertising services and SDK software services.

On October 5, 2020, Shenzhen Mengyun acquired Mcloudvr Software Network Technology HK ("Mcloudvr HK") for no consideration, which engaged in holographic integrated entertainment solutions, from the majority shareholder of Shanghai Mengyun, as of the acquisition date, there is no operation for Mcloudvr HK. Mcloudvr HK and another two investors established Ocean Cloud Technology Co., Limited. ("Ocean HK") in November 2021 and Ocean HK established Shenzhen Haiyun Xinsheng Technology Co., Ltd. ("Shenzhen Haiyun") in December 2021. On January 18, 2022, Shenzhen Haiyun acquired Shenzhen Tata Mutual Entertainment Information Technology Co., Ltd. ("Shenzhen Tata") for RMB 4 (USD 0.62) from four third parties. Shenzhen Tata further established Horgos Tata Mutual Entertainment Information Technology Co., Ltd. ("Horgos Tata") on March 22, 2022. On June 30, 2022, Shenzhen Haiyun transferred Shenzhen Tata and its subsidiary to a third party for RMB 1 (USD 0.15). On January 29, 2022, Shenzhen Haiyun established Shenzhen Youmi Technology Co., Ltd. ("Shenzhen Youmi") under the law of PRC. Shenzhen Youmi further established Horgos Youmi Technology Co., Ltd. ("Horgos Youmi") on March 17, 2022. On February 18, 2022, Shenzhen Haiyun established Shenzhen Yushian Technology Co., Ltd. ("Shenzhen Yushian") under the law of PRC. Shenzhen Yushian further established Horgos Yushian Technology Co., Ltd. ("Horgos Yushian") on March 24, 2022.

On June 24, 2021 Shanghai Mengyun established Quanyou Vision Technology Co., Ltd ("Shanghai Quanyou"), which primarily engages in software development and was later dissolved on September 1, 2021.

On July 31, 2022, Shenzhen Haiyun acquired Beijing Weixiaohai Technology Co., Ltd. ("Beijing Weixiaohai"), which engaged in advertising service. On October 1, 2022, Shenzhen Haiyun transferred Beijing Weixiaohai to a third party for RMB 1.

On May 31, 2023, Shenzhen Haiyun transferred Shenzhen Youmi and Horgos Youmi to a third party for RMB 10.

On September 30, 2023, Shanghai Mengyun transferred Qianhai Youshi, Yijia Network, Horgos Youshi, Kashgar Youshi to a third party for RMB 7,000,000.

On September 30, 2023, Shenzhen Mengyun transferred Shenzhen Tianyuemeng and Horgos Tianyuemeng to a third party for RMB 3,000,000.

On February 26, 2024, Shenzhen Haiyun established Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") under the law of PRC. On March 1, 2024, Haiyun Xingchen acquired Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue"), which engaged in advertising service.

In May 2024, Horgos Weiyi Software Technology Co., Ltd and Horgos BroadVision Technology Co., Ltd. dissolved.

On March 18, 2025, MC established a fully owned subsidiary HaiYun Group Investment Ltd. ("HaiYun Group") in the British Virgin Islands.

On May 7, 2025, HaiYun Group established a fully owned subsidiary HaiCloud Technology Inc. ("HaiCloud Inc") in Cayman Islands. On August 11, 2025, HaiYun Group owned 65% equity of HaiCloud Inc as the result of the equity structure adjustment of HaiCloud Inc.

On May 27, 2025, HaiCloud Inc established a fully owned subsidiary HaiCloud Technology Limited. ("HaiCloud Ltd") in Hong Kong.

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On June 27, 2025, HaiCloud Ltd established a wholly-owned subsidiary ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang").

On July 3, 2025, Haiyun Xingchen acquired 100% equity of Shanghai Kuosou Technology Ltd ("Shanghai Kuosou").

On September 30, 2025, we disposed of all our equity interests in Yichang Ji Yue and BeiJing Ji Yue.

The accompanying consolidated financial statements reflect the activities of MicroCloud and each of the following entities as of December 31, 2025:

The consolidated financial statements reflect the activities of the Company and each of the following entities:

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| | |
|:---|:---|
| **Name** | **Ownership** |
| MC Hologram Inc ("MC") – A Cayman Islands company | 100% owned by MicroCloud |
| – Formed on November 10, 2020 |  |
| – Registered capital of USD 50,000 |  |
| – Primarily engages in holographic integrated solutions. |  |
| Quantum Edge HK Limited ("Mengyun HK") – A Hong Kong company | 100% owned by MC |
| Quantum Edge HK Limited ("Mengyun HK") – Formed on November 25, 2020 | 100% owned by MC |
| Quantum Edge HK Limited ("Mengyun HK") – Registered capital of HK 10,000 | 100% owned by MC |
| Quantum Edge HK Limited ("Mengyun HK") – A holding company | 100% owned by MC |
| Beijing Xihuiyun Technology Co., Ltd. ("Beijing Xihuiyun") – A PRC limited liability company | 100% owned by Mengyun HK |
| Beijing Xihuiyun Technology Co., Ltd. ("Beijing Xihuiyun") – Formed on May 11, 2021 | 100% owned by Mengyun HK |
| Beijing Xihuiyun Technology Co., Ltd. ("Beijing Xihuiyun") – Registered capital of USD 30,000,000 | 100% owned by Mengyun HK |
| Beijing Xihuiyun Technology Co., Ltd. ("Beijing Xihuiyun") – A holding company | 100% owned by Mengyun HK |

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| | |
|:---|:---|
| Shanghai Mengyun Holographic Technology Co., Ltd. ("Shanghai Mengyun") – A PRC limited liability company | 81.63% owned by Beijing Xihuiyun and 18.37% owned by Mengyun HK |
| Shanghai Mengyun Holographic Technology Co., Ltd. ("Shanghai Mengyun") – Formed on March 24, 2016 | 81.63% owned by Beijing Xihuiyun and 18.37% owned by Mengyun HK |
| Shanghai Mengyun Holographic Technology Co., Ltd. ("Shanghai Mengyun") – Registered capital of RMB 27,000,000 | 81.63% owned by Beijing Xihuiyun and 18.37% owned by Mengyun HK |
| Shanghai Mengyun Holographic Technology Co., Ltd. ("Shanghai Mengyun") – Primarily engages in holographic integrated solutions. | 81.63% owned by Beijing Xihuiyun and 18.37% owned by Mengyun HK |
| Shenzhen Mengyun Holographic Technology Co., Ltd. ("Shenzhen Mengyun") – A PRC limited liability company | 100% owned by Shanghai Mengyun |
| Shenzhen Mengyun Holographic Technology Co., Ltd. ("Shenzhen Mengyun") – Formed on March 15, 2016 | 100% owned by Shanghai Mengyun |
| Shenzhen Mengyun Holographic Technology Co., Ltd. ("Shenzhen Mengyun") – Registered capital of RMB 10,000,000 | 100% owned by Shanghai Mengyun |
| Shenzhen Mengyun Holographic Technology Co., Ltd. ("Shenzhen Mengyun") – Primarily engages in holographic integrated solutions. | 100% owned by Shanghai Mengyun |
| Shenzhen BroadVision Technology Co., Ltd. ("Shenzhen Bowei") – A PRC limited liability company | 100% owned by Shenzhen Mengyun |
| Shenzhen BroadVision Technology Co., Ltd. ("Shenzhen Bowei") – Formed on April 12, 2016 | 100% owned by Shenzhen Mengyun |
| Shenzhen BroadVision Technology Co., Ltd. ("Shenzhen Bowei") – Registered capital of RMB 10,000,000 | 100% owned by Shenzhen Mengyun |
| Shenzhen BroadVision Technology Co., Ltd. ("Shenzhen Bowei") – Primarily engages in holographic PCBA solutions. | 100% owned by Shenzhen Mengyun |

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| | |
|:---|:---|
| **Name** | **Ownership** |
| Mcloudvr Software Network Technology HK Co., Limited ("Mcloudvr HK") – A Hong Kong company | 100% owned by Shenzhen Mengyun |
| Mcloudvr Software Network Technology HK Co., Limited ("Mcloudvr HK") – Formed on February 2, 2016 | 100% owned by Shenzhen Mengyun |
| Mcloudvr Software Network Technology HK Co., Limited ("Mcloudvr HK") – Registered capital of HKD 100,000 | 100% owned by Shenzhen Mengyun |
| Mcloudvr Software Network Technology HK Co., Limited ("Mcloudvr HK") – Primarily engages in holographic integrated solutions. | 100% owned by Shenzhen Mengyun |

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| | |
|:---|:---|
| Broadvision Intelligence (Hong Kong), Ltd. ("Broadvision HK") – A Hong Kong company | 100% owned by Shenzhen Bowei |
| Broadvision Intelligence (Hong Kong), Ltd. ("Broadvision HK") – Formed on November 5, 2020 | 100% owned by Shenzhen Bowei |
| Broadvision Intelligence (Hong Kong), Ltd. ("Broadvision HK") – Registered capital of HKD 10,000 | 100% owned by Shenzhen Bowei |
| Broadvision Intelligence (Hong Kong), Ltd. ("Broadvision HK") – No operation | 100% owned by Shenzhen Bowei |
| Ocean Cloud Technology Co., Limited. ("Ocean HK") – A Hong Kong company | 56% owned by Mcloudvr HK |
| Ocean Cloud Technology Co., Limited. ("Ocean HK") – Formed on November 4, 2021 | 56% owned by Mcloudvr HK |
| Ocean Cloud Technology Co., Limited. ("Ocean HK") – Registered capital of HKD 10,000 | 56% owned by Mcloudvr HK |
| Ocean Cloud Technology Co., Limited. ("Ocean HK") – No operation | 56% owned by Mcloudvr HK |
| Shenzhen Haiyun Xinsheng Technology Co., Ltd. ("Shenzhen Haiyun") – A PRC limited liability company | 100% owned by Ocean HK |
| Shenzhen Haiyun Xinsheng Technology Co., Ltd. ("Shenzhen Haiyun") – Formed on December 3, 2021 | 100% owned by Ocean HK |
| Shenzhen Haiyun Xinsheng Technology Co., Ltd. ("Shenzhen Haiyun") – Registered capital of RMB 300,000 | 100% owned by Ocean HK |
| Shenzhen Haiyun Xinsheng Technology Co., Ltd. ("Shenzhen Haiyun") – No operation | 100% owned by Ocean HK |
| Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") – A PRC limited liability company | 100% owned by Shenzhen Haiyun |
| Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") – Formed on February 26, 2024 | 100% owned by Shenzhen Haiyun |
| Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") – Registered capital of RMB 300,000 | 100% owned by Shenzhen Haiyun |
| Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") – No operation | 100% owned by Shenzhen Haiyun |
| Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue") – A PRC limited liability company | 100% owned by Haiyun Xingchen |
| Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue") – Formed on January 18, 2021 | 100% owned by Haiyun Xingchen |
| Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue") – Registered capital of RMB 1,000,000 | 100% owned by Haiyun Xingchen |
| Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue") – Advertising service<br> Disposed on September 30, 2025 | 100% owned by Haiyun Xingchen |

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| | |
|:---|:---|
| BeiJing Ji Yue Technology Ltd. ("BeiJing Ji Yue") – A PRC limited liability company | 100% owned by Yichang Ji Yue |
| BeiJing Ji Yue Technology Ltd. ("BeiJing Ji Yue") – Formed on July 24, 2018 | 100% owned by Yichang Ji Yue |
| BeiJing Ji Yue Technology Ltd. ("BeiJing Ji Yue") – Registered capital of RMB 500,000 | 100% owned by Yichang Ji Yue |
| BeiJing Ji Yue Technology Ltd. ("BeiJing Ji Yue") – Advertising service<br> Disposed on September 30, 2025 | 100% owned by Yichang Ji Yue |
| Shenzhen Yushian Technology Co., Ltd. ("Shenzhen Yushian") – A PRC limited liability company | 100% owned by Shenzhen Haiyun |
| Shenzhen Yushian Technology Co., Ltd. ("Shenzhen Yushian") – Formed on February 18, 2022 | 100% owned by Shenzhen Haiyun |
| Shenzhen Yushian Technology Co., Ltd. ("Shenzhen Yushian") – Registered capital of RMB 1,000,000 | 100% owned by Shenzhen Haiyun |
| Shenzhen Yushian Technology Co., Ltd. ("Shenzhen Yushian") – Advertising service | 100% owned by Shenzhen Haiyun |
| HaiYun Group Investment Ltd. ("HaiYun Group") – A BVI Business company | 100% owned by MC |
| HaiYun Group Investment Ltd. ("HaiYun Group") – Formed on March 18, 2025 | 100% owned by MC |
| – No operation |  |
| HaiCloud Technology Inc. ("HaiCloud Inc") – A Cayman Islands company | 65% owned by HaiYun Group |
| HaiCloud Technology Inc. ("HaiCloud Inc") – Formed on May 7, 2025 | 65% owned by HaiYun Group |
| – Primarily engages in holographic integrated solutions. |  |

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| | |
|:---|:---|
| **Name** | **Ownership** |
| HaiCloud Technology Limited. ("HaiCloud Ltd") – A Hong Kong company | 100% owned by HaiCloud Inc |
| HaiCloud Technology Limited. ("HaiCloud Ltd") – Formed on May 27, 2025 | 100% owned by HaiCloud Inc |
| HaiCloud Technology Limited. ("HaiCloud Ltd") – Registered capital of HKD 1,000,000 | 100% owned by HaiCloud Inc |
| HaiCloud Technology Limited. ("HaiCloud Ltd") – No operation |  |
| ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang") – A PRC limited liability company | 100% owned by HaiCloud Ltd |
| ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang") – Formed on June 27, 2025 | 100% owned by HaiCloud Ltd |
| ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang") – Registered capital of RMB 1,000,000 | 100% owned by HaiCloud Ltd |
| ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang") – No operation |  |
| Shanghai Kuosou Technology Ltd. ("Shanghai Kuosou") – A PRC limited liability company | 100% owned by Haiyun Xingchen |
| Shanghai Kuosou Technology Ltd. ("Shanghai Kuosou") – Formed on February 11, 2018 | 100% owned by Haiyun Xingchen |
| Shanghai Kuosou Technology Ltd. ("Shanghai Kuosou") – Registered capital of RMB 1,000,000 | 100% owned by Haiyun Xingchen |
| Shanghai Kuosou Technology Ltd. ("Shanghai Kuosou") – Primarily engages in Advertising service. | 100% owned by Haiyun Xingchen |

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**Note 2 — Summary of significant accounting policies**

<u>Liquidity</u>

In assessing the Company's liquidity, the Company monitors and analyses its cash on-hand and its operating and capital expenditure commitments. The Company's liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Cash flow from operations and proceeds from convertible bonds have been utilized to finance the working capital requirements of the Company. As of December 31, 2024 and December 31, 2025, the Company had cash of RMB 851,470,436. and RMB 1,843,388,870. The Company's working capital was RMB 1,580,172,173 and RMB 2,693,653,812 as of December 31, 2024 and December 31, 2025. The Company believes its revenues and operations will continue to grow and the current working capital is sufficient to support its operations and debt obligations as they become due one year through report date.

<u>Basis of presentation</u>

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC"), regarding financial reporting, and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operation results.

<u>Principles of consolidation</u>

The consolidated financial statements include the financial statements of the Company and its subsidiaries, which include the wholly-foreign owned enterprise ("WFOE") over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.

<u>Use of estimates and assumptions</u>

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company's consolidated financial statements include the useful lives of property and equipment, impairment of long-lived assets, allowance for expected credit losses, revenue recognition, right-of-use assets and lease liabilities, valuation allowance for deferred tax assets and uncertain tax position, purchase price allocations for business combination and accounting for Convertible Instruments under ASC 815. These estimates include, among others, assessments of recoverability of assets and valuation allowances, which are subject to significant judgment and may be affected by future events and conditions. Actual results could differ from these estimates.

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<u>Foreign currency translation and other comprehensive income (loss)</u>

The reporting currency of the Company was US Dollar ("USD") for the year ended December 31, 2022. On June 30, 2023, the Company determined that it would qualify as a foreign private issuer, as that term is defined in Rule 3b-4(c) promulgated under the Securities Exchange Act of 1934, beginning as of July 1, 2023. The Company therefore changed its reporting currency from USD to Chinese Renminbi ("RMB") as of June 30, 2023.

To enhance comparability of its consolidated financial statement, the Company presented financial information in both RMB and USD for the year ended December 31, 2025 as additional information to the reader.

Pursuant to Accounting Standards Codification ("ASC") 830 "Foreign Currency Matters", the Company determined that its functional currency is RMB. MicroCloud and its subsidiaries, MC, Mengyun HK, Mcloudvr HK, Ocean HK, Broadvision HK, HaiYun Group, HaiCloud Inc and HaiCloud Ltd, maintain their book and records in USD, hence their financial information were translated into RMB in preparation of the consolidated financial statements. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the period.

Translation adjustments included in accumulated other comprehensive loss amounted to RMB 832,436 and RMB 33,928,456 as of December 31, 2024 and 2025, respectively. The balance sheet amounts, with the exception of shareholders' equity at December 31, 2024 and 2025 were translated at USD 1.00 to RMB 7.1884 and to RMB 7.0288, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2023, 2024 and 2025 were USD 1.00 to RMB 7.0467, RMB 7.1217 and RMB 7.1429, respectively. The shareholders' equity accounts were stated at their historical rate. Cash flows are also translated at average translation rates for the period, therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

<u>Cash and cash equivalents</u>

Cash and cash equivalents primarily consist of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use. Cash and cash equivalents also consist of funds earned from the Company's operating revenues which were held at third party platform fund accounts which are unrestricted as to immediate use or withdraw. The Company maintains most of its bank accounts in the PRC.

<u>Short-term investments</u>

Short-term investments consist primarily of structured financial products issued by international financial institutions and equity securities traded in active markets. The structured financial products are generally Phoenix autocallable notes linked to the performance of certain underlying equity securities. These instruments are typically settled or redeemable within a relatively short period of time.

Short-term investments are measured at fair value. Changes in fair value are recognized in investment gain(loss), net in the consolidated statements of income and comprehensive income.

<u>Notes receivable</u>

Notes receivable represents bank acceptance bills received from customers and are generally due within one year. Notes receivable is recorded at their amortized cost, which approximates fair value due to their short-term nature.

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Bill discounting arrangements

The Company may enter into bill discounting arrangements with banks to obtain financing. If the bank retains the right of recourse in the event of default, the transaction is accounted for as a secured borrowing. Accordingly, the notes receivable is not derecognized, and the proceeds received are recognized as short-term borrowings.

If the Company transfers notes receivable without recourse and meets the criteria for derecognition under ASC 860, the notes receivable is derecognized upon transfer.

<u>Allowance for expected credit losses</u>

Notes receivable is subject to the Company's expected credit loss model. Given the short-term nature of these instruments and the high credit quality of the issuing banks, no material allowance for expected credit losses has been recognized.

<u>Accounts receivable, net</u>

Accounts receivable includes trade accounts due from customers. Accounts are considered overdue after 90 days.

Accounts receivable, net are recognized in the period when the Company has provided services to its customers and when its right to consideration is unconditional. On January 1, 2023, the Company adopted ASU 2016-13, "Financial Instruments — expected credit losses (Accounting Standards Codification ("ASC" Topic 326): Measurement on expected credit losses on Financial Instruments", including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, "ASC 326"). ASC 326 introduces an approach based on expected losses to estimate the allowance for expected credit losses, which replaces the previous incurred loss impairment model. The adoption of this ASU does not have a material effect on the Company's consolidated financial statements.

The Company evaluates its accounts receivable for expected credit losses on a regular basis. The Company maintains an estimated allowance for expected credit losses to reduce its accounts receivable to the amount that it believes will be collected. The Company's estimation of allowance for expected credit losses considers factors such as historical credit loss experience, age of receivable balances, current market conditions, reasonable and supportable forecasts of future economic conditions, as well as an assessment of receivables due from specific identifiable counterparties to determine whether these receivables are considered at risk or uncollectible. The Company adjusts the allowance percentage periodically when there are significant differences between estimated bad debts and actual bad debts. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the Company also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted.

The allowance for expected credit losses as of December 31, 2024, and 2025 was RMB 4,030,967 and RMB 5,513,270, respectively.

<u>Inventories</u>

Inventories are comprised of finished goods and are stated at the lower of cost or net realizable value using the weighted average method. Management reviews inventories for obsolescence and cost in excess of net realizable value periodically when appropriate and records a reserve against the inventory when the carrying value exceeds net realizable value. As of December 31, 2024, and 2025, the Company has allowances of RMB 850,926 and RMB 675,697, respectively.

<u>Prepayments and other current assets</u>

Prepayments and other current assets are mainly payments made to vendors or service providers for purchasing goods or services that have not been received or provided, deposits for rent and utilities and employee advances. This amount is refundable and bears no interest. Prepayment and deposit are classified as either current or non-current based on the terms of the respective agreements. These advances are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. As of December 31, 2025, management has assessed that the prepayments are recoverable, as the underlying contracts remain valid and the related goods or services are expected to be received.

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

Property and equipment are stated at cost less accumulated depreciation and impairment, if applicable. Depreciation is computed using the straight-line method over the estimated useful lives of the assets with 5% residual value. The estimated useful lives are as follows:

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| | |
|:---|:---|
|  | **Useful Life** |
| Office equipment | 3 years |
| Mechanical equipment | 3 – 5 years |
| Electronic equipment | 3 – 5 years |
| Vehicles | 3 – 5 years |

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Management reviews the estimated useful lives and residual values of property and equipment at least annually and revises them as necessary to reflect changes in expected usage, technological developments, and physical condition.

<u>Cost method investments</u>

The Company accounts for investments with less than 20% of the voting shares and does not have the ability to exercise significant influence over operating and financial policies of the investee using the cost method. The Company records cost method investments at the historical cost in its consolidated financial statements and subsequently records any dividends received from the net accumulated earnings of the investee as income. Dividends received in excess of earnings are considered a return of investment and are recorded as reduction in the cost of the investments.

Cost method investments are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investments is less than its carrying value. An impairment is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investments; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

<u>Impairment for long-lived assets</u>

Long-lived assets, including property and equipment with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. No impairment losses were recognized during the years ended 31 December 2024 and 2025.

<u>Convertible bonds</u>

Convertible bonds are debt or equity instruments that either require or permit the investor to convert the instrument into equity securities of the issuer. The Company accounts for its convertible notes in accordance with ASC 470-20 Debt with Conversion and Other Options, whereby the convertible instrument is initially accounted for as a single unit of account, unless it contains a derivative that must be bifurcated from the host contract in accordance with ASC 815-15 Derivatives and hedging – Embedded Derivatives or the substantial premium model in ASC 470-20 Debt – Debt with Conversion and Other Options applies.

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<u>Business combination</u>

The purchase price of an acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. Transaction costs associated with business combinations are expensed as incurred, and are included in general and administrative expenses in the Company's consolidated statements of operations. The results of operations of the acquired business are included in the Company's operating results from the date of acquisition.

<u>Fair value measurement</u>

The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.

The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow:

● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

<u>Warrants liabilities</u>

The Company accounts for warrants (Public Warrants and Private Warrants) as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in Financial Accounting Standards Board ("FASB") ASC 480 and ASC 815, "Derivatives and Hedging" ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own ordinary shares and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. The Company has elected to account for its Public Warrants as equity and the Private Warrants as liabilities.

The Company has classified its Public Warrants as equity instruments and its Private Warrants as liability-classified instruments. The fair value of the Private Warrants is estimated using a Black-Scholes option pricing model and is classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs.

The Company reassesses the classification of its warrants at each reporting date and will reclassify warrants if facts and circumstances change.

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<u>Revenue recognition</u>

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to receive.

The Company's revenue is derived from holographic solutions and related services, including product sales, software development, licensing, advertising, and other services.

For arrangements that include variable consideration, such as cost-per-action, cost-per-connection, or revenue-sharing arrangements, the Company estimates the amount of consideration to which it expects to be entitled and applies the constraint such that revenue is recognized only to the extent that it is probable that a significant reversal will not occur.

Revenue is recognized when the following 5-step revenue recognition criteria are met:

1) Identify the contract with a customer

2) Identify the performance obligations in the contract

3) Determine the transaction price

4) Allocate the transaction price

5) Recognize revenue when or as the entity satisfies a performance obligation

The Company's revenue recognition policies effective upon the adoption of ASC 606 are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(i)* *Holographic Solutions* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*a.* *Holographic Technology LiDAR Products* 

The Company generates LiDAR revenue through selling integrated circuit board embedded with holographic software. The Company considers the hardware and embedded software as a single performance obligation as they are highly integrated. The Company typically enters into written contracts with its customer where the rights of the parties, including payment terms, are identified and sales prices to the customers are fixed with no separate sales rebate, discount, or other incentive and no right of return exists on sales of inventory. The Company's performance obligation is to deliver products according to contract specifications. The Company recognizes product revenue at a point in time when the control of products is transferred to customers. The Company considers the hardware and embedded software to be a single performance obligation as they are highly integrated and not separately identifiable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*b.* *Holographic Technology Intelligence Vision software and Technology Development Service* 

The Company generates revenue by developing ADAS software and technology, which are generally on a fixed-priced basis. The Company has no alternative use for the customized software and the Company has an enforceable right to payment for performance completed to date. Revenues from ADAS software development contracts are recognized over time during the contract period based on the Company's measurement of progress towards completion using input method, which is usually measured by comparing labor hours expended to date to total estimated labor hours needed to satisfy the performance obligation as the criteria in ASC 606-10-25-27 are met. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period. The Company has a long history of developing various ADAS software resulting in its ability to reasonably estimate the progress toward completion on each fixed price customized contracts.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*c.* *Holographic Technology Licensing and Content Products* 

The Company provides holographic content products and holographic software for music videos, shows, and commercials on a fixed-price basis. Content and software are generally pre-developed functional IP, and customer-specific arrangements typically involve selection, compilation, formatting, or delivery rather than substantive modification. Revenue is recognized at a point in time when control transfers.

The Company evaluates whether such arrangements represent a right to use intellectual property or a right to access intellectual property. Based on the nature of these arrangements, they are considered functional intellectual property and revenue is recognized at a point in time when control is transferred to the customer. No post-contract support or upgrades are provided.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*d.* *Holographic Technology Hardware Sales* 

The Company is a distributer of holographic hardware and generates revenue through resale. In accordance with ASC 606, revenue recognition: principal agent consideration, an entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. Otherwise, the entity is an agent in the transaction. The Company evaluates three indicators of control in accordance with ASU 2016-08: 1) For hardware sales, the Company is the most visible entity to customers and assumes fulfilment risk and risks related to the acceptability of products, including addressing customer complaints directly and handling of product returns or refunds directly. 2) The Company assumes inventory risk after taking the title from vendors and is responsible for product damage during shipment period prior to acceptance of its customers and is also responsible for product return if the customer is not satisfied with the products. 3) The Company determines the resale price of hardware products. 4) The Company is the party that directs the use of the inventory and can prevent the vendor from transferring the product to a customer or to redirect the products to a different customer. After evaluating the above scenario, the Company considers itself the principal of these arrangements and records hardware sales revenue on a gross basis.

Hardware sales contracts are on a fixed price basis with no separate sales rebate, discount, or other incentive. Revenue is recognized at a point in time when the Company has delivered products and the acceptance by its customer with no future obligation. The Company generally permits returns of products due to deficits; however, returns are historically insignificant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(ii)* *Holographic Technology Service* 

Holographic advertisements are the use of holographic technology integrated into advertisements on media platforms and offline display. The Company enters advertising contracts with advertisers to promote merchandises and services where the price, which is generally based on cost per action ("CPA"), is fixed and determinable. The Company provides its advertising service to channel providers where the amounts cost per action are also fixed and determinable. Revenue is recognized at a point of time when agreed actions are performed. The Company considers itself as provider of the services under the CPA model as it has the control of the services at any time before it is transferred to the customers which is evidenced by 1) having a right to a service to be performed by the other party, which gives the Company the ability to direct that party to provide the service to the customers on the Company's behalf. 2) having discretion in setting the price for the service 3) billing monthly advertising fee directly to customers by settling valid CPA data with customers. Therefore, the Company acts as the principal of these arrangements and reports revenue earned and costs incurred related to these transactions on a gross basis. The Company also provides advertisement services through influencers on social networks. The Company charges advertisers a fixed rate, which is generally a fixed percentage of total value of merchandise sold over a specific period ("GMV"). Revenue is recognized at a point of time when merchandise is sold through social network.

The Company's SDK service is a collection of software development tools in one installable package that enables customers (usually software developers) to add holographic functionality and run holographic advertisements in their APPs or software. SDK contracts are primarily on a fixed rate basis, or cost per SDK Connection. Revenue is recognized when the performance obligation is satisfied, which occurs when a successful SDK connection is completed. Service fees are generally billed monthly based on per-connection basis. For arrangements involving usage-based or other variable consideration, the Company applies the variable consideration constraint and recognizes revenue only to the extent that it is probable that a significant reversal will not occur.

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<u>Contract balances</u>

Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing when the Company has satisfied its performance obligation and has unconditional right to the payment. Contract assets represent the Company's right to consideration in exchange for goods or services that the Company has transferred to a customer. The Company has no contract assets as of December 31, 2024 and 2025.

Contract liabilities represent cash received for services in advance of revenue recognition which is recognized as revenue when all the Company's revenue recognition criteria are met. The Company's contract liabilities amounted to RMB 2,950,665 and RMB 5,483,268 as of December 31, 2024 and 2025, respectively. During the year ended December 31, 2025, the Company recognized revenue of approximately RMB 2,499,072 that was included in the contract liability balance at the beginning of the year. The company expects to recognize the remaining contract liabilities as revenue over the next 12 months.

The Company applies the practical expedient under ASC 606 and does not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less.

<u>Cost of revenues</u>

For holographic solutions, the cost of revenue consists primarily of the costs of hardware products sold and outsourced content providers, third party software development costs, and compensation expenses for the Company's professionals.

For holographic technology service, the cost of revenue consists primarily of costs paid to channel distributors for advertising services and compensation expenses for the Company's professionals.

<u>Research and development</u>

Research and development expenses include salaries and other compensation-related expenses to the Company's research and product development personnel, outsourced subcontractors, as well as office rental, depreciation and related expenses for the Company's research and product development team.

<u>Value added taxes ("VAT")</u>

Revenue represents the invoiced value of service net of VAT. VAT is based on the gross sales price. The VAT rate is 6% on services and 13% on goods in China. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable. All of the VAT returns filed by the Company's subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing.

<u>Income taxes</u>

The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

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An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. No penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.

<u>Leases</u>

Effective January 1, 2022, the Company adopted ASU 2016-02, "Leases" (Topic 842), and elected the practical expedients that does not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component.

The Company determines if a contract contains a lease at inception. US GAAP requires that the Company's leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All of the Company's real estate leases are classified as operating leases.

When determining the lease payments for an operating lease transitioning to ASC 842 using the effective date, it's based on future payments at the transition date, based on the present value of lease payments over the remaining lease term. Since the implicit rate for the Company's leases is not readily determinable, the Company use its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.

Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.

The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.

<u>Share-based compensation</u>

The Company records share-based compensation expense for employees by allocations from MicroCloud using a proportional cost allocation method by considering the headcount and its estimates of each employee's time attributable to the Company. The share-based compensation expenses are valued at fair value on the grant date when the reward is approved. Share-based compensation is recognized net of forfeitures, as amortized expense on a straight-line basis over the requisite service period, which is the vesting period.

The Company accounts for share-based compensation expenses using an estimated forfeiture rate at the time of grant and revising, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share-based compensation expenses are recorded net of estimated forfeitures such that expenses are recorded only for those share-based awards that are expected to vest.

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<u>Employee benefit</u>

The full-time employees of the Company are entitled to staff welfare benefits including medical care, housing fund, pension benefits, unemployment insurance and other welfare, which are government mandated defined contribution plans. The Company is required to accrue for these benefits based on certain percentages of the employees' respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued.

<u>Non-controlling interests</u>

Our non-controlling interests represent the minority shareholders' ownership interests related to our subsidiaries, including 44% for Ocean HK, 35% for HaiCloud Inc and their subsidiaries. The non-controlling interests are presented in the consolidated balance sheets separately from equity attributable to our shareholders. Non-controlling interests in the results of us are presented on the consolidated statement of income as allocations of the total income or loss for the year ended December 31, 2025 between non-controlling interest holders and our shareholders.

Non-controlling interests consist of the following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31,<br>2024** | **December 31,<br>2025** | **December 31,<br>2025** |
|  | **RMB** | **RMB** | **USD** |
| Ocean HK | (823251) | (2001657) | (284779) |
| HaiCloud Inc | - | 7175508 | 1020872 |
| Total non-controlling interests | (823251) | 5173851 | 736093 |

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<u>Loss per share</u>

The Company computes loss per share in accordance with ASC 260, "Loss per Share". ASC 260 requires companies to present basic and diluted loss per share. Basic loss per share is measured as net income divided by the weighted average ordinary share outstanding for the period. Diluted loss per share presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted loss per share.

<u>Statutory reserves</u>

Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable "statutory surplus reserve fund". Subject to certain cumulative limits, the "statutory surplus reserve fund" requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC ("PRC GAAP") at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the "reserve fund". For foreign invested enterprises, the annual appropriation for the "reserve fund" cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss.

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<u>Segment reporting</u>

In November 2023, the FASB issued ASU 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses enabling investors to better understand an entity's overall performance and assess potential future cash flows. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The standard will be effective for annual reporting periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the ASU during the year ended December 31, 2024. The adoption did not have a material impact on our consolidated financial statements.

The CODM (Guohui Kang) primarily reviews consolidated financial information and does not regularly evaluate discrete financial information for each operating segment. Accordingly, the Company operates as a single reportable segment.

The Company's revenues are primarily generated in the People's Republic of China ("PRC"). Information about geographic areas, including revenues and long-lived assets, is disclosed separately in the notes to the consolidated financial statements The Company has determined two operating segments: (1) Holographic solutions, and (2) Holographic technology service. These segments are determined based on the nature of products and services provided to customers and the manner in which management internally reviews financial information.

<u>Recently issued accounting pronouncements</u>

In December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure. This standard requires more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The Company adopted ASU 2023-09 for the year ended December 31, 2025. The adoption resulted in enhanced disclosures and did not have a material impact on the Company's consolidated financial position or results of operations.

Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

**Note 3 — Reverse Stock Split**

On February 2, 2024, the Company's reverse stock split plan became effective. Every ten (10) shares of the Company's ordinary share issued, par value of US$0.0001, was combined into one (1) share of ordinary share, par value $0.001.

In October 2024, the Company's reverse stock split plan became effective. Every ten (20) shares of the Company's ordinary share issued, par value of US$0.001, was combined into one (1) share of ordinary share, par value $0.02. The following information in Note 3 was adjusted for the reverse stock split as required by ASC 260.

On March 24, 2025, in an Extraordinary General Meeting of the Shareholders, Company shareholders approved the proposed 1-for-40 reverse share split and increase of authorized share capital. April 21, 2025 is the effective date for the 1-for-40 reverse share split, As the result of the 1-for-40 reverse share split, the authorized share capital of the Company changed from US$10,000,000 divided into 500,000,000 shares comprising (i) 400,000,000 Class A Shares, and (ii) 100,000,000 Class B Shares to US$10,000,000 divided into 12,500,000 shares comprising (i) 10,000,000 Consolidated Class A Shares, and (ii) 2,500,000 Consolidated Class B Shares. Following the Share Consolidation, the authorized share capital of the Company increased from US$10,000,000 divided into 12,500,000 shares comprising (i) 10,000,000 Consolidated Class A Shares, and (ii) 2,500,000 Consolidated Class B Shares to US$400,000,000 divided into 500,000,000 shares comprising (i) 400,000,000 Consolidated Class A Shares by the creation of an additional 390,000,000 Consolidated Class A Shares, and (ii) 100,000,000 Consolidated Class B Shares by the creation of an additional 97,500,000 Consolidated Class B Shares.

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**Note 4 — Deconsolidation**

During the year ended December 31, 2025, the Company disposed of Yichang Ji Yue and Beijing Ji Yue.

The Company deconsolidated Yichang Ji Yue and Beijing Ji Yue on September 30, 2025, when control was transferred. The Company disposed of 100% equity interests and ceased to have control over the subsidiaries.

The gain on disposal is included in other income in the consolidated statements of operations.

The Company recognized a gain of RMB 311,369 from the transfer. The gain primarily resulted from the derecognition of net liabilities of the disposed subsidiaries.

Since the disposal did not represent any strategic change of the Company's operation and the tax impact of the disposal was not material, the disposal was not presented as discontinued operations. The Company does not retain any equity interest or continuing involvement in the disposed subsidiaries.

Net assets of the entities disposed of and loss on disposal were as follows:

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| | | | |
|:---|:---|:---|:---|
|  | | | **Total** |
|  | **Yichang**<br>**Ji Yue** | **Beijing**<br>**Ji Yue** | **RMB** |
| Total current assets | 3326247 | 4525934 | 7852181 |
| Total other assets |  |  |  |
| Total assets | 3326247 | 4525934 | 7852181 |
| Total current liabilities | 3440060 | 4723488 | 8163548 |
| Total net assets | (113813) | (197554) | (311367) |
| Total consideration | 2 |  | 2 |
| Total gain on disposal | 113815 | 197554 | 311369 |

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**Note 5 — Business combination**

Acquisition of Shanghai Kuosou

On May 31, 2025, Haiyun Xingchen entered into acquisition agreement to acquire 100% equity interests of Shanghai Kuosou which mainly engaged in advertising services. The aggregate purchase price is RMB 794,125 and the business registration change was completed on July 3, 2025. The acquisition date was July 3, 2025, when control was obtained.

The Company's acquisition of Shanghai Kuosou was accounted for as business combination in accordance with ASC 805. The Company then allocated the fair value of consideration of Shanghai Kuosou based upon the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date. The Company estimated the fair values of the assets acquired and liabilities assumed at the acquisition date in accordance with the Business Combination standard issued by the FASB with the valuation methodologies using level 3 inputs, except for other current assets and current liabilities were valued using the cost approach. Management of the Company is responsible for determining the fair value of assets acquired, liabilities assumed and intangible assets identified as of the acquisition. Acquisition-related costs incurred for the acquisitions are not material and have been expensed as incurred in general and administrative expense.

The Company considers that the carrying balance of the financial statement of Shanghai Kuosou at the date of the acquisition is equal to the fair value, as all key items of the financial statements of Shanghai Kuosou are related to basic commercial transactions, and the term is relatively short. The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date, which represents the net purchase price allocation on the date of the acquisition of Shanghai Kuosou.

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| | |
|:---|:---|
|  | **Fair value** |
|  | **RMB** |
| Cash | 2023429 |
| Other current assets | 547494 |
| Current liabilities | (1776798) |
| Total consideration | 794125 |

---

Goodwill and intangible assets

No goodwill or identifiable intangible assets were recognized as part of this acquisition. Management determined that:

● The acquired entity primarily consists of short-term monetary assets and liabilities

● There were no identifiable intangible assets that met the recognition criteria under ASC 805

● The fair value of net identifiable assets approximated the purchase consideration

Accordingly, no goodwill or bargain purchase gain was recognized.

Valuation methodology

The fair values of the acquired assets and liabilities were estimated using valuation techniques consistent with the market and cost approaches. Due to the short-term nature of the acquired assets and liabilities, their carrying amounts were considered to approximate fair value.

Acquisition-related costs

Acquisition-related costs were not material and were expensed as incurred within general and administrative expenses.

The acquired business contributed revenue of RMB 51,692,524 and net income of RMB 234,739 for the year ended December 31, 2025.

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**Note 6 — Short-term Investments**

Short-term Investments consist of the following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31, <br> 2024** | **December 31, <br> 2025** | **December 31, <br> 2025** |
|  | **RMB** | **RMB** | **USD** |
| Structured financial products | 687702649 | 633204356 | 90087121 |
| Equity securities and ETFs | 37962037 | 265947428 | 37836818 |
| Total | 725664686 | 899151784 | 127923939 |

---

Fair value measurements

The Company measures its short-term investments at fair value on a recurring basis in accordance with the fair value hierarchy established under applicable accounting standards:

● Level 1: Quoted prices (unadjusted) in active markets for identical assets.

● Level 2: Observable inputs other than quoted prices included within Level 1.

● Level 3: Unobservable inputs supported by little or no market activity.

The following tables present the Company's short-term investments measured at fair value on a recurring basis:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Fair Value** | **Level 1** | **Level 2** | **Level 3** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
| Equity securities and ETFs | 37962037 | 37962037 |  |  |
| Structured financial products | 687702649 | - | 687702649 |  |
| Total | 725664686 | 37962037 | 687702649 |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  | **Fair Value** | **Level 1** | **Level 2** | **Level 3** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
| Equity securities and ETFs | 265947428 | 265947428 |  |  |
| Structured financial products | 633204356 | - | 633204356 |  |
| Total | 899151784 | 265947428 | 633204356 |  |

---

Equity securities and exchange-traded funds are classified as Level 1 as their fair values are based on quoted market prices in active markets. Structured financial products are classified as Level 2 as their fair values are based on observable market inputs and pricing information provided by financial institutions.

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**Investment activity**

During the year ended December 31, 2025, the Company invested a total of RMB 5,854,990,400 (USD 833,000,000) in short-term investments and recognized an investment loss of RMB 98,351,630 (USD 13,769,146), which was recorded in investment loss, net in the consolidated statements of income and comprehensive income.

Subsequent to December 31, 2025, the fair value of certain short-term investments decreased due to market fluctuations. The decline occurred after the balance sheet date and therefore has not been reflected in the accompanying consolidated financial statements.

Management believes the change in fair value does not indicate conditions that existed as of December 31, 2025.

**Note 7 — Accounts receivable, net**

Accounts receivable, net consisted of the following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31,<br>2024** | **December 31,<br>2025** | **December 31,<br>2025** |
|  | **RMB** | **RMB** | **USD** |
| Accounts receivable | 27502332 | 27669404 | 3936576 |
| Less: allowance for expected credit losses | (4030967) | (5513270) | (784383) |
| Accounts receivable, net | 23471365 | 22156134 | 3152193 |

---

The following table summarizes the changes in allowance for expected credit losses:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31,<br>2024** | **December 31,<br>2025** | **December 31,<br>2025** |
|  | **RMB** | **RMB** | **USD** |
| Beginning balance | 4588786 | 4030967 | 560760 |
| Allowance for expected credit losses | 2492478 | 2306700 | 322936 |
| &nbsp;&nbsp;&nbsp;write-off | (3050297) | (51892) | (7265) |
| &nbsp;&nbsp;&nbsp;Other changes - Deconsolidation |  | (772505) | (108150) |
| Exchange rate difference | - | - | 16102 |
| Ending balance | 4030967 | 5513270 | 784383 |

---

Allowance for expected credit losses for the years ended December 31, 2024 and 2025 amounted to RMB 4,030,967 and RMB 5,513,270 (USD 784,383), respectively.

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**Note 8 — Notes Receivable** 

Notes receivable primarily consists of bank acceptance bills received from customers in the ordinary course of business.

As of December 31, 2025, the Company had notes receivable of RMB 3,638,300 (2024: nil), all of which are expected to be settled within one year.

During the year ended December 31, 2025, the Company entered into bill discounting arrangements with certain banks. Under these arrangements, the Company discounted notes receivable to obtain financing. As the banks retain the right of recourse in the event of default, the transfers do not qualify for derecognition under ASC 860. Accordingly, the Company continues to recognize these notes receivable and records the proceeds received as short-term borrowings.

As of December 31, 2025, notes receivable with a carrying amount of RMB 3,627,557 were pledged as collateral for short-term borrowings of the same amount, disclosed as loan payable in the balance sheet.

The Company has assessed the expected credit losses associated with notes receivable and determined that no material allowance for expected credit losses was required as of December 31, 2025.

**Note 9 — Inventories, net**

Inventories, net consist of the following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31,<br>2024** | **December 31,<br>2025** | **December 31,<br>2025** |
|  | **RMB** | **RMB** | **USD** |
| Raw materials | 1539710 | 788957 | 112246 |
| Finished goods | 76899 | 4483 | 638 |
| Total | 1616609 | 793440 | 112884 |
| Less: Inventory allowance | (850926) | (675697) | (96132) |
| Inventories, net | 765683 | 117743 | 16752 |

---

The Company evaluates inventory for impairment on a regular basis. In determining net realizable value, management considers various factors, including inventory age, historical usage and sales patterns, current market conditions, technological obsolescence, and future demand.

Given the rapid technological advancements and short product life cycles in the integrated circuit industry, inventory is subject to a higher risk of obsolescence. As such, the Company applies an aging-based approach to assess inventory impairment, whereby provision rates increase with the age of the inventory.

The Company's impairment assessment is based on historical experience and management's expectations of future market conditions. Compared with industry peers, the Company applies relatively conservative provision rates, particularly for inventory aged over one year.

For the year ended December 31, 2025, the Company recorded a net reversal of inventory write-down of RMB 175,229 (2024: write-down of RMB 674,467), which is included in cost of sales. Management believes that the inventory balances are stated at the lower of cost and net realizable value as of December 31, 2025.

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**Note 10 — Prepayment and other current assets**

Prepayment and other current assets consisted of the following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31,<br>2024** | **December 31,<br> 2025** | **December 31,<br> 2025** |
|  | **RMB** | **RMB** | **USD** |
| Prepayments | 9122086 | 8514583 | 1211385 |
| Other Receivables | 549493 | 1503790 | 213947 |
| Less: impairment losses | - | (2050000) | (291657) |
| Prepayment and other current assets | 9671579 | 7968373 | 1133675 |

---

As of December 31, 2025, the Company had prepayments of RMB 8,514,583 (2024: RMB 9,122,086). During the year, certain prepayments were written off due to the inability to recover amounts from specific vendors, including cases where vendors could not be contacted or failed to fulfill contractual obligations.

Certain prepayments represent advance payments for services to be provided in future periods under contractual arrangements, including research and development and promotional service agreements extending into 2026.

Management has assessed the recoverability of prepayments as of December 31, 2025 and believes that the remaining balances are recoverable.

For the year ended December 31, 2025, the Company recognized impairment losses on prepayments of RMB 2,072,001, which were recorded in operating expenses and recognized write-off of RMB 22,001.

**Note 11 — Property and equipment, net**

Property and equipment, net consist of the following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31,<br>2024** | **December 31,<br>2025** | **December 31,<br>2025** |
|  | **RMB** | **RMB** | **USD** |
| Office equipment | 1005558 | 1024191 | 145714 |
| Mechanical equipment | 1059178 | 1059178 | 150691 |
| Electronic and other equipment | 1684135 | 1729181 | 246014 |
| Vehicles | 43982 | 114182 | 16245 |
| Subtotal | 3792853 | 3926732 | 558664 |
| Less: accumulated depreciation | (3209052) | (3435165) | (488728) |
| Total | 583801 | 491567 | 69936 |

---

Depreciation expense for the years ended December 31, 2023, 2024 and 2025 amounted to RMB 807,722, RMB 818,541 and RMB 206,650 (USD 28,931), respectively.

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**Note 12 — Account Payable**

Account payable consists of the following:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31,<br>2024** | **December 31,<br>2024** | **December 31,<br>2025** | **December 31,<br>2025** | **December 31,<br> 2025** | **December 31,<br> 2025** |
|  | **RMB** | **RMB** | **RMB** | **RMB** | **USD** | **USD** |
| Purchase of goods and services | | 13,405,894 | | 20,872,743 | | 2,969,603 |

---

Accounts payable primarily consist of amounts due to third-party suppliers for the purchase of goods and services in the ordinary course of business. The balances are unsecured, non-interest bearing, and are generally due within one year.

As of December 31, 2024 and 2025, accounts payable amounted to RMB 13,405,894 and RMB 20,872,743 (USD 2,969,603), respectively.

**Note 13 — Convertible bonds**

Convertible bonds consist of the following:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31,<br>2024** | **December 31,<br>2024** | **December 31,<br>2025** | **December 31,<br>2025** | **December 31,<br>2025** | **December 31,<br>2025** |
|  | **RMB** | **RMB** | **RMB** | **RMB** | **USD** | **USD** |
| Investors | | **-** | | 45,265,472 | | 6,440,000 |

---

The Company evaluated the embedded conversion feature under ASC 815 and determined that it meets the definition of a derivative. The conversion feature exposes the holder to variability in the Company's share price and allows settlement through shares that are readily convertible to cash, thereby meeting the net settlement criterion.

However, the Company further assessed whether the embedded feature qualifies for the scope exception under ASC 815-40. As the conversion price is based on a variable formula (70% of the lowest closing price over the preceding 60 trading days), the feature is not considered indexed solely to the Company's own stock and therefore does not qualify for equity classification.

Accordingly, the embedded conversion feature would generally require bifurcation and separate accounting as a derivative liability.

However, the Company noted that a substantial portion of the Notes was converted within a short period after issuance, in many cases within days to a few weeks. Based on a sensitivity analysis of price variability and the short duration of exposure, the Company concluded that the fair value impact of the embedded derivative is not material to the financial statements.

The Company evaluated the embedded conversion feature under ASC 815 and concluded that, while the feature may meet the definition of a derivative, the fair value of the embedded feature was not material to the financial statements. Accordingly, the Company did not separately account for the feature. The Company considered the short duration between issuance and conversion in its assessment. Therefore, the Notes were accounted for as a single liability instrument.

As of December 31, 2025, convertible bonds of RMB 45,265,472 (USD 6,440,000) remained outstanding.

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**Note 14 — Taxes**

Cayman Islands

MicroCloud, MC was incorporated in the Cayman Islands and is not subject to tax on income or capital gains under the laws of Cayman Islands. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.

Hong Kong

Mengyun HK, Mcloudvr HK, Ocean HK, Broadvision HK and HaiCloud Ltd, our subsidiaries incorporated in Hong Kong, are subject to a two-tiered income tax rate for taxable income earned in Hong Kong. The first HK$2 million of profits earned by a company is subject to be taxed at an income tax rate of 8.25%, while the remaining profits will continue to be taxed at the existing tax rate of 16.5%.

PRC

The subsidiaries incorporated in the PRC are governed by the income tax laws of the PRC and the income tax provision for operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the "EIT Laws"), domestic enterprises and Foreign Investment Enterprises (the "FIE") are subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemptions may be granted on a case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises ("HNTEs"). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. Shanghai Mengyun obtained the "high-tech enterprise" tax status in October 2017 and further renewed in December 2023, which reduced its statutory income tax rate to 15% from January 2017 to December 2025. Shenzhen Mengyun obtained the "high-tech enterprise" tax status in November 2018 and further renewed in December 2021, which reduced its statutory income tax rate to 15% from January 2018 to December 2023. Shenzhen Bowei obtained the "high-tech enterprise" tax status in December 2021 and further renewed in December 2024, which reduced its statutory income tax rate to 15% from January 2021 to December 2026. From January 2023 to December 2027. For small and micro-sized enterprises, in accordance with the "Announcement of the Ministry of Finance and the State Taxation Administration No. 6 of 2023", all taxable incomes not exceeding RMB 3 million will be uniformly levied at an actual tax rate of 5%. Beijing Xihuiyun, Shenzhen Haiyun, Haiyun Xingchen, Shenzhen Yushian, HaiYun Zhichuang, Yichang Jiyue, Beijing Jiyue and Shanghai Kuosou were eligible to employ this policy.

Horgos Weiyi, Horgos Youshi, Horgos Bowei and Horgos Tianyuemeng were formed and registered in Horgos in Xinjiang, China from 2016 to 2020, and Kashgar Youshi was formed and registered in Kashgar in Xinjiang, China in 2016. These companies are not subject to income tax for 5 years and can obtain another two years of tax exemption status and three years at reduced income tax rate of 12.5% after the 5 years due to the local tax policies to attract companies in various industries.

Significant components of the provision for income taxes are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the<br>year ended <br>December 31, <br>2023** | **For the<br>year ended <br>December 31, <br>2024** | **For the<br>year ended <br>December 31, <br>2025** | **For the<br>year ended <br>December 31, <br>2025** |
|  | **RMB** | **RMB** | **RMB** | **USD** |
| Current income tax credit (expense) | (100859) | (392878) |  |  |
| Deferred income tax benefit (expense) | (4038047) | 2931528 |  |  |
| Income tax credit (expense) | (4138906) | 2538650 |  |  |

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For the year ended December 31, 2025, the Company did not recognize income tax expense primarily due to operating losses incurred during the period and the full valuation allowance recorded against deferred tax assets.

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The following table reconciles China statutory rates to the Company's effective tax rate:

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| | | | |
|:---|:---|:---|:---|
|  | **For the<br>year ended<br>December 31,<br>2023** | **For the<br>year ended<br>December 31,<br>2024** | **For the<br>year ended<br>December 31,<br>2025** |
| China statutory income tax rate | 25.00% | 25.00% | 25.00% |
| Preferential tax rate reduction | (37.28)% | (22.08)% | (2.32)% |
| Change in valuation allowance | (15.37)% | 3.90% | (12.37)% |
| Additional R&D deduction in China | 1.38% | 8.66% | 8.55% |
| Permanent difference | (0.20)% | 0.52% | 0.20% |
| Tax rate difference outside China<sup>(1)</sup> | (0.05)% | 0.38% | (19.06)% |
| Effective tax rate | (26.52)% | 16.38% | -% |

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<sup>(1)</sup> It is mainly due to the lower tax rate of the entities incorporated in Hong Kong, and tax exempt in Cayman Islands.

Deferred tax assets and liabilities

Significant components of deferred tax assets and liabilities were as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31, <br>2024** | **December 31, <br>2025** | **December 31, <br>2025** |
|  | **RMB** | **RMB** | **USD** |
| Deferred tax assets: |  |  |  |
| Allowance for expected credit losses | 483725 | 871837 | 122056 |
| Impairment loss for investment | 400000 | 400000 | 56000 |
| Net operating loss carry forward | 16443342 | 17114228 | 2395978 |
| Inventory reserve | 127639 | 101355 | 14190 |
| Right of use | 24848 |  |  |
| Less: valuation allowance | (17479554) | (18487420) | (2588224) |
| Deferred tax assets, net |  |  |  |
| Deferred tax liabilities: |  |  |  |
| Recognition of intangible assets arising from business combinations |  |  |  |
| Deferred tax liabilities, net | - | - | - |
| Total deferred tax assets, net | - | - | - |

---

The Company evaluated the recoverable amounts of deferred tax assets and provided a valuation allowance to the extent that future taxable profits will be available against which the net operating loss and temporary differences can be utilized. Valuation allowance is provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Company considered factors including future taxable income exclusive of reversing temporary differences and tax loss carry forwards. Valuation allowance was provided for net operating loss carry forward because it was more likely than not that such deferred tax assets would not be realized based on the Company's estimate of its future taxable income. If events occur in the future that allow the Company to realize more of its deferred income tax than the presently recorded amounts, an adjustment to the valuation allowances will result in a decrease in tax expense when those events occur. The Company has recorded a full valuation allowance against its deferred tax assets as of December 31, 2024 and 2025.

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As of December 31, 2025, the Company had net operating loss carried forward of approximately RMB 115,296,107, which arose from Shanghai Mengyun, Shenzhen Mengyun, Shenzhen Bowei, Shenzhen Yushian, Shanghai Kuosou and Mcloudvr HK, the net operating loss carried forward of the subsidiaries established in the PRC will expire during the period from 2026 to 2030.

Uncertain tax positions

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2024 and 2025, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2024 and 2025 and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from December 31, 2025.

Value added taxes ("VAT")

Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price. VAT rate is 6% on services and 13% on goods in China.

Taxes payable consisted of the following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31, <br>2024** | **December 31, <br>2025** | **December 31, <br>2025** |
|  | **RMB** | **RMB** | **USD** |
| VAT taxes payable | 115104 | 195000 | 27743 |
| Income taxes payable | 5922 |  |  |
| Other taxes payable | 26571 | 34059 | 4846 |
| Totals | 147597 | 229059 | 32589 |

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**Note 15 — Concentration of risk**

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. In China, the insurance coverage of each bank is RMB 500,000 (approximately USD 71,136). As of December 31, 2025, cash balance of RMB 475,986,987 (USD 67,719,524) was deposited with financial institutions located in China, of which RMB 471,979,770 (USD 67,149,410) was subject to credit risk. The Hong Kong Deposit Protection Board pays compensation up to a limit of HKD 800,000 (approximately USD 102,802) if the bank with which an individual/a company hold its eligible deposit fails. As of December 31, 2025, cash balance of RMB 976,055,908 (USD 138,865,227) was maintained at financial institutions in Hong Kong, of which RMB 970,871,007 (USD 138,127,562) was subject to credit risk. In the US, the insurance coverage of each bank is USD 250,000. As of December 31, 2025, cash balance of USD 2,205,499 (RMB 15,502,008) was deposited with a financial institution located in US, of which USD 1,705,096 (RMB 11,984,777) was subject to credit risk. In Singapore, Singapore Deposit Insurance Corporation Limited (SDIC) provides the insurance coverage of each bank is SGD 100,000 (USD 77,661). As of December 31, 2025, cash balance of RMB 375,843,966 (USD 53,471,996) was deposited with financial institutions located in Singapore, of which RMB 374,752,246 (USD 53,316,675) was subject to credit risk. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. A majority of our expense transactions are denominated in RMB and a significant portion of our and our subsidiaries' assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the PBOC. Remittances in currencies other than RMB by us in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

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A majority of the Company's expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries' assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the PBOC. Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company.

Customer concentration risk

For the year ended December 31, 2023, two customers accounted for 25.0% and 12.2% of the Company's total revenue. For the year ended December 31, 2024, two customers accounted for 13.4% and 12.4% of the Company's total revenue, respectively. For the year ended December 31, 2025, two customers accounted for 17.1% and 15.2% of the Company's total revenue, respectively.

As of December 31, 2023, three customers accounted for 19.8%, 13.0% and 11.8% of the Company's accounts receivable, respectively. As of December 31, 2024, one customer accounted for 10.6% of the Company's accounts receivable, respectively. As of December 31, 2025, two customers accounted for 23.7% and 15.3% of the Company's accounts receivable, respectively.

Vendor concentration risk

For the year ended December 31, 2023, three vendors accounted for 37.6%, 13.0% and 12.0% of the Company's total purchases. For the year ended December 31, 2024, two vendors accounted for 16.6% and 15.4% of the Company's total purchases. For the year ended December 31, 2025, three vendors accounted for 20.7%, 16.0% and 15.3% of the Company's total purchases.

As of December 31, 2023, three vendors accounted for 36.1%, 26.1% and 22.2% of the Company's accounts payable. As of December 31, 2024, four vendors accounted for 14.3%, 12.7%, 12.2% and 10.3% of the Company's accounts payable. As of December 31, 2025, two vendors accounted for 27.7% and 17.7% of the Company's accounts payable.

**Note 16 — Leases**

Lease commitments

The Company determines if a contract contains a lease at inception. US GAAP requires that the Company's leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which results in an economic penalty.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. The leases generally do not contain options to extend at the time of expiration. As of December 31, 2024 and December 31, 2025, the Company's operating leases had a weighted average remaining lease term of approximately 1.66 years and 0.74 years, respectively. As of December 31, 2024 and 2025, the weighted average discount rate for operating leases was approximately 7% and 7%, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2023, 2024 and 2025 were RMB 1,759,856, RMB 1,614,519 and RMB 1,752,580, respectively.

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Operating lease expenses are allocated between the cost of revenue and selling, research and development, general, and administrative expenses. Operating lease cost for the years ended December 31, 2023, 2024 and 2025 were RMB 2,306,237, RMB 1,637,384 and RMB 1,696,991, respectively.

The five-year maturity of the Company's operating lease obligations is presented below:

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| | | |
|:---|:---|:---|
| | **Operating Lease <br>Amount** | **Operating Lease <br>Amount** |
| <br>**Twelve Months Ending December 31,** | **RMB** | **USD** |
| 2026 | 1180653 | 167974 |
| Total lease payments | 1180653 | 167974 |
| Less: Interest | (35218) | (5011) |
| Present value of lease liabilities | 1145435 | 162963 |

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Future amortization of the Company's ROU assets is presented below:

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| | | |
|:---|:---|:---|
| | **Right-of-use<br> assets<br> Amount** | **Right-of-use<br> assets<br> Amount** |
| <br>**Twelve months ending December 31,** | **RMB** | **USD** |
| 2026 | 1186167 | 168758 |
| Total | 1186167 | 168758 |

---

All remaining lease payments are due within one year as of December 31, 2025.

**Note 17 — Shareholders' equity**

Ordinary shares

The Company is authorized to issue 500,000,000 ordinary shares with a par value of $0.8 per share. Holders of the ordinary shares are entitled to one vote for each share.

On February 2, 2024, the Company effected a share consolidation at a ratio of one-for-ten (10) ordinary shares with a par value of US$0.0001 each in the Company's issued share capital into one ordinary share with a par value of US$0.001. The Company believed that it was appropriate to reflect on the transactions on a retroactive basis pursuant to ASC 260, Earnings Per Share. The Company has retroactively adjusted all share and per share data for all periods presented.

In October, 2024, the Company effected a share consolidation at a ratio of one-for-twenty (20) ordinary shares with a par value of US$0.001 each in the Company's issued share capital into one ordinary share with a par value of US$0.02, and changed the Company's authorized share capital from US$10,000,000 divided into 500,000,000 ordinary shares to US$10,000,000 divided into 400,000,000 Class A ordinary shares and 100,000,000 Class B ordinary shares; The Company has retroactively adjusted all share and per share data from ordinary share to Class A Ordinary Shares for all periods presented.

On April 21, 2025, the Company effected a share consolidation at a ratio of one-for-forty (40) ordinary shares with a par value of US$0.02 each in the Company's issued share capital into one ordinary share with a par value of US$0.8.

[**Table of Contents**](#toc)

Giving the effects of the share consolidation, as of December 31, 2024 and 2025, there were 1,362,583 and 22,512,360 Class A Ordinary Shares issued and outstanding, respectively, and there were nil 0 and 400,000 Class B Ordinary Shares issued and outstanding, respectively.

Statutory reserve

Mengyun PRC entities are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, Mengyun PRC entities may allocate a portion of its after-tax profits based on PRC accounting standards to an enterprise expansion fund and staff bonus and welfare fund at its discretion. Mengyun PRC entities may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange.

During the years ended December 31, 2024 and 2025, Mengyun PRC entities collectively attributed RMB 11,670 and nil to statutory reserves, respectively.

Restricted assets

The Company's ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary. Relevant PRC statutory laws and regulations permit payments of dividends by Beijing Xihuiyun and Shanghai Mengyun (collectively "Mengyun PRC entities") only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Mengyun PRC entities.

Mengyun PRC entities are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, Mengyun PRC entities may allocate a portion of its after-tax profits based on PRC accounting standards to an enterprise expansion fund and staff bonus and welfare fund at its discretion. Mengyun PRC entities may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange.

As a result of the foregoing restrictions, Mengyun PRC entities are restricted in their ability to transfer their assets to the Company. Foreign exchange and other regulations in the PRC may further restrict Mengyun PRC entities from transferring funds to the Company in the form of dividends, loans and advances. As of December 31, 2025, the amounts restricted are primarily comprised of the paid-in capital and statutory reserves of the Company's PRC subsidiaries, which amounted to RMB 41,775,776.

The restricted net assets are determined based on the statutory financial statements of the PRC subsidiaries and reflect the impact of foreign exchange translation adjustments in consolidation under U.S. GAAP.

**Note 18 — Warrants**

The Company issued Public Warrants and Private Warrants in connection with its initial public offering and concurrent private placement. As of December 31, 2025, the Company had 5,750,000 Public Warrants and 270,500 Private Warrants outstanding.

The Company accounts for its outstanding Warrants in accordance with ASC 480, "Distinguishing Liabilities from Equity," and ASC 815-40, "Derivatives and Hedging—Contracts in Entity's Own Equity." The Public Warrants meet the criteria for equity classification and are recorded within shareholders' equity. The Private Warrants do not meet the criteria for equity classification and are therefore classified as liabilities and measured at fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations. Management has determined that under the Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Private Warrants as liabilities at their fair value and adjusts the Private Warrants to fair value at each reporting period. Management has further determined that its Public Warrants qualify for equity treatment. Warrant liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations. The Private Warrants are valued using a Black Scholes model.

[**Table of Contents**](#toc)

Public Warrants

On June 24, 2021, the Company sold 5,750,000 units at a price of $10.00 per Public Unit in its Initial Public Offering. Each Public Unit consists of one ordinary share of the Company, $0.0001 par value per share, one right and one redeemable warrant (the "Public Warrant"). Each Public Warrant entitles the holder to purchase one-half (1/2) of an Ordinary Shares at an exercise price of $11.50 per whole share, subject to adjustment as described in Form S-1 Amendment No. 2 filed on June 11, 2021. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares. This means that only an even number of warrants may be exercised at any given time by a warrant holder.

The Public Warrants became exercisable on September 16, 2022, the Business Combination date. As of December 31, 2025, the Public Warrants are exercisable for cash as the Company has an effective and current registration statement covering the Ordinary Share issuable upon exercise of the Public Warrants. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.

The Company may call the warrants for redemption (excluding the Private Warrants), in whole and not in part, at a price of $0.01 per warrant:

● at any time while the Public Warrants are exercisable,

● upon not less than 30 days' prior written notice of redemption to each Public Warrant holder,

● if, and only if, the reported last sale price of the Ordinary Shares equals or exceeds $16.50 per share, for any 20 trading days within a 30-trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and

● if, and only if, there is a current registration statement in effect with respect to the issuance of the Class A Ordinary Share underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a "cashless basis," as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.

Subsequent to issuance, the Company effected multiple reverse share splits. In accordance with the terms of the warrant agreement, these events resulted in proportional adjustments to both (i) the exercise price of the warrants and (ii) the number of shares issuable upon exercise of each warrant.

These adjustments increased the exercise price while correspondingly decreasing the number of shares underlying each warrant. As a result, such changes did not alter the economic substance of the warrants.

Following these adjustments, the exercise price of the Private Warrants increased from $11.50 per share at issuance to $2,300 as of December 31, 2024. During the year ended December 31, 2025, the Company effected an additional reverse share split, resulting in a further proportional adjustment. As of December 31, 2025, the exercise price of the Private Warrants was $92,000, with a corresponding reduction in the number of shares issuable upon exercise of each warrant.

[**Table of Contents**](#toc)

Private Warrants

Simultaneously with the closing of the Initial Public Offering, the Company consummated a private placement of 270,500 Private Units at $10.0 per unit. The Private Units are identical to the units sold in the Initial Public Offering except that the warrants included in the Private Units (the "Private Warrants") and the Ordinary Shares issuable upon the exercise of the Private Warrants will not be transferable, assignable or saleable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

The private warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the balance sheets. The warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs.

The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $625,000. Variables used in the option-pricing model include (1) risk-free interest rate at the date of grant (0.90%), (2) expected warrant life of 5 years, (3) expected volatility of 58.40%, and (4) expected dividend yield of 0. The Company classifies the Private Warrants as Level 3 instruments within the fair value hierarchy due to the use of unobservable inputs.

The key inputs into the Black-Scholes model were as follows at their following measurement dates:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,<br>2023** | **December 31,<br>2024** | **December 31,<br>2025** | **December 31,<br>2025** |
|  | **USD** | **USD** | **USD** | **RMB** |
| Input |  |  |  |  |
| Share price | 3.55 | 4.93 | 2.64 | 18.56 |
| Risk-free interest rate | 3.95% | 4.26% | 3.47% | 3.47% |
| Volatility | 60.6% | 59.5% | 49.66% | 49.66% |
| Exercise price | 11.50 | 2300 | 92000 | 646650 |
| Dividend Yield | 0.0% | 0.0% | 0.0% | 0.0% |
| Warrant life (yr) | 3.71 years | 2.71 years | 1.71 years | 1.71 years |

---

The Company's warrant liabilities amounted to nil as of December 31, 2024, and 2025.

**Fair Value Hierarchy**

The following table presents the fair value of the Company's warrant liabilities measured on a recurring basis:

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31, <br> 2024** | **December 31, <br> 2025** | **December 31, <br> 2025** |
|  | **RMB** | **RMB** | **USD** |
| Warrant liabilities (Level 3) |  |  |  |

---

The Private Warrants are classified within Level 3 of the fair value hierarchy as the valuation relies on significant unobservable inputs.

Fair Value of Private Warrants

As of December 31, 2024 and December 31, 2025, the exercise price of the Private Warrants, after giving effect to adjustments under the warrant agreement, was significantly higher than the market price of the Company's ordinary shares. Accordingly, the warrants were deeply out-of-the-money.

As a result, the estimated fair value of the Private Warrants was de minimis as of both reporting dates, and the Company has presented the warrant liability as nil in the accompanying consolidated balance sheets.

[**Table of Contents**](#toc)

Changes in Fair Value

The change in fair value of the Private Warrants during the year ended December 31, 2025 was primarily attributable to (i) the decline in the Company's share price, (ii) the reduction in the remaining contractual term, and (iii) adjustments to the exercise price resulting from reverse share splits.

The following table summarizes the Company's Warrants activities and status of Warrants on December 31, 2025:

---

| | | | |
|:---|:---|:---|:---|
| **Private Warrants** | **Warrants** | **Weighted Average<br>Exercise Price<br>Per Share** | **Average Remaining<br>Period (Years)** |
| Outstanding as of December 31, 2023 | 270500 | $11.50 | 3.71 |
| &nbsp;&nbsp;&nbsp;Issued |  |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited |  |  |  |
| &nbsp;&nbsp;&nbsp;Exercised |  |  |  |
| &nbsp;&nbsp;&nbsp;Expired | - |  |  |
| Outstanding as of December 31, 2024 | 270500 | $2300 | 2.71 |
| &nbsp;&nbsp;&nbsp;Issued |  |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited |  |  |  |
| &nbsp;&nbsp;&nbsp;Exercised |  |  |  |
| &nbsp;&nbsp;&nbsp;Expired | - |  |  |
| Outstanding as of December 31, 2025 | 270500 | $92000 | 1.71 |

---

**Note 19 — Commitments and contingencies**

Contingencies

The Company is party to following legal proceedings, as well as unasserted claims.

**Litigation**

The Company, along with its shareholder Joyous JD Limited, has initiated litigation in the New York Supreme Court New York County against Greenland Asset Management Corporation, the sponsor of the pre-business combination company, Golden Path Acquisition Corporation ("Sponsor").

Gain Contingencies (Potential Recovery)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Joyous JD Limited is seeking damages in connection with the Sponsor's breach of certain investment agreements which was executed by and between the Sponsor and Joyous JD Limited;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Company is seeking damages in connection with the Sponsor's noncompliant misuse of Form S-4 in registering shares during the course of the business combination, which resulted in a forced withdrawal of the Form S-4. The Company has commenced a lawsuit seeking damages.

Loss Contingencies (Potential Obligations)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Greenland Asset Management initiated a countersuit against the Company in response to the Company's lawsuit.

Due to the uncertainty surrounding the process and outcome of the lawsuit, and given that the litigation is ongoing and has not yet been finalized, the final ruling of the Court will prevail.

[**Table of Contents**](#toc)

**Note 20 — Segments**

ASC 280, "Segment Reporting", establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company's business segments.

The Company's chief operating decision maker is the Chief Executive Officer, who reviews the financial information of the separate operating segments when making decisions about allocating resources and assessing the performance of the group. The Company's revenues are primarily generated in the PRC. Information about geographic areas, including revenues and long-lived assets, is disclosed separately. The CODM evaluates segment performance primarily based on revenue and gross profit. The Company has determined two operating segments: (1) Holographic solutions, and (2) Holographic technology service. The segments differ based on the nature of products and services and how they are managed and evaluated internally.

The Company's revenue is primarily derived from holographic solutions and related services, including product sales, software development, licensing, advertising, and other services.

Revenue is recognized either at a point in time or over time depending on the nature of the performance obligations. Product sales, licensing, advertising, and other services are generally recognized at a point in time upon transfer of control to the customer. Software development and technology services are recognized over time as services are performed.

Disaggregation of revenue by timing of recognition. The following table presents revenue disaggregated by timing of recognition:

---

| | | | |
|:---|:---|:---|:---|
|  | **Holographic <br> solutions** | **Holographic <br> technology <br> service** | **Total <br> December 31, <br> 2023** |
|  | **RMB** | **RMB** | **RMB** |
| Revenue recognized at a point in time | 22415106 | 135202499 | 157617605 |
| Revenue recognized over time | 45930400 | - | 45930400 |
| Total revenue | 68345506 | 135202499 | 203548005 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Holographic <br> solutions** | **Holographic<br> technology <br> service** | **Total <br> December 31, <br> 2024** |
|  | **RMB** | **RMB** | **RMB** |
| Revenue recognized at a point in time | 28284788 | 161405750 | 189690538 |
| Revenue recognized over time | 100607446 | - | 100607446 |
| Total revenue | 128892234 | 161405750 | 290297984 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Holographic <br> solutions** | **Holographic<br> technology <br> service** | **Total December 31, 2025** |
|  | **RMB** | **RMB** | **RMB** |
| Revenue recognized at a point in time | 12342114 | 204427203 | 216769317 |
| Revenue recognized over time | 186916906 | - | 186916906 |
| Total revenue | 199259020 | 204427203 | 403686223 |

---

[**Table of Contents**](#toc)

The following tables present summary information by segment for the years ended December 31, 2023, 2024 and 2025:

---

| | | | |
|:---|:---|:---|:---|
|  | **Holographic<br>solutions** | **Holographic<br>technology<br> service** | **Total <br>December 31, <br>2023** |
|  | **RMB** | **RMB** | **RMB** |
| Revenues | 68345506 | 135202499 | 203548005 |
| Cost of revenues | (59562014) | (69734292) | (129296306) |
| Gross profit | 8783492 | 65468207 | 74251699 |
| Depreciation and amortization | (6161834) | - | (6161834) |
| Total capital expenditures | (774615) | - | (774615) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Holographic<br>solutions** | **Holographic<br>technology<br> service** | **Total <br>December 31, <br>2024** |
|  | **RMB** | **RMB** | **RMB** |
| Revenues | 128892235 | 161405749 | 290297984 |
| Cost of revenues | (106682488) | (118169173) | (224851661) |
| Gross profit | 22209747 | 43236576 | 65446323 |
| Depreciation and amortization | (363432) | (455109) | (818541) |
| Total capital expenditures | (11927) | - | (11927) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Holographic<br>solutions** | **Holographic<br>technology<br> service** | **Total <br>December 31, <br>2025** |
|  | **RMB** | **RMB** | **RMB** |
| Revenues | 199259020 | 204427203 | 403686223 |
| Cost of revenues | (160434849) | (157374663) | (317809512) |
| Gross profit | 38824171 | 47052540 | 85876711 |
| Depreciation and amortization | (197059) | (9591) | (206650) |
| Total capital expenditures | (87550) | (12344) | (99894) |

---

Total assets as of:

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31, <br>2024** | **December 31, <br>2025** | **December 31, <br>2025** |
|  | **RMB** | **RMB** | **USD** |
| Holographic solutions | 1582974051 | 2758511223 | 392458346 |
| Holographic technology service | 31923161 | 20187715 | 2872142 |
| Total assets | 1614897212 | 2778698938 | 395330488 |

---

[**Table of Contents**](#toc)

Disaggregated information of holographic solutions revenues by business lines are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the<br>year ended <br>December 31, <br>2023** | **For the<br>year ended <br>December 31, <br>2024** | **For the<br>year ended <br>December 31, <br>2025** | **For the<br>year ended <br>December 31, <br>2025** |
|  | **RMB** | **RMB** | **RMB** | **USD** |
| Holographic Technology LiDAR Products | 16330569 | 20279244 | 9020959 | 1262927 |
| Holographic Technology Intelligence Vision software and Technology Development Service | 45930400 | 100607447 | 187991434 | 26318643 |
| Holographic Technology Licensing and Content Product | 5594979 | 7969381 | 2246627 | 314525 |
| Holographic Hardware Sales | 489558 | 36163 | - | - |
| Total Holographic Solutions | 68345506 | 128892235 | 199259020 | 27896095 |

---

The CODM evaluates segment performance based on segment revenues, gross profit, significant segment expenses and income before income taxes.

Reconciliation of segment gross profit to consolidated loss before income taxes:

---

| | | | |
|:---|:---|:---|:---|
|  | **Holographic<br> solutions** | **Holographic<br> technology <br> service** | **Total<br> December 31,<br> 2023** |
|  | **RMB** | **RMB** | **RMB** |
| Gross profit | 8783492 | 65468207 | 74251699 |
| Operating expenses: |  |  |  |
| Selling expenses | (5467408) | (1224908) | (6692316) |
| General and administrative expenses | (23501382) | (41852819) | (65354201) |
| Research and development expenses | (10899882) | (67755690) | (78655572) |
| Allowance for expected credit losses | (845392) | (12321) | (857713) |
| Change in fair value of warrant liabilities | - | 372961 | 372961 |
| Total operating expenses | (40714065) | (110472776) | (151186841) |
| Loss from operations | (31930573) | (45004569) | (76935142) |
| Other income (expenses) |  |  |  |
| Finance income, net | 2596503 | 766581 | 3363084 |
| Loss on disposal of subsidiaries | (7174930) | (8104019) | (15278949) |
| Other income, net | 555352 | 2568751 | 3124103 |
| Total other expenses, net | (4023075) | (4768687) | (8791762) |
| Loss before income taxes | (35953648) | (49773256) | (85726904) |

---

[**Table of Contents**](#toc)

---

| | | | |
|:---|:---|:---|:---|
|  | **Holographic<br> solutions** | **Holographic<br> technology<br> service** | **Total<br> December 31,<br> 2024** |
|  | **RMB** | **RMB** | **RMB** |
| Gross profit | 22209747 | 43236576 | 65446323 |
| Operating expenses: |  |  |  |
| Selling expenses | (2465056) | (1061747) | (3526803) |
| General and administrative expenses | (8213194) | (15039323) | (23252517) |
| Research and development expenses | (23148863) | (151245884) | (174394747) |
| Allowance for expected credit losses | (1272420) | (1220058) | (2492478) |
| Change in fair value of warrant liabilities | - | 62543 | 62543 |
| Total operating expenses | (35099533) | (168504469) | (203604002) |
| Loss from operations | (12889786) | (125267893) | (138157679) |
| Other income (expenses) |  |  |  |
| Finance income, net | 2167284 | 21083076 | 23250360 |
| Investment gain |  | 42298644 | 42298644 |
| Gain on disposal of subsidiaries |  | 5904530 | 5904530 |
| Other income, net | 1379654 | 3630906 | 5010560 |
| Total other income, net | 3546937 | 72917157 | 76464094 |
| Loss before income taxes | (9342849) | (52350736) | (61693585) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Holographic<br> solutions** | **Holographic<br> technology <br> service** | **Total<br> December 31,<br> 2025** |
|  | **RMB** | **RMB** | **RMB** |
| Gross profit | 38824171 | 47052540 | 85876711 |
| Operating expenses: |  |  |  |
| Selling expenses | (2019307) | (675421) | (2694728) |
| General and administrative expenses | (6550604) | (12687505) | (19238109) |
| Research and development expenses | (12593485) | (44367345) | (56960830) |
| Allowance for expected credit losses | (1978105) | (2400596) | (4378701) |
| Change in fair value of warrant liabilities | - | - | - |
| Total operating expenses | (23141500) | (60130868) | (83272368) |
| Income (Loss) from operations | 15682671 | (13078328) | 2604343 |
| Other income (expenses) |  |  |  |
| Finance income, net | 1865996 | 42508337 | 44374333 |
| Investment loss |  | (98351630) | (98351630) |
| Gain on disposal of subsidiaries |  | 311369 | 311369 |
| Other income, net | 481700 | 406282 | 887982 |
| Total other income (expenses), net | 2347696 | (55125642) | (52777946) |
| Income (Loss) before income taxes | 18030367 | (68203970) | (50173603) |

---

[**Table of Contents**](#toc)

**Note 21 — Subsequent events**

These consolidated financial statements were approved by management and available for issuance on March 27, 2026. The Company has evaluated subsequent events through this date.

On January 10, 2026, the Company's board of directors approved the dissolution of Shenzhen Yushian Technology Co., Ltd. ("SZYSA").

The Company determined that this event represents a non-recognized subsequent event under ASC 855, as the decision to dissolve was made after December 31, 2025 and does not reflect conditions that existed as of the balance sheet date.

As part of the planned dissolution, certain assets and liabilities of SZYSA are expected to be transferred within the group or settled in the normal course of business, including the transfer of prepayments to another subsidiary for continued execution of underlying contracts.

Based on management's current assessment, the dissolution is expected to result in losses upon liquidation; however, the final financial impact will depend on the ultimate settlement of assets and liabilities and cannot be reasonably estimated at this time.

## Exhibit 2.5

**Exhibit 2.5**

**DESCRIPTION OF WARRANTS**

As of December 31, 2025, the Company has 5,750,000 public warrants and 270,500 private warrants.

In the future, we may issue warrants to purchase our securities. We may issue the warrants independently or together with any underlying securities, and the warrants may be attached or separate from the underlying securities. We may also issue a series of warrants under a separate warrant agreement to be entered into between us and a warrant agent. The warrant agent will act solely as our agent in connection with the warrants of such series and will not assume any obligation or relationship of agency for or with holders or beneficial owners of warrants.

The following description is a summary of selected provisions relating to the warrants that we may issue. The summary is not complete. When warrants are offered in the future, a prospectus supplement or other offering document will explain the particular terms of those securities and the extent to which these general provisions may apply. The specific terms of the warrants as described in a prospectus supplement or other offering document will supplement and, if applicable, may modify or replace the general terms described in this section.

**Terms**

The applicable prospectus supplement, information incorporated by reference, or free writing prospectus, may describe the terms of any warrants that we may offer, including, but not limited to, the following:

● the title of the warrants;

● the total number of warrants;

● the price or prices at which the warrants will be issued;

● the price or prices at which the warrants may be exercised;

● the currency or currencies that investors may use to pay for the warrants;

● the date on which the right to exercise the warrants will commence and the date on which the right will expire;

● whether the warrants will be issued in registered form or bearer form;

● information with respect to book-entry procedures, if any;

● if applicable, the minimum or maximum amount of warrants that may be exercised at any one time;

● if applicable, the designation and terms of the underlying securities with which the warrants are issued and the number of warrants issued with each underlying security;

● if applicable, the date on and after which the warrants and the related underlying securities will be separately transferable;

● if applicable, a discussion of material federal income tax considerations;

● if applicable, the terms of redemption of the warrants;

● the identity of the warrant agent, if any;

● the procedures and conditions relating to the exercise of the warrants; and

● any other terms of the warrants, including terms, procedures, and limitations relating to the exchange and exercise of the warrants.

**Warrant Agreement**

We may issue the warrants in one or more series under one or more warrant agreements, each to be entered into between us and a bank, trust company, or other financial institution as warrant agent. We may add, replace, or terminate warrant agents from time to time. We may also choose to act as our own warrant agent or may choose one of our subsidiaries to do so.

The warrant agent under a warrant agreement will act solely as our agent in connection with the warrants issued under that agreement. Any holder of warrants may, without the consent of any other person, enforce by appropriate legal action, on its own behalf, its right to exercise those warrants in accordance with their terms.

**Form, Exchange, and Transfer**

We may issue the warrants in registered form or bearer form. Warrants issued in registered form, i.e., book-entry form, will be represented by a global security registered in the name of a depository, which will be the holder of all the warrants represented by the global security. Those investors who own beneficial interests in a global warrant will do so through participants in the depository's system, and the rights of these indirect owners will be governed solely by the applicable procedures of the depository and its participants. In addition, we may issue warrants in non-global form, i.e., bearer form. If any warrants are issued in non-global form, warrant certificates may be exchanged for new warrant certificates of different denominations, and holders may exchange, transfer, or exercise their warrants at the warrant agent's office or any other office indicated in the applicable prospectus supplement, information incorporated by reference, or free writing prospectus.

Prior to the exercise of their warrants, holders of warrants exercisable for ordinary shares or preferred shares will not have any rights of holders of ordinary shares or preferred shares and will not be entitled to dividend payments, if any, or voting rights of the Class A Ordinary Share or preferred shares.

**Exercise of Warrants**

A warrant will entitle the holder to purchase for cash an amount of securities at an exercise price that will be stated in, or that will be determinable as described in, the applicable prospectus supplement, information incorporated by reference, or free writing prospectus. Warrants may be exercised at any time up to the close of business on the expiration date set forth in the applicable offering material. After the close of business on the expiration date, unexercised warrants will become void. Warrants may be redeemed as set forth in the applicable offering material.

Warrants may be exercised as set forth in the applicable offering material. Upon receipt of payment and the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other office indicated in the applicable offering material, we will forward, as soon as practicable, the securities purchasable upon such exercise. If less than all of the warrants represented by such warrant certificate are exercised, a new warrant certificate will be issued for the remaining warrants.

## Exhibit 4.5

**Exhibit 4.5**

**DESCRIPTION OF SECURITIES**

We are an exempted company incorporated in the Cayman Islands and our affairs are governed by the memorandum and articles of association, as amended and restated from time to time, and Companies Act (As Revised) of the Cayman Islands, which is referred to as the "Companies Act" below, and the common law of the Cayman Islands.

Our authorized share capital is US$400,000,000 divided into 500,000,000 shares, consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) 400,000,000 Class A Ordinary Shares with a par value of US$0.8
per share; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) 100,000,000 Class B Ordinary Shares with a par value of US$0.8
per share.

Voting Rights

Holders of both Class A and Class B Ordinary Shares vote collectively as a single class on all matters submitted to shareholders. Each Class A share carries one vote, while each Class B share carries 20 votes at general meetings, as outlined in our Second Amended and Restated Memorandum and Articles of Association.

Conversion Provisions

Non-Convertibility of Class B Shares: Class B Ordinary Shares cannot be converted into Class A shares or any other equity securities of the Company.

Class A to Class B Restrictions: Class A Ordinary Shares do not have conversion rights into Class B shares under any circumstances.

Dividend Rights

Holders of Class B Ordinary Shares are not entitled to receive dividends of any kind, whereas Class A shareholders may be eligible for distributions as determined by the board of directors.

Parity of Rights

Except for voting and dividend rights explicitly outlined above, all shares rank equally in terms of distributions, liquidation preferences, and other corporate rights, unless otherwise specified by Cayman Islands law or our governing documents.

**Ordinary shares**

The following includes a summary of the terms of ordinary shares, based on our Second Amended and Restated Memorandum and Articles of Association and Cayman Islands law.

***General.*** Our authorized share capital is US$400,000,000 divided into 500,000,000 shares consisting of (a) 400,000,000 Class A Ordinary Shares with a par value of US$0.8 per share; and (b) 100,000,000 Class B Ordinary Shares, each with a par value of US$0.8 per share. All of our issued and outstanding ordinary shares are fully paid and non-assessable. Certificates representing the Class A and Class B ordinary shares are issued in registered form. We may not issue share to bearer. Our shareholders who are non-residents of the Cayman Islands may freely hold and transfer their ordinary shares.

***Dividends.*** The holders of the Company's ordinary shares are entitled to such dividends as may be declared by its Board of Directors subject to its Second Amended and Restated Memorandum and Articles of Association and the Companies Act. In addition, the Company's shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by its directors. Dividends may only be paid out of profits or share premium account. in accordance with the Companies Act, and provided always that no dividend may be declared and paid unless the company's directors determine that, immediately after the payment, the company will be able to pay its debts as they become due in the ordinary course of business and the company has funds lawfully available for such purpose.

***Voting Rights.*** In respect of all matters subject to a shareholders' vote, each ordinary share is entitled to one vote. Voting at any meeting of shareholders is by poll and not on a show of hands.

A quorum required for a meeting of shareholders consists of one or more shareholders together holding not less than one-half of the issued and outstanding ordinary shares entitled to vote at general meetings present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. As a Cayman Islands exempted company, the Company is not obliged by the Companies Act to call shareholders' annual general meetings. The Company's Second Amended and Restated Memorandum and Articles of Association provide that to the extent required by the Listing Rules at the Nasdaq, the Company shall in each year hold a general meeting as its annual general meeting in which case the Company will specify the meeting as such in the notices calling it, and the annual general meeting will be held at such time and place as may be determined by its directors. The Company may, but shall not (unless required by applicable laws or the Listing Rules at the Nasdaq) be obliged to, in each year hold any other general meeting. Each general meeting, other than an annual general meeting, shall be an extraordinary general meeting. Shareholders' annual general meetings and any other general meetings of the company's shareholders may be called by a majority of its Board of Directors or, in the case of an extraordinary general meeting only, upon a requisition in writing given by one or more shareholders holding at the date of deposit of the requisition at least 10% of the rights to votes at general meetings, in which case the directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote at such meeting; however, the company Second Amended and Restated Memorandum and Articles of Association do not provide its shareholders with any right to put any proposals before any annual general meetings or any extraordinary general meetings not called by such shareholders. Advance notice of at least five (5) clear days' is required for the convening of the Company's annual general meeting and other general meetings unless such notice is waived in accordance with its articles of association. For these purposes, Clear Days, in relation to a period of notice, means that period excluding (a) the day when the notice is given or deemed to be given and (b) the day for which it is given or on which it is to take effect.

An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the Class A Ordinary Share cast by those shareholders entitled to vote who are present in person or by proxy at a general meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes attaching to the Class A Ordinary Share cast by those shareholders entitled to vote who are present in person or by proxy at a general meeting.

***Transfer of ordinary shares.*** Subject to the restrictions in the Company's Second Amended and Restated Memorandum and Articles of Association as set out below, any of the Company's shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by the Company's Board of Directors.

The Company's Board of Directors may decline to register any transfer of any ordinary share which were issued in conjunction with rights, options or warrants issued on terms that one cannot be transferred without the other, unless the Board of Directors receive evidence satisfactory to them of the like transfer of such option or warrant.

The registration of transfers may, after compliance with any notice required of the Nasdaq, be suspended and the register closed at such times and for such periods as the Company's Board of Directors may from time to time determine, *provided*, *however*, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as the Company's board may determine.

***Liquidation.*** If the Company is wound up, the shareholders may pass a special resolution allowing the liquidator to do either or both of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to divide in specie among the shareholders the whole or any
part of the assets of the Company and, for that purpose, to value any assets and to determine how the division shall be carried out as
between the shareholders or different classes of shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to vest the whole or any part of the assets in trustees for
the benefit of shareholders and those liable to contribute to the winding up.

***Redemption, Repurchase and Surrender of ordinary shares.*** The Company may (a) issue shares on terms that such shares are subject to redemption, at the Company's option or at the option of the holders thereof, on such terms and in such manner as may be determined, before the issue of such shares, by the Company's Board of Directors, or (b) with the consent by a special resolution of the Company's shareholders holding shares of a particular class, vary the rights attaching to that class of shares so as to provide that those shares are to be redeemed or are liable to be redeemed at the option of the Company on the terms and in the manner which the directors determine at the time of such variation. The Company may also repurchase any of its shares provided that the manner and terms of such purchase have been approved by its Board of Directors or are otherwise authorized by its Second Amended and Restated Memorandum and Articles of Association. Under the Companies Act, the redemption or repurchase of any share may be paid out of the Company's profits or out of the proceeds of a fresh issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if the Company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding, or (c) if the Company has commenced liquidation. In addition, the Company may accept the surrender of any fully paid share for no consideration.

***Variation of Rights of Shares.*** If at any time the Company's share capital is divided into different classes of shares then, unless the terms on which a class of shares was issued state otherwise, the rights attached to any class of shares (unless otherwise provided by the terms of issue of the shares of that class), may be varied with the consent in writing of a the holders of two-thirds of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of the class. The rights conferred upon the holders of the shares of any class issued 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 shares ranking *pari passu* with such existing class of shares.

***Inspection of Books and Records.*** Holders of the company ordinary shares have no general right under Cayman Islands law to inspect or obtain copies of the Company's list of shareholders or its corporate records (save for the Second Amended and Restated Memorandum and Articles, the register of mortgages and charges and any special resolutions of the company's shareholders). However, the Company will provide its shareholders with annual audited financial statements. See "Where You Can Find Additional Information."

***Issuance of Additional Shares.*** The Company's Second Amended and Restated Memorandum and Articles of Association authorize its Board of Directors to issue additional ordinary shares from time to time as its Board of Directors shall determine, to the extent of available authorized but unissued shares.

The Company's Second Amended and Restated Memorandum and Articles of Association also authorize its Board of Directors to deal with the unissued shares of the Company (a) either at a premium or at par; (b) with or without preferred, deferred or other special rights or restrictions whether in regard to dividend, voting, return of capital or otherwise.

The Company's Board of Directors may issue preferred shares without action by its shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders of ordinary shares.

***Anti-Takeover Provisions.*** Some provisions of the Company's Second Amended and Restated Memorandum and Articles of Association may discourage, delay or prevent a change of control of the Company or management that shareholders may consider favorable, including provisions that authorize the Company's Board of Directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by its shareholders.

***Exempted Company.*** The Company is an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:

● does not have to file an annual return of its shareholders with the Registrar of Companies;

● is not required to open its register of members for inspection;

● does not have to hold an annual general meeting;

● may issue shares with no par value;

● may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

● may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

● may register as a limited duration company; and

● may register as a segregated portfolio company.

"Limited liability" means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder's shares of the Company.

**Register of Members**

Under Cayman Islands law, the Company must keep a register of members and there shall be entered therein:

● the names and addresses of the members of the Company and a statement of the shares held by each member, which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) distinguishes each share by its number (so long as the share has a number);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) confirms the amount paid, or agreed to be considered as paid on the shares of each member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) confirms the number and category of shares held by each member; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) confirms whether each relevant category of shares held by a member carries voting rights under the articles of association of the Company, and if so, whether such voting rights are conditional;

● the date on which the name of any person was entered on the register as a member; and

● the date on which any person ceased to be a member.

For these purposes, "voting rights" means rights conferred on shareholders in respect of their shares to vote at general meetings of the Company on all or substantially all matters. A voting right is conditional where the voting right arises only in certain circumstances.

Under Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members shall be deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Upon the closing of this public offering, the register of members shall be immediately updated to reflect the issue of shares by us. Once our register of members has been updated, the shareholders recorded in the register of members shall be deemed to have legal title to the shares set against their name. However, there are certain limited circumstances where an application may be made to a Cayman Islands court for a determination on whether the register of members reflects the correct legal position. Further, the Cayman Islands court has the power to order that the register of members maintained by a company should be rectified where it considers that the register of members does not reflect the correct legal position. If an application for an order for rectification of the register of members were made in respect of our ordinary shares, then the validity of such shares may be subject to re-examination by a Cayman Islands court.

## Exhibit 8.1

**Exhibit 8.1**

**PRINCIPAL SUBSIDIARIES OF THE REGISTRANT**

---

| | |
|:---|:---|
| **Name** | **Ownership** |
| MC Hologram Inc ("MC") – A Cayman Islands company | 100% owned by MicroCloud |
| – Formed on November 10, 2020 |  |
| – Registered capital of USD 50,000 |  |
| – Primarily engages in holographic integrated solutions. |  |
| Quantum Edge HK Limited ("Mengyun HK") – A Hong Kong company | 100% owned by MC |
| Quantum Edge HK Limited ("Mengyun HK") – Formed on November 25, 2020 | 100% owned by MC |
| Quantum Edge HK Limited ("Mengyun HK") – Registered capital of HK 10,000 | 100% owned by MC |
| Quantum Edge HK Limited ("Mengyun HK") – A holding company | 100% owned by MC |
| Beijing Xihuiyun Technology Co., Ltd. ("Beijing Xihuiyun") – A PRC limited liability company | 100% owned by Mengyun HK |
| Beijing Xihuiyun Technology Co., Ltd. ("Beijing Xihuiyun") – Formed on May 11, 2021 | 100% owned by Mengyun HK |
| Beijing Xihuiyun Technology Co., Ltd. ("Beijing Xihuiyun") – Registered capital of USD 30,000,000 | 100% owned by Mengyun HK |
| Beijing Xihuiyun Technology Co., Ltd. ("Beijing Xihuiyun") – A holding company | 100% owned by Mengyun HK |
| Shanghai Mengyun Holographic Technology Co., Ltd. ("Shanghai Mengyun") – A PRC limited liability company | 81.63% owned by Beijing Xihuiyun and 18.37% owned by Mengyun HK |
| Shanghai Mengyun Holographic Technology Co., Ltd. ("Shanghai Mengyun") – Formed on March 24, 2016 | 81.63% owned by Beijing Xihuiyun and 18.37% owned by Mengyun HK |
| Shanghai Mengyun Holographic Technology Co., Ltd. ("Shanghai Mengyun") – Registered capital of RMB 27,000,000 | 81.63% owned by Beijing Xihuiyun and 18.37% owned by Mengyun HK |
| Shanghai Mengyun Holographic Technology Co., Ltd. ("Shanghai Mengyun") – Primarily engages in holographic integrated solutions. | 81.63% owned by Beijing Xihuiyun and 18.37% owned by Mengyun HK |
| Shenzhen Mengyun Holographic Technology Co., Ltd. ("Shenzhen Mengyun") – A PRC limited liability company | 100% owned by Shanghai Mengyun |
| Shenzhen Mengyun Holographic Technology Co., Ltd. ("Shenzhen Mengyun") – Formed on March 15, 2016 | 100% owned by Shanghai Mengyun |
| Shenzhen Mengyun Holographic Technology Co., Ltd. ("Shenzhen Mengyun") – Registered capital of RMB 10,000,000 | 100% owned by Shanghai Mengyun |
| Shenzhen Mengyun Holographic Technology Co., Ltd. ("Shenzhen Mengyun") – Primarily engages in holographic integrated solutions. | 100% owned by Shanghai Mengyun |
| Shenzhen BroadVision Technology Co., Ltd. ("Shenzhen Bowei") – A PRC limited liability company | 100% owned by Shenzhen Mengyun |
| Shenzhen BroadVision Technology Co., Ltd. ("Shenzhen Bowei") – Formed on April 12, 2016 | 100% owned by Shenzhen Mengyun |
| Shenzhen BroadVision Technology Co., Ltd. ("Shenzhen Bowei") – Registered capital of RMB 10,000,000 | 100% owned by Shenzhen Mengyun |
| Shenzhen BroadVision Technology Co., Ltd. ("Shenzhen Bowei") – Primarily engages in holographic PCBA solutions. | 100% owned by Shenzhen Mengyun |

---

---

| | |
|:---|:---|
| **Name** | **Ownership** |
| Mcloudvr Software Network Technology HK Co., Limited ("Mcloudvr HK") – A Hong Kong company | 100% owned by Shenzhen Mengyun |
| Mcloudvr Software Network Technology HK Co., Limited ("Mcloudvr HK") – Formed on February 2, 2016 | 100% owned by Shenzhen Mengyun |
| Mcloudvr Software Network Technology HK Co., Limited ("Mcloudvr HK") – Registered capital of HKD 100,000 | 100% owned by Shenzhen Mengyun |
| Mcloudvr Software Network Technology HK Co., Limited ("Mcloudvr HK") – Primarily engages in holographic integrated solutions. | 100% owned by Shenzhen Mengyun |
| Broadvision Intelligence (Hong Kong), Ltd. ("Broadvision HK") – A Hong Kong company | 100% owned by Shenzhen Bowei |
| Broadvision Intelligence (Hong Kong), Ltd. ("Broadvision HK") – Formed on November 5, 2020 | 100% owned by Shenzhen Bowei |
| Broadvision Intelligence (Hong Kong), Ltd. ("Broadvision HK") – Registered capital of HKD 10,000 | 100% owned by Shenzhen Bowei |
| Broadvision Intelligence (Hong Kong), Ltd. ("Broadvision HK") – No operation | 100% owned by Shenzhen Bowei |
| Ocean Cloud Technology Co., Limited. ("Ocean HK") – A Hong Kong company | 56% owned by Mcloudvr HK |
| Ocean Cloud Technology Co., Limited. ("Ocean HK") – Formed on November 4, 2021 | 56% owned by Mcloudvr HK |
| Ocean Cloud Technology Co., Limited. ("Ocean HK") – Registered capital of HKD 10,000 | 56% owned by Mcloudvr HK |
| Ocean Cloud Technology Co., Limited. ("Ocean HK") – No operation | 56% owned by Mcloudvr HK |
| Shenzhen Haiyun Xinsheng Technology Co., Ltd. ("Shenzhen Haiyun") – A PRC limited liability company | 100% owned by Ocean HK |
| Shenzhen Haiyun Xinsheng Technology Co., Ltd. ("Shenzhen Haiyun") – Formed on December 3, 2021 | 100% owned by Ocean HK |
| Shenzhen Haiyun Xinsheng Technology Co., Ltd. ("Shenzhen Haiyun") – Registered capital of RMB 300,000 | 100% owned by Ocean HK |
| Shenzhen Haiyun Xinsheng Technology Co., Ltd. ("Shenzhen Haiyun") – No operation | 100% owned by Ocean HK |
| Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") – A PRC limited liability company | 100% owned by Shenzhen Haiyun |
| Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") – Formed on February 26, 2024 | 100% owned by Shenzhen Haiyun |
| Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") – Registered capital of RMB 300,000 | 100% owned by Shenzhen Haiyun |
| Shenzhen Haiyun Xingchen Technology Co., Ltd. ("Haiyun Xingchen") – No operation | 100% owned by Shenzhen Haiyun |
| Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue") – A PRC limited liability company | 100% owned by Haiyun Xingchen |
| Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue") – Formed on January 18, 2021 | 100% owned by Haiyun Xingchen |
| Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue") – Registered capital of RMB 1,000,000 | 100% owned by Haiyun Xingchen |
| Yichang Ji Yue Technology Ltd. ("Yichang Ji Yue") – Advertising service<br> Disposed on September 30, 2025 | 100% owned by Haiyun Xingchen |
| BeiJing Ji Yue Technology Ltd. ("BeiJing Ji Yue") – A PRC limited liability company | 100% owned by Yichang Ji Yue |
| BeiJing Ji Yue Technology Ltd. ("BeiJing Ji Yue") – Formed on July 24, 2018 | 100% owned by Yichang Ji Yue |
| BeiJing Ji Yue Technology Ltd. ("BeiJing Ji Yue") – Registered capital of RMB 500,000 | 100% owned by Yichang Ji Yue |
| BeiJing Ji Yue Technology Ltd. ("BeiJing Ji Yue") – Advertising service<br> Disposed on September 30, 2025 | 100% owned by Yichang Ji Yue |

---

---

| | |
|:---|:---|
| **Name** | **Ownership** |
| Shenzhen Yushian Technology Co., Ltd. ("Shenzhen Yushian") – A PRC limited liability company | 100% owned by Shenzhen Haiyun |
| Shenzhen Yushian Technology Co., Ltd. ("Shenzhen Yushian") – Formed on February 18, 2022 | 100% owned by Shenzhen Haiyun |
| Shenzhen Yushian Technology Co., Ltd. ("Shenzhen Yushian") – Registered capital of RMB 1,000,000 | 100% owned by Shenzhen Haiyun |
| Shenzhen Yushian Technology Co., Ltd. ("Shenzhen Yushian") – Advertising service | 100% owned by Shenzhen Haiyun |
| HaiYun Group Investment Ltd. ("HaiYun Group") – A BVI Business company | 100% owned by MC |
| HaiYun Group Investment Ltd. ("HaiYun Group") – Formed on March 18, 2025 | 100% owned by MC |
| – No operation |  |
| HaiCloud Technology Inc. ("HaiCloud Inc") – A Cayman Islands company | 65% owned by HaiYun Group |
| HaiCloud Technology Inc. ("HaiCloud Inc") – Formed on May 7, 2025 | 65% owned by HaiYun Group |
| – Primarily engages in holographic integrated solutions. |  |
| HaiCloud Technology Limited. ("HaiCloud Ltd") – A Hong Kong company | 100% owned by HaiCloud Inc |
| HaiCloud Technology Limited. ("HaiCloud Ltd") – Formed on May 27, 2025 | 100% owned by HaiCloud Inc |
| HaiCloud Technology Limited. ("HaiCloud Ltd") – Registered capital of HKD 1,000,000 | 100% owned by HaiCloud Inc |
| HaiCloud Technology Limited. ("HaiCloud Ltd") – No operation |  |
| ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang") – A PRC limited liability company | 100% owned by HaiCloud Ltd |
| ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang") – Formed on June 27, 2025 | 100% owned by HaiCloud Ltd |
| ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang") – Registered capital of RMB 1,000,000 | 100% owned by HaiCloud Ltd |
| ShenZhen HaiYun Zhichuang Technology Ltd. ("HaiYun Zhichuang") – No operation |  |
| Shanghai Kuosou Technology Ltd. ("Shanghai Kuosou") – A PRC limited liability company | 100% owned by Haiyun Xingchen |
| Shanghai Kuosou Technology Ltd. ("Shanghai Kuosou") – Formed on February 11, 2018 | 100% owned by Haiyun Xingchen |
| Shanghai Kuosou Technology Ltd. ("Shanghai Kuosou") – Registered capital of RMB 1,000,000 | 100% owned by Haiyun Xingchen |
| Shanghai Kuosou Technology Ltd. ("Shanghai Kuosou") – Primarily engages in Advertising service. | 100% owned by Haiyun Xingchen |

---

## Exhibit 12.1

**Exhibit 12.1**

**Certification by the Principal Executive Officer**

**Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

I, Guohui Kang, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 20-F of MicroCloud Hologram Inc. (the "Company");

&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 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 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:

&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: March 27, 2026 | Date: March 27, 2026 |
| By: | /s/ Guohui Kang |
| Name: | Guohui Kang |
| Title: | Chief Executive Officer |

---

## Exhibit 12.2

**Exhibit 12.2**

**Certification by the Principal Financial Officer**

**Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

I, Bei Zhen, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 20-F of MicroCloud Hologram Inc. (the "Company");

&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 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 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:

&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: March 27, 2026 | Date: March 27, 2026 |
| By: | /s/ Bei Zhen |
| Name: | Bei Zhen |
| Title: | Chief Financial Officer |

---

## Exhibit 13.1

**Exhibit 13.1**

**Certification by the Principal Executive Officer** 

**Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

In connection with the Annual Report of MicroCloud Hologram Inc. (the "Company") on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Guohui Kang, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: March 27, 2026 | Date: March 27, 2026 |
| By: | /s/ Guohui Kang |
| Name: | Guohui Kang |
| Title: | Chief Executive Officer |

---

## Exhibit 13.2

**Exhibit 13.2**

**Certification by the Principal Financial Officer**

**Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

In connection with the Annual Report of MicroCloud Hologram Inc. (the "Company") on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bei Zhen, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: March 27, 2026 | Date: March 27, 2026 |
| By: | /s/ Bei Zhen |
| Name: | Bei Zhen |
| Title: | Chief Financial Officer |

---

## Exhibit 15.1

**Exhibit 15.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in the Registration Statements on Form F-3 (file no. 333-274650, file no. 333-279753 and file no. 333-288691) of our report dated March 27, 2026, relating to the consolidated financial statements of MicroCloud Hologram Inc., appearing in this Annual Report on Form 20-F for the year ended December 31, 2025.

/s/ Assentsure PAC

Singapore

March 27, 2026