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: 001-41712

Digital Currency X Technology Inc.

(Exact name of Registrant as Specified in its Charter)

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of Incorporation or Organization)

Room 1101, 11/F., Capital Centre, 151 Gloucester Road,

Wanchai, Hong Kong 000000

(Address of Principal Executive Offices)

Melissa Chen

Tel: +86-0535-2766221

Room 1101, 11/F., Capital Centre, 151 Gloucester Road,

Wanchai, Hong Kong

(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:

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

None

(Title of Class)

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

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 19,560,823 class A ordinary shares issued and 19,560,821 class A ordinary shares outstanding par value US$3.6 per share as of December 31, 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

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

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

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

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial 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:

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 ☒

Digital Currency X Technology Inc.

ANNUAL REPORT ON FORM 20-F

TABLE OF CONTENTS

INTRODUCTION

Digital Currency X Technology Inc. (“Digital Currency X”) is a Cayman Islands exempted company structured as a holding company. We completed a reorganization (the “Reorganization”) in June 2023 and became a public company upon our merger with Jupiter Wellness Acquisition Corp. (“JWAC”), a Delaware corporation. We are a technology company focused on digital asset management, currently undergoing a strategic transition following the divestment of our legacy electric vehicle business. Our new core business is centered on two key initiatives: the DexTrader platform, an on-chain data and information service platform, and our digital asset treasury management, which includes staking activities to generate yield.

As part of this strategic transition, on March 18, 2026, the Company entered into an agreement to sell its entire electric vehicle manufacturing business, operated through its subsidiary Chijet Inc. and its related entities. This divestment was a strategic decision to eliminate a loss-making operation and enable the Company to focus its resources on new technology-driven business lines. Upon the closing of this transaction, the Company will no longer conduct operations in the new energy vehicle industry, and the historical financial results of the disposed business will be classified as discontinued operations.

Our new platform, DexTrader, was launched in 2026 to provide global cryptocurrency traders with real-time, comprehensive data insights and analytical tools for decentralized exchanges (DEXs). DexTrader is positioned solely as a data and information service, similar to a financial news and data terminal, and does not facilitate or participate in any asset transactions. As of the date of this annual report, DexTrader remains in its early operational phase, focused on user acquisition and product optimization, and has not yet generated any revenues.

FORWARD-LOOKING STATEMENTS

This annual report contains “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that represent our beliefs, projections and predictions about future events. You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

These forward-looking statements are subject to various and significant risks and uncertainties, including those which are beyond our control. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. 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. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should thoroughly read this annual report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements. We disclaim any obligation to update our forward-looking statements, except as required by law.

This annual report also contains certain data and information that we obtained from various private publications and industry sources related to the digital asset and blockchain industry. Statistical data in these publications also include projections based on a number of assumptions.

In addition, the new and rapidly changing nature of the digital asset and blockchain technology industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our industry. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

Digital Currency X is not an operating company, but a Cayman Islands holding company. Following the divestiture of our legacy automotive business in March 2026, our operations are now focused on digital asset treasury management and DexTrader platform operation. Consequently, our core operations are no longer conducted in mainland China. As used in this annual report, “we,” “us,” “our company,” “the Company” or “our” refers to Digital Currency X Technology Inc. and its subsidiaries.

As a result of the divestment, the significant legal and operational risks and uncertainties associated with having a business based in mainland China, which were relevant to our former automotive operations, are no longer applicable to our current and future core business. In connection with our former operations, we faced various legal and operational risks and uncertainties associated with being based in or having operations primarily in mainland China and the complex and evolving PRC laws and regulations. For example, we faced risks associated with the fact that the PRC government had significant authority in regulating our former operations and could influence or intervene in those operations at any time, regulatory approvals on offerings conducted overseas by, and foreign investment in, China-based issuers, anti-monopoly regulatory actions, and oversight on data security. These risks could have resulted in a material adverse change in our historical operations and the value of our Class A Ordinary Shares (as defined herein), and could significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline or become of little or no value. For a detailed description of risks related to our former business in mainland China, see “Item 3. Key Information-D. Risk Factors-Risks Related to Our Former Operations in mainland China.”

While our current business is not subject to these PRC-specific risks, investors should be aware of the historical context of our former operations. The PRC government’s significant authority in regulating our former operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers, was a significant risk factor that could have limited or completely hindered our ability to offer or continue to offer securities to investors during that period. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or become of little or no value. For more details, see “Item 3. Key Information-D. Risk Factors-Risks Related to Our Former Operations in mainland China-The PRC government’s significant oversight and discretion over our former business operation could result in a material adverse change in our operations and the value of our Class A Ordinary Shares.”

Similarly, risks and uncertainties that arose from the legal system in mainland China, including risks and uncertainties arising from the legal system in mainland China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, which may also exist in other jurisdictions, could have resulted in a material adverse change in our former operations and the value of our shares. For more details, see “Item 3. Key Information-D. Risk Factors-Risks Related to Our Former Operations in mainland China-There may be changes from time to time in the interpretation and application of the laws of mainland China, and any failure to comply with laws and regulations could have a material adverse effect on our business, results of operations, financial condition and the value of our Class A Ordinary Shares.”

Recent Development

Nasdaq continued listing compliance

On January 23, 2026, we received a written notification (the “January Notice”) from the Listing Qualifications (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”), that it has regained compliance with the market value of listed securities requirement under Nasdaq Listing Rule 5550(b)(2) (the “Rule”). The Company was previously notified on December 12, 2025 by the Staff that it had failed to maintain a minimum market value of listed securities of $35,000,000 over the previous 30 consecutive business days as required by the Rule. The January Notice stated that the Staff has determined that for the last 20 consecutive business days, from December 23, 2025 to January 22, 2026, the Company’s market value of listed securities has been $35,000,000 or greater. Accordingly, the Company has regained compliance with the Rule and this matter is now closed.

Disposal of Automotive Business

On March 18, 2026, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Drivepoint Holdings Ltd., a limited liability company incorporated in the Cayman Islands. Pursuant to the Share Purchase Agreement, the Company conditionally agreed to sell, and the purchaser conditionally agreed to acquire, Chijet Inc., through the sale and purchase of the entire issued share capital of Chijet Inc. at a consideration of US$1.00 in cash, subject to the terms and conditions of the Share Purchase Agreement (the “Disposal”). The Disposal is part of the Company’s strategic transition away from its legacy electric vehicle manufacturing business, which has experienced intense industry competition, supply chain challenges, and cumulative losses exceeding US$100 million. Following a comprehensive strategic review, the Company’s board of directors determined that divesting Chijet Inc. would allow the Company to eliminate a loss-making operation, improve its financial position, and focus resources on its new core business in technology and digital asset management. The Company believes that the Disposal will enhance its ability to achieve sustainable profitability, support the growth of new technology-driven business lines, and facilitate ongoing compliance with Nasdaq listing requirements. The Disposal has been approved by the board of directors of the Company and the closing is subject to certain conditions. Upon Closing, the Company will cease to hold any interest in Chijet Inc. Accordingly, Chijet Inc., together with its subsidiaries, will cease to be subsidiaries of the Company and will no longer be consolidated into the financial statements of Company from the date of the Disposal onward. The historical financial results of the disposed business for the periods presented in this annual report will be classified as discontinued operations in our future financial statements, starting with the fiscal year 2026. See “Item 4. Information on the Company – 4A. History and Development of the Company.”

3.A. [Reserved]

3.B. Capitalization and Indebtedness

Not Applicable.

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

Not Applicable.

3.D. Risk Factors

Investing in our ordinary shares is highly speculative and involves a significant degree of risk. You should carefully consider the following risks as well as all other information contained in this annual report, including the matters discussed under the headings “Forward-Looking Statements” and “Item 5. Operating and Financial Review and Prospects” before you decide to make an investment in our ordinary shares. Following the divestiture of our legacy automotive business in March 2026, Digital Currency X is a holding company with its operations now focused on its technology and digital asset business, which are not primarily conducted in mainland China. The risks discussed below could materially and adversely affect our business, prospects, financial condition, results of operations, cash flows, ability to pay dividends and the trading price of our ordinary shares. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, prospects, financial condition, results of operations, cash flows and ability to pay dividends, and you may lose all or part of your investment.

Such risks are not exhaustive. We may face additional risks that are presently unknown to us or that we believe to be immaterial as of the date of this annual report. Known and unknown risks and uncertainties may significantly impact and impair our business operations.

Risk Related to Our Business and Industry

We are undergoing a fundamental transformation of our business model from vehicle manufacturing to a technology and digital asset-focused company, and our management team’s historical experience may not translate to our new operations.

Historically, our primary business was the development and manufacturing of traditional and new energy vehicles under the Chijet brand. Following our pivot to Digital Currency X Technology Inc. in December 2025, our focus has shifted entirely to our new business lines: the DexTrader data and information services platform, and digital asset treasury management, including staking. Our management team consists of industry veterans with decades of experience in automotive engineering, manufacturing, and industrial supply chain management. They possess limited historical experience in blockchain technology, digital asset custody, and cryptocurrency treasury management. If our management team cannot effectively adapt to this highly specialized and volatile industry, or if we fail to attract and retain qualified crypto-native talent, our new business strategy will fail.

Although the divestiture of our legacy automotive subsidiary was completed, we may be subject to post-closing risks.

On March 20, 2026, we completed the sale of our legacy electric vehicle subsidiary, Chijet Inc., for $1. While this transaction was intended to eliminate ongoing financial losses from the automotive business, there can be no assurance that we will not be subject to post-closing liabilities, indemnification claims, or disputes arising from the sale agreement or the historical operations of the divested entity. Any such unforeseen liabilities could negatively impact our financial condition and divert management’s attention from our new digital asset strategy.

Our balance sheet is highly concentrated in digital assets, subjecting us to extreme price volatility and the risk of substantial financial loss.

We held approximately US$401.96 million in digital assets within our treasury as of December 31, 2025. The prices of cryptocurrencies are extremely volatile and are influenced by factors beyond our control, including global macroeconomic conditions, regulatory crackdowns, technological glitches, and shifting market sentiment. A significant decline in the value of our digital asset holdings would immediately and materially impair our financial condition, book value, and our Nasdaq stock price.

Our participation in decentralized finance (DeFi) ecosystems exposes us to novel financial and technological risks, including smart contract vulnerabilities.

As part of our treasury optimization strategy, we deploy capital into DeFi protocols. This includes our strategy of staking digital assets to generate yield. These protocols rely on smart contracts deployed on public blockchains. Smart contracts are susceptible to coding errors, exploits, and “flash loan” attacks. If a DeFi protocol we utilize is hacked or fails to operate as intended, we could lose a significant portion, or all, of the digital assets we have committed to that ecosystem, with little to no legal recourse for recovery.

If our proprietary custody infrastructure experiences a security breach or cyberattack, our digital asset holdings could be permanently lost.

We are developing infrastructure for secure cryptocurrency custody. Digital assets are highly attractive targets for cybercriminals. If our security protocols, including private key management and cold storage mechanisms, are breached, our treasury could be stolen. Because digital asset transactions are generally irreversible, any such loss would likely be permanent and uninsured, leading to a catastrophic loss of capital.

Our business model and technologies have not yet been proven in a commercial environment, and any failure to commercialize our strategic plans would adversely affect our results of operations and business, damage our reputation, and could result in substantial liabilities in excess of our resources.

Investors should be aware of the difficulties normally encountered by an enterprise undergoing a fundamental transformation into a new industry, many of which are beyond our control, including substantial risks and expenses in the course of developing new, unproven digital asset infrastructure, establishing our presence in Web3 markets, reorganizing operations, and undertaking specialized treasury management activities. Our future financial performance depends, in part, on our ability to design, develop, deploy, scale, and secure our new business lines on a timely and cost-effective basis, including our ability to generate consistent returns from our staking activities, rather than our historical focus on manufacturing and assembling vehicles.

We have a history of operating losses and expect to incur significant additional operating losses during this transition.

We are operating with a history of negative operating cash flows stemming from our legacy operations, having incurred net losses of $30.07 million, $69.01 million and $98.50 million during the years ended December 31, 2025, 2024, and 2023 respectively. These historical losses were generated by our now-divested automotive business and are not indicative of the expected financial performance of our new digital asset treasury management operations. We expect that we will continue to incur operating and net losses for the medium term as we capitalize our new digital asset operations. The amount of future losses and when, if ever, we will achieve profitability are uncertain. In addition, even if we achieve profitability under our new operational focus, there can be no assurance that we will be able to maintain profitability in the future. Our potential profitability is now particularly dependent upon the successful commercialization of our DexTrader platform, the broader market adoption of digital currencies, and our ability to generate positive returns from our digital asset staking and treasury management activities, which may not occur at the levels we currently anticipate or at all.

Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited consolidated financial statements included in this annual report.

Our audited consolidated financial statements have been prepared assuming that we, Chijet Group, will continue as a going concern, which contemplates the realization of our assets and settlement of our liabilities in the ordinary course of business.

In recent periods, we have experienced recurring operating losses and negative cash flows from operations. Furthermore, we have undergone a significant strategic transformation, including the disposal of our legacy automotive business and a shift to digital asset-related activities, which have a limited operating history. These factors expose us to certain risks and uncertainties.

Pursuant to applicable accounting guidance, our management has assessed our ability to remain a going concern for a period of at least twelve months from the date these financial statements are issued. This assessment involved preparing detailed cash flow forecasts based on our current cost structure and expected operating needs.

Based on this evaluation, our management anticipates that we will have sufficient liquidity to meet our obligations as they come due for at least twelve months from the issuance date. The forecasts indicate that we can sustain operations primarily through our existing cash resources and ongoing cost management, without relying on uncertain inflows such as projected revenues, financing activities, or returns from our digital asset-related operations.

A significant portion of our assets consists of digital assets, which are subject to price volatility and changing market conditions. Additionally, certain of our digital assets have been placed under staking arrangements after year-end, which may restrict their availability for short-term liquidity purposes. Although these factors introduce uncertainty, they have been taken into account in our management’s assessment.Our management has launched various strategic initiatives to support our long-term operations and financial position, including the development of a digital asset trading platform, the expansion of our digital asset-related services, and access to financing arrangements that could provide additional liquidity if necessary. The timing and extent of benefits from these initiatives depend on market conditions and execution risks.In light of the foregoing, our management believes that it is not probable that we will fail to meet our obligations as they fall due within one year from the date these financial statements are issued. Consequently, our consolidated financial statements have been prepared on a going concern basis.

The implementation of our M&A strategy, which requires the integration of our newly acquired company and its business, operations and employees with our own, involves significant risks, and the failure to integrate successfully may adversely affect our future results.

Any failure to successfully integrate the business, operations and employees of our newly acquired subsidiary, or to otherwise realize the anticipated benefits of this acquisition, could harm our results of operations. Our ability to realize these benefits will depend on the timely integration and consolidation of organizations, operations, facilities, procedures, policies and technologies, and the harmonization of differences in the business cultures between our companies. The challenges involved in integrating include:

The benefits we expect to realize from this is, necessarily, based on projections and assumptions about the combined businesses of our company, and assume, among other things, Our projections and assumptions concerning this acquisition may be inaccurate, however, and we may not successfully integrate and our operations in a timely manner, or at all. We may also be exposed to unexpected contingencies or liabilities of the acquired company. If we do not realize the anticipated benefits of this transaction, our growth strategy and future profitability would be adversely affected.

Our discontinued automotive operations had liabilities under government loan agreements, and while these liabilities were transferred in the divestiture, we cannot guarantee that we will be free from future claims related to these historical obligations.

Our former automotive business’s ability to obtain funds or incentives from government sources was subject to the availability of funds under applicable government programs and approval of its applications to participate in such programs. The application process for these funds and other incentives was highly competitive. We cannot assure you that the former business would have been successful in obtaining any of these additional grants, loans, and other incentives. If it was not successful in obtaining any of these additional incentives and was unable to find alternative sources of funding to meet its planned capital needs, its business and prospects for certain projects could have been materially adversely affected.

In May 2016, our former subsidiary secured two interest-free loans from non-financial institutions specifically for developing the electric vehicle industry in Xiangyang, PRC. The loans’ utilization was strictly limited to this purpose, with their maturity depending on the development’s progress. However, due to the COVID-19 pandemic and subsequent regulations, the subsidiary was unable to meet the loan conditions or secure government subsidies to repay the loans by July 2022. Consequently, the loans were reclassified as current liabilities for the years 2024 and 2025, and the subsidiary incurred a penalty of US$748,166 (RMB5.23 million), which is 5% of the land use rights cost, due to its default. The lender also reserved rights to demand compensation for losses, repurchase the land, and require repayment of any related government subsidies. As of March 19, 2026, no subsidies had been received. The principal amounts outstanding were approximately US$99.33 million (RMB694.60 million) and US$95.16 million (RMB694.60 million) as of December 31, 2025 and 2024, respectively. The variance primarily resulted from currency exchange rate fluctuations. The court is currently conducting an auction of the mortgaged buildings, land, and machinery.

The former subsidiary was negotiating with the lender to extend the loan terms and was planning to expand production to fulfill the loan conditions. During the period ended December 31, 2025, the subsidiary was unable to meet the conditions to apply for the government subsidies to repay the loans. In June 2023, the subsidiary signed two pledge agreements with the lender. Pursuant to the pledge agreements, it pledged machinery and equipment, molds and tooling with a carrying value of approximately US$4.64 million, buildings with a carrying value of approximately US$14.28 million and land use rights with a carrying value of US$14.05 million to the government to secure the repayment of the principal and related interest on the aforementioned loans. These assets and associated liabilities were part of the divested automotive business.

Additionally, in December 2019, Shandong Baoya, a former subsidiary, entered into loan agreements with Yantai Guofeng Investment Holding Group Co., Ltd. The loans bore an annual interest rate of 6.5%. Pursuant to the loan agreements, if Shandong Baoya met certain development conditions, part of the loan could be waived and converted to a government subsidy, including interest on such portion. For the year ended December 31, 2025, no principal amount was converted to government subsidies. As of December 31, 2025, the outstanding principal was US$105.82 million. As of April 30, 2026, the outstanding principal and interest were US$156.00 million. As of December 31, 2024, Shandong Baoya was notified that Yantai Guofeng had transferred its creditor’s rights in Shandong Baoya to Yantai Public Transportation Co., Ltd (“Yantai Trans”).

On February 10, 2025, Yantai Trans filed an application for property preservation with the Yantai Intermediate Court, which resulted in the freezing of Shandong Baoya’s land use rights. The net value of the land use rights was US$26.18 million as of December 31, 2025.

Our former automotive subsidiaries were in breach of certain loan agreements, and although these liabilities were transferred in the divestiture, we may be exposed to post-closing claims.

Our former subsidiaries obtained loans from certain related parties and other institutions to fund their business operations. FAW Jilin, China FAW Corporation Limited (the minority shareholder of FAW Jilin) and its affiliate, FAW Finance Co., Ltd entered into a series of working capital loan agreements. The amount of these loans was RMB700 million (approximately US$95.90 million) on January 29, 2019, in the amount of RMB350 million (approximately US$47.95 million) on May 20, 2019, in the amount of RMB150 million (approximately US$20.55 million) on August 29, 2019, in the amount of approximately RMB270 million (approximately US$36.95 million) on October 29, 2019, in the amount of approximately RMB188 million (approximately US$25.73 million) on November 27, 2019, in the amount of approximately RMB87.4 million (approximately US$11.98 million) on December 13, 2019, each of the loans bears an annual interest rate of 3.915% with a term of one year. On January 23, 2020, the loan in the amount of RMB 700 million was extended for 12 months. On May 20, 2020, the parties entered into a supplemental agreement to the loan agreements, pursuant to which, FAW Jilin agreed to make four annual installment payments of US$39.44 million (RMB 287.87 million), for the remaining principal balance and pledged certain land use rights, buildings, machinery and equipment, molds and tooling and other logistics equipment of FAW Jilin. FAW Jilin failed to make the payments on November 1, 2022, November 1, 2023 and November 1, 2024. As of April 30, 2026, the aggregate outstanding principal and interest under such loans were US$206.97 million. See “Item 13. Defaults, Dividend Arrearages and Delinquencies” for more details and current status of the loan agreements.

If FAW Finance Co., Ltd. were to enforce the pledge, the operations of the divested automotive business would have been disrupted. As these assets and liabilities have been divested, a direct operational risk to us is remote, but we may face indemnification or other claims. Consequently, the former business’s business, financial condition, results of operations and prospects could have been materially and adversely affected.

In May 2016, our former subsidiary secured two interest-free loans from non-financial institutions specifically for developing the electric vehicle industry in Xiangyang, PRC. The loans’ utilization was strictly limited to this purpose, with their maturity depending on the development’s progress. However, due to the COVID-19 pandemic and subsequent regulations, the subsidiary was unable to meet the loan conditions or secure government subsidies to repay the loans by July 2022. Consequently, the loans were reclassified as current liabilities for the years 2024, and 2025, and the subsidiary incurred a default penalty of US$748,166 (RMB5.23 million), which is 5% of the land use rights cost. The lender also reserved rights to demand compensation for losses, repurchase the land, and require repayment of any related government subsidies. As of April 30, 2026, no subsidies had been received. The principal amounts outstanding were approximately US$99.33 million (RMB694.60 million) and US$95.16 million (RMB 694.60 million), respectively, as of December 31, 2025, and December 31, 2024. The variance primarily resulted from currency exchange rate fluctuations. The court is currently conducting an auction of the mortgaged buildings, land, and machinery.

The former subsidiary was negotiating with the lender to extend the loan terms and was planning to expand production to fulfill the loan conditions. During the period ended December 31, 2025, the subsidiary was unable to meet the conditions to apply for the government subsidies to repay the loans. In June 2023, the former subsidiary signed two pledge agreements with the lender. Pursuant to the pledge agreements, the former subsidiary pledged machinery and equipment, mold and tooling with a carrying value of approximately US$4.64 million, buildings with a carrying amount of approximately US$14.28 million and land use rights with a carrying value of US$14.05 million to the government to secure the repayment of the principal and related interest on the aforementioned loans. If the lenders were to enforce the pledge, the operations of the divested automotive business would have been disrupted. As these assets and liabilities have been divested, this no longer poses a direct operational risk to our current business. Consequently, the former business’s business, financial condition, results of operations and prospects could have been materially and adversely affected.

We will require additional capital to support business growth, and this capital might not be available on commercially reasonable terms, or at all.

We anticipate that we will need to raise additional funds through equity or debt financings. Our new business, which includes the development of the DexTrader platform and the management of a substantial digital asset treasury, is capital-intensive, and we expect that the costs and expenses associated with our planned operations will continue to increase in the near term. We do not expect to achieve positive cash flow from operations in the short term, if at all. Our plan to grow our business is dependent upon the timely availability of funds and further investment in technology development, cybersecurity, testing, and the build-out of our secure digital asset infrastructure. In addition, the fact that we have a limited operating history in the digital asset industry means that we have limited historical data on the demand for our services. As a result, our future capital requirements are uncertain, and actual capital requirements may be greater than what we currently anticipate.

If we raise additional funds through further issuances of equity or convertible debt securities, our shareholders could suffer significant dilution and economic loss, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our current equity securities. Any debt financing in the future could involve additional 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.

We may not be able to obtain additional financing on terms favorable to us, if at all. Our ability to obtain such financing could be adversely affected by a number of factors, including general conditions in the global economy and in the global financial markets, including recent volatility and disruptions in the capital and credit markets,

If we are not able to successfully manage our growth strategy, our business operations and financial results may be adversely affected.

Our expected future growth presents numerous managerial, administrative, and operational challenges. Our ability to manage the growth of our operations will require us to continue to develop and improve our management information systems and our other internal systems and controls. In addition, our growth will increase our need to attract, develop, motivate, and retain both our management and employees. The inability of our management to effectively manage our growth or the inability of our employees to achieve anticipated performance could have a material adverse effect on our business.

Operation of our business in international markets may expose us to additional risks, which could have an adverse effect on our operating results.

Some of our current operations involve participating in global digital asset ecosystems, and we expect to generate a portion of our revenues from decentralized operations outside of the United States in the future. Operations in international markets may require us to respond to new and unanticipated regulatory, compliance, technological, and other challenges. These efforts may be time-consuming and costly, and there can be no assurance that we will be successful in responding to these and other challenges we may face as we operate in international markets, including:

Our international operations are also subject to general geopolitical risks, such as political, social, and economic instability, war, civil unrest, sabotage, kidnapping and ransom, expropriation, incidents of terrorism, changes in diplomatic and trade relations, or responses to such events, which could disrupt global internet infrastructure or digital asset markets. One or more of these factors could adversely affect any of our international operations and result in lower revenue and/or greater operating expenses than we expect, and could significantly affect our results of operations and financial condition.

Our overall success in international markets will depend, in part, on our ability to succeed in differing legal, regulatory, economic, social, and political conditions. We may not be successful in developing and implementing policies and strategies that will be effective in managing these risks in each country where we do business. Our failure to manage these risks successfully could harm our international operations, reduce our international revenue, and increase our costs, thus adversely affecting our business, financial condition, and operating results.

Our revenue, expenses, and operating results may fluctuate significantly.

Our revenue, expenses, and operating results may fluctuate significantly because of numerous factors, some of which may contribute to more pronounced fluctuations in an uncertain global economic environment or volatile cryptocurrency market. In addition to the other risks described in this “Risk Factors” section, the following factors could cause our operating results to fluctuate:

As a consequence, operating results for any future periods are difficult to predict and, therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the foregoing factors, or any other factors discussed elsewhere herein, could have a material adverse effect on our business, results of operations, and financial condition that could adversely affect the price of our shares.

Failure of third-party service providers to maintain secure technological infrastructure or provide reliable services in a timely manner could compromise our digital asset operations, which could damage our reputation, have a negative impact on our strategic goals, and adversely affect our growth.

Our success depends on our ability to securely manage our digital asset treasury and operate our custody solutions, which in part depends on the ability of third parties to provide us with highly secure and reliable technological infrastructure and services. In developing and maintaining our digital asset ecosystem, we rely heavily on third-party software, decentralized blockchain networks, smart contract auditing services, and cybersecurity infrastructure that meet our exacting specifications, as well as on specialized services performed by Web3 contractors.

We will also rely on third-party node operators, cryptocurrency exchanges, and decentralized finance (DeFi) protocols to execute, validate, and yield-generate transactions related to our treasury management; and we may need to engage new technological partners or deploy capital into emerging protocols with which we have limited historical experience.

If any of our technological partners or service providers are unable to provide secure and reliable services that meet our operational standards or satisfy our strategic commitments, our reputation, business, and operating results could be harmed. In addition, because the digital asset industry often relies on decentralized open-source protocols and third parties that operate with limited liability frameworks, we may be unable to avail ourselves of traditional warranty and contractual protections. This lack of legal recourse means we may incur significant unrecoverable losses or liabilities related to compromised infrastructure or exploited smart contracts, which could have a material adverse effect on our business, financial condition, and operating results. Moreover, any delays, hacks, network congestion, or interruptions in these third-party platforms or services could adversely affect the quality and performance of our treasury management and custody solutions, and require considerable expense to establish alternate infrastructure. This could cause us to experience difficulty executing our digital currency strategies and retaining institutional confidence, and could fundamentally harm our brand, reputation, and growth.

Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate.

Market opportunity estimates and growth forecasts, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate. The estimates and forecasts we include in this annual report relating to the size and expected growth of the digital asset custody market and institutional Web3 adoption may also prove to be inaccurate. The estimated global addressable market is based on assumptions that may prove to be inaccurate or incorrect. In addition, the estimated global market for digital assets and decentralized finance may not materialize in the timeframe we expect, if ever, and even if these markets meet the estimates presented in this annual report, this should not be taken as indicative of our future growth or prospects. In order to be successful, we will need to prove our ability to commercialize and scale our proprietary Web3 technology, successfully secure institutional partnerships and custody clients, obtain sufficient capital to finance our operations, including the ongoing development and deployment of our secure digital asset infrastructure, and otherwise successfully scale our treasury management strategies. We face a number of challenges in achieving our objectives, including those described elsewhere in these risk factors, and these challenges are significant. There can be no assurance that we will be able to achieve our objectives or successfully grow our business, capture meaningful market share, or take advantage of market opportunities in the digital asset space.

Our business depends significantly on experienced and skilled personnel alongside third-party blockchain engineering subcontractor resources, and if we lose key personnel or if we are unable to attract and integrate additional skilled personnel, it will be markedly more difficult for us to manage our business and execute our digital asset strategies.

The success of our new business model and the secure deployment of our cryptocurrency custody infrastructure will depend in large part on the skill of our internal personnel and on specialized Web3 development resources, rather than historical trade labor. Competition for highly qualified personnel, particularly those with deep expertise in blockchain technology, cryptographic security, and decentralized finance (DeFi) ecosystems, is exceptionally high and continues to intensify. In the event we are unable to attract, hire, and retain the requisite crypto-native personnel and subcontractors, we may experience severe delays in developing our technological infrastructure and optimizing our treasury strategies in accordance with our projected schedules and operational budgets.

Further, any increase in industry demand for these highly specialized engineering personnel may result in significantly higher compensation and retention costs, causing us to exceed our budgets for technological development and infrastructure deployment. Either of these circumstances may have a material adverse effect on our business, financial condition, and operating results, harm our reputation and trust among institutional clients, and cause us to curtail our pursuit of new digital asset initiatives.

Ultimately, our future success during this critical transition is particularly dependent on the vision, skills, experience, and effort of our senior management team, including our executive officers and our director, and chief executive officer, Melissa Chen. If we were to lose the services of any of our executive officers or key technological employees, our ability to effectively manage our pivot to digital asset treasury operations and securely implement our decentralized technology strategy could be fundamentally harmed, causing our business and financial prospects to suffer.

We expect to operate in a highly competitive industry, and our current or future competitors may be able to compete more effectively than we do, which could have a material adverse effect on our business, revenues, growth rates, and market share.

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition could be adversely affected if we are unable to compete effectively. The crypto industry is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, changing customer needs, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. Many of our competitors have longer operating histories in the Web3 space and greater resources than we do and could focus their substantial financial resources to develop a competitive advantage.

We face significant competition from a variety of companies around the world, in particular those located outside the United States, who at times are and may in the future be subject to significantly less stringent regulatory and compliance requirements in their local jurisdictions. Their business models rely on being unregulated or only regulated in a small number of lower compliance jurisdictions, whilst also offering their products in highly regulated jurisdictions, including the United States, without necessarily complying with the relevant regulatory requirements in such jurisdictions. Given the uneven enforcement by United States and foreign regulators, many of these competitors have been able to operate from offshore while offering large numbers of products and services to consumers, including in the United States, without complying with the relevant licensing and other requirements in these jurisdictions, and historically without penalty. We also have expended significant managerial, operational, and compliance costs to comply with laws and regulations applicable to us in the jurisdictions in which we operate, and expect to continue to incur significant costs to comply with these requirements, which these unregulated or less regulated competitors have not had to incur.

Our competitors may also offer on-chain data analytics or treasury services at prices below cost, devote significant sales resources to competing with us, or attempt to recruit our highly specialized key personnel by increasing compensation, any of which could improve these competitors’ competitive positions. In addition, we may also face competition based on technological developments that compete with our digital asset infrastructure. Decentralized networks and other disruptive technologies such as generative AI may fundamentally alter the use of our products or services in unpredictable ways. If we do not keep pace with product and technology advances and otherwise keep our solutions competitive, our competitors may develop technology that would make our infrastructure noncompetitive or obsolete.

Some of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as greater name recognition within the crypto community, longer operating histories, larger institutional customer bases, broader and deeper decentralized product lines, greater customer support resources, proven cryptographic technology, lower labor and research and development costs, substantially greater financial and other resources, and larger scale liquidity pools.

Some of our expected larger competitors, such as established centralized cryptocurrency exchanges, may have substantially broader product offerings and may be able to leverage their relationships with partners and customers based on other products to gain business in a manner that discourages potential customers from utilizing our services, including by selling at zero or negative margins or product bundling. In addition, innovative start-up companies, and larger companies that are making significant investments in blockchain research and development, may invent similar or superior technologies that compete with our technology. Our current and potential competitors may establish cooperative relationships among themselves or with third parties that may further enhance their resources. If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

Security breaches and disruptions to our information technology infrastructure could interfere with our operations and expose us to liability, which could have a material adverse effect on our business, financial condition and results of operations.

In the ordinary course of business, we rely heavily on information technology networks and systems to process, transmit, and store information electronically, and to manage and support a variety of business processes and activities. Additionally, we collect and store certain data, including proprietary business information and customer and employee data, and may have access to other confidential information in the ordinary course of our business. Despite our cybersecurity measures (including monitoring of networks and systems, and maintenance of backup and protective systems) which are continuously reviewed and upgraded, our information technology networks and infrastructure may still be vulnerable to damage, disruptions, or shutdowns due to attacks by hackers or breaches, employee error or malfeasance, data leakage, power outages, computer viruses and malware, telecommunication or utility failures, systems failures, natural disasters, or other catastrophic events. Further, the risk of potential cyberattacks by state actors or others have been heightened in connection with the ongoing conflict between Russia and Ukraine and it is uncertain how this new risk landscape will impact our operations. When geopolitical conflicts develop, government systems as well as critical infrastructures such as financial services and utilities may be targeted by state-sponsored cyberattacks even if they are not directly involved in the conflict.

We have not experienced and defended against threats to our systems and security (such as phishing attempts) to date. However, we could incur significant costs in order to investigate and respond to future attacks, to respond to evolving regulatory oversight requirements, to upgrade our cybersecurity systems and controls, and to remediate security compromise or damage. In response to past threats and attacks, we have implemented further controls and planned for other preventative actions to further strengthen our systems against future attacks. We cannot assure that such measures will provide absolute security, that we will be able to react in a timely manner, or that our remediation efforts following past or future attacks will be successful. Consequently, our financial performance and results of operations would be materially adversely affected.

We are or may be subject to risks associated with strategic alliances or acquisitions.

We have in the past, and may in the future, enter partnerships, collaborations, joint ventures, or strategic alliances with third parties in connection with the development, operation, and enhancement of our platform and products and the provision of our services. These alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party, and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.

When appropriate opportunities arise, we may acquire additional digital assets, decentralized products, blockchain technologies, or businesses that are complementary to our existing digital asset treasury management business. In addition to possible shareholder approval, we may need approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could result in increased delay and costs and may disrupt our business strategy if we fail to do so. Furthermore, acquisitions and the subsequent integration of new Web3 assets, cryptographic protocols, and businesses into our own custody infrastructure require significant attention from our management and could result in a diversion of resources from our existing decentralized finance operations, which in turn could have an adverse effect on our operations. Acquired digital assets or blockchain businesses may not generate the financial results or yields we expect. Acquisitions could result in the use of substantial amounts of our fiat or digital currency reserves, potentially dilutive issuances of equity securities or proprietary tokens, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets, and exposure to potential unknown liabilities of the acquired business, including hidden smart contract vulnerabilities or legacy regulatory infractions. Moreover, the costs of identifying, auditing, and consummating acquisitions in the rapidly evolving digital asset space may be significant.

Our ability to execute our digital asset strategies and our future growth depend upon our ability to maintain relationships with our existing technological providers and strategic partners, to source new infrastructure providers for our critical custody solutions, and to complete building out our decentralized ecosystem while effectively managing the risks due to such relationships.

Our success will be dependent upon our ability to enter into new service agreements and maintain our relationships with technological providers and strategic partners who are critical and necessary to the operation and security of our digital asset treasury. We also rely on these providers and our strategic partners to provide us with key cryptographic infrastructure, smart contract auditing, and technological support for our custody solutions. The service agreements we have or may enter into with key technology vendors and our strategic partners in the future may have provisions where such agreements can be terminated in various circumstances, including potentially without cause. If these providers and strategic partners become unable to provide, or experience delays in providing critical Web3 infrastructure or technology, or if the service and strategic agreements we have in place are terminated, it may be difficult to find replacement infrastructure and technology. Changes in business conditions, network congestion, governmental regulatory changes, and other factors beyond our control or that we do not presently anticipate could affect our ability to receive seamless technological services from our providers and strategic partners.

Furthermore, we have not secured long-term service agreements for all of our required blockchain infrastructure, custody technology, and security auditing services. We may be at a disadvantage in negotiating enterprise-level agreements for the highly specialized technologies required to manage an approximately US$401.96 million digital asset treasury as of December 31, 2025. Additionally, there is the possibility that finalizing the integration of these third-party technological solutions and decentralized protocols will cause significant disruption to our operations, or such service agreements could be executed at costs that make it difficult for us to operate profitably.

If we do not enter into longer-term service agreements with predictable pricing for our technological infrastructure and node operations, we may be exposed to severe fluctuations in the prices of blockchain networking, cloud storage, and cryptographic security services. Agreements for the use of proprietary custody software, decentralized API endpoints, and other Web3 infrastructure contain or are likely to contain variable pricing provisions that are subject to adjustment based on changes in market demand or underlying blockchain network transaction fees. Substantial increases in the prices for such technological services, whether due to acute network congestion, cybersecurity market dynamics, or general inflation, would increase our operating costs and could reduce our margins if we cannot recoup the increased costs. Any attempts to increase the management or custody fees charged to our institutional clients in response to increased underlying technological costs could be viewed negatively by our current or potential clients and could adversely affect our business, prospects, financial condition, or results of operations.

Our operations rely heavily on a variety of agreements with our strategic partners, including agreements related to blockchain research and development, digital asset custody, smart contract security, and decentralized finance (DeFi) integration. We may also come to rely on other Web3 technology providers, node operators, and cryptocurrency exchanges. The inability for us to maintain agreements or partnerships with our existing strategic partners or to enter into new agreements or partnerships could have a material and adverse effect on our ability to operate as a standalone business, execute our digital asset treasury strategies, reach our technological deployment targets, or focus our efforts on our core areas of differentiation.

Our operations rely heavily on a variety of agreements, including agreements related to cryptographic infrastructure, secure custody engineering, and exchange liquidity, with our strategic partners, including certain other decentralized protocol developers, Web3 vendors, and blockchain technology providers. Our reliance on these agreements subjects us to a number of significant risks, including the risk of being unable to operate as a standalone business, securely manage our cryptocurrency treasury, reach our development and deployment targets, or focus our efforts on core areas of differentiation.

These partnerships permit us to benefit from the extensive experience of established technology and know-how in decentralized infrastructure and digital asset security, while focusing our efforts on core areas of differentiation, such as treasury optimization, proprietary custody solutions, and the rapid adoption of the latest Web3 technologies. We intend to continue to rely on these partnerships as part of our strategy. We intend to rely primarily on our arrangements with specified infrastructure and technological partners to support our future digital asset operations and ecosystem models. If we are unable to maintain agreements or partnerships with our existing strategic partners or to enter into new agreements or partnerships, our ability to operate as a standalone business, execute our on-chain strategies, reach our development and deployment targets, or focus our efforts on core areas of differentiation could be materially and adversely affected.

We are dependent on our strategic partners and technological suppliers, some of which are single-source providers of critical cryptographic infrastructure, and the inability of these strategic partners and suppliers to deliver necessary technological services on schedule and at prices, quality levels, and capacities acceptable to us, or our inability to efficiently manage these dependencies, could have a material and adverse effect on our results of operations and financial condition.

We rely on our strategic partners and technological vendors for the provision and development of the key cryptographic infrastructure and smart contract architecture used in our digital asset treasury and custody solutions. While we plan to utilize open-source protocols and obtain infrastructure services from multiple providers whenever possible, some proprietary technological components used in our custody systems will be licensed by us from a single source, and our limited, and in many cases single-source, technological supply chain exposes us to multiple potential sources of operational failure or bandwidth shortages for our treasury operations.

However, it is possible that in the future our infrastructure providers may not be able to meet our required security specifications and performance characteristics, which would impact our ability to achieve our strategic treasury objectives. Additionally, our vendors may be unable to obtain required SOC certifications or provide necessary security warranties for their software that are necessary for use in our institutional custody solutions. We may also be impacted by changes in our technological needs, including API and network fee increases from our providers, in order to meet our security targets and development timelines as well as due to protocol upgrades. Likewise, any significant increases in our digital asset holdings or decentralized finance (DeFi) transaction volume may in the future require us to procure additional server capacity and node infrastructure in a short amount of time. Our providers may not ultimately be able to sustainably and timely meet our cost, security, and volume needs, requiring us to replace them with other sources. If we are unable to obtain suitable technological infrastructure and smart contract auditing services from our partners, or if our vendors decide to create or supply a competing digital asset custody product, our business could be adversely affected. Further, if we are unsuccessful in our efforts to control and reduce our decentralized networking costs, our results of operations will suffer.

While we have not experienced any temporary critical infrastructure disruption in the recent past, nor have our digital asset operations been severely affected by such circumstances, we have implemented risk prevention measures. These measures include establishing alternative infrastructure providers for all critical software components, utilizing multiple decentralized node operators across different geographic regions to minimize the risk of regional internet or cloud service disruption, and forming strategic partnerships for core key technologies such as private key sharding and secure multi-party computation (MPC) to effectively guarantee priority service access in case of market-based technological shortages. In addition, we could experience delays if our strategic technological partners and Web3 infrastructure providers do not meet agreed-upon service timelines or experience network capacity constraints. Any disruption in the provision of critical blockchain infrastructure, whether or not from a single-source vendor, could temporarily paralyze our digital asset treasury operations until an alternative provider is securely integrated, and there can be no guarantee that we or our strategic partners will be able to mitigate delays caused by any disruption in the availability of critical services. Even in cases where we may be able to establish alternate vendor relationships and license replacement cryptographic infrastructure, we may be unable to do so quickly, or at all, at service costs or security levels that are acceptable to us. This risk is heightened by the fact that we have less negotiating leverage with elite Web3 security firms than larger and more established cryptocurrency exchanges, which could adversely affect our ability to obtain necessary technological resources on favorable terms, or at all. Any of the foregoing could materially and adversely affect our results of operations, financial condition, and prospects. Furthermore, as the scale of our digital asset treasury and custody operations increases, we will need to accurately forecast computing demands, procure scalable cloud solutions, and manage high-volume on-chain transactions globally. If we are unable to accurately align our technological infrastructure capacity to our actual treasury needs or successfully implement automated transaction execution and private key management to accommodate the increased complexity of our decentralized operations, we may incur unexpected network disruptions, elevated blockchain transaction fees, and potential loss of digital assets, which could have a material and adverse effect on our results of operations and financial condition.

We may not be able to accurately estimate the supply and demand for our digital asset custody solutions and treasury management services, which could result in inefficiencies in our business, hinder our ability to generate revenue, and create delays in the deployment of our technological infrastructure. If we fail to accurately predict our operational and cryptographic computing requirements, we incur the risk of having to pay for research and development costs as well as decentralized node and server capacities that we reserved but will not be able to use, or conversely, that we will not be able to secure sufficient additional computing and network capacities at reasonable costs in the event institutional demand for our services exceeds expectations.

It is inherently difficult to predict our future revenues and appropriately budget for our expenses in the highly volatile digital asset sector, and we have limited insight into emerging macroeconomic or technological trends that may affect our business. We are required to provide forecasts of our infrastructure computing demand to certain of our strategic cloud and blockchain network providers prior to the scheduled onboarding of institutional clients. Currently, as a newly transitioned entity, there is little historical basis for making judgments about the demand for our proprietary custody solutions, our ability to successfully deploy and manage large-scale decentralized treasury operations, or our profitability in the future. If we overestimate our requirements, we may incur a higher cost of research and development for our blockchain protocols which will increase our operational burn rate, and our strategic infrastructure providers may have excess reserved computing capacity, which indirectly would increase our sunk costs. If we underestimate our requirements, our strategic network providers may have inadequate computing capacity, which could interrupt the execution of our treasury strategies and result in delays in client onboarding and revenue generation. In addition, lead times for specialized cryptographic infrastructure and smart contract auditing services that we order may vary significantly and depend on factors such as the specific vendor, network congestion, and demand for Web3 security services at a given time. If we fail to secure sufficient technological resources in a timely manner, the secure onboarding of institutional clients could be delayed, which would harm our brand, business, financial condition, and results of operations.

We may be unable to effectively grow our global institutional client base, technological deployment capabilities, and our decentralized finance (DeFi) integrations, or we may be unable to accurately project and effectively manage our growth. If we are unable to expand our secure custody networks and protocol auditing capabilities, institutional customers’ perceptions of our security and reliability could be negatively affected, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

Our success will depend on our ability to continue to expand our institutional sales and relationship management capabilities. As we develop and launch our digital asset products worldwide, our success will depend on our ability to correctly forecast institutional demand across various regulatory jurisdictions. If we incorrectly forecast demand in one jurisdiction, we cannot easily pivot this highly specialized compliance and technological infrastructure to another market where demand for our specific treasury products exists due to differing global regulatory regimes. We may face difficulties with scaling our custody solutions at increasing volumes, particularly in international markets requiring significant compliance localization. Moreover, because of the unique, proprietary nature of our cryptographic infrastructure, we require that our custody protocols be audited and maintained exclusively by our internal engineers or by certain authorized elite Web3 security firms. If we experience delays in adding secure capacity or auditing our protocols efficiently, or experience unforeseen vulnerabilities with the reliability of our smart contracts, it could critically overburden our technological capabilities and expose our treasury to unacceptable risks.

There is no assurance that we will be able to successfully scale our business to meet our institutional acquisition, infrastructure deployment, and treasury optimization targets globally, or that our financial and operational projections on which such targets are based will prove accurate. These scaling plans require significant fiat and digital asset investments and immense management resources, and there is no guarantee that they will generate additional institutional mandates or yield generation for our treasury, or that we will be able to avoid cost overruns or be able to hire the highly specialized Web3 personnel needed to support them. As we expand, we will also need to ensure our strict compliance with evolving regulatory requirements in various global jurisdictions applicable to the custody, management, and transacting of digital assets. If we fail to manage our strategic growth effectively, our reputation within the cryptocurrency ecosystem, business prospects, financial condition, and operating results may be severely harmed.

We may in the future experience significant delays in the design, development, deployment, launch, and financing of our digital asset custody solutions and treasury management infrastructure, as well as delays in the build-out of our secure technological networks, which could harm our business and prospects.

Any delay in the financing, development, design, deployment, and launch of our digital asset ecosystem, including planned future proprietary custody protocols and decentralized finance integrations, could materially damage our business, prospects, financial condition, and results of operations. Companies operating in the highly complex and nascent Web3 space often experience delays in the development, design, rigorous security auditing, and commercial release of new cryptographic infrastructure, and as we transition into this sector, we may experience such delays with regard to our decentralized product offerings. Our plan to successfully deploy our treasury management strategies and institutional custody solutions is heavily dependent upon the timely availability of capital, upon our finalizing of the related technological development, infrastructure procurement, smart contract testing, network build-out, and security auditing plans in a timely manner, and ultimately upon our ability to execute these complex technological integrations within our anticipated timeline. Furthermore, prior to the large-scale rollout of our new digital asset services to institutional clients, we will need our platforms and custody protocols to be fully compliant with differing and rapidly evolving requirements, including but not limited to stringent licensing and regulatory mandates, in the various global jurisdictions where we intend to offer our services.

Additionally, if we do not timely complete our planned internal development of proprietary technological infrastructure, or if such network deployment is delayed due to engineering bottlenecks or cybersecurity challenges, we may be required to contract with third-party Web3 infrastructure providers or centralized custodians to perform certain critical treasury operations. The additional licensing fees, network costs, or revenue-sharing arrangements required by these third parties could substantially increase our operational burn rate and adversely affect our business, financial condition, and results of operations.

The success and growth of our business depends upon our ability to continuously and rapidly innovate, develop, and market new digital asset treasury and custody products, and there are significant risks related to future institutional market adoption of our services. Our limited operating history in the digital asset and Web3 infrastructure space makes evaluating our business and future prospects difficult and may increase the risk of your investment.

The success and growth of our business depends upon our ability to continuously and rapidly innovate, develop, and market new decentralized financial products, and there are significant risks related to future market adoption of our products and the presence of favorable regulatory frameworks or institutional mandates facilitating the broader adoption of digital currencies. We have a limited operating history in cryptocurrency treasury management and operate in a rapidly evolving, highly volatile, and heavily regulated market. We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by early-stage companies transitioning into rapidly changing technological markets, including risks related to our ability to, among other things: successfully launch and scale our proprietary custody platforms and treasury operations on the timing and with the security specifications we have planned; hire, integrate, and retain highly specialized Web3 professional and technical talent, including crypto-native key members of management; continue to make significant investments in blockchain research, infrastructure development, cybersecurity auditing, marketing, and institutional sales; successfully obtain, maintain, protect, and enforce our intellectual property regarding cryptographic protocols and defend against claims of intellectual property infringement, misappropriation, or other violations; build a well-recognized and trusted brand within the institutional digital asset ecosystem; establish and refine our secure technological networks and decentralized node infrastructure; establish and maintain satisfactory arrangements with our strategic technological partners and Web3 infrastructure providers; establish and expand an institutional customer base; navigate an exceptionally evolving, fragmented, and complex global regulatory environment governing digital currencies; anticipate and adapt to changing market conditions, including shifting institutional demand for specific custody solutions or decentralized finance (DeFi) yield strategies, rapid technological developments, and changes in the competitive Web3 landscape; and successfully design, secure, deploy, and market new proprietary custody protocols or decentralized treasury strategies at a profitable level in the future.

Our institutional client acquisition and the success of our treasury strategies will depend in part on our ability to establish and maintain confidence in our business prospects among institutional clients, analysts, and others within the digital asset industry.

Institutional clients and strategic partners may be less likely to utilize our proprietary custody solutions or engage with our treasury platforms if they do not believe that our business will succeed or that our operations, including secure infrastructure and technological support operations, will continue for many years. Similarly, Web3 infrastructure providers and other third parties will be less likely to invest time and resources in developing business relationships or protocol integrations with us if they are not convinced that our strategic pivot will succeed. Accordingly, to build, maintain, and grow our new digital asset business, we must establish and maintain confidence among clients, technological partners, analysts, and other parties with respect to our liquidity, our history of losses from legacy operations, and our Web3 business prospects. Maintaining such confidence may be particularly difficult as a result of many factors, including our limited operating history in decentralized finance and cryptocurrency custody, others’ unfamiliarity with our proprietary cryptographic infrastructure, any delays in scaling secure network deployment, smart contract auditing, and custody operations to meet institutional demand, fierce competition, and our treasury performance compared with broader market expectations. Many of these factors are largely outside of our control, and any negative perceptions about our business prospects, even if exaggerated or unfounded, would likely harm our business and make it more difficult to raise additional capital or attract strategic fiat gateways in the future.

In addition, a significant number of cryptocurrency custodians and decentralized protocols have recently entered the digital asset industry, an industry historically associated with extreme volatility, intense regulatory scrutiny, and a high rate of enterprise failure. If these new entrants or other digital asset infrastructure providers go out of business, deploy smart contracts that suffer severe exploits, or otherwise fail to securely manage digital assets as expected, such failures may dramatically increase institutional and regulatory scrutiny of others in the industry, including us. This contagion effect could further challenge client, partner, and analyst confidence in our business prospects and the overall viability of our decentralized ecosystem.

We may be unable to adequately control the substantial costs associated with our operations.

We will require significant capital to develop and grow our business and will need to seek new financing in the future. We have incurred and expect to continue to incur significant expenses, including technological infrastructure costs, sales and distribution expenses as we build our brand and market our digital asset custody solutions; expenses relating to developing and securing our blockchain protocols; expanding our decentralized node networks and secure server facilities; research and development expenses; cybersecurity procurement costs; and general and administrative expenses as we scale our operations and incur the costs of being a public company. In addition, we expect to incur significant costs servicing and maintaining our institutional customers’ digital asset portfolios, including establishing our security operations, partnerships with Web3 infrastructure providers, and specialized custody frameworks. These expenses could be significantly higher than we currently anticipate. Moreover, any delays in the start of smart contract testing or protocol deployment, obtaining necessary cryptographic equipment or supplies, expansion of our secure network capacities or infrastructure agreements, or the procurement of regulatory permits and licenses relating to our expected digital asset treasury and custody model could significantly increase our expenses. In such an event, we could be required to seek additional financing earlier than we expect, and such financing may not be available on commercially reasonable terms or at all. In the longer term, our ability to become profitable will depend not only on our ability to control costs but also on our ability to attract institutional capital and manage our treasury at yields sufficient to achieve our expected margins. If we are unable to cost-efficiently develop, design, deploy, market, sell, distribute, and maintain our digital asset infrastructure, our margins, profitability, and prospects would be materially and adversely affected. We have incurred net losses each year since our inception.

As of December 31, 2025, we had working capital of $405.81 million. We expect to continue this trend in the foreseeable future as we continue to design and develop our proprietary custody solutions, build up our technological infrastructure components and digital asset reserves, complete our planned network integrations and deploy a comprehensive suite of decentralized services, develop and deploy institutional custody partnerships, expand our cryptographic design, research, development, network maintenance, and security auditing capabilities, increase our institutional sales and marketing activities to develop our global distribution infrastructure, and expand our general and administrative functions to support our growing Web3 operations and status as a public company.

If our technological development or commercialization is delayed, our costs and expenses may be significantly higher than we currently expect. Because we will incur the costs and expenses from these efforts before we receive any incremental revenues with respect thereto, we expect the losses in future periods will be significant.

Our digital asset treasury operations and cryptocurrency custody solutions rely heavily on complex cryptographic infrastructure and involve a significant degree of uncertainty and risk in terms of operational performance, network security, and technological costs.

The existing and planned technological architecture for our decentralized finance and custody operations consists of sophisticated software networks, decentralized nodes, and specialized hardware security modules combining many complex cryptographic protocols. These digital and hardware infrastructure components are susceptible to unexpected malfunctions, software bugs, and network congestion from time to time, and their continuous operation will depend on rapid engineering remediation, software patches, and ongoing node maintenance to resume secure operations, which may not be successfully deployed or available when critically needed.

Unexpected malfunctions of our proprietary cryptographic infrastructure or third-party blockchain networks may significantly affect the intended operational efficiency and security of our treasury management operations. Operational performance and technological costs can be highly difficult to predict and are often influenced by factors entirely outside of our control, such as, but not limited to, severe blockchain network congestion, malicious cyberattacks, smart contract exploits, unexpected hard forks in underlying blockchain protocols, severe outages at third-party cloud service providers, difficulties or delays in recruiting specialized cybersecurity talent, damages or defects in hardware wallets or private key sharding systems, and systemic failures within the broader decentralized finance ecosystem. Should these profound operational and technological risks materialize, it may result in the permanent loss, theft, or freezing of our digital asset reserves, catastrophic damage to our technological architecture, severe monetary losses, delays and unanticipated fluctuations in our treasury yield generation, crippling administrative enforcement actions and regulatory fines, exponentially increased cybersecurity insurance costs, and devastating potential legal liabilities, all of which could have a material and adverse effect on our business, results of operations, cash flows, financial condition, or prospects.

We face risks associated with our digital asset staking operations, including the risk of smart contract vulnerabilities on the EdgeAI mainnet, floating yield volatility, and potential regulatory restrictions, which could materially and adversely affect our business, financial condition, results of operations and prospects.

After the fiscal year ended December 31, 2025, we staked EdgeAI native tokens into a designated smart contract on the EdgeAI mainnet for a 12-month lock-up period in January 2026. As of the date of this annual report, the carrying value of our staked tokens was US$401.96 million. Because our returns rely entirely on algorithmic, on-chain mechanics rather than guaranteed payments, we are exposed to significant market risk. We anticipate a floating annualized yield of 3.5% to 8% payable in EdgeAI tokens; therefore, any decline in the tokens’ fiat value or failure in the mainnet’s reward mechanisms could substantially diminish our expected economic benefits.

Furthermore, our staked assets and associated yields depend heavily on the security and operability of the EdgeAI mainnet. Smart contracts are susceptible to technical vulnerabilities, coding errors, and malicious cyberattacks. If the network experiences technical failures or a successful exploit of the smart contract holding our assets, our tokens could be lost, stolen, or rendered permanently inaccessible. Given the irreversible nature of blockchain transactions, we may have no recourse to recover these assets, resulting in a total loss and immediate impairment charge.

Additionally, the global regulatory framework governing digital assets and staking is highly uncertain and rapidly evolving. Regulators increasingly scrutinize staking activities, sometimes asserting they constitute unregistered securities offerings. Pursuant to our agreement, the EdgeAI Foundation may suspend the arrangement if we become subject to legal restrictions. Any new laws, regulatory enforcement actions, or required registrations could severely disrupt our digital asset strategy, force a premature termination of the agreement, or result in significant compliance costs and penalties, thereby materially and adversely affecting our business and prospects.

Our digital infrastructure and globally distributed operations could be and have been adversely affected by events outside of our control, such as natural disasters, wars, health epidemics, macroeconomic shocks, or severe security incidents.

We may be fundamentally impacted by events that disrupt the global internet or underlying blockchain networks, including natural disasters, wars, health epidemics, pandemics, or other catastrophic events outside of our control. Further, if major disasters such as earthquakes, wildfires, or tornadoes occur in regions where our critical third-party cloud service providers or decentralized node operators are concentrated, or if our proprietary information systems, cryptographic custody networks, or broader internet communications severely break down or operate improperly, our technological architecture may be seriously compromised, or we may have to temporarily halt or delay our treasury management operations, decentralized finance (DeFi) yield generation, and client transaction executions. In addition, global events such as pandemics or geopolitical conflicts can severely impact economic markets, global computing infrastructure supply chains, remote workforce availability, and institutional investor behavior across the world, driving extreme volatility in digital asset prices, and we have been, and may in the future be, adversely affected as a result. Furthermore, while we no longer operate vehicle manufacturing plants, we could be impacted by severe physical security incidents at the data centers hosting our servers or, more critically, devastating cybersecurity incidents targeting our digital asset custody protocols and private key storage infrastructure. Such incidents could result in the catastrophic loss of treasury assets or significant damage to our secure networks, requiring us to delay or permanently discontinue specific decentralized operations to rebuild our cryptographic architecture. We may incur significant expenses, unrecoverable digital asset losses, or severe operational delays relating to such events outside of our control, which could have a material adverse impact on our business, results of operations, and financial condition.

We rely on our IT systems, and any material disruption to our IT systems could have a material and adverse effect on us.

The availability and effectiveness of our services depend on the continued operation of our information technology and communications systems. We rely on our IT systems, and such systems are vulnerable to damage or interruption from various adverse effects, such as fire, terrorist attacks, natural disasters, power loss, telecommunications failures, computer viruses, computer denial of service attacks, or other attempts to harm our systems. Our products and services are also highly technical and complex and may contain errors or vulnerabilities that could result in interruptions in our services or the failure of our systems or the systems on which we rely.

We are subject to evolving laws, regulations, standards, policies, and contractual obligations related to data privacy, security, and consumer protection, and any actual or perceived failure to comply with such obligations could harm our reputation and brand, subject us to significant fines and liability, or otherwise adversely affect our business.

Due to our data collection practices, products, services, and technologies, upon entries into relevant jurisdictions, we will be subject to or affected by a number of federal, state, local, and international laws and regulations, as well as contractual obligations and industry standards, that impose certain obligations and restrictions with respect to data privacy and security and govern our collection, storage, retention, protection, use, processing, transmission, sharing, and disclosure of personal information, including that of our employees, customers, and other third parties with whom we conduct business. These laws, regulations, and standards may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible that they will be interpreted and applied in ways that may have a material and adverse impact on our business, financial condition, and results of operations.

The global data protection landscape is rapidly evolving, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. We may not be able to monitor and react to all developments in a timely manner. The European Union adopted the General Data Protection Regulation (“GDPR”), which became effective on May 25, 2018, and California adopted the California Consumer Privacy Act of 2018 (“CCPA”), which became effective in January 2020. Both the GDPR and the CCPA impose additional obligations on companies regarding the handling of personal data and provide certain privacy rights to individual persons whose data is collected. Compliance with existing, proposed, and recently enacted laws and regulations (including implementation of the privacy and process enhancements called for under the GDPR and CCPA) can be costly, and any failure to comply with these regulatory standards could subject us to legal and reputational risks.

Specifically, the CCPA establishes a privacy framework for covered businesses, including an expansive definition of personal information and data privacy rights for California residents. The CCPA includes a framework with potentially severe statutory damages for violations and a private right of action for certain data breaches. The CCPA requires covered businesses to provide California residents with new privacy-related disclosures and new ways to opt-out of certain uses and disclosures of personal information. As we expand our operations, the CCPA may increase our compliance costs and potential liability. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States. Additionally, effective in most respects starting on January 1, 2023, the California Privacy Rights Act (“CPRA”) will significantly modify the CCPA, including by expanding California residents’ rights with respect to certain sensitive personal information. The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA.

Other jurisdictions have begun to propose similar laws. Compliance with applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms to comply with such laws and regulations, which could cause us to incur substantial costs or require us to change our business practices, including our data practices, in a manner adverse to our business. In particular, certain emerging privacy laws are still subject to a high degree of uncertainty as to their interpretation and application. Failure to comply with applicable laws or regulations or to secure personal information could result in investigations, enforcement actions, and other proceedings against us, which could result in substantial fines, damages, and other liability, as well as damage to our reputation and credibility, which could have a negative impact on our revenues and profits.

We post public privacy policies on our websites and provide privacy notices to the categories of persons whose personal information we collect, process, use, or disclose. Although we endeavor to comply with our published policies and other documentation, we may at times fail to do so or may be perceived to have failed to do so. Moreover, despite our efforts, we may not be successful in achieving compliance if our employees, contractors, service providers, vendors, or other third parties fail to comply with our published policies and documentation. Such failures could carry similar consequences or subject us to potential local, state, and federal action if they are found to be deceptive, unfair, or misrepresentative of our actual practices. Claims that we have violated individuals’ privacy rights or failed to comply with data protection laws or applicable privacy notices could, even if we are not found liable, be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities, and other third parties of security breaches involving certain types of data. Such laws may be inconsistent or may change, or additional laws may be adopted. In addition, our agreements with certain customers may require us to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity, penalties or fines, litigation, and our customers losing confidence in the effectiveness of our security measures, and could require us to expend significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach. Any of the foregoing could materially and adversely affect our business, prospects, results of operations, and financial condition.

Our ability to effectively manage our expected growth in the digital asset treasury management sector will be fundamentally dependent on the performance of highly skilled personnel, including our Chief Executive Officer Melissa Chen, our senior management team, and other key cryptographic and Web3 employees, and our ongoing ability to recruit and retain such specialized talent. The loss of key personnel or an inability to attract, retain, and motivate qualified blockchain professionals may severely impair our ability to expand our new business model.

Our future success in executing our decentralized finance strategies and securing our cryptocurrency custody infrastructure will be substantially dependent upon the continued service and performance of our senior management team and key personnel possessing deep technological, cybersecurity, and digital asset expertise. Although we anticipate that our management and key personnel will remain in place during this strategic pivot, it is possible that we could lose critical talent. For example, we are highly dependent on the services of Melissa Chen, our Chief Executive Officer, who exerts a significant influence on and is a primary driver of our new Web3 business plan, technological deployment, and treasury optimization strategy. If Ms. Chen were to discontinue his service to us, we would be significantly disadvantaged in navigating the complex transition from legacy manufacturing to digital asset management. The replacement of any members of our senior management team or other key decentralized infrastructure personnel would likely involve significant time and exorbitant costs, and may significantly delay or prevent the achievement of our business objectives. Our future success also depends, in part, on our ability to continue to attract, integrate, and retain highly skilled smart contract engineers, node operators, and cybersecurity personnel.

Competition for such highly skilled Web3 personnel is exceptionally intense globally. As with any rapidly scaling technology enterprise, there can be no guarantee that we will be able to attract such individuals or that the presence of such individuals will necessarily translate into treasury profitability. Because we operate in the highly specialized and rapidly evolving cryptoeconomy, there is a severely limited pool of personnel available with proven, enterprise-level decentralized finance and custody experience, and such highly sought-after individuals may be subject to non-competition and other agreements that restrict their ability to work for us. Our inability to attract and retain these key technical and managerial personnel may materially and adversely affect our digital asset operations, and any failure by our management to effectively anticipate, implement, and manage the profound technological and regulatory changes required to sustain our growth would have a material and adverse effect on our business, financial condition, and results of operations.

Our ability to effectively manage our expected growth will be dependent on the performance of highly skilled personnel, including our Chief Executive Officer Melissa Chen, our senior management team, and other key employees, and our ability to recruit and retain key employees. The loss of key personnel or an inability to attract, retain, and motivate qualified personnel may impair our ability to expand our business.

Risks Related to Litigation and Regulations

While our primary operations are no longer in mainland China, Changes in China’s regulatory landscape regarding digital assets, including recent extraterritorial enforcement directives, could severely restrict our operations, subject us to penalties, and materially adversely affect our business.

Our operations and strategic initiatives, particularly those involving decentralized finance ecosystems and real world asset tokenization, are subject to complex, evolving, and highly restrictive international regulatory frameworks, most notably recent directives from regulatory authorities in the People’s Republic of China. On February 6, 2026, multiple Chinese regulatory bodies, including the People’s Bank of China and the China Securities Regulatory Commission, jointly promulgated the Notice on Further Preventing and Handling Risks Related to Virtual Currencies and Other Matters, which categorically classifies virtual currency transactions as illegal financial activities and strictly prohibits all related business operations within China. Crucially for our business model, this directive explicitly extends regulatory enforcement to offshore entities, strictly forbidding overseas enterprises from providing any form of virtual currency or real world asset tokenization services to domestic Chinese entities or individuals. Furthermore, the directive imposes absolute prohibitions on the offshore issuance of stablecoins pegged to the Renminbi without explicit regulatory consent and mandates severe scrutiny over any offshore real world asset tokenization initiatives that are backed by domestic Chinese assets or interests. Consequently, any inadvertent nexus to the Chinese market, whether through domestic residents covertly accessing our decentralized finance platforms and custody infrastructure, or through our necessary engagement with Chinese vendors, technology partners, or financial institutions who may now be subjected to extraterritorial civil or criminal liability for assisting overseas digital asset entities, could expose our Company to profound compliance liabilities. Any failure on our part to completely geofence our services from domestic Chinese residents or any inadvertent violation of these sweeping extraterritorial regulations through our global treasury operations could precipitate severe governmental enforcement actions, substantial financial penalties, criminal liability for our officers and directors, and irreparable damage to our corporate reputation and institutional client relationships.

Our business is subject to complex U.S. state regulatory frameworks, notably the New York State Department of Financial Services (NYSDFS) BitLicense requirements, and any failure to maintain compliance could disrupt our operations and restrict our market access.

In addition to international regulatory complexities, our business operations within the United States are heavily encumbered by disparate and exceptionally rigorous state-level regulatory frameworks, most prominently the comprehensive virtual currency regulations enforced by the New York State Department of Financial Services under the BitLicense framework. Operating within New York or offering services to its residents requires us to not only secure and meticulously maintain a BitLicense but also to subject our strategic and operational decisions to continuous regulatory oversight, including the absolute necessity of obtaining prior written approval from regulators before introducing any material new products, services, or modifications to our existing custody infrastructure and treasury strategies. This regulatory regime imposes substantial capital control requirements, compelling us to hold designated, potentially massive amounts of capital in highly liquid, investment-grade assets and to maintain dedicated, dollar-denominated trust accounts for customer benefit, thereby aggressively restricting the capital available for deployment in our core treasury optimization and yield-generation strategies. Furthermore, maintaining compliance with the New York regulatory apparatus necessitates the continuous funding and execution of exhaustive internal compliance programs, which mandate deeply integrated anti-money laundering risk assessments tailored specifically to our decentralized finance and custody business models, alongside rigorous quarterly and annual financial reporting, stringent consumer protection disclosures mandated across multiple languages, and exhaustive regulatory oversight of all corporate marketing activities. Consequently, the sheer operational friction and immense financial burden associated with strictly adhering to these multifaceted compliance, capital, and reporting mandates significantly inhibit our operational agility, and any real or perceived failure to flawlessly execute these compliance obligations could result in immediate license suspension, severe monetary sanctions, and our total exclusion from the critical New York institutional market, thereby inflicting a material adverse effect on our overall financial condition and strategic market positioning.

We may in the future be subject to legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business, results of operations, cash flows, and financial condition.

From time to time, we may be subject to claims, lawsuits, government investigations, and other proceedings involving product liability, consumer protection, competition and antitrust, intellectual property, privacy, securities, tax, labor and employment, health and safety, our direct distribution model, environmental claims, commercial disputes, corporate, and other matters that could adversely affect our business, results of operations, cash flows, and financial condition. In the ordinary course of business, we have been the subject of complaints or litigation, including claims.

Litigation and regulatory proceedings may be protracted and expensive, and the results are difficult to predict. Additionally, our litigation costs could be significant, even if we achieve favorable outcomes. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, or require us to modify, make temporarily unavailable, or stop manufacturing or selling our vehicles in some or all markets, all of which could negatively affect our sales and revenue growth and adversely affect our business, prospects, results of operations, cash flows, and financial condition.

The results of litigation, investigations, claims, and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment. There can be no assurances that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, results of operations, cash flows, and financial condition. In addition, the threat or announcement of litigation or investigations by governmental authorities or other parties, irrespective of the merits of the underlying claims, may itself have an adverse impact on the trading price of our securities.

We may become subject to severe technology liability and fiduciary claims, which could critically harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

We may become subject to technology and software liability claims, which could harm our business, prospects, results of operations, and financial condition. The digital asset custody and decentralized finance industry experiences significant claims related to technological failures, and we face inherent risks of exposure to claims in the event our proprietary custody infrastructure or smart contracts do not perform or are claimed not to perform as expected or malfunction, resulting in the catastrophic theft, freezing, or permanent loss of institutional digital assets. We also expect that, as is true for other digital asset custodians and infrastructure providers, our platforms may be targeted by sophisticated cyberattacks or exploited through unforeseen vulnerabilities, and even if such losses are not directly caused by the failure of our internal systems but rather by third-party protocols, we may face massive liability claims, breach of fiduciary duty allegations, and severe adverse publicity in connection with such incidents. In addition, we may face claims arising from or related to failures, claimed failures, or misuse of new technologies that we expect to offer, including automated decentralized finance (DeFi) yield strategies, proprietary algorithmic treasury execution features, and future upgrades to our cryptographic custody architecture. In addition, the blockchain networks and smart contracts that we utilize are built on highly complex, experimental codebases; on rare occasions, these decentralized protocols can experience catastrophic exploits or cascading liquidations that rapidly drain stored digital assets in a manner that can trigger broader systemic contagion across interconnected liquidity pools (see “-Risks Related to Our Business and Industry-Our treasury strategies will make use of decentralized finance protocols and smart contracts, which have been observed to suffer severe exploits or permanent loss of funds.”). Any such events or failures of our custody architecture, smart contracts, or automated security warning systems could subject us to devastating class-action lawsuits, forced platform halts, or emergency redesign efforts, all of which would be immensely time-consuming and expensive.

A successful liability claim against us could require us to pay a substantial monetary award or fully compensate clients for permanently lost cryptocurrency. Moreover, a liability claim against us or our direct competitors could generate substantial negative publicity about our security architecture and business and inhibit or prevent the commercialization of our future digital asset services, which would have material and adverse effects on our brand, business, prospects, and results of operations. Our cybersecurity and errors and omissions insurance coverage might not be sufficient to cover all potential liability claims involving volatile digital assets, and such specialized insurance coverage may not continue to be available to us or, if available, may only be obtained at a significantly higher cost. Any lawsuit seeking significant monetary damages or other liability claims related to the loss of digital assets may have a material and adverse effect on our reputation, business, and financial condition.

Our technological suppliers and infrastructure partners may be exposed to delays, limitations, and risks related to the specialized regulatory licenses, environmental scrutiny, and other operating permits required to operate the decentralized nodes and data centers powering our digital asset operations.

Operation of institutional-grade digital asset infrastructure and secure data facilities requires highly specialized regulatory approvals, such as Money Transmitter Licenses (MTLs), state-specific virtual currency licenses, or Trust Charters, as well as local land use and high-density power consumption permits from federal, state, and local government entities. We may expand our decentralized network capacities by entering into additional agreements with our cloud suppliers and infrastructure partners over time to achieve a future target computing and custody capacity, and both we and our partners will be required to apply for and secure various financial, data security, and energy use permits necessary for the commercial operation of such expanded and additional data facilities. Furthermore, the underlying proof-of-work blockchain networks upon which certain digital assets in our treasury rely are subject to intense environmental scrutiny regarding their energy consumption and carbon footprint, potentially subjecting our infrastructure partners to stringent environmental regulations, restrictive zoning laws, or moratoriums on high-performance computing operations. Delays, denials, or severe restrictions on any of the applications for or assignment of the licenses and permits to operate our cryptographic infrastructure or the data centers of our partners could adversely affect our ability to execute on our business plans and treasury optimization objectives based on our current target network capacity or our future target institutional custody capabilities.

If we fail to implement and maintain an effective system of internal controls over financial reporting, we may be unable to accurately report our results of operations, meet reporting obligations, or prevent fraud. As a result, our security holders could lose confidence in our financial and other public reporting, which would harm our business and trading price of our securities.

We are subject to reporting obligations under U.S. securities laws. The SEC adopted rules pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 requiring every public company to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of its internal control over financial reporting.

For the fiscal year ended December 31, 2025, we identified the following material weaknesses and significant deficiencies:(1) Complex transaction controls – We lack standardized processes to identify, evaluate, account for, and disclose complex and non-recurring transactions under U.S. GAAP and SEC rules, particularly for disposal of legacy operations and discontinued operations. Key accounting judgments, impairment measurements, and disclosure review procedures are insufficient, (2) Digital asset controls – We lack complete policies and processes for digital asset custody, wallet management, private key security, transaction authorization, and independent reconciliation. Wallet and private key policies are not fully standardized, approval mechanisms are unclear, and regular book-to-blockchain reconciliation is not established. See “Item 15. Controls and Procedures” for further details. Our management is currently in the process of evaluating the steps necessary to remediate the ineffectiveness, such as (i) establishing standardized processes for complex transactions, enhancing review and oversight, and engaging external experts when needed; and (ii) developing standardized digital asset policies, independent reconciliation mechanisms, and enhanced monitoring.

However, these measures may not fully remediate the identified deficiencies. If we fail to timely remediate these or other deficiencies, material misstatements could occur, and our ability to comply with financial reporting requirements and regulatory filings could be impaired. The digital asset control deficiencies also increase risks related to asset security, transaction authorization, and reconciliation accuracy. As a result, our business, financial condition, results of operations, prospects, and share price could be materially and adversely affected.

We are subject to various environmental and energy-use laws and regulations that could impose substantial costs on us and cause delays in expanding our technological infrastructure and digital asset custody capabilities.

Our infrastructure partners’ data center operations, as well as the underlying decentralized networks upon which our digital asset treasury relies, are increasingly subject to stringent environmental laws and regulations in different jurisdictions globally. The environmental impact of blockchain technology has drawn intense scrutiny from environmental regulators and policymakers. Environmental and energy-use laws and regulations are highly complex and rapidly evolving, and as a newly transitioned digital asset enterprise, we have limited historical experience in forecasting and complying with these specific technological sustainability mandates. Moreover, we may be heavily affected by future amendments to such laws, new Environmental, Social, and Governance (ESG) reporting mandates, or other stringent environmental regulations that may require us or our infrastructure partners to fundamentally change our operations, such as migrating to renewable energy sources, relocating servers to different jurisdictions, or abandoning certain energy-intensive digital asset ecosystems entirely. This could potentially result in a material and adverse effect on our business, prospects, results of operations, and financial condition. These laws can give rise to severe liability for administrative oversight costs, mandatory carbon offset purchases, fines, and penalties. Capital and operating expenses needed to comply with these emerging environmental and energy-use regulations can be significant, and violations by us or our third-party data center operators could result in debilitating litigation, substantial regulatory fines and penalties, forced suspension of our technological deployments, or a complete cessation of our decentralized treasury operations.

Risks Related to Intellectual Property

We may fail to adequately obtain, maintain, enforce, and protect our existing and future intellectual property and licensing rights, and we may not be able to prevent third parties from unauthorized use of our intellectual property and proprietary technology. If we are unsuccessful in any of the foregoing, our competitive position could be harmed, and we could be required to incur significant expenses to enforce our rights.

Our ability to compete effectively in the digital asset treasury sector is dependent in part upon our ability to obtain, maintain, enforce, and protect our existing and future intellectual property, proprietary cryptographic technology, and licensing rights, but we may not be able to prevent third parties from the unauthorized use of our intellectual property, which could severely harm our business and competitive position. We establish and protect our intellectual property and proprietary Web3 technology through a combination of licensing agreements, nondisclosure and confidentiality agreements, and other contractual provisions, as well as through patent, trademark, copyright, and trade secret laws. Despite our efforts to obtain and protect intellectual property rights relating to our digital asset custody architecture and smart contracts, there can be no assurance that these protections will be available in all cases, or will guarantee our success in claiming the intellectual property rights, or will be adequate or timely to prevent our competitors or other third parties from copying, reverse engineering, or otherwise obtaining and using our proprietary algorithms, or seeking court declarations that they do not infringe, misappropriate, or otherwise violate our intellectual property. Failure to adequately obtain, maintain, enforce, and protect our intellectual property could result in our competitors offering identical or similar digital asset custody services, potentially resulting in the loss of our competitive advantage and a decrease in our revenue, which would adversely affect our business, prospects, financial condition, and results of operations.

The measures we take to obtain, maintain, protect, and enforce our intellectual property, including preventing unauthorized use by third parties, may not be effective for various reasons, including the following:

Patent, trademark, copyright, and trade secret laws vary significantly throughout the world. The laws of some countries, including those where we deploy our decentralized node infrastructure, may not be as protective as the laws in the United States, and mechanisms for obtaining and enforcing intellectual property rights may be ineffectual or inadequate. Further, policing the unauthorized use of our intellectual property in some jurisdictions may be difficult or too expensive to be practical. In addition, third parties may seek to challenge, invalidate, or circumvent our patents, trademarks, copyrights, trade secrets, or other intellectual property, or applications for any of the foregoing, which could permit our competitors or other third parties to develop and commercialize products and technologies that are the same or similar to ours.

While we have registered and applied for registration of trademarks in an effort to protect our brand and goodwill with customers, competitors, or other third parties have in the past and may in the future oppose our trademark applications or otherwise challenge our use of the trademarks and other brand names in which we have invested. Such oppositions and challenges can be expensive and may adversely affect our ability to maintain the goodwill gained in connection with a particular trademark. In addition, we may lose our trademark rights if we are unable to submit specimens or other evidence of use by the applicable deadline to perfect such trademark rights.

Furthermore, we cannot be certain that these agreements will not be breached and that third parties will not improperly gain access to our trade secrets, know-how, and other proprietary technology. Third parties may also independently develop the same or substantially similar proprietary technology. Monitoring unauthorized use of our intellectual property is difficult and costly, as are the steps we have taken or will take to prevent misappropriation.

We have acquired or licensed, and plan to further acquire or license, patents and other intellectual property from third-party Web3 infrastructure providers and security auditing firms, and we may face claims that our use of this acquired or in-licensed technology infringes, misappropriates, or otherwise violates the intellectual property rights of third parties. In such cases, we will seek indemnification from our licensors; however, our rights to indemnification may be unavailable or insufficient to cover our costs and losses, particularly those resulting from compromised digital assets. Furthermore, disputes may arise with our licensors regarding the intellectual property subject to, and any of our rights and obligations under, any software license or open-source protocol agreement.

To prevent the unauthorized use of our intellectual property, it may be necessary to prosecute actions for infringement or misappropriation against third parties. Any such action could result in significant costs and diversion of our resources and management’s attention from our core treasury operations, and there can be no assurances that we will be successful in any such action. Many of our current and potential competitors in the digital asset space have the ability to dedicate substantially greater resources to enforce their intellectual property rights than we currently do. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon our proprietary custody technology, and our pending patent applications may not issue as patents, all of which could have a material adverse effect on our business, prospects, financial condition, and results of operations.

Our patent applications may not issue as patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting solutions similar to ours.

We cannot be certain that we are the first inventor of the subject matter to which we have filed a particular patent application, or if we are the first party to file such a patent application. If another party has filed a patent application to the same subject matter as we have, we may not be entitled to the protection sought by the patent application. Further, the scope of protection of issued patent claims is often difficult to determine. As a result, we cannot be certain that the patent applications that we file will issue, or that our issued patents will afford protection against competitors with similar technology. In addition, our competitors may design around our issued patents, which may adversely affect our business, prospects, financial condition, or operating results.

We use other parties’ software and other intellectual property in our proprietary software, including “open source” software. Any inability to continuously use such software or other intellectual property in the future could have a material adverse impact on our business, financial condition, results of operations, and prospects.

We use open-source software in our products and anticipate using open-source software in the future. Some open-source software licenses require those who distribute open-source software as part of their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative works of the open-source code on unfavorable terms or at no cost, and we may be subject to such terms. The terms of many open-source licenses to which we are subject have not been interpreted by U.S. or other courts, and there is a risk that open-source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Any actual or claimed requirement to disclose our proprietary source code or pay damages for breach of contract could harm our business and could help third parties, including our competitors, develop products and services that are similar to or better than ours. While we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open-source agreement, such use could inadvertently occur, or could be claimed to have occurred. Additionally, we could face claims from third parties claiming ownership of, or demanding release of, the open-source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open-source license. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license, or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement, which may be a costly and time-consuming process, and we may not be able to complete the re-engineering process successfully.

Additionally, the use of certain open-source software can lead to greater risks than use of other parties’ commercial software, as open-source licensors generally do not provide warranties or controls on the origin of software. There is typically no support available for open-source software, and we cannot ensure that the authors of such open-source software will implement or push updates to address security risks or will not abandon further development and maintenance. Many of the risks associated with the use of open-source software, such as the lack of warranties or assurances of title or performance, cannot be eliminated, and could, if not properly addressed, negatively affect our business. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have a material and adverse effect on our business, financial condition, and results of operations.

We may become subject to claims of intellectual property infringement by third parties which, regardless of merit, could be time-consuming and costly and result in significant legal liability, and could negatively impact our business, financial condition, results of operations, and prospects.

Our competitors or other third parties may hold or obtain patents, copyrights, trademarks, or other proprietary rights that could prevent, limit, or interfere with our ability to make, use, develop, sell, or market our products and services, which could make it more difficult for us to operate. From time to time, the holders of such intellectual property rights may assert their rights and urge us to take licenses and/or may bring suits alleging infringement or misappropriation of such rights, which could result in substantial costs, negative publicity, and management attention, regardless of merit. While we endeavor to obtain and protect the intellectual property rights that we expect will allow us to retain or advance our strategic initiatives, there can be no assurance that we will be able to adequately identify and protect the portions of intellectual property that are strategic to our business, or mitigate the risk of potential suits or other legal demands by our competitors. Accordingly, we may consider entering into licensing agreements with respect to such rights, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur, and such licenses and associated litigation could significantly increase our operating expenses. In addition, if we are determined to have or believe there is a high likelihood that we have infringed upon a third party’s intellectual property rights, we may be required to cease making, selling, or incorporating certain components or intellectual property into our goods and services, to pay substantial damages and/or license royalties, to redesign our products and services and/or to establish and maintain alternative branding for our products and services. In the event that we are required to take one or more such actions, our brand, business, financial condition, and operating results may be harmed.

Risks Related to Doing Business in China

Although we are in the process of divesting our legacy operations in mainland China, our choice of auditor or their location may still subject us to risks under the HFCAA. Our Class A Ordinary Shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting or prohibition of trading of our shares, or the threat of their being delisted or prohibited from trading, may materially and adversely affect the value of your investment.

Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB because of a position taken by an authority in the foreign jurisdiction for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.

Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our Class A Ordinary Shares are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our Class A Ordinary Shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our shares. Such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.

The Chinese government may intervene in or influence our divestiture process and residual operations in China at any time, which could result in a material change in our operations and ability to execute our digital asset strategy.

The Chinese government exerts substantial influence, discretion, oversight, and control over the manner in which companies incorporated under the laws and regulations of China, or those with significant operations, subsidiaries, or management residing in China, must conduct their business activities, including activities relating to overseas offerings of securities and foreign investments. Although we have agreed to divest our unprofitable legacy electric vehicle subsidiary, Chijet Inc., for $1 in order to pivot our strategic focus toward technology and digital asset management, this transaction remains subject to closing conditions, capital controls, and potential regulatory scrutiny. Until this divestiture is fully completed and legally recognized, and to the extent any of our executive management, administrative functions, or technological infrastructure remains located within mainland China, we remain deeply exposed to PRC regulatory risks.

Crucially, the Chinese government has adopted a strictly prohibitive stance on digital assets; mainland regulatory authorities, including the People’s Bank of China, have issued sweeping bans declaring all cryptocurrency-related business activities illegal and strictly prohibiting cryptocurrency trading, fiat-to-crypto exchanges, decentralized finance participation, and digital asset mining within the PRC. Because we are executing a comprehensive digital currency strategy that includes our DexTrader data platform and digital asset staking activities with treasury holdings exceeding approximately US$401.96 million as of December 31, 2025, any determination by PRC authorities that our current operations, our strategic pivot, or the activities of our China-based personnel violate these uncompromising bans could result in immediate and severe enforcement actions. Such actions may include the freezing of our assets, severe financial penalties, criminal liability for our executives, and the forced cessation of our digital asset operations.

Furthermore, the Chinese government has recently implemented new regulatory frameworks, including those promulgated by the China Securities Regulatory Commission (CSRC) regarding the overseas listing and capital activities of domestic companies, as well as strict cross-border data transfer laws. We cannot rule out the possibility that PRC authorities will require us to seek permission, undergo retroactive cybersecurity reviews, or face regulatory roadblocks regarding our strategic pivot, the repatriation of funds, or the divestiture of our mainland assets. Any such regulatory intervention, enforcement of the cryptocurrency ban against our residual mainland footprint, or a failure to successfully and completely sever our operational reliance on mainland China could result in a material adverse change in our operations, permanently compromise our decentralized treasury infrastructure, and cause the value of our Nasdaq-listed securities to significantly decline or become completely worthless.

Changes in Chinese policies, regulations, and rules may occur quickly, and the enforcement of laws by the Chinese government is subject to change, which could have a significant impact upon our ability to successfully complete our strategic pivot and operate profitably.

Although we are actively divesting our legacy vehicle manufacturing subsidiary in China to focus entirely on digital asset treasury management, the completion of this divestiture, the handling of any residual corporate entities, and our historical operational footprint remain deeply exposed to the economic, political, and legal developments in the PRC. Policies, regulations, rules, and the enforcement of laws by the Chinese government, particularly concerning cross-border capital flows, the repatriation of funds, foreign investments, and the sweeping national bans on all cryptocurrency-related activities, may have significant effects on our ability to sever our historical ties without incurring severe financial penalties or regulatory intervention. Our ability to operate profitably and seamlessly transition to a decentralized digital asset ecosystem may be adversely affected by rapid and unexpected changes in policies by the Chinese government, including changes in laws, regulations, their interpretation, and their retroactive enforcement, which could target our historical operations, restrict our restructuring efforts, or paralyze our remaining administrative functions.

Litigation and negative publicity surrounding China-based companies listed in the U.S. may result in increased regulatory scrutiny of us and negatively impact the trading price of the Class A Ordinary Shares and could have a material adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects.

We believe that litigation and negative publicity surrounding companies with operations in China that are listed in the U.S. have negatively impacted stock prices for such companies. Various equity-based research organizations have published reports on China-based companies after examining, among other things, their corporate governance practices, related party transactions, sales practices and financial statements that have led to special investigations and stock suspensions on national exchanges. Any similar scrutiny of us, regardless of its lack of merit, could result in a diversion of management resources and energy, potential costs to defend ourselves against rumors, decreases and volatility in our Class A Ordinary Shares trading price, and increased directors and officers insurance premiums and could have a material adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects.

It may be difficult for overseas regulators to conduct investigation or collect evidence within mainland China.

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Although the 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 cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities Law, or Article 177, 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. Furthermore, pursuant to the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises which became effective on March 31, 2023, the investigation and evidence collection in relation to the oversea securities offering and listing of the PRC companies by overseas securities regulatory authorities and relevant authorities shall be conducted through the cross-border cooperation mechanism for supervision and administration. The PRC companies shall obtain the prior consent from the CSRC or relevant authorities before cooperating with such overseas securities regulatory authorities or relevant authorities in connection with relevant inspections or investigations or providing relevant documents to such overseas securities regulatory authorities or relevant authorities. The inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. See also “-Risks Related to Our Class A 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” for risks associated with investing in us as a Cayman Islands holding company.

There may be changes from time to time in the interpretation and application of the laws of mainland China, and any failure to comply with laws and regulations could have a material adverse effect on our business, results of operations, financial condition and the value of our ADSs.

Our operations in mainland China are governed by PRC laws and regulations. Our mainland China subsidiaries are subject to laws and regulations applicable to foreign investment in mainland China. 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. Many laws, regulations and legal requirements are relatively new and may change from time to time. The PRC legal system is evolving quickly. The interpretation and enforcement of relevant laws and regulations are subject to change. New laws and regulations may be promulgated and existing laws and regulations, as well as the interpretation and enforcement thereof, may change quickly. In addition, any new or changes in PRC laws and regulations related to foreign investment in mainland China could affect the business environment and our ability to operate our business in mainland China.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. While this may also apply to other jurisdictions, administrative and court proceedings in mainland China may take a long time, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities retain discretion in interpreting and implementing statutory provisions and contractual terms like other jurisdictions do, it may be difficult to predict the outcome of administrative and court proceedings that we are involved in. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business and results of operations.

We may be required to complete filing procedures with the China Securities Regulatory Commission in connection with our future offerings. We cannot predict whether we will be able to complete such filing on a timely manner, or at all.

On July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. We do not believe that any provision in these opinions had a material adverse impact on our business or offshore listing plan.

On February 17, 2023, the CSRC, as approved by the State Council, released the Filing Rules. The Filing Rules took effect on March 31, 2023, when the CSRC started to accept filing applications. Pursuant to the Filing Rules, PRC domestic enterprises that directly or indirectly offer or list their securities in an overseas market are required to file with the CSRC within three business days after submitting their listing application documents to the relevant regulator in the place of intended listing. Failure to complete such filing may subject a PRC domestic enterprise to an order of rectification, a warning or a fine between RMB1 million and RMB10 million. Pursuant to these regulations, a domestic enterprise applying for listing abroad shall, among others, complete record filing procedures and report relevant information to the securities regulatory authority as required. We completed the CSRC filing procedures in connection with our initial public offering.

Our future capital raising activities such as follow-on equity or debt offerings, listing on other stock exchanges and going private transactions, may also be subject to the filing requirement with the CSRC. Failure to complete such filing procedures as required under the Filing Rules, or a rescission of any such filings completed by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in mainland China, and other forms of sanctions that may materially and adversely affect our business, financial condition and results of operations.

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

The conversion of Renminbi into other currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has fluctuated against other currencies, at times significantly and unpredictably. The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in global and geographical political and economic conditions and China’s foreign exchange policies. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

Significant revaluation of the Renminbi may have a material and adverse effect on your investment. For example, to the extent that we need to convert Renminbi from our divestiture activities into U.S. dollars to fund our new digital asset business, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the U.S. dollar amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our Class A Ordinary Shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us.

Limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transaction to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC Foreign exchange regulations that restrict our ability to convert Renminbi into foreign currency.

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

A number of PRC laws and regulations have established procedures and requirements that could make merger and acquisition activities in China by foreign investors more time consuming and complex, such as the PRC Anti-monopoly Law, the Rules on the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the M&A Rules, the Rules of the Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Security Review Rules, and the Measures for the Security Review of Foreign Investment. These laws and regulations impose requirements in some instances that MOFCOM and the NDRC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. In addition, the Anti-Monopoly Law requires that MOFCOM be notified in advance of any concentration of undertaking if certain thresholds are triggered. The M&A Security Review Rules provide that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM, and prohibit any attempt to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. Moreover, the Measures for the Security Review of Foreign Investment provide that foreign investors or the relevant parties in China shall proactively report to the Office of the Working Mechanism any foreign investment in, among other sectors, important information technology and key technology that involve national security concerns and result in the foreign investor’s acquisition of actual control of the enterprise invested in before making such investment. In the future, we may grow our business by acquiring complementary businesses. Complying with the applicable requirements of the relevant regulations to complete any future acquisitions that we may engage in could be time consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit our ability to complete such acquisitions, which could affect our ability to expand our business or maintain our market share.

PRC regulations relating to offshore investment activities by PRC residents may limit our mainland China subsidiaries’ ability to change their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.

In July 2014, the State Administration of Foreign Exchange, or SAFE, promulgated the Circular of the State Administration of Foreign Exchange on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purpose) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities and also requires the foreign-invested enterprise that is established through round-trip investment to truthfully disclose its controller(s). SAFE Circular 37 further requires amendment to the SAFE registrations in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as change of a PRC individual shareholder, name and operation term, or any significant changes with respect to the offshore special purpose vehicle, such as increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders or beneficial owners who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. In February 2015, SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, effective since June 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, should be registered with qualified banks instead of SAFE. The qualified banks examine the applications and accept registrations under the supervision of SAFE. Any failure or inability of the relevant shareholders or beneficial owners who are PRC residents to comply with the registration procedures set forth in these regulations, or any failure to disclose or misrepresentation of the controller(s) of the foreign-invested enterprise that is established through round-trip investment, may subject us to fines and legal sanctions, such as restrictions on our cross-border investment activities, on the ability of our PRC subsidiaries to distribute dividends and the proceeds from any reduction in capital, share transfer or liquidation to us.

We may not at all times be fully informed of the identities of all the PRC residents holding direct or indirect interest in our company, and we cannot provide any assurance that these PRC residents will comply with our request to make or obtain any applicable registrations or continually comply with all requirements under SAFE Circular 37 or other related rules. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations. Registration for the change in our round-trip invested entity might not be completed in a timely manner. Failure by our shareholders or beneficial owners to comply with SAFE regulations, 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 or affect our ownership structure. As a result, our business operations and our ability to distribute profits to you could be materially and adversely affected.

Increases in labor costs and enforcement of stricter labor laws and regulations in China may adversely affect our business and our financial condition.

As we wind down our legacy operations, China’s overall economy and the average wage in China have increased in recent years and are expected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase for any remaining employees. Unless we are able to pass on these increased labor costs to those who pay for our products and services, our results of operations may be materially and adversely affected.

In addition, we have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including pensions, housing provident fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. In order to efficiently administer the contribution of employment benefit plans of our employees in some cities, we engaged third-party agents to make the contribution for our employees. In addition, for some of our employees, we did not pay social insurance and housing provident fund in full. If the relevant competent government authority is of the view that we have underpaid social insurance and housing provident fund for our employees or the third-party agency arrangement does not satisfy the requirements under the relevant PRC laws and regulations, we may be required to pay the shortage of our contributions or subject to fines or other legal sanctions. If we are subject to full distribution, late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. Pursuant to the PRC Labor Contract Law and its implementation rules, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employee’s probation and unilaterally terminating labor contracts. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the PRC Labor Contract Law and its implementation rules may limit our ability to effect those changes in a cost-effective manner, which could adversely affect our business and results of operations.

In October 2010, the SCNPC promulgated the PRC Social Insurance Law, effective on July 1, 2011 and amended on December 29, 2018. On April 3, 1999, the State Council promulgated the Regulations on the Administration of Housing Provident Funds, which was amended on March 24, 2002 and March 24, 2019. Companies registered and operating in China are required under the Social Insurance Law and the Regulations on the Administration of Housing Provident Funds to apply for social insurance registration and housing provident fund deposit registration within 30 days of their establishment and to pay for their employees different social insurance including pension insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to the extent required by law. As advised by our PRC legal counsel, (i) under the Regulations on Administration of Housing Provident Fund, (a) if we fail to complete housing provident fund registration before the prescribed deadlines, we may be subject to a fine ranging from RMB10,000 to RMB50,000; and (b) if we fail to pay housing provident fund contributions within the prescribed deadlines, we may be subject to an order by the relevant PRC authorities to make such payments; and (ii) according to the Social Insurance Law, (a) for outstanding social insurance fund contributions that we did not fully pay within the prescribed deadlines, the relevant PRC authorities may demand that we pay the outstanding social insurance contributions within a stipulated deadline and we may be liable for a late payment fee equal to 0.05% of the outstanding contribution amount for each day of delay; and (b) if we fail to make such payments, we may be liable to a fine of one to three times the outstanding contribution amount.

As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment practices do not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. We cannot assure you that we have complied or will be able to comply with all labor-related law and regulations including those relating to obligations to make social insurance payments and contribute to the housing provident funds. 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 will be adversely affected.

We may rely on dividends and other distributions on equity paid by our mainland China subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our mainland China subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.

We are a Cayman Islands holding company and we may rely on dividends and other distributions on equity paid by our mainland China subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our existing mainland China 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. In addition, our mainland China subsidiaries, may pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC laws, each of our mainland China subsidiaries 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 their registered capital.

Our mainland China subsidiaries generate primarily all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our mainland China subsidiaries to use their Renminbi revenue to pay dividends to us. For instance, when we repatriate funds to the PRC from overseas financing activities, we may be required to complete certain filing or approval procedures to transfer funds out of the PRC for purposes such as investment, acquisition, or other capital account activities. Failure to complete these procedures could negatively affect our ability to pursue overseas expansion. Additionally, we cannot assure that additional regulatory requirements governing the convertibility of RMB into foreign currencies will not be imposed in the future, such as due to foreign exchange policy adjustments in response to changes in global economic conditions. If we are unable to access sufficient foreign currencies to meet our needs, we may face challenges in paying dividends to shareholders in foreign currencies or funding our overseas expansion efforts. Any limitation on the ability of our mainland China subsidiaries to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

In addition, the EIT Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by PRC 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.

There may be changes from time to time in the interpretation and enforcement of PRC laws and regulations and changes in policies, rules, and regulations in China, could limit the legal protections available to you and us.

Our PRC subsidiaries are subject to various PRC laws, rules and regulations generally applicable to companies in China. The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, 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 four decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in China.

As relevant laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations and enforcement of many laws, regulations and rules are always subject to change. As a result, under certain circumstances, it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations. For example, on December 29, 2023, the Standing Committee of the National People’s Congress promulgated the amended PRC Company Law, which came into effect on July 1, 2024 and supersede the existing PRC Company Law. The amended PRC Company Law provides stricter requirements on capital contribution of a company established in the PRC. According to the amended PRC Company Law, we may be required to fulfill the obligations of capital contribution to our PRC subsidiaries within a much shorter period than the currently effective period. However, since the amended PRC Company Law is still relatively new, there is still uncertainty regarding the implementation and interpretation of the amended PRC Company Law.

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. 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, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business, impede our ability to continue our operations and reduce the value of your investment in our company.

Such uncertainties, including the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof, could limit the legal protections available to us and our investors, including you.

In light of recent events indicating greater oversight by the Cyberspace Administration of China over cybersecurity, particularly for companies seeking to list on a foreign exchange, we may be subject to a variety of PRC laws and other obligations regarding cybersecurity, data protection and any other rules, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business.

The Chinese government has recently indicated an intent to exert oversight and control over overseas securities offerings and other capital markets activities and foreign investment in mainland China-based companies like us. 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 Scrutinizing Illegal Securities Activities in Accordance with the Law, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters.

On November 14, 2021, the Cyberspace Administration of China, or the CAC, released the Network Internet Data Protection Draft Regulations (draft for comments), which reiterates that data processors refer to individuals or organizations that autonomously determine the purpose and the manner of processing data. If a data processor that processes personal data of more than one million users intends to list overseas, it shall apply for a cybersecurity review. In addition, data processors that process important data or are listed overseas shall carry out an annual data security assessment on their own or by engaging a data security services institution, and the data security assessment report for the prior year should be submitted to the local cyberspace affairs administration department before January 31 of each year.

On December 28, 2021, the Measures for Cybersecurity Review (2021 version) was promulgated and became effective on February 15, 2022, and replaced the previous version published on April 13, 2020. According to the Measures for Cybersecurity Review (2021 version), critical information infrastructure operators, or CIIOs, that purchase network products and services, and network platform operators engaging in data processing activities that affect or may affect national security are subject to cybersecurity review. In addition, the relevant regulatory authorities are still entitled to impose security reviews on network products and services that are deemed capable of affecting national security. The network platform operators who possess personal information of more than one million users and intend to be listed at a foreign stock exchange must be subject to the cybersecurity review. CIIOs and network platform operators may voluntarily file for a cybersecurity review with CAC prior to purchasing network products and services if they deem their behavior affects or may affect national security based on self-assessment and self-evaluation. Notwithstanding the voluntary filing, the relevant authorities are entitled to initiate cybersecurity reviews accordingly. We believe that we were not subject to the cybersecurity review in connection with our listing and previous issuance of securities to foreign investors since (i) as companies that engaged in the research and development, production and sales of vehicles, including EVs, we and our subsidiaries are unlikely to be classified as CIIOs under the PRC Cybersecurity Law and the Security Protection Measures on Critical Information Infrastructure promulgated by the State Council on July 30, 2021; and (ii) we and our subsidiaries possess personal information of less than one million users. In addition, although we have not received any regulatory notice that identifies us as a CIIO from any PRC governmental authority, we cannot rule out the possibility that we, or certain of our customers or suppliers, may be deemed as a CIIO. If we are deemed as a CIIO, our purchases of network products or services, if deemed to be affecting or may affect national security, will need to be subject to a cybersecurity review, before we can enter into agreements with relevant customers or suppliers, and before the conclusion of such procedures, these customers will not be allowed to use our offerings or services, and we are not allowed to purchase products or services from our suppliers. As there remains significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations, we could be subject to cybersecurity review, and if so, we may not be able to pass such review. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website closure, and revocation of prerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations. As of the date of this annual report, we have not been involved in any investigations on cybersecurity review initiated by the CAC or related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect.

The PRC government authorities also further enhanced the supervision and regulation of cross-border data transmission. On July 7, 2022, the CAC issued the Measures for Security Assessment of Cross-border Data Transfers, which took effect on September 1, 2022. Such measures stipulate that data processors who provide overseas the important data collected and generated during operations within the PRC and personal information that shall be subject to security assessment shall conduct a security assessment. On March 22, 2024, the CAC issued Provisions on Facilitating and Regulating Cross-border Data Flows, which provided that data handlers shall identify and declare important data in accordance with relevant rules. In accordance with these provisions, data handlers who provide data abroad, and meet any of the following conditions, are required to declare the outbound data transfer the security assessment to the national cyberspace administration authority through the provincial-level cyberspace administration authority where the data handlers are located: (i) critical information infrastructure operators providing personal information or important data abroad; (ii) data handlers other than critical information infrastructure operator providing important data abroad or cumulatively providing abroad personal information without any sensitive personal information of more than one million individuals or sensitive personal information of more than 10,000 individuals since January 1 of the current year. The assessment results of the data export are valid for three years. In addition, these provisions provide certain exemptions from obligations under the circumstances of cross-border data transfer, including, among others, the obligations for declaring data security assessment, concluding a standard contract for provisions of personal information abroad or passing the certification for personal information protection. As of the date of this annual report, such measures have not materially affected our business or results of operations.

On February 24, 2023, the CSRC, together with other PRC government authorities, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises (the “Confidentiality and Archives Administration Provisions”), which have come into effect on March 31, 2023. The Confidentiality and Archives Administration Provisions require, among others, that PRC domestic enterprises seeking to offer and list securities in overseas markets, either directly or indirectly, shall establish the confidentiality and archives system, and shall complete approval and filing procedures with competent authorities, if such PRC domestic enterprises or their overseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets of PRC government agencies to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals. It further stipulates that providing or publicly disclosing documents and materials which may adversely affect national security or public interests, and accounting files shall be subject to corresponding procedures in accordance with relevant laws and regulations. We believe that we and our subsidiaries have not and will not provide or publicly disclose documents or materials involving state secrets or work secrets of PRC government agencies or which may adversely affect national security or public interests, to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals. Any failure or perceived failure by us or our subsidiaries to comply with the above confidentiality and archives administration requirements under the Confidentiality and Archives Administration Provisions and other PRC laws and regulations may result in that the relevant entities would be held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime. We cannot assure you, however, that regulators in China will not take a contrary view or will not subsequently require us to undergo the cybersecurity review and subject us to penalties for non-compliance.

As of the date of this annual report, we believe we are in compliance with the regulations or policies that have been issued by the CAC to date in general, with the other subsidiaries in China are not subject to any penalties, fines, suspensions, investigations from any competent authorities for violation of the existing regulations or policies that have been issued by the CAC. There remains uncertainty, however, as to how the regulations or policies issued by the CAC will be interpreted or implemented and whether the CAC may adopt new laws, regulations, rules, or detailed implementation and interpretation. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. Any inability to adequately address cybersecurity and data protection concerns, even if unfounded, or failure to comply with such standards, could result in inquiries and other proceedings or actions against us by governmental authorities, users, consumers or others, such as warnings, fines, penalties, required rectifications and/or other sanctions, as well as negative publicity and damage to our reputation, which could have an adverse effect on our business and results of operations.

Furthermore, the PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us. Such actions taken by the PRC government authorities may influence our operations at any time, which are beyond our control. Therefore, any such action may adversely affect our operations and significantly limit or hinder our ability to offer or continue to offer securities to you and cause our securities to significantly decline in value or become worthless.

Changes in the political and economic policies of the PRC government or in relations between China and the United States may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.

Substantially all of our operations are conducted in the PRC and substantially all of our revenues are sourced from the PRC. Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal developments in the PRC or changes in government relations between China and the United States or other governments. There is uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs.

The Chinese economy, political and social conditions differ from those of many other jurisdictions. Over the past decades, the Chinese government has taken various measures to promote the market economy and encourage entities to establish sound corporate governance. The PRC government has also implemented certain measures in the past, including interest rate adjustment, aiming at sustaining the pace of economic growth. Any such development may cause decreased economic activity and affect the overall economic growth, and may adversely affect our business and operating results, leading to reduction in demand for our services and adversely affect our competitive position. We currently enjoy preferential local governmental policies, which contain eligibility requirements. We cannot guarantee that we will be able to successfully renew our preferential treatment in the future.

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.

Under the applicable regulations and SAFE rules, PRC citizens who participate in an employee stock ownership plan or a stock option plan in an overseas publicly listed company are required to register with SAFE or its local branches and complete certain other procedures. Pursuant to the rules related to stock options by SAFE, participants in a stock incentive plan who are PRC residents must retain a qualified PRC domestic agent, which could be a PRC subsidiary of the overseas publicly listed company or another qualified institution selected by the PRC subsidiary. Such qualified PRC domestic agent must, among other things, file on behalf of such participant an application with SAFE to conduct the SAFE registration with respect to such stock incentive plan and obtain approval for an annual allowance with respect to the purchase of foreign exchange in connection with the exercise or sale of stock options or stock such participant holds. Such participating PRC residents’ foreign exchange income received from the sale of stock and dividends distributed by the overseas publicly listed company must be fully remitted into a PRC collective foreign currency account opened and managed by the PRC agent before distribution to such participants. In addition, the PRC domestic agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan or the PRC domestic agent or any other material changes. We and our PRC resident employees who have been granted stock options or other share-based incentives of ours will be subject to these rules. If we or our PRC resident participants fail to comply with these regulations, we and/or our PRC resident participants may be subject to fines and legal sanctions. In addition, China’s State Administration of Taxation (“SAT”) has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees working in China who exercise share options and/or are granted restricted shares in the future will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee share options and/or restricted shares with 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 laws and regulations, we may face sanctions imposed by the tax authorities or other PRC government authorities.

PRC regulation on loans to, and direct investment in, our PRC subsidiaries by offshore holding companies and governmental control in currency conversion may delay or prevent us from funding the wind-down or divestiture of our legacy Chinese operations, or from repatriating funds, which could materially and adversely affect our liquidity and our transition to our digital asset strategy.

Digital Currency X Technology Inc. is an exempted company incorporated in the Cayman Islands structured as a holding company that historically conducted its vehicle manufacturing operations in China through its PRC subsidiaries. As we execute the planned divestiture of our legacy electric vehicle subsidiary, Chijet Inc., for $1, we may still need to make loans or additional capital contributions to our PRC subsidiaries to settle historical liabilities, satisfy restructuring closing conditions, or manage wind-down operations. As permitted under PRC laws and regulations, we may make loans to our PRC subsidiaries subject to the approval from governmental authorities and limitation of amount, or we may make additional capital contributions. Furthermore, loans by us to our PRC subsidiaries to finance these transition activities cannot exceed the statutory limits and are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System and registration with other governmental authorities in China.

The SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises (“SAFE Circular 19”), effective on June 1, 2015 and last amended on March 23, 2023, which regulates the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company such that RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of bank loans that have been transferred to a third party. Although SAFE Circular 19 allows RMB capital to be used for equity investments within the PRC, it reiterates the principle that RMB converted from the foreign currency-denominated capital may not be directly or indirectly used for purposes beyond its business scope. Crucially, because our new strategic focus is centered entirely on digital asset treasury management, activities that are categorically banned in mainland China, we are completely prohibited from using any converted RMB capital to fund our new business scope within the PRC.

The SAFE also promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account (“SAFE Circular 16”), effective on June 9, 2016 and last amended on December 4, 2023, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital to issue RMB entrusted loans to a prohibition against using such capital to grant loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE Circular 16 could result in strict administrative penalties. SAFE Circular 19, SAFE Circular 16, and the related SAFE Circular 28, may significantly limit our ability to transfer any foreign currency we hold to our PRC subsidiaries to facilitate our corporate restructuring, which may adversely affect our liquidity and our ability to cleanly sever our mainland footprint.

In light of the various requirements imposed by PRC regulations on loans to, and direct investment in, the PRC subsidiaries by offshore holding companies, and the fact that the PRC government may at its discretion restrict access to foreign currencies for current account transactions or capital repatriation in the future, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans or capital contributions required to execute our divestiture. If we fail to complete such registrations or obtain such approvals, our ability to successfully conclude our strategic pivot, settle legacy mainland liabilities, or repatriate any residual value to capitalize our borderless digital asset treasury may be negatively affected, which could materially and adversely affect our overall liquidity and the viability of our new operational focus.

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

Under the PRC Enterprise Income Tax Law (“EIT Law”), that became effective in January 2008 and was amended in February 2017 and December 2018, as well as its implementing rules, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, a circular, known as SAT Circular 82, issued in April 2009 by the State Administration of Taxation (the “SAT”), specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights. Further to SAT Circular 82, the SAT issued a bulletin, known as SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of such “Chinese-controlled offshore incorporated resident enterprises.” SAT Bulletin 45 provides procedures and administrative details for the determination of resident status and administration on post-determination matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups or by PRC or foreign individuals.

We do not believe that we, as an exempted company incorporated in the Cayman Islands, meets all of these conditions to be classified as a PRC resident enterprise following the planned divestiture of our legacy Chinese vehicle subsidiary. However, because certain members of our executive management team and administrative personnel may historically or currently reside in or maintain significant ties to mainland China during our transition, the PRC tax authorities could determine that our “de facto management body” remains in the PRC. If the PRC tax authorities determine that we are a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. 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.”

Finally, since there remain uncertainties regarding the interpretation and implementation of the EIT Law and its implementation rules, it is uncertain whether, if we are regarded as a PRC resident enterprise, any dividends payable by us to our investors and gains on the sale of our shares would become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (subject to the provisions of any applicable tax treaty). It is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our ordinary shares.

There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our legacy PRC subsidiaries, and any dividends or liquidation distributions payable by our PRC subsidiaries to our offshore holding companies during our divestiture process may not qualify for certain treaty benefits.

Digital Currency X Technology Inc. is an exempted company incorporated in the Cayman Islands with limited liability structured as a holding company. As we execute the divestiture and wind-down of our legacy Chinese vehicle operations, we may still need dividends, liquidation proceeds, or other distributions on equity from our historical PRC subsidiaries to satisfy our immediate liquidity requirements and fund our transition to a global digital asset treasury strategy.

Pursuant to the EIT 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 a special arrangement between Hong Kong and China, such rate may be reduced to 5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in the PRC company. Our legacy PRC entities are wholly owned by our offshore intermediate holding companies, and accordingly, these intermediate holding companies may qualify for a 5% tax rate in respect of distributions from the PRC subsidiaries when they are not obligated to pay more than 50% of the income in twelve months to residents in a third country or region. Under the Notice of the State Administration of Taxation on Issues regarding the Administration of the Dividend Provision in Tax Treaties promulgated on February 20, 2009, the taxpayer needs to satisfy certain conditions to utilize the benefits under a tax treaty. These conditions include: (1) the taxpayer must be the beneficial owner of the relevant dividends, and (2) the corporate shareholder to receive dividends from the PRC subsidiary must have continuously met the direct ownership thresholds during the 12 consecutive months preceding the receipt of the dividends. Further, under Announcement of the State Administration of Taxation on Issues Relating to “Beneficial Owner” in Tax Treaties, which took effect on April 1, 2018, a “Beneficial Owner” shall mean a person who has ownership and control over the income and the rights and property from which the income is derived. To determine the “beneficial owner” status of a resident of the treaty counterparty who needs to take advantage of the tax treaty benefits, a comprehensive analysis shall be carried out, taking into account actual conditions of the specific case.

Entitlement to a lower tax rate on dividends according to tax treaties or arrangements between the PRC central government and governments of other countries or regions is subject to the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits (“Circular 35”). Circular 35 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. Given the heightened regulatory scrutiny surrounding cross-border capital flows and our explicit strategic pivot toward strictly prohibited digital asset activities, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment during our corporate restructuring will not be aggressively challenged by the relevant PRC tax authority, or that we will be entitled to any preferential withholding tax rate under tax treaties for dividends or liquidation proceeds received from our legacy mainland subsidiaries.

Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.

Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises (“SAT Circular 698”) issued by the SAT on December 10, 2009, where a foreign investor transfers the equity interests of a resident enterprise indirectly via disposition of the equity interests of an overseas holding company, or an “indirect transfer,” and such overseas holding company is located in a tax jurisdiction that (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor shall report the indirect transfer to the competent tax authority. The PRC tax authority will examine the true nature of the indirect transfer, and if the tax authority considers that the foreign investor has adopted an “abusive arrangement” in order to avoid PRC tax, it may disregard the existence of the overseas holding company and re-characterize the indirect transfer.

On February 3, 2015, the SAT issued the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises (“SAT Bulletin 7”), to supersede existing provisions in relation to the “indirect transfer” as set forth in SAT Circular 698, while the other provisions of SAT Circular 698 remain in force. Pursuant to SAT Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable business purposes and aiming to avoid the payment of enterprise income tax, such indirect transfer must be reclassified as a direct transfer of equity in PRC resident enterprises. To assess whether an indirect transfer of PRC taxable properties has reasonable commercial purposes, all arrangements related to the indirect transfer must be considered comprehensively and factors set forth in SAT Bulletin 7 must be comprehensively analyzed in light of the actual circumstances. SAT Bulletin 7 also provides that, where a non-PRC resident enterprise transfers its equity interests in a resident enterprise to its related parties at a price lower than the fair market value, the competent tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.

On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Matters Concerning Withholding of Income Tax of Non-resident Enterprises as Source (“SAT Bulletin 37”), which repealed the entire SAT Circular 698 and the provision in relation to the time limit for the withholding agent to declare to the competent tax authority for payment of such tax of SAT Bulletin 7. Pursuant to SAT Bulletin 37, the income from a property transfer, as stipulated in the second item under Article 19 of the EIT Law, shall include the income derived from transferring such equity investment assets as stock equity. The balance of deducting the equity’s net value from the total income from equity transfer shall be taxable income from equity transfer. Where a withholding agent enters into a business contract, involving the income specified in the third paragraph of Article 3 in the EIT Law, with a non-resident enterprise, the tax-excluding income of the non-resident enterprise will be treated as the tax-including income, based on which the tax payment will be calculated and remitted, if it is agreed in the contract that the withholding agent shall assume the tax payable.

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. Our Company may be subject to filing obligations or taxed or subject to withholding obligations in such transactions, under SAT Bulletin 7 and SAT Bulletin 37. It is possible that we or our non-PRC resident investors may become at risk of being taxed under SAT Bulletin 7 and SAT Bulletin 37 and may be required to expend valuable resources to comply with SAT Bulletin 7 and SAT Bulletin 37 or to establish that we or our non-PRC resident investors should not be taxed under SAT Bulletin 7 and SAT Bulletin 37, which may have an adverse effect on our financial condition and results of operations or such non-PRC resident investors’ investment in us.

Dividends payable to our foreign investors and gains on the sale of our Ordinary Shares by our foreign investors may be subject to PRC tax.

Under the EIT Law and its implementation regulations issued by the State Council, a 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises, which do not have an establishment or place of business in the PRC or which have such establishment or place of business but the dividends are not effectively connected with such establishment or place of business, to the extent such dividends are derived from sources within the PRC. Any gain realized on the transfer of Ordinary Shares by such investors is also subject to PRC tax at a current rate of 10% which in the case of dividends will be withheld at source if such gain is regarded as income derived from sources within the PRC. If we are deemed a PRC resident enterprise, dividends paid on our Ordinary Shares, and any gain realized from the transfer of our Ordinary Shares, may be treated as income derived from sources within the PRC and may as a result be subject to PRC taxation. See “Regulation - Regulations Relating to Taxation.” Furthermore, if we are deemed a PRC resident enterprise, dividends payable to individual investors who are non-PRC residents and any gain realized on the transfer of Ordinary Shares by such investors may be subject to PRC tax at a current rate of 20%. Any PRC tax liability may be reduced under applicable tax treaties. However, it is unclear whether 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 if we are considered a PRC resident enterprise. If dividends payable to our non-PRC investors, or gains from the transfer of our Ordinary Shares by such investors are subject to PRC tax, the value of your investment in our Ordinary Shares may decline significantly.

We may rely on dividends, liquidation proceeds, and other distributions on equity paid by our legacy PRC subsidiaries to fund any cash and financing requirements we may have during our corporate transition, and the PRC subsidiaries’ restrictions on paying dividends or making other payments to us could restrict our ability to satisfy our liquidity requirements and have a material and adverse effect on our ability to execute our digital asset strategy.

We are an exempted company incorporated in the Cayman Islands with limited liability structured as a holding company. As we execute the divestiture of our legacy vehicle operations, we may need dividends, liquidation distributions, and other returns on equity from our historical PRC subsidiaries to satisfy our immediate liquidity requirements, including the critical fiat funds necessary to capitalize our new global digital asset treasury, pay dividends to shareholders, and service any debt we may incur during this strategic pivot. Historically, our PRC subsidiaries generated and retained cash from legacy operating activities and re-invested it in our mainland business. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their accumulated profits each year, if any, to fund certain statutory reserve funds until the total amount set aside reaches 50% of their registered capital. Our PRC subsidiaries may also allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion, which may be heavily utilized during severance or wind-down operations. These statutory reserves are not distributable as cash dividends. Furthermore, if our PRC subsidiaries incur debt on their own behalf or hold legacy debt obligations, the instruments governing such debt may strictly restrict their ability to pay dividends or make other payments to us to facilitate our corporate restructuring. Any limitation on the ability of our legacy PRC subsidiaries to distribute dividends, remit divestiture proceeds, or make payments to us may severely restrict our ability to satisfy our transition liquidity requirements.

In addition, the PRC government may further strengthen its already stringent capital controls, and more severe restrictions and substantial vetting processes may be put forward by SAFE for cross-border transactions falling under both the current account and the capital account. Given that the ultimate purpose of repatriating these onshore funds is to finance a decentralized cryptocurrency treasury, activities that are strictly and categorically prohibited under mainland Chinese law, we anticipate extreme regulatory friction in clearing these cross-border transfers. Any limitation on the ability of our PRC subsidiaries to pay dividends, remit liquidation proceeds, or make other kinds of payments to us could materially and adversely limit our ability to successfully conclude our strategic pivot, make critical Web3 investments or infrastructure acquisitions that could be beneficial to our new business, or otherwise fund and conduct our decentralized operations globally.

Fluctuations in exchange rates could result in foreign currency exchange losses to us and may reduce the value of, and amount in U.S. Dollars of dividends payable on, our shares in foreign currency terms and could impact our gross profit and gross margin.

The value of the RMB and the Hong Kong dollar against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. In August 2015, the PBOC, changed the way it calculates the mid-point price of RMB against the U.S. dollar, requiring the market-makers who submit for reference rates to consider the previous day’s closing spot rate, foreign-exchange demand and supply as well as changes in major currency rates. It is difficult to predict how market forces or PRC or U.S. government policy, including any interest rate increases by the Federal Reserve, may impact the exchange rate between the RMB and the U.S. dollar in the future. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, including from the U.S. government, which has threatened to label China as a “currency manipulator,” which could result in greater fluctuation of the RMB against the U.S. dollar. However, the PRC government may still at its discretion restrict access to foreign currencies for current account transactions in the future. Therefore, it is difficult to predict how market forces or government policies may impact the exchange rate between the RMB and the U.S. dollar or other currencies in the future. In addition, the PBOC may take measures in the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals. If the exchange rate between RMB and U.S. dollar fluctuates in unanticipated manners, our results of operations and financial condition, and the value of, and dividends payable on, our shares in foreign currency terms may be adversely affected. We may not be able to pay dividends in foreign currencies to our shareholders. Appreciation of RMB to U.S. dollar will result in foreign currency translation gain, while depreciation of RMB to U.S. dollar will result in foreign currency translation loss.

Restrictions on currency exchange may limit our ability to utilize our revenues effectively.

All of our revenues are denominated in Renminbi. The Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. Currently, our WFOE may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Since we expect a significant portion of our future revenue will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies to our shareholders. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant PRC governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries.

To the extent cash or assets in our business are in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund our new digital asset operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of our company and our subsidiaries by the PRC government to transfer cash or assets, which may materially and adversely affect our business, financial condition, and results of operations and may result in our inability to sustain our strategic pivot and decentralized treasury strategies.

We are an offshore holding company with no material operations of its own and historically conducted substantially all of its legacy vehicle operations through its PRC subsidiaries. As of the date of this annual report, as we navigate the divestiture of our legacy business, a significant portion of our fiat cash and historical assets remain located in the PRC. As a holding company, we may rely on dividends, liquidation distributions, and other returns on equity paid by our legacy PRC subsidiaries for our immediate cash and transition financing requirements. If our PRC subsidiaries incur debt on their own behalf in the future or hold legacy debt obligations, the instruments governing such debt may strictly restrict their ability to pay dividends or remit proceeds to us. We are in the process of adopting our formal Web3 cash and digital asset management policies which will dictate the purpose, amount, and cryptographic security procedures of fiat and digital asset transfers among our holding company and global subsidiaries. Historically, one PRC operating entity provided financial support for other entities’ operations by inter-company loans and we have not experienced difficulties or limitations on our ability to transfer fiat cash between mainland subsidiaries. Among our holding company and its subsidiaries, fiat cash is transferred as needed in the form of capital contributions or working capital loans to the PRC subsidiaries, as we are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries only through loans or capital contributions, and only if we satisfy the applicable government registration and approval requirements. We believe that there is currently no restriction imposed by the Hong Kong government on the transfer of capital within, into, and out of Hong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities—a regulatory threshold that invites exceptionally high scrutiny for enterprises transitioning into the digital asset sector. Crucially, to the extent cash or assets in our business are trapped in the PRC or Hong Kong or a PRC or Hong Kong entity, these funds or assets may not be available to fund our decentralized treasury operations or for other use outside of the PRC or Hong Kong due to sudden interventions in or the imposition of stringent restrictions and limitations on the ability of our company and our subsidiaries by the PRC government to transfer cash or assets cross-border, particularly given the PRC’s sweeping administrative bans on capital flows associated with cryptocurrency activities. As of the date of this annual report, no transfers, dividends, or other distributions of fiat or digital assets have been made to date from our subsidiaries to our holding company in connection with our new strategic focus, nor have we or any of our subsidiaries ever paid dividends or made distributions to U.S. investors to date.

The PRC government imposes strict controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands during the wind-down and divestiture of our legacy business, we may not be able to transfer cash out of China, repatriate liquidation proceeds, or pay dividends in foreign currencies to our global shareholders. Therefore, to the extent legacy fiat cash or historical assets in our business remain trapped in the PRC or Hong Kong or a PRC or Hong Kong entity, these funds or assets may not be available to capitalize our new global digital asset treasury, fund our decentralized finance operations, or be utilized for other uses outside of the PRC or Hong Kong. This is due to sudden interventions in or the imposition of severe restrictions and limitations on the ability of our company and our subsidiaries by the PRC government to transfer cash or assets cross-border. This risk is profoundly magnified by the fact that the ultimate destination of these repatriated funds is to finance a decentralized cryptocurrency ecosystem, a purpose that directly contravenes the PRC’s sweeping national bans on digital asset activities and capital flows associated with virtual currencies. Such capital controls and restrictions may materially and adversely affect our transition liquidity, business, financial condition, and results of operations, and may result in our inability to successfully complete our strategic pivot or sustain our decentralized expansion strategies.

Notwithstanding the foregoing, there can be no assurance that the PRC government will not impose even more stringent restrictions in the future on our ability to transfer or distribute cash within our legacy PRC subsidiaries or to remit divestiture funds to foreign investors, which could result in an absolute inability or strict legal prohibition on making transfers or distributions outside of China and may fatally undermine our ability to finance our ongoing Web3 operations.

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

Digital Currency X is an exempted company incorporated under the laws of the Cayman Islands. We historically conducted substantially all of our production and sales in China, and substantially all of our assets are located in China. In addition, our executive officers and certain directors are PRC nationals and reside within China for a significant portion of the time. The PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom, Japan and many other jurisdictions. As a result, it may not be possible for investors to serve process upon us or those persons in China, or to enforce against us or them in China, any judgments obtained from non-PRC jurisdictions. As a result, it may be difficult for you to effect service of process upon us or those persons inside mainland China. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors who do not reside in the United States or have substantial assets located in the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state.

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 United States has 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 PRC. Accordingly, without the consent of the competent PRC securities regulators or other relevant authorities, no entity or individual may provide any documents and materials relating to securities business activities to foreign entities or government agencies. As such, there are also uncertainties as to the procedures and requisite timing for the oversea securities regulatory agencies to conduct investigations and collect evidence within the territory of the PRC.

Risks Related to Ownership of Our Class A Ordinary Shares

We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002.

We are required to provide management’s attestation on internal controls. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act of 2002 are significantly more stringent than those required of privately-held companies. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the regulatory compliance and reporting requirements that will be applicable to us. If we are not able to implement the additional requirements of Section 404 in a timely manner or with adequate compliance, we may not be able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our Ordinary Share.

The requirements of being a public company may strain our resources and divert management’s attention.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. (the “Exchange Act,”) the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations will increase the legal and financial compliance costs of ours, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after it is no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants to comply with these requirements, which will increase its costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

If we are characterized as a passive foreign investment company for U.S. federal income tax purposes, our U.S. shareholders may suffer adverse tax consequences.

If we are a passive foreign investment company (“PFIC”) for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder of Class A Ordinary Shares, the U.S. holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Digital Currency X’s PFIC status for its current and subsequent taxable years may depend on its unbooked goodwill as valued based on the projected market value of its equity and whether it qualifies for the PFIC start-up exception. Depending on the particular circumstances, the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status 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. Please see the section of this annual report entitled “Taxation-Certain Material U.S. Federal Income Tax Considerations-Passive Foreign Investment Company Rules” for a more detailed discussion with respect to Digital Currency X’s potential PFIC status. U.S. holders are urged to consult their tax advisors regarding the possible application of the PFIC rules to holders of Class A Ordinary Shares.

The IRS may not agree that we should be treated as a non-U.S. corporation for U.S. federal income tax purposes.

Although we are incorporated in the Cayman Islands, the IRS may assert that we should be treated as a U.S. corporation for U.S. federal income tax purposes pursuant to Section 7874 of the Internal Revenue Code of 1986, as amended (the “Code”) For U.S. federal income tax purposes, a corporation is generally considered a U.S. “domestic” corporation if it is created or organized in or under the laws of the U.S., any state thereof, or the District of Columbia. Because we are not so created or organized (but are instead incorporated only in the Cayman Islands), we would generally be classified as a foreign corporation (that is, a corporation other than a U.S. “domestic” corporation) under these rules. Section 7874 of the Code provides an exception under which a corporation created or organized under foreign law may, in certain circumstances, be treated as a U.S. corporation for U.S. federal income tax purposes.

As more fully described in the section titled “Taxation-Certain Material U.S. Federal Income Tax Considerations - U.S. Federal Income Tax Treatment of Digital Currency X - Tax Residence of Digital Currency X for U.S. Federal Income Tax Purposes,” based on the rules for determining share ownership under Code Section 7874 and the Treasury regulations promulgated under Code Section 7874 (the “Section 7874 Regulations”), and certain factual assumptions, we are not currently expected to be treated as a U.S. corporation for U.S. federal income tax purposes under Code Section 7874. However, the application of Section 7874 of the Code is complex, is subject to detailed regulations (the application of which is uncertain in various respects and would be impacted by changes in such U.S. tax laws and regulations with possible retroactive effect), and is subject to certain factual uncertainties. Accordingly, there can be no assurance that the IRS will not challenge our status as a foreign corporation under Code Section 7874 or that such challenge would not be sustained by a court.

If the IRS were to successfully challenge under Code Section 7874 our status as a foreign corporation for U.S. federal income tax purposes, we and certain shareholders of ours could be subject to significant adverse tax consequences, including a higher effective corporate income tax rate on us and future withholding taxes on certain of our shareholders, depending on the application of any income tax treaty that might apply to reduce such withholding taxes. In particular, holders of Class A Ordinary Shares would be treated as holders of stock of a U.S. corporation.

Code Section 7874 may increase our U.S. affiliates’ U.S. taxable income or have other adverse consequences to us and our shareholders.

Following the acquisition of a U.S. corporation by a foreign corporation, Code Section 7874 can limit the ability of the acquired U.S. corporation and its U.S. affiliates to use U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions, as well as result in certain other adverse tax consequences, even if the acquiring foreign corporation is respected as a foreign corporation for purposes of Code Section 7874. In general, if a foreign corporation acquires, directly or indirectly, substantially all of the properties held directly or indirectly by a U.S. corporation, and after the acquisition the former shareholders of the acquired U.S. corporation hold at least 60% (by either vote or value) but less than 80% (by vote and value) of the shares of the foreign acquiring corporation by reason of holding shares in the acquired U.S. corporation, subject to other requirements, certain adverse tax consequences under Section 7874 of the Code may apply.

If these rules apply to the Business Combination, we and certain of our shareholders may be subject to adverse tax consequences including, but not limited to, restrictions on the use of tax attributes with respect to “inversion gain” recognized over a 10-year period following the transaction, disqualification of dividends paid from preferential “qualified dividend income” rates and the requirement that any U.S. corporation owned by us include as “base erosion payments” that may be subject to a minimum U.S. federal income tax any amounts treated as reductions in gross income paid to certain related foreign persons. Furthermore, certain “disqualified individuals” (including officers and directors of a U.S. corporation) may be subject to an excise tax on certain stock-based compensation held thereby at a rate of 20%.

As more fully described in the section titled “Taxation-Certain Material U.S. Federal Income Tax Considerations - U.S. Federal Income Tax Treatment of Digital Currency X - Utilization of JWAC’s Tax Attributes and Certain Other Adverse Tax Consequences to Digital Currency X and Digital Currency X’s Shareholders,” based on the terms of the Business Combination, the rules for determining share ownership under Section 7874 of the Code and the Section 7874 Regulations (as defined in “Taxation-Certain Material U.S. Federal Income Tax Considerations - U.S. Federal Income Tax Treatment of Digital Currency X - Tax Residence of Digital Currency X for U.S. Federal Income Tax Purposes”), and certain factual assumptions, we are not currently expected to be subject to these rules under Code Section 7874 after the Business Combination. The above determination, however, is subject to detailed regulations (the application of which is uncertain in various respects and would be impacted by future changes in such U.S. Treasury regulations, with possible retroactive effect) and is subject to certain factual uncertainties. Accordingly, there can be no assurance that the IRS will not challenge whether we are subject to the above rules or that such a challenge would not be sustained by a court.

However, even if we are not subject to the above adverse consequences under Section 7874, we may be limited in using our equity to engage in future acquisitions of U.S. corporations over a 36-month period following the Business Combination. If we were to be treated as acquiring substantially all of the assets of a U.S. corporation within a 36-month period after the Business Combination, the Section 7874 Regulations would exclude certain shares of ours attributable to the Business Combination for purposes of determining the Section 7874 Percentage (as defined in “Taxation-Certain Material U.S. Federal Income Tax Considerations - U.S. Federal Income Tax Treatment of Digital Currency X - Tax Residence of Digital Currency X for U.S. Federal Income Tax Purposes”) of that subsequent acquisition, making it more likely that Code Section 7874 will apply to such subsequent acquisition.

See “Taxation-Certain Material U.S. Federal Income Tax Considerations - U.S. Federal Income Tax Treatment of Digital Currency X - Utilization of JWAC’s Tax Attributes and Certain Other Adverse Tax Consequences to Digital Currency X and Digital Currency X’s Shareholders” for a more detailed discussion of the application of Code Section 7874 to the Business Combination. Investors in our company should consult their own advisors regarding the application of Code Section 7874 to the Business Combination.

We are an “emerging growth company” and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make its shares of common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and 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. Additionally, as an emerging growth company, we elected to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As such, the financial statements of Digital Currency X may not be comparable to companies that comply with public company effective dates. It cannot be predicted if investors will find Class A Ordinary Shares less attractive because we may rely on these exemptions. If some investors find Class A Ordinary Shares less attractive as a result, there may be a less active trading market for Class A Ordinary Shares and its share price may be more volatile.

Our share price may be volatile, and purchasers of our Class A Ordinary Shares could incur substantial losses.

Our share price has been extremely volatile in the past and may continue to be so in the future. Since our January 1^st 2024, our class A ordinary shares has traded at prices ranging from $1.15 and $21.6. (After share merge) The stock market in general has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their class A ordinary shares at or above the price paid for such shares. The market price for our class A ordinary shares may be influenced by many factors, including, but not limited to:

The Nasdaq Capital Market imposes listing standards on our Class A Ordinary Shares that we may not be able to fulfill in the future, thereby leading to a possible delisting of our Class A Ordinary Shares.

Company was listed at Nasdaq Global Market since SPAC.

Company received the notice of delisting due on the market cap issue. Company needs to keep the market cap over 35 million dollars. Company’s share price decreased to 1.15 dollar per share. After 180 days, on February 11, 2025, Company applied the hearing regarding overcome the market cap defect. Company issue new 23 million new shares to acquire Too Express. In the meantime, company issue the 20 times voting power share to keep the control right.

On April 30, 2025 Company received approval from Nasdaq to confirm that Company meet all of the criteria necessary for Nasdaq Capital Market to allow our class A ordinary shares to remain listed. Company’s share started to trade on May 2, 2025 on the Nasdaq Capital Market.

Subsequently, on October 15, 2025, we were notified by Nasdaq that our ordinary shares failed to maintain a minimum bid price of $1.00 over the preceding 30 consecutive business days as required by Nasdaq Listing Rule 5550(a)(2). We successfully regained compliance with this minimum bid price requirement, as confirmed by a notice from Nasdaq on November 18, 2025, after our closing bid price remained at or above $1.00 for 10 consecutive business days.

Shortly thereafter, on December 12, 2025, we received a notification from Nasdaq indicating that we were not in compliance with the minimum Market Value of Listed Securities of US$35 million (“MVLS”) requirement for continued listing on The Nasdaq Capital Market, and that we had a compliance period of 180 calendar days, or until June 10, 2026, to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(C). On January 23, 2026, we received a written notification from the Listing Qualifications Staff of Nasdaq stating that we had successfully regained compliance with the market value of listed securities requirement under Nasdaq Listing Rule 5550(b)(2), as the Staff determined that for the preceding 20 consecutive business days, from December 23, 2025, to January 22, 2026, our market value of listed securities had been $35,000,000 or greater. Although this specific matter is now closed and we successfully retained our Capital Market listing, as a listed company we remain subject to various ongoing listing standards, and we cannot assure you that we will continue to meet these rigorous requirements in the future.

If our Class A Ordinary Shares are ultimately delisted from the Nasdaq Capital Market the Class A Ordinary Shares would likely then trade only in the over-the-counter market and the market liquidity of the Class A Ordinary Shares would be adversely affected and their market price could decrease. If the Class A Ordinary Shares were to trade on the over-the-counter market, selling the Class A Ordinary Shares could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity with respect to our securities; a determination that our Class A Ordinary Shares are a “penny stock,” which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; a reduced amount of news and analyst coverage for our company; and a decreased ability to issue additional securities or obtain additional financing in the future. These factors could result in lower prices and larger spreads in the bid and ask prices for the Class A Ordinary Shares and would substantially impair our ability to raise additional funds and could result in a loss of investor interest and fewer development opportunities for us.

The future sales of our Class A Ordinary Shares by our principal shareholders may adversely affect the market price of our Ordinary Shares.

Sales of a substantial number of our Class A Ordinary Shares in the public market by our principal shareholder could occur at any time. If our principal shareholders sell, or the market perceives that they intend to sell, substantial amounts of our Class A Ordinary Shares in the public market, the market price of our Class A Ordinary Shares would likely decline.

We may issue additional Class A Ordinary Shares or other equity or convertible debt securities without approval of our shareholders which would dilute existing ownership interests and may depress the market price of our Class A Ordinary Shares.

We may issue additional Class A Ordinary Shares or other equity or convertible debt securities of equal or senior rank in the future without approval of our shareholders. Our issuance of additional Class A Ordinary Shares or other equity or convertible debt securities of equal or senior rank would have the following effects: (1) our existing shareholders’ proportionate ownership interest may decrease; (2) the amount of cash available per share, including for payment of dividends in the future, may decrease; (3) the relative voting power of each previously outstanding Class A Ordinary Shares may be diminished; and (4) the market price of our Class A Ordinary Shares may decline.

Anti-takeover provisions contained in our fourth amended and restated memorandum and articles of association (the “Amended and Restated Memorandum and Articles of Association”), as well as provisions of Cayman Islands law, could impair a takeover attempt and limit the price investors might be willing to pay in the future for the Class A Ordinary Shares and could entrench management.

Our fourth amended and restated memorandum and articles of association (the “Amended and Restated Memorandum and Articles of Association”) contains anti-takeover provisions under Cayman Islands law, which could delay or prevent a change of control. These provisions may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for Digital Currency X’s securities.

Our authorized but unissued shares are available for future issuances without shareholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved ordinary shares could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Concentration of ownership among our existing executive officers, directors and their affiliates may prevent new investors from influencing significant corporate decisions.

Our executive officers, directors and their affiliates as a group beneficially own approximately 56.15% of outstanding Class A Ordinary Shares and Class B Ordinary Shares (as defined herein). As a result, these shareholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors, any amendment of our Charter and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control or changes in management and will make the approval of certain transactions difficult or impossible without the support of these shareholders.

We do not expect to declare any dividends in the foreseeable future.

We do not anticipate declaring any cash dividends to holders of its common stock in the foreseeable future. Consequently, investors may need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we publish our results on a semi-annual basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq Capital Market. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.

As a Cayman Islands exempted company that is listed on Nasdaq, we are subject to 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 Nasdaq corporate governance listing standards, including, but not limited to, board of directors independent requirements, director nomination procedures, compensation committee matters. We are following our home country law instead of the Nasdaq listing rules that require us to obtain shareholder approval for certain dilutive events, such as certain transactions other than a public offering involving issuances of a 20% or greater interest in the company, and acquisitions of the stock or assets of another company. As a result, our shareholders may be afforded less protection than they otherwise would enjoy under Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. In addition, we also follow other home country practice in lieu of the requirements under Nasdaq listing rules with respect to certain corporate governance standards with respect to the following Nasdaq requirements:

ITEM 4. INFORMATION ON THE COMPANY

4A. History and Development of the Company

We are a Cayman Islands exempted company structured as a holding company. Until the disposal of our entire interest in Chijet Inc. on March 20, 2026 (the “Disposal”), as further described below under “Recent Development,” we conducted our historical operations in the electric vehicle industry in China through Chijet Inc. and its subsidiaries, including Shandong Baoya. Following the Disposal, we have transitioned our strategic focus to technology and digital asset management. Our principal executive offices are located at Room 1101, 11/F., Capital Centre, 151 Gloucester Road, Wanchai, Hong Kong. Our agent for service of process in the United States is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711.

We were incorporated as an exempt company with limited liability under the laws of the Cayman Islands on June 22, 2022. Our wholly owned subsidiary, Chijet Inc. was incorporated under the laws of the Cayman Islands on July 6, 2021. Until the Disposal on March 20, 2026, Chijet Inc., in turn, indirectly held an over 85% interest in Shandong Baoya. In addition, prior to the Disposal, Chijet Inc. indirectly held an over 60% interest in FAW Jilin.

Our former core operating entity, Shandong Baoya, was founded in 2009 and is one of the earliest companies in China to engage in the research and development, production and sales of new energy vehicles. Our former subsidiaries, which were disposed of as part of the Disposal, mainly included Baoya New Energy Automobile R&D Institution (Yantai) Co., Ltd., Baoya New Energy Automobile Sale (Yantai) Co., Ltd., Xiangyang Yazhi New Energy Automobile Co., Ltd. (“Xiangyang Yazhi”), Xiangyang Yazhi New Energy Automobile Sale Co. Ltd., Bijie Yabei New Energy Automobile Co., Ltd. (“Bijie Yabei”), Dezhou Yitu New Energy Automobile Co., Ltd., Dezhou Yarui New Energy Automobile Co., Ltd (“Dezhou Yarui”), Baoya New Energy Automobile R&D (Xiangyang) Co., Ltd. In 2019 we acquired our interest in FAW Jilin. Our former primary operating entities were Shandong Baoya, and Shandong Baoya’s subsidiary, FAW Jilin. FAW Jilin had a subsidiary named FAW Jilin Automobile Sale Co., Ltd. and a branch named Shandong Branch of FAW Jilin.

On December 27, 2019, we acquired our interest in FAW Jilin Automobile Co., Ltd., which we refer to as “FAW Jilin.” Pursuant to the Agreement and Plan of Merger relating to this acquisition the purchase price was approximately US$205.50 million (RMB 1.5 billion).

In preparation for listing our securities on the Nasdaq Stock Market through a merger with a Special Purpose Acquisition Company (“SPAC”) traded on Nasdaq, we completed a reorganization in June 2023, which involved the following preliminary steps:

By June 3, 2022, Chijet Inc. acquired a 85.172% stake in Shandong Baoya through its wholly-owned subsidiary WFOE via the following transactions: (1) WFOE acquired 17.245% stake in Shandong Baoya from two shareholders by the issuance of 1,795,977 of our ordinary shares issued by Chijet Inc.; and (2) WFOE acquired 67.927% stake in Shandong Baoya from seven shareholders (the “Sellers”), individual and institutional, for total consideration of Renminbi (“RMB”)7. Upon the Baoya New Energy (Shandong) Co., Ltd.’s transaction, all seven shareholders entered into a voting agreement to vote consensually concerning operating and development matters of Chijet Inc. and its subsidiaries. Given no change in control, the transaction was accounted for as business combination under common control.

For financial reporting purposes, the acquisition of Shandong Baoya New Energy Vehicle Co., Ltd. represented a transaction between entities under common control, resulted in a change in reporting entity and required retrospective combination of entities for all periods presented, as if the combination had been in effect since the inception of common control. Accordingly, the consolidated financial statements of Chijet Inc. and subsidiaries reflected the accounting of the combined acquired subsidiaries at historical carrying values, except that equity reflected the equity of Chijet Inc.

On July 12, 2022, we entered into a definitive business combination agreement with Deep Medicine Acquisition Corp., a blank check, special purpose acquisition company incorporated in Delaware, and a related support agreement with the company and its sponsor, Bright Vision Sponsor LLC. On September 26, 2022 this business combination agreement and related support agreement were terminated following expiration of a prescribed negotiation period in the business combination agreement. None of the parties were obligated to pay any penalties as a result of the termination, pursuant to the terms of the business combination agreement. During 2022, due to COVID-19 pandemic closures, we had approximately five months temporary suspensions of operations.

Our website is https://1957413.ir365connect.com/. The information on our website is not incorporated by reference into this annual report.

As used in this annual report, the terms “we,” “us,” “our,” “Digital Currency X” and “the Company” refer to Digital Currency X Technology Inc. and its subsidiaries. It should be noted that following the Disposal of Chijet Inc. on March 20, 2026, Chijet Inc. and its subsidiaries ceased to be subsidiaries of the Company. Therefore, unless the context indicates otherwise, descriptions of the automotive business, its operations, assets, and liabilities relate to a business that we no longer own.

On October 25, 2022, Digital Currency X entered into a business combination agreement (the “Business Combination Agreement”) with Jupiter Wellness Acquisition Corp. (“JWAC”), a Delaware corporation, Chijet Inc., certain sellers described in the Business Combination Agreement, Mu Hongwei in the capacity as the Seller Representative thereunder and Chijet Motor (USA) Company, Inc. (“Merger Sub”), a Delaware corporation and a wholly-owned subsidiary of Digital Currency X (the “Business Combination”). Pursuant to the Business Combination Agreement, among other things, (a) we acquired all of the issued and outstanding capital shares of Chijet Inc. held by the Sellers in exchange for ordinary shares of Digital Currency X., and any shares Chijet Inc. held in Digital Currency X were surrendered for no consideration, such that Digital Currency X became a wholly-owned subsidiary of Digital Currency X and the Sellers become shareholders of Digital Currency X (referred to as the Share Exchange); and immediately thereafter (b) the Merger Sub merged with and into JWAC, with JWAC continuing as the surviving entity and a wholly-owned subsidiary of Digital Currency X.

On the closing date of the Business Combination Agreement, we made the following securities issuances to JWAC’s and certain specified securityholders: (i) each outstanding share of the JWAC Common Stock, which was held by JWAC’s public stockholders were exchanged for (1) one Digital Currency X class A ordinary share, (totaling approximately 43,357 class A ordinary shares), and (2) one private contingent value right of Digital Currency X; (ii) each outstanding share of JWAC Class B Common Stock was converted into JWAC Common Stock and likewise exchanged for the right to receive115,000 class A ordinary shares (following which exchange all of the JWAC Common Stock JWAC Class B Common Stock were cancelled and ceased to exist); (iii) the registered holder of each outstanding right to receive one-eighth (1/8) of one share of JWAC Common Stock, which thereby provided such holder with the right to receive one share of JWAC Common Stock (the “JWAC Rights”) upon holding eight of such JWAC Rights, was issued the number of full shares of JWAC Common Stock to which such holder of JWAC Rights was eligible, and which were exchanged for the equivalent number of our class A ordinary shares, (such JWAC Rights were converted into 57,500 class A ordinary shares; (iv) each share of JWAC Common Stock which was not held by JWAC’s public stockholders was exchanged for one of our class A ordinary share (consisting of privately placed JWAC Common Stock and JWAC Common Stock issued for JWAC’s privately placed rights) as well as shares issued privately to Chijet Inc. directors and for expenses( which consisted of 50,121 class A ordinary shares; and (v) the privately placed warrant of Greentree Financial Group Inc. (“Greentree”) was exchanged for an equivalent warrant exercisable into 166,667 class A ordinary shares, which was partially exercised thereon for 8,333 shares. We also issued warrants (the “Representative Warrant”) to I-Bankers as representative of the underwriters in connection with the JWAC’s initial public offering (the “JWAC IPO”), consisting in the aggregate Representative Warrants to purchase 13,800 shares of Class A common stock of JWAC (the “JWAC Common Stock,”) exercisable at $360.00 per share for five years. The Representative Warrant was exchanged for an equivalent warrant exercisable into 13,800 class A ordinary shares.

The following information regarding PRC licenses and permissions relates to our former subsidiaries, which were disposed of on March 20, 2026, and is presented for historical context only. This information is not representative of our current operations. As of the date of this annual report, we and our former PRC subsidiaries have received from PRC authorities all requisite licenses, permissions or approvals that are material for the business operations currently conducted in China, and have not been subject to any penalties or other disciplinary action from any PRC authority for the failure to obtain or the insufficiency of any license, permission or approval in connection with the conduct of our business operations. We have not been denied by any PRC authority with respect to the application of any requisite permissions by us or our former PRC subsidiaries. Apart from the business licenses held by each of our former PRC subsidiaries, the following table provides details on the material licenses and permissions held by our former PRC subsidiaries. However, if we do not receive or maintain the approvals, or we inadvertently conclude that such approvals are not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to investigations by competent regulators, fines or penalties, ordered to suspend our relevant operations and rectify any non-compliance, prohibited from engaging in relevant business or conducting any offering, and these risks could result in a material adverse change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

The chart below summarizes our corporate structure as of the date of this annual report:

Note: On March 20, 2026, the Company completed the disposal of its entire interest in Chijet Inc. and its subsidiaries. As a result, the entities previously comprising our automotive business are no longer part of our corporate structure.

On January 10, 2025, our shareholders approved and adopted an amended and restated memorandum and articles of association, which changed the authorized issued share capital of our company from US$30,000,000.00 divided into 10,000,000,000 shares of par value of US$0.003 each, to US$30,000,000.00 divided into 10,000,000,000 shares of a par value of US$0.003 each, consisting of (i) 9,982,000,000 class A ordinary shares of a par value of US$0.003 each and (ii) 18,000,000 class B ordinary shares of a par value of US$0.003 each. Each class A ordinary share is entitled to one (1) vote and each class B ordinary share is entitled to twenty (20) votes. In connection with this-re-designation of our authorized capital, all of the then outstanding and issued outstanding ordinary shares were converted into class A ordinary shares on a one-for-one basis.

On April 28, 2025, we closed a transaction where 23,255,814 class A ordinary shares (“Company Shares”) were issued as the purchase price for our acquisition of the 80% equity interests (the “TE Shares”) in Too Express Group Inc. Pursuant to a Future Rights Agreement delivered at the closing, if the shareholder equity of the Company as of June 30, 2025 is a negative number, the Company shares shall be forfeited and the TE Shares shall be returned to the original sellers of the TE Shares. Our board of directors concluded that the conditions for the forfeiture of the Company Shares under the Future Rights Agreement had been met and as such, the Company Shares were forfeited, retired and cancelled as of August 1, 2025. We entered into an agreement with the original sellers of the TE shares regarding the return of the TE shares, pursuant to the terms of the future rights agreement.

On April 30, 2025, we were notified by Nasdaq that our application to transfer the listing of our class A ordinary shares from the Nasdaq Global Market to the Nasdaq Capital Market was approved. Our securities began trading on the Nasdaq Capital Market on May 2, 2025.

On September 2, 2025, the Company entered into a placement agency agreement (“Placement Agency Agreement”) with Maxim Group LLC (“Maxim” or the “Placement Agent”) and securities purchase agreement with certain investor named therein in connection with the offer and sale of (i) 13,560,000 class A ordinary shares, par value US$0.003 per share of the Company and (ii) ordinary warrants (each an “Ordinary Warrant” and collectively, the “Ordinary Warrants”) to purchase up to 13,560,000 class A ordinary shares at an initial exercise price of $0.59 per share, at a combined public offering price of US$0.59 per share and accompanying Ordinary Warrants. Pursuant to the Placement Agency Agreement, the Company also agreed to issue to the Placement Agent certain warrants to purchase up to 678,000 class A ordinary shares as part of the compensation payable to the Placement Agent in connection with this Offering (the “Placement Agent Warrants”). The Placement Agent Warrants are in substantially similar form to the Ordinary Warrants.

On September 5, 2025, the Company issued a total of 640,850 class A ordinary shares, par value $0.003 per share, to the holders of contingent value rights (“CVRs”) on record as of July 22, 2025, on a pro rata basis. This issuance was triggered because certain earnout milestones set forth in the Business Combination Agreement, dated October 25, 2022, were not achieved for the calendar year ended December 31, 2024. Consequently, two shareholders of the Company, Euroamer Kaiwan Technology Company Limited and Chijet Holdings Limited, surrendered an aggregate of 640,850 class A ordinary shares (the “Earnout Shares”) to the Company for cancellation. Pursuant to the terms of the Business Combination Agreement, the Company was required to issue an equivalent number of class A ordinary shares to be allocated among the qualifying CVR holders. Based on a total of 1,300,706 issued and outstanding CVRs at the time of the distribution, each CVR entitled its holder to receive 0.492694 class A ordinary shares. In accordance with the distribution terms, any qualifying CVR holder who would have otherwise been entitled to a fraction of a class A ordinary share (after aggregating all fractional shares issuable to such person) had their issuance rounded down in the aggregate to the nearest whole share.

On September 24, 2025, the Company’s shareholders voted and approved at the annual general meeting that the Company shall undertake an up to 100 for 1 share consolidation of the issued and unissued shares of the Company (the “Range”), such that (i) every up to one hundred (100) class A ordinary shares of a par value of US$0.003 each be consolidated into one (1) class A ordinary share with a par value of not more than US$0.3 each, and (ii) every up to one hundred (100) class B ordinary shares of a par value of US$0.003 each be consolidated into one (1) class B ordinary share with a par value of not more than US$0.3 each (the “Share Consolidation”), with the exact ratio to be set at a whole number within the Range to be determined by the board of directors of the Company in its sole discretion and such Share Consolidation to be further implemented and effected by the board of directors of the Company. The board of directors of the Company has further resolved to implement a one hundred (100)-for-one (1) share consolidation of its issued and unissued ordinary shares, which became effective on November 3, 2025, and adjusted the par value per share from US$0.003 to US$0.30. Subsequently, on December 24, 2025, the Board of Directors approved a 12-for-1 share consolidation, which became effective on January 22, 2026. This further adjusted the par value per share from US$0.30 to US$3.60.

On September 24, 2025, the Company’s shareholders voted and approved at the annual general meeting that subject to and conditional upon the approval of the Registrar of Companies in the Cayman Islands (the “Cayman Registrar”), the name of the Company be changed from “CHIJET MOTOR COMPANY, INC.” to “Digital Currency X Technology Inc.”, with effect from the date of the certificate of incorporation on change of name to be issued by the Cayman Registrar. At the opening of trading on December 10, 2025, the class A ordinary shares of CHIJET MOTOR COMPANY, INC. (NASDAQ: CJET) began trading on the Nasdaq Capital Market under the new name “Digital Currency X Technology Inc.” and new ticker symbol “DCX.”

On October 15, 2025, we were notified by Nasdaq that our ordinary shares failed to maintain a minimum bid price of $1.00 over the preceding 30 consecutive business days as required by Nasdaq Listing Rule 5550(a)(2). We successfully regained compliance with this minimum bid price requirement, as confirmed by a notice from Nasdaq on November 18, 2025, after our closing bid price remained at or above $1.00 for 10 consecutive business days.

On October 26, 2025, the Company entered into a Securities Purchase Agreement (the “Original Agreement”) with certain investors. Under the Original Agreement, the purchasers agreed to subscribe for, and the Company agreed to issue and sell, an aggregate of US$300,000,000 of units (the “Units”) with each Unit consisting of one ordinary share, par value of US$0.003 per share of the Company and three warrants (the “Warrants”), at a purchase price of US$0.1 per Unit. The Warrants have an exercise price of $0.12 per share (subject to adjustment as set forth in the Warrants), are exercisable on or after October 26, 2025 and will expire three (3) years after that date. Subsequent to the execution of the Original Agreement, on November 3, 2025, the Company completed a 100-for-1 consolidation of its issued and unissued Ordinary Shares, resulting in an increase in the par value of each Ordinary Share from US$0.003 to US$0.3. Pursuant to Cayman Islands law, shares cannot be issued at a price below their par value. Consequently, the original per Unit purchase price of $0.1 specified in the Original Agreement became invalid. To address this, on November 25, 2025, the Company and the purchasers entered into a Supplemental Agreement to Securities Purchase Agreement (the “Supplemental Agreement”), which replaced the relevant terms in the Original Agreement (the “Private Placement”). Pursuant to the Supplemental Agreement, the purchase price per Unit was increased from US$0.1 per Unit to US$1.27 per Unit, the total number of Units to be issued by the Company to purchaser was reduced from 30,000,000 Units to 23,622,047 Units, calculated as US$30,000,000 aggregate investment divided by US$1.27 per Unit, and the exercise price for each Warrant was increased from US$0.12 per ordinary share to US$1.40 per ordinary share.

On November 25, 2025, the Company entered into securities purchase agreements with certain investors for the purchase and sale of (i) 1,311,855 class A ordinary shares, par value US$0.3 per share, and (ii) Pre-Funded Warrants to purchase 7,149,675 class A ordinary shares (the “Pre-Funded Warrants” and each a “Pre-Funded Warrant”), exercisable at an initial exercise price of US$0.001 per share. Each class A ordinary share is offered at an offering price of US$1.30 per share, and each Pre-Funded Warrant is offered at an offering price of $1.299 each.

On December 12, 2025, we received a notification from Nasdaq indicating that we were not in compliance with a minimum Market Value of Listed Securities of US$35 million (“MVLS”) for continued listing on The Nasdaq Capital Market (the “MVLS Requirement”), and that the Company has a compliance period of one hundred eighty (180) calendar days, or until June 10, 2026, to regain compliance with Nasdaq’s MVLS Requirement pursuant to Nasdaq Listing Rule 5810(c)(3)(C).

On December 22, 2025, the Company held an extraordinary general meeting of shareholders at which our shareholders approved to increase the Company’s authorized share capital from US$30,000,000.00 divided into 100,000,000 shares of a par value of US$0.3 each, comprising (a) 99,820,000 class A ordinary shares of a par value of US$0.3 each and (b) 180,000 class B ordinary shares of a par value of US$0.3 each, to US$3,000,000,000.00 divided into 10,000,000,000 shares of a par value of US$0.3 each, comprising (a) 9,982,000,000 class A ordinary shares of a par value of US$0.3 each and (b) 18,000,000 class B ordinary shares of a par value of US$0.3 each, by the creation of additional 9,882,180,000 class A ordinary shares and 17,820,000 class B ordinary shares, with immediate effect (the “Share Capital Increase”). In conjunction with this comprehensive Share Capital Increase, the shareholders granted explicit discretionary authority to the board of directors to implement one or more share consolidations of our ordinary shares over a period of up to two years from the date of the meeting. Under this authorization, the board of directors is empowered to determine the exact timing, implementation, and specific consolidation ratios at its absolute discretion, provided that the cumulative consolidation ratio across all such actions shall not exceed 3000:1, and any fractional shares resulting from such consolidations will be rounded up to the nearest whole share to facilitate administrative efficiency.

In 2025, we expanded our digital currency information ecosystem with the launch of DexTrader (accessible at https://dextrader.ai/), an on-chain data and information service platform. DexTrader is designed to provide global cryptocurrency traders with real-time, comprehensive data insights and analytical tools pertaining to decentralized exchanges (DEXs). As of the date of this annual report, DexTrader remains in its early operational phase and has not yet generated any revenues. We are currently focused on user acquisition and product optimization, and there can be no assurance as to when, or if, the platform will become a revenue-generating business.

Recent Development

Nasdaq continued listing compliance

On January 23, 2026, we received a written notification (the “January Notice”) from the Listing Qualifications (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”), that it has regained compliance with the market value of listed securities requirement under Nasdaq Listing Rule 5550(b)(2) (the “Rule”). The Company was previously notified on December 12, 2025 by the Staff that it had failed to maintain a minimum market value of listed securities of $35,000,000 over the previous 30 consecutive business days as required by the Rule. The January Notice stated that the Staff has determined that for the last 20 consecutive business days, from December 23, 2025 to January 22, 2026, the Company’s market value of listed securities has been $35,000,000 or greater. Accordingly, the Company has regained compliance with the Rule and this matter is now closed.

Disposal of Automotive Business

On March 18, 2026, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Drivepoint Holdings Ltd., a limited liability company incorporated in the Cayman Islands. Pursuant to the Share Purchase Agreement, the Company conditionally agreed to sell, and the purchaser conditionally agreed to acquire, Chijet Inc., through the sale and purchase of the entire issued share capital of Chijet Inc. at a consideration of US$1.00 in cash, subject to the terms and conditions of the Share Purchase Agreement (the “Disposal”). On March 20, 2026, the Company completed the disposal of Chijet Inc. The Disposal is part of the Company’s strategic transition away from its legacy electric vehicle manufacturing business, which has experienced intense industry competition, supply chain challenges, and cumulative losses exceeding US$100 million. Following a comprehensive strategic review, the Company’s board of directors determined that divesting Chijet Inc. would allow the Company to eliminate a loss-making operation, improve its financial position, and focus resources on its new core business in technology and digital asset management. The Company believes that the Disposal will enhance its ability to achieve sustainable profitability, support the growth of new technology-driven business lines, and facilitate ongoing compliance with Nasdaq listing requirements. The Disposal has been approved by the board of directors of the Company and the closing has occurred. Upon Closing, the Company ceased to hold any interest in Chijet Inc. Accordingly, Chijet Inc., together with its subsidiaries, have ceased to be subsidiaries of the Company and are no longer be consolidated into the financial statements of Company from the date of the Disposal onward. The historical financial results of the disposed business for the periods presented in this annual report have been classified as discontinued operations in our consolidated financial statements.

4B. Business Overview

Important Note Regarding the Disposal of Automotive Business

On March 20, 2026, subsequent to the fiscal year ended December 31, 2025, the Company completed the disposal of its entire electric vehicle business through the sale of its wholly-owned subsidiary, Chijet Inc. (the “Disposal”). Consequently, the Company is no longer engaged in the research, development, production, or sale of new energy vehicles. The following description of the automotive business, its products, operations, technologies, and market relates exclusively to the historical business conducted during the fiscal year ended December 31, 2025, and prior periods. This business is no longer part of our ongoing operations. Following the Disposal, the Company has shifted its strategic focus to technology and digital asset management.

During the fiscal year ended December 31, 2025, we were engaged in the research and development, production and sales of new energy vehicles (“NEVs”). NEVs referred to plug-in electric vehicles including battery electric vehicles, plug-in hybrid (PHEV) electric vehicles and fuel cell electric vehicles. Our mission in this former business was to produce vehicles with efficient exhaust emissions, improve air quality, and benefit users and the environment. We operated this business through our then-subsidiaries, as described below.

Our former core operating entity, Shandong Baoya New Energy Vehicle Co., Ltd., or Shandong Baoya, was founded in 2009 and was one of the earliest companies in China to engage in the research and development, production and sales of new energy vehicles. Our former subsidiaries mainly included Baoya New Energy Automobile R&D Institution (Yantai) Co., Ltd., Baoya New Energy Automobile Sale (Yantai) Co., Ltd., Xiangyang Yazhi, Xiangyang Yazhi New Energy Automobile Sale Co. Ltd., Bijie Yabei, Dezhou Yitu New Energy Automobile Co., Ltd., and Dezhou Yarui, Baoya New Energy Automobile R&D (Xiangyang) Co., Ltd. In 2019 we acquired our interest in FAW Jilin Automobile Co., Ltd., which we refer to as “FAW Jilin.” Our former primary operating entities were Shandong Baoya, FAW Jilin.

Our former main business included the design and development, production, sales, after-sales service and export of new energy vehicles and vehicle parts. Our former passenger vehicles included small cars, sedans and sports utility vehicles, or SUVs, and our commercial vehicles include light trucks and vans. Our former automobile industry group provided products and services to the entire value chain for our vehicles including R&D, manufacturing, sales and product services.

Our former manufacturing process used intelligent manufacturing ecosystems, which focused on efficiency in planning, R&D, supply chain management, manufacturing, quality, and logistics.

Our two former core operating entities, Shandong Baoya and FAW Jilin produced new energy vehicles and traditional fuel vehicles. After more than 40 years of development and operations, FAW Jilin had sold millions of vehicles in China and had established its place as one of the leaders in the popularization of light and small vehicles in China.

Our Former Vehicles

Our former vehicle production lines included three platforms: the A-class electric car platform, referred to as FBS; the hybrid A-class SUV platform, referred to as RSS; the electric commercial vehicle platform, referred to as TVS; and the micro electric vehicle platform, referred to as FAS. We manufactured a variety of passenger vehicles (with the names R7, R8, R9), trucks (with the names T80, T90), passenger cars (the V80) and special sanitation vehicles and ambulances.

Our former vehicles included technological innovations and breakthroughs which we had made (with our development partners), and these technologies included: (1) in-wheel motors, (2) solid-state batteries, (3) smart cockpits and (4) domain controllers.

Our Former Power Solutions

Our former power supply solutions offered super charging mode and fast power changing mode. The super charging mode was designed to match the public fast charging pile and 4C fast charging battery system to achieve a charge of 200KM in up to 10 minutes, thus helping solve the problem of battery life anxiety. Prior to the Disposal, we were in contact with Zhongchuang Xinhang (6C scheme), Lanjun Ruipu (4C scheme), Yiwei Lithium Energy (4C scheme) and other enterprises to lay the framework for battery charging services and related components. In the electricity exchange mode we had planned to cooperate with Aodong New Energy and Xiexin New Energy to realize quick exchange in small areas through a modular platform battery system for battery exchanges. All such plans and contacts were part of the disposed business.

Historical Sales, Advertising and Marketing

We advertised through multimedia such as television, Internet, and print. Our marketing aimed to put the pursuit of customer satisfaction first, provide customers with a more convenient way to purchase cars through widely distributed distribution channels; narrow the distance with consumers through auto shows, road shows, and tour exhibitions, as well as through media public relations manuscript reports, WeChat public account, official website, Vlog and personal WeChat Moments spread product image and performance.

Historical Strategic Cooperation

We had signed strategic cooperation agreements with Ruidong New Energy Technology Co., Ltd. to develop on board equipment to carry out the integration and development of a new energy hybrid power system in order to improve product endurance and other performance indicators.

Historical Technology Research and Development

We cooperated with Yantai University, Hunan University Wuxi Intelligent Control Research Institute, Beijing Welion New Energy Technology Co., Ltd., CRRC Corporation Limited, Nantong Ruidong New Energy Technology Co., Ltd. and other scientific research institutes.

Prior to the Disposal, we believed the research and development capability of our automotive business was one of its principal competitive strengths. The business had invested a significant amount of resources in research and development and had built a team focused on engineering. All R&D personnel and activities described herein were part of the disposed business. As of December 31, 2025, the business had research and development engineers and R&D data processing staff. Its research and development activities were conducted at Jilin Office.

Our research and development expenses were US $0.59 million, US$1.48 million, and US$8.40 million in the years ended December 31, 2025, 2024, and 2023, respectively.

Historical Intellectual Properties

The former automotive business maintained and protected the intellectual property related to its vehicles. As part of the Disposal, substantially all of this intellectual property was transferred with the sale of Chijet Inc. As of the date of this annual report, the disposed business held a portfolio of 87 granted patents, including 4 invention patents, 55 utility model patents, 28 appearance patents, 0 pending patents and 0 granted trademarks in the PRC.

Historical Customers

The customers of our former business consisted of distributors, online car-hailing and other private market customers, supplemented by government and group procurement.

Historical Delivery of Vehicles

The former business sold and distributed its products through three modes: distribution (dealer sales), direct sales (factory sales and direct sales stores) and overseas agency sales. Domestic sales of commercial vehicles were mainly delivered by land (road) transportation, and international sales were mainly by maritime transportation.

A substantial portion of the former business’s sales was attributable to a limited number of long-term customers. Its top customers (which each accounted for 10% or more of its sales in each period) together accounted for 54%, 22%, and 22%, respectively, of its total sales for the fiscal years ended December 31, 2025, 2024, and 2023.

The following table sets forth for the periods indicates the geographic breakdown of the former business’s sales by the region where purchase orders were originated.

The former business was focused on strengthening its relationships with large customers. Its customers looked to it for a reliable source of supply. For each key customer, it appointed an account manager complemented by a product development team. The former business had plans to expand its sales channels, including enlarging overseas sales.

Historical Manufacturing, Supply Chain

The former business had more than four hundred existing suppliers, and related contracting parties, located domestically and internationally. The majority of its supply base was located in China, which was believed to be beneficial as it enabled the business to acquire supplies more quickly and reduced the risk of delays related to shipping and importing. It had developed close relationships with several key suppliers. It obtained systems, components, raw materials, parts, manufacturing equipment and other supplies and services from suppliers which it believed to be reputable and reliable. Similar to other global major automobile manufacturers, it followed its internal process to source suppliers taking into account quality, cost and timing. It had a part quality management team which was responsible for managing and ensuring that supplies met quality standards.

The key components and materials of its vehicles included batteries, drive motors and vehicle specification chips. It sourced these components and raw materials from outside sources. It did not typically enter into binding master supply agreements with its major suppliers but it provided its suppliers quarterly forecasts which generally covered product specifications, quantities and delivery terms. These forecasts served as an indication of the size and key components of its order, and neither party was committed to supply or purchase any products until a firm purchase order was issued. It purchased its components and materials based on forecasts from its customers as well as its own assessments of its customers’ needs. Its rolling forecasts were generally made three months in advance and updated monthly.

In order to reduce its component and raw material costs and its dependence on any one supplier, it generally developed compatible components and raw materials and purchased its components and raw materials from more than one source. However, it sourced the key components and raw materials from a limited group of suppliers in order to ensure timely supply and consistent quality. It performed periodic evaluations of its component and raw material suppliers based on a number of factors, including the quality and cost of the materials, delivery and response time, the quality of the services and the financial health and management of the suppliers. It maintained a strategic relationship with many of its key material suppliers, and it generally maintained a component and raw material inventory sufficient for approximately 2-8 days.

Two suppliers accounted for 22% and 6% of the former business’s total purchase of raw materials for the fiscal year ended December 31, 2025. For the fiscal year ended December 31, 2024, two suppliers accounted for 75% and 4% of its total purchases of raw materials. Two suppliers accounted for 38% and 7% of its total purchases of raw materials for the fiscal year ended December 31, 2023.

Historical Quality Control

FAW Jilin as a production base had passed the IATF16949 quality management system audit, IATF certificate number: 0362398. Its quality control requirements were set according to IATF16949:2016 “Quality Management System Requirements for Automobile Production Parts and Service Parts Organization”, “Compulsory Product Certification Implementation Rules-Automobile”, “Compulsory Product Certification Implementation Rules-Automotive Interior” and other requirements to perform quality control.

The former business maintained quality control standards and documentation, including a first-level quality control document “Quality Manual”, and 166 quality control standards and procedures relating to management support processes, product birth process, mass production process, and sales service process.

Its supplier quality management included carrying out quality review of its supplier access, process optimization, elimination and exit support through supplier system audit, product audit, process audit, and other functions.

Material Contracts

Set forth below is a summary of all material agreements to which our former subsidiaries were a party entered into within the preceding three fiscal years. These agreements were obligations of the subsidiaries that were sold as part of the Disposal. The Company believes that upon the closing of the Disposal, it was released from any direct or indirect obligations under these agreements, the liabilities of which were transferred to the purchaser. However, there can be no assurance that the Company will not be subject to future claims in connection with these historical agreements.

Loan Agreement with Yantai Guofeng Investment Holdings Groups Co., Ltd.

On December 9, 2019, Shandong Baoya entered into a loan agreement Yantai Guofeng Investment Holdings Group Co., LTD (“Yantai Guofeng”), an affiliate of the Company. The loan is part of a broader initiative supported by local government entities to promote new energy vehicle projects in the region. The principal of the loan is RMB1.5 billion (approximately US$205.50 million), to be paid in specific installments based on project milestones, including an initial RMB450 million (approximately US$61.65 million) to facilitate the mixed capital increase project for FAW Jilin and remaining RMB1.05 billion (approximately US$143.85 million) to be paid pursuant to the capital increase schedules. The loan has a 6.5% annual interest rate, with repayment obligations structured based on the progress and outcomes of the vehicle production project. Additionally, the agreement includes clauses for automatic termination under certain conditions, such as failure to meet certain project-related development commitments. Pursuant to the loan agreement, if Shandong Baoya meets certain development conditions, part of the loan could be waived and converted to a government subsidy, including interest on such portion. By December 31, 2021, a total of US$104.12 million (RMB760 million) of the principal amount has been converted to government subsidies because the initial conversion criteria have been satisfied. The remaining criteria include, but are not limited to, achieving the first phase of mass production and reaching the prescribed production and sales numbers of vehicles. For the year ended December 31, 2025, no principal amount has been converted to government subsidies. As of April 30, 2026, the outstanding principals and interests were US$156.00 Million. As of December 31, 2025, Shandong Baoya was notified that Yantai Guofeng has transferred its creditor’s rights in Shandong Baoya to Yantai Public Transportation Co., Ltd (“Yantai Trans”). On February 10, 2025, Yantai Trans filed an application for property preservation with the Yantai Intermediate Court, which resulted in the sealing up of Shandong Baoya’s land use right. The net value of the sealed up land use right was US$26.18 million as of December 31, 2025.

The loan agreement remained in force and both parties continued to uphold its terms as of the date of this annual report. This agreement was an obligation of Shandong Baoya, which was sold as part of the Disposal. See “Item 13. Defaults, Dividend Arrearages and Delinquencies”, which are included in this annual report for more details of the loan agreement.

Loan Agreements between FAW Finance Co. Ltd., China FAW Corporation Limited and FAW Jilin Automobile Co., Ltd., dated January 29, 2019, May 20, 2019, August 29, 2019, October 29, 2019, November 27, 2019, December 13, 2019, respectively, Loan Extension Agreement, dated January 23, 2020 and the Supplementary Agreement to the Loan Agreements dated on May 20, 2020

FAW Jilin, China FAW Corporation Limited (the minority shareholder of FAW Jilin) and its affiliate, FAW Finance Co., Ltd have entered into a series of working capital loan agreements in the amount of RMB700 million (approximately US$95.90 million) on January 29, 2019, in the amount of RMB350 million (approximately US$47.95 million) on May 20, 2019, in the amount of RMB150 million (approximately US$20.55 million) on August 29, 2019, in the amount of approximately RMB270 million (approximately US$36.95 million) on October 29, 2019, in the amount of approximately RMB188 million (approximately US$25.73 million) on November 27, 2019, in the amount of approximately RMB87.4 million (approximately US$11.98 million) on December 13, 2019, each of the loans bears an annual interest rate of 3.915% with a term of one year. On January 23, 2020, the loan in the amount of RMB 700 million was extended for 12 months. On May 20, 2020, the parties have entered into a supplement agreement to the loan agreements, pursuant to which, FAW Jilin agreed to make four installment payments of US$39.44 million (RMB 287.87 million), each for the remaining principal balance and pledged certain land use rights, buildings, machinery and equipment, mold and tooling and other logistic equipment of FAW Jilin. FAW Jilin failed to make the payments on November 1, 2022, November 1, 2023, November 1, 2024, and November 1, 2025. As of April 30, 2026, the aggregate outstanding principals and interests under such loans were US$206.97 million.

These agreements were obligations of FAW Jilin, which was sold as part of the Disposal. See “Item 13. Defaults, Dividend Arrearages and Delinquencies” for more details and current status of the loan agreements.

Principal Creditor’s Rights and Maximum Mortgage Contract between FAW Finance Co. Ltd. and FAW Jilin Automobile Co., Ltd., dated May 20, 2019 and Maximum Mortgage Contract between FAW Finance Co. Ltd. and FAW Jilin Automobile Co., Ltd., dated November 21, 2019

In connection with the foregoing loan agreements among FAW Jilin, China FAW Corporation Limited (the minority shareholder of FAW Jilin), and its affiliate, FAW Finance Co., Ltd., FAW Jilin and FAW Finance Co., Ltd. entered into a principal creditor’s rights and maximum mortgage contract on May 20, 2019, and a maximum mortgage contract on November 21, 2019. Pursuant to this, FAW Jilin has pledged land use rights and property to secure creditor’s rights in the amount of approximately US$58.94 million, with a creditor’s rights determination period from May 21, 2019 to May 21, 2024. Additionally, it pledged its equipment to secure creditor’s rights in the amount of approximately US$19.29 million, with a creditor’s rights determination period from June 1, 2019 to June 1, 2024.

These agreements related to obligations of FAW Jilin, which was sold as part of the Disposal. See “Item 13. Defaults, Dividend Arrearages and Delinquencies” for more details and current status of these agreements. Also see “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business and Industry - We are in breach of certain loan agreements and may become in breach of other loan agreements in the future. If lenders enforce the pledge on certain of our properties, our business operation may be disrupted, and our business, financial condition, results of operations and prospects could be materially and adversely affected.”

Mortgage Guarantee Contract of Building and Land among Xiangyang Yazhi, Lender A and Lender B, dated June 20, 2023, and Mortgage Guarantee Contract of Equipment among Xiangyang Yazhi, Lender A and Lender B, dated June 20, 2023

In connection with two loan agreements and related promissory note, commitment letter, creditor’s rights investment agreement, and guarantee letters among Xiangyang Yazhi, Lender A, and Lender B, Xiangyang Yazhi, Lender A, and Lender B entered into a mortgage guarantee contract for building and land dated June 20, 2023, and a mortgage guarantee contract for equipment dated June 20, 2023, respectively. Pursuant to the mortgage agreements, Xiangyang Yazhi pledged its machinery and equipment, a building with an area, and a parcel of land use right, located in Xiangyang City, China, to the lenders to secure the loans with the principal amount of approximately US$99.33 million (RMB 694.60 million).

These agreements related to obligations of Xiangyang Yazhi, which was sold as part of the Disposal. See “Item 13. Defaults, Dividend Arrearages and Delinquencies” for more details and current status of these agreements. Also see “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business and Industry - We are in breach of certain loan agreements and may become in breach of other loan agreements in the future. If lenders enforce the pledge on certain of our properties, our business operation may be disrupted, and our business, financial condition, results of operations and prospects could be materially and adversely affected” and “We may face significant challenges in securing on acceptable terms for a substantial part of the government grants, loans, and other incentives for which we apply. We have not been, and may continue to be, unable to convert any existing loans into government grants and subsidies we have applied for. We have failed to meet certain conditions of our existing loans and may not be able to meet the conditions of other loans. This poses a material risk to our financial stability and may materially and adversely impact our business, financial results and future prospects.”

Token Staking Agreement between Company and EdgeAI Foundation, dated January 6, 2026

On January 6, 2026, the Company entered into a token staking agreement with the EdgeAI Foundation (the “Foundation”). Pursuant to the agreement, the Company staked a specified quantity of EdgeAI native tokens into a smart contract designated by the Foundation for a fixed lock-up period of 12 months. The accrual of staking rewards under this arrangement is scheduled to formally commence in April 2026. Under the terms of the agreement, the Company is entitled to receive a floating annualized yield ranging from 3.5% to 8%, payable in EdgeAI tokens on a per-block or monthly basis. The Foundation does not guarantee any fixed return; rather, actual yields are determined solely by the algorithmic, on-chain mechanics of the EdgeAI mainnet. The staked tokens are programmatically locked on the EdgeAI mainnet and will automatically unlock upon the expiration of the 12-month term, unless the parties execute a written renewal agreement. Additionally, the agreement may be terminated prior to its expiration upon mutual written consent. The Foundation also reserves the right to suspend the staking arrangement in the event the Company becomes subject to certain legal or regulatory restrictions.

The token staking agreement related to our new business. See “Item 4. Information on the Company—A. History and Development of the Company” for more details of our new business. Also see “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business and Industry - We face risks associated with our digital asset staking operations, including the risk of smart contract vulnerabilities on the EdgeAI mainnet, floating yield volatility, and potential regulatory restrictions, which could materially and adversely affect our business, financial condition, results of operations and prospects.”

Historical Seasonality of the Former Business

There were certain seasonal fluctuations in China’s new energy vehicle sales market. Generally, September to December was the peak sales season, and January to February was the off-season. The seasonality of our former products was in line with the situation in China’s new energy vehicle market.

Competition in the Former Automotive Business

The automotive industry in which our former business operated was and continues to be intense and evolving. The primary competitive factors in that market included pricing, technological innovation, vehicle performance, quality and safety, among others. This competitive landscape was a significant factor in the Board’s decision to approve the Disposal.

Our former business faced competition from a wide range of domestic and international auto manufacturers, including traditional car companies, joint ventures, and other NEV manufacturers such as Nio Inc., Li Auto Inc., and Xpeng Inc. Most of these competitors were better capitalized and had greater financial resources. The highly competitive nature of the auto industry could have negatively affected the market position and financial performance of our former business. The discussion of competition in the automotive industry is not relevant to our current business in technology and digital asset management.

Data Privacy Risks Related to Former Operations

Our former business involved collecting and retaining certain internal and customer data. It also maintained information about various aspects of its operations as well as regarding its employees. The integrity and protection of customer, employee and company data was critical to that business. Customers and employees of that business expected that their personal information would be adequately protected. The business was required by applicable PRC laws to keep such information confidential and take adequate security measures to safeguard it. While these operations have been disposed of, there can be no assurance that the Company will not face residual claims or liabilities related to the data handling practices of its former subsidiaries.

The PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen’s personal information obtained in performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the Standing Committee of the National People’s Congress, or the SCNPC, issued the Cyber Security Law of the PRC, which became effective on June 1, 2017. Pursuant to the Cyber Security Law of the PRC, network operators must not, without users’ consent, collect their personal information, and may only collect users’ personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations.

The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides legal basis for privacy and personal information infringement claims under the Chinese civil laws. PRC regulators, including the CAC, the MIIT, and the Ministry of Public Security, have been increasingly focused on regulation in data security and data protection.

On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect in November 2021. The Personal Information Protection Law aims at protecting the personal information rights and interests, regulating the processing of personal information, ensuring the orderly and free flow of personal information in accordance with the law and promoting the reasonable use of personal information. The Personal Information Protection Law applies to the processing of personal information within China, as well as certain personal information processing activities outside China, including those for the provision of products and services to natural persons within China or for the analysis and assessment of acts of natural persons within China. As a result, our overseas subsidiaries could potentially become subject to the Personal Information Protection Law. Processors processing personal information exceeding the threshold to be set by the relevant authorities and CIIOs are required to store, within the territory of the PRC, all personal information collected and produced within the PRC. In addition, the Personal Information Protection Law imposes pre-approval and other requirements for any cross-border data transfer by PRC entities. Given the Personal Information Protection Law is still in its infancy, there are uncertainties with respect to its interpretation and application.

The PRC regulatory requirements regarding cybersecurity are evolving. For instance, various regulatory bodies in China, including the CAC, the Ministry of Public Security and the State Administration for Market Regulation (the “SAMR”), have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. The Measures for Cybersecurity Review (2021 version) issued by the CAC on November 16, 2021, which became effective on February 15, 2022, includes the following key changes:

On July 7, 2022, the CAC published the Measures for Security Assessment of Cross-border Data Transfers, which became effective on September 1, 2022 and specifies the circumstances in which data processors providing data outbound shall apply for outbound data transfer security assessment with the Cyberspace Administration, including, among others, the data processor provide important information outbound. On March 22, 2024, the CAC issued Provisions on Facilitating and Regulating Cross-border Data Flows, which provided that data handlers shall identify and declare important data in accordance with relevant rules. In accordance with these provisions, data handlers who provide data abroad, and meet any of the following conditions, are required to declare the outbound data transfer security assessment to the national cyberspace administration authority through the provincial-level cyberspace administration authority where the data handlers are located: (i) critical information infrastructure operators providing personal information or important data abroad; (ii) data handlers other than critical information infrastructure operator providing important data abroad or cumulatively providing abroad personal information without any sensitive personal information of more than one million individuals or sensitive personal information of more than 10,000 individuals since January 1 of the current year. The assessment results of the data export are valid for three years. In addition, these provisions provide certain exemptions from obligations under the circumstances of cross-border data transfer, including, among others, the obligations for declaring data security assessment, concluding a standard contract for provisions of personal information abroad or passing the certification for personal information protection. On December 16, 2022, the National Information Security Standardization Technical Committee issued the Practical Guidance on Cybersecurity Standard - the Regulations on Safety Verification in Cross-border Personal Information Processing, which stipulates personal information protection obligations of personal information processor and foreign recipient. However, there remain uncertainties as to the interpretation and application of such measures, if we are deemed to be a data processor providing important data outbound, we could be subject to the outbound data security assessment with national Cyberspace Administration as mentioned above.

On December 8, 2022, the MIIT issued the Administrative Measures for Data Security in the Field of Industry and Information Technology (Trial), or the Data Security Measures in the IT Field, which stipulates that all businesses which handle data in the field of industry and informatization in China are required to categorize such information as “ordinary,” “important” or “core” and businesses processing “important” or “core” data shall comply with certain filing and reporting obligations. Data in the field of industry and informatization includes industrial data, telecoms data and radio data. Data handlers in the field of industry and informatization shall file their catalogues of important data and core data with the local industrial regulatory authorities for the record, shall follow the principles of legality and legitimacy in collecting data and shall not steal or collect data by other illegal means. On October 9, 2023, the MIIT further issued the Implementing Rules for the Risk Assessment of Data Security in the Field of Industry and Information Technology (Trial Implementation) (Draft for Comments), pursuant to which, processors of important data and core data shall complete a data security risk assessment at least once a year under the principles of timeliness, objectivity and effectiveness, produce a true, complete and accurate assessment report, and be held accountable for the assessment results. We face uncertainties as to whether any of our data will be classified as “important” or “core” data and, if so classified, whether any such data can be shared with our overseas subsidiaries.

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

As of the date of this annual report, we have not been involved in any investigations on cybersecurity or privacy and data security initiated by related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect. However, as uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we will comply with such regulations in all respects and we may be ordered to rectify or terminate any actions that are deemed illegal by regulatory authorities. We may also become subject to fines and/or other sanctions which may have material adverse effect on our business, operations and financial condition.

Historical Insurance Coverage

Our former business maintained vehicle insurance, property insurance, machinery breakdown insurance, inventory insurance, and real property insurance. We considered its insurance coverage sufficient for its business operations in China.

Historical Environmental Matters

The main environmental protection facilities of our former business were: two-chamber RTO thermal incineration, Venturi wet paint mist purification, low-nitrogen combustion, filter tube dust removal, bag filter dust removal, adsorption + two-chamber RTO thermal incineration, water spin wet paint mist purification, painting VOCS online monitoring, comprehensive sewage treatment station of sewage discharge unit, online monitoring of its sewage station, among other matters.

We believe that our former business was, during the periods covered by this report, in compliance with all current environmental protection requirements under PRC laws and regulations. In the event of any changes in the PRC laws and/or regulations and/or government policies on environmental protection and more stringent requirements are imposed on the Company, we may have to incur extra costs and expenses to comply with such requirements.

Legal Proceedings

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Our former subsidiary, FAW Jilin, had significant litigations in contractual disputes in court. The following table sets forth the current legal proceedings that we are involved, which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations. It is important to distinguish between proceedings against the Company directly and proceedings against its former subsidiaries. The liabilities and obligations related to proceedings solely against the former subsidiaries (e.g., FAW Jilin, Shandong Baoya) are believed to have been transferred to the purchaser as part of the Disposal. In addition, in March 2026, the purchaser voluntarily provided an explicit undertaking to indemnify and satisfy liabilities arising from legal proceedings relating solely to the former subsidiaries. Based on such undertaking and the terms of the Disposal, management believes that the legal separation of such risks from the former parent company has been further substantiated. However, proceedings where Digital Currency X Technology Inc. is a named defendant remain our direct obligation.