Zeta Network Group 20-F for FY2026
Zeta Network Group (ZNB)
About this 20-F
Zeta Network Group filed this 20-F on October 19, 2026, covering the fiscal year ended June 30, 2026 (FY2026).
Zeta Network Group reported a net loss of $157,464,795 for fiscal 2026, driven by a $114.0 million cryptocurrency impairment and $8.6 million mining equipment write-down. Mining revenue rose 225% to $28,362,773, with substantial doubt raised about going concern. AI summary
Headline figures
Fiscal year ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Diluted EPS
- -$927.59
- compared with -$89,400.12 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OR
For the fiscal year ended
OR
OR
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Tel: +1 (929) 317-2699
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Chief Executive Officer
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: As of June 30, 2026, there were
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| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
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ZETA NETWORK GROUP
FORM 20-F ANNUAL REPORT
TABLE OF CONTENTS
i
INTRODUCTORY NOTE
Unless otherwise indicated and except where the context otherwise requires, references in this annual report on Form 20-F to:
| ● | “we,” “us,” “our,” or “the Company,” refers to Zeta Network Group, a Cayman Islands exempted company, its predecessor entities and its subsidiaries; |
| ● | “CACM” refers to CACM Group NY, Inc. | |
| ● | “Color Star” refers to Color Star Technology Ohio Inc. | |
| ● | “Model Queen” refers to Model Queen Limited, a company incorporated in Hong Kong. | |
| ● | “BTC KZ” refers to BTC KZ LLP, a company organized under the laws of Kazakhstan; | |
| ● | “SolvBTC” refers to a 1:1 wrapped Bitcoin-backed token issued by Solv Protocol; | |
| ● | “USDT” refers to Tether, a stablecoin pegged to the U.S. dollar; | |
| ● | “China” or “PRC” refers to People’s Republic of China, and for the purpose of this annual report, excludes Taiwan, Hong Kong and Macau; |
| ● | “Color Metaverse” refers to Color Metaverse Pte. Ltd.; |
| ● | “Color World” refers to the ColorWorld Metaverse platform; |
| ● | “HK$” refers to Hong Kong dollars, the lawful currency of Hong Kong; |
| ● | “Hong Kong” or “HK” or “Hong Kong S.A.R.” refers to the Hong Kong Special Administrative Region of the PRC; |
| ● | “RMB” or “Renminbi” refers to the legal currency of China and “$,” “dollars,” “US$” or “U.S. dollars” refers to the legal currency of the United States. |
Our financial statements are expressed in U.S. dollars, which is our reporting currency. Certain of our financial data in this annual report on Form 20-F is translated into U.S. dollars solely for the reader’s convenience. We make no representation that any Renminbi, Hong Kong dollars or U.S. dollar amounts could have been, or could be, converted into U.S. dollars, Hong Kong dollars, or Renminbi, as the case may be, at any particular rate or at all.
ii
FORWARD-LOOKING STATEMENTS
This 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. All statements other than statements of historical fact are “forward-looking statements,” including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as “may”, “will”, “should”, “could”, “would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates” and similar expressions, as well as statements in the future tense, identify forward-looking statements.
These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, and the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based or the success of our business. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings “Risk Factors”, “Operating and Financial Review and Prospects,” and elsewhere in this report.
iii
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
Zeta Network Group is a Cayman Islands holding company with operations primarily conducted by its subsidiaries. Our operations now consist principally of cryptocurrency mining conducted through our wholly owned Hong Kong subsidiary, Model Queen, the mining machines of which are hosted in Kazakhstan, together with our digital asset holdings. Investors purchasing our securities are purchasing equity interests in the Cayman Islands holding company.
On February 17, 2023, the China Securities Regulatory Commission (“CSRC”) released Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies with five interpretive guidelines (the “Trial Measures”) which came into effect on March 31, 2023. Pursuant to the Trial Measures, a PRC domestic company that seeks to offer and list securities in overseas markets, either in direct or indirect overseas offering, shall fulfill the filing procedure with the CSRC per requirement of the Trial Measures, submit relevant materials that contain a filing report and a legal opinion, and provide truthful, accurate and complete information. Direct overseas offering and listing by domestic companies refers to such overseas offering and listing by a joint-stock company incorporated domestically. Any overseas offering and listing made by an issuer that meets both the following conditions will be determined as indirect offering and listing in overseas market and, therefore, be subject to filing requirement: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China. The determination as to whether or not an overseas offering and listing by domestic companies is indirect, shall be made on substance over form basis.
As of the date of this annual report, as advised by Tahota Law Firm, our PRC counsel, we believe we are not required to obtain the approval from or complete the filing with the CSRC for our offerings and thus we have not submitted an application for approval for any offering with the CSRC pursuant to the Trial Measures based on the facts that (i) our operating subsidiaries are incorporated in Hong Kong and the United States and we presently do not maintain a PRC subsidiary or other registered PRC operating entity; (ii) for the fiscal years ended June 30, 2026 and 2025, we generated all of our revenue from businesses outside of China; and (iii) the principal places of business of our business activities are located outside China and all principal business activities are conducted outside China. Thus, we do not meet the explicit conditions set out in the Trial Measures to determine whether an overseas offering shall be deemed as a direct or an indirect overseas offering and listing by a domestic company. However, as the determination as to whether or not an overseas offering and listing by domestic companies is indirect, shall be made on a substance over form basis, there are substantial uncertainties as to the implementation and interpretation, and the CSRC may take a view that is contrary to our understanding of the Trial Measures. If we are required by the CSRC to submit and complete the filing procedures of our offerings and listing, we cannot assure you that we will be able to complete such filings in a timely manner, or even at all. Any failure by us to comply with such filing requirements under the Trial Measures may result in rectification, warnings, and a fine between RMB1 million and RMB10 million, which could adversely and materially affect our business operations and financial outlook, and significantly limit or completely hinder our ability to offer or continue to offer our Class A Ordinary Shares to investors and could cause the value of our Class A Ordinary Shares to significantly decline or such shares to become worthless.
1
As of the date of this annual report, we and any of our subsidiaries (1) are not required to obtain permissions from any PRC authorities to operate or issue our Class A Ordinary Shares to investors, (2) are not subject to permission requirements or oversight from the CSRC, Cyberspace Administration of China (“CAC”) or any other entity that is required to approve of our operations, and (3) have not received or been denied such permissions by any PRC authorities. As of the date of this annual report, these new laws and guidelines have not impacted our ability to conduct our business, accept foreign investments, or continue to list on a U.S. or other foreign exchange; however, if (i) we inadvertently conclude that permissions or approvals are not required from applicable PRC authorities, (ii) applicable laws, regulations, or interpretations change, and we are required to obtain such permissions or approvals in the future, or (iii) we fail to file or were denied any required permission from the PRC authorities to any of our offerings or transactions, our ability to conduct our business may be materially impacted, and we will not be able to continue listing on any U.S. exchange, continue to offer securities to investors, the interest of the investors may be materially and adversely affected and our Class A Ordinary Shares may significantly decrease in value or become worthless. To date, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could materially and adversely impact our business and financial outlook and may impact our ability to accept foreign investments, or continue to list on a U.S. or other foreign exchange. See “Item 3.D. Risk Factors - The business, financial condition and results of operations of our Hong Kong subsidiary and/or the value of our securities or our ability to offer or continue to offer securities to investors may be materially and adversely affected to the extent the laws, rules and regulations of the PRC become applicable to us.”
We presently do not maintain a PRC subsidiary or other registered PRC operating entity, either directly or through Variable Interest Entity (VIE) arrangements. However, since certain of our directors and officers reside in mainland China, we may face risks and uncertainties relating to such residence. We consider that the current laws and regulations of the PRC applicable in China have no material impact on our business, financial condition or results of operations.
During the fiscal year ended June 30, 2026, we had no assets and generated no revenue in the PRC and no cash has been transferred in or out of the PRC. To date, our subsidiaries have not declared or paid any dividends or other distributions to Zeta Network Group, and Zeta Network Group has not declared or paid any dividends or distributions to its shareholders or other investors.
Our Class A Ordinary Shares may be prohibited from trading on a national exchange or “over-the-counter” markets under the Holding Foreign Companies Accountable Act (the “HFCAA”) if the Public Company Accounting Oversight Board (“PCAOB”) determines it is unable to inspect or investigate completely our auditors for two consecutive years beginning in 2021. 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 or Hong Kong. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and 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. Our auditor, Assentsure PAC, is headquartered in Singapore and, as a PCAOB-registered public accounting firm, is required to undergo regular inspections by the PCAOB to assess its compliance with the laws of the U.S. and professional standards. Assentsure PAC has been subject to PCAOB inspections and is not among the PCAOB-registered public accounting firms headquartered in the PRC or Hong Kong that are subject to PCAOB’s determination of having been unable to inspect or investigate completely. Notwithstanding the foregoing, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, if there is any regulatory change or step taken by PRC regulators that does not permit Assentsure PAC to provide audit documentations located in China to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the determination so that we are subject to the HFCAA, as the same may be amended, you may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected or investigated by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate, which could result in limitation or restriction to our access to the U.S. capital markets, and trading of our securities, including trading on the national exchange and trading on “over-the-counter” markets, may be prohibited under the HFCAA and our securities may be delisted by an exchange.
2
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
An investment in our ordinary shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all other information contained in this annual report, including the matters discussed under the headings “Forward-Looking Statements” and “Operating and Financial Review and Prospects” before you decide to invest in our ordinary shares. We are a holding company and we conduct our operations through our subsidiaries, and we are subject to a legal and regulatory environment that in many respects differs from the United States. If any of the following risks, or any other risks and uncertainties that are not presently foreseeable to us, actually occur, our business, financial condition, results of operations, liquidity and our future growth prospects could be materially and adversely affected.
Risks Related to Our Business and Industry
We have disposed of our entertainment and media business and now depend on a single cryptocurrency mining business, which has operated at a gross loss.
On December 31, 2025 we entered into a share sale and purchase agreement with a third party to dispose of our 100% ownership interest in Color Star DMCC, the subsidiary established to carry out our music industry business and our online cultural entertainment platform, Color World. The transfer of shares was completed on January 5, 2026. That disposal has been accounted for as a discontinued operation because it represented a strategic shift that had a major effect on our operations and financial results. Our subsidiary Color Star Technology Ohio Inc. (“Color Star”) has not commenced operations, and CACM Group NY, Inc. (“CACM”) no longer provides construction management consulting services. As a result, our operations now consist principally of cryptocurrency mining conducted through our wholly owned subsidiary Model Queen Limited (“Model Queen”), together with our digital asset holdings.
Our cryptocurrency mining business has not been profitable. During the fiscal year ended June 30, 2026, we generated cryptocurrency mining revenue of approximately US$28.4 million and incurred cost of revenue of approximately US$33.7 million, resulting in a gross loss of approximately US$5.3 million. That gross loss was primarily due to high energy and hosting costs, depreciation of mining equipment, lower Bitcoin production caused by increased network mining difficulty, and periods of lower Bitcoin prices. These results reflect the capital-intensive nature of the mining business and our exposure to cryptocurrency market volatility. Our hosting fee and maintenance fee increased to US$0.072 and US$0.002 per kWh, respectively, from April 1, 2026, and for each of the quarters ended March 31, 2026 and June 30, 2026, our mining revenue was less than our hosting and maintenance fees and BTC KZ made no USDT payment to us. If network mining difficulty continues to increase, if energy or hosting costs rise further, or if the price of Bitcoin declines, our mining operations may continue to generate losses.
In addition, we are dependent on a single counterparty. As of each of June 30, 2026 and 2025, all of our receivables from our mining operations were due from BTC KZ, our hosting service provider. Our contractual counterparty for our mining operations and for the settlement of our mining proceeds is BTC KZ, not the pool operator. BTC KZ is also our lender under a secured term loan, of which US$8,593,101 was outstanding as of June 30, 2026, all payable in the twelve months ending June 30, 2027, and it holds a first-priority security interest in our mining machines. If we default under that loan, BTC KZ could enforce that security interest against our mining machines. The loss of that relationship, or a failure by that counterparty to settle amounts owed to us, would have a material adverse effect on our revenue, results of operations and liquidity.
3
Our reliance on a third-party hosting service provider may subject our operations to increased risk of mining failure.
The performance and reliability of our mining machines and our technology are critical to our reputation and our operations. We engaged BTC KZ to provide hosting services to our mining machines at its data center in Kazakhstan. Pursuant to the hosting services agreement, all of our hash rate capacity is hosted by BTC KZ as of the date of this annual report. As a result, our operations and ability to mine Bitcoin could be adversely affected if BTC KZ experiences general incompetence in performing its duties, experiences financial difficulties or bankruptcy, or otherwise cannot operate our Bitcoin miners in accordance with its contractual obligations. If our hosting services agreement with BTC KZ terminates for any reason, we may be forced to seek a replacement service provider and there is no guarantee that we will find a suitable one on acceptable terms and on time, or at all. Our hosting services agreement with BTC KZ, as renewed on March 21, 2026, expires on March 20, 2027, and any further renewal requires the mutual written agreement of the parties.
Bitcoin is subject to halving, and as such the reward for successfully solving a block will halve several times in the future and its value may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts, which could cause us to cease our mining operations altogether and investors could suffer a complete loss of their investment.
Halving is a process designed to control the overall supply and reduce the risk of inflation in crypto assets using a proof-of-work consensus algorithm. In an event referred to as Bitcoin “halving,” the Bitcoin reward for mining any block is cut in half. This process is scheduled to occur once every 210,000 blocks. It is estimated that Bitcoin will halve approximately every four years, until the total amount of Bitcoin rewards issued reaches 21.0 million, and the theoretical supply of new Bitcoin is exhausted, which is expected to occur in around 2140. Once 21.0 million Bitcoin are generated, the network will stop producing more. While Bitcoin prices have had a history of price fluctuations around halving events, there is no guarantee that any such price change will be favorable or would compensate for the reduction in mining reward. If a corresponding and proportionate increase in the price of Bitcoin does not follow these anticipated halving events, the revenue from our mining operations would decrease, and we may not have an adequate incentive to continue mining and may cease mining operations altogether, which may adversely affect an investment in our securities and investors could suffer a complete loss of their investment.
Furthermore, such reductions in Bitcoin rewards for uncovering blocks may result in a reduction in the aggregate hash rate of the Bitcoin network as the incentive for miners decreases. Miners ceasing operations would reduce the collective processing power on the network, which would adversely affect the confirmation process for transactions and make the Bitcoin network more vulnerable to malicious actors or botnets obtaining control in excess of 50% of the processing power active on the blockchain. Such events may adversely affect our activities and an investment in our securities.
There are risks related to technological obsolescence, the vulnerability of the global supply chain for Bitcoin hardware disruption, and difficulty in obtaining new hardware which may have a negative effect on our business.
Our mining operations can only be successful and ultimately profitable if the costs, including hardware and electricity costs, associated with mining crypto assets are lower than the price of a Bitcoin. Our mining machines experience ordinary wear and tear in the course of operation and may also face significant malfunctions caused by a number of extraneous factors beyond our control. We purchased our mining machines from BTC KZ. The degradation of our mining machines requires us to, over time, replace those mining machines which are no longer functional. Additionally, as the technology evolves, we are required to acquire newer models of miners to remain competitive in the market. Reports have been released which indicate that manufacturers or sellers of mining machines adjust the prices of their mining machines according to Bitcoin prices, so the cost of new machines is unpredictable but could be extremely high. As a result, at times, we may obtain mining machines and other hardware from third parties at premium prices, to the extent they are available. This upgrading process requires substantial capital investment, and we may face challenges. Further, the global supply chain for Bitcoin mining machines is presently heavily dependent on China-based manufacturers. In addition, there have been shortages of the semiconductors which are key components in miner production. Should any disruptions to the China-based global supply chain for Bitcoin hardware on the spot market or otherwise occur, we may not be able to obtain adequate replacement parts for our existing mining machines or to obtain additional mining machines from the manufacturer or third parties on a timely basis. Such events could have a material adverse effect on our ability to pursue our business strategy, which could have a material adverse effect on our business and the value of our Class A Ordinary Shares.
4
Cryptocurrency mining operations in Kazakhstan are subject to extensive national and regional regulation which increases the costs of compliance and possible liability for non-compliance.
Cryptocurrency is subject to extensive regulation by Kazakhstan’s national and regional regulatory authorities. Regional and national statutes regulate foreign investment, operational safety, intellectual property rights, information security, employees’ health and safety, and other financial and digital technology controls. In Kazakhstan these regulations are mainly enforced by the Ministry of Artificial Intelligence and Digital Development, which succeeded the Ministry of Digital Development, Innovation and Aerospace Industry in September 2025. We intend to operate in compliance with all known investment, operation and digital technology standards and regulations applicable to our Kazakhstan cryptocurrency mining activities. BTC KZ, our hosting service provider, holds the digital mining license under which our machines are operated. However, there can be no assurance that our compliance will not be challenged or delayed or that future changes in local or national laws, regulations or interpretations thereof will not have a material adverse effect on our ability to sustain mining operations.
We have a short operating history with our current business model focusing on cryptocurrency mining, digital asset holdings and Bitcoin treasury activities.
We have a short operating history with our current business model focusing on cryptocurrency mining and the holding of digital assets. We transitioned from a construction materials business into online entertainment and education in 2020, expanded into the metaverse industry in January 2022, began cryptocurrency mining in April 2025 and disposed of our music and online cultural entertainment business in January 2026. Our limited history of operating under the current business model may not serve as an adequate basis for evaluating our prospects and operating results, including net revenues, cash flows and operating margins.
We have encountered, and may continue to encounter, risks, challenges and uncertainties associated with operating in the cryptocurrency mining, digital asset and Bitcoin treasury industries, such as building and maintaining reliable and secure technology infrastructure, managing digital asset holdings, addressing regulatory compliance and uncertainty, engaging, training and retaining qualified personnel. If we do not manage these risks successfully, our operating and financial results may differ materially from our expectations and our business and financial performance may suffer.
Our Bitcoin-linked treasury strategy exposes us to various risks, including risks associated with Bitcoin, SolvBTC, the concentration of our assets in SolvBTC and the custody of digital assets.
Bitcoin is a highly volatile asset that has historically experienced significant price fluctuations over short periods of time. SolvBTC is designed to maintain a value equivalent to Bitcoin on a one-to-one basis, but its market value may deviate from the value of Bitcoin. The trading price of Bitcoin has at times declined substantially and such declines may occur again in the future. Fluctuations in the value of Bitcoin and SolvBTC are expected to impact our financial results and the market price of our listed securities.
Our operating results may fluctuate significantly from period to period due to factors including changes in the market price of Bitcoin and SolvBTC, changes in the value of our digital asset holdings, financing activities, strategic investments, regulatory developments, market conditions and factors outside our control. As a result, period-to-period comparisons may not be meaningful and investors should not rely on past results as indicators of future performance.
We expect that a large portion of our assets will be concentrated in our SolvBTC holdings. As of June 30, 2026, we did not hold any SolvBTC, because our 2,000 SolvBTC had been transferred to investors on June 26, 2026 under a crypto asset swap and return agreement. We entered into that agreement on June 12, 2026 with the 30 individual investors in our October 2025 private placement. Because of the price volatility of SolvBTC, the parties agreed to swap our SolvBTC for a less volatile crypto asset acceptable to both parties. If no swap was completed within 30 business days after an investor received its SolvBTC, the investor was required to return the same number of SolvBTC to us, without any cash payment or adjustment for changes in market value. No swap was completed. Those SolvBTC were returned to us in July 2026. As of June 30, 2026, our receivable for their return represented approximately 88.9% of our total assets. As of September 30, 2026, we held approximately 2,156.6533 SolvBTC. The concentration of our assets in SolvBTC limits our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent in our Bitcoin-linked treasury strategy. Unlike traditional treasury assets such as cash, cash equivalents, or short-term government securities, our SolvBTC holdings do not generate interest income, dividends, or predictable cash flows and involve ongoing costs associated with self-custody and security. As a result, our ability to fund operations and satisfy our financial obligations is dependent on our ability to sell or otherwise monetize SolvBTC, which may not be possible at favorable prices or at all, particularly during periods of market instability or reduced liquidity for digital assets. If we are required to sell our SolvBTC to meet working capital needs, debt service obligations, or other liabilities, we may be forced to do so at prices significantly below the carrying value of those holdings, which could result in material losses. Moreover, even in normal market conditions, the market for SolvBTC may be less liquid than the market for Bitcoin itself. The available market liquidity or trading depth for SolvBTC on digital asset trading platforms may be insufficient to absorb a sale of the size of our holdings without causing significant price slippage, meaning the effective price we receive on a large sale could be materially lower than the quoted market price at the time the sale is initiated.
5
SolvBTC is a tokenized representation of Bitcoin issued through Solv Protocol, and its market value may be affected not only by the price of Bitcoin but also by factors relating to the operation, security and technical integrity of Solv Protocol, the assets backing SolvBTC, and market participants’ willingness to accept SolvBTC at or near its intended value relative to Bitcoin. Any failure of SolvBTC to maintain its intended value relative to Bitcoin, any exploit, governance issue or technical disruption affecting Solv Protocol, or any loss of market confidence in SolvBTC could adversely affect the value or liquidity of our SolvBTC holdings, including independently of movements in the price of Bitcoin.
Our Bitcoin-linked treasury strategy has not been tested over an extended period of time or under different market conditions. We are continually examining the risks and rewards of our strategy to acquire and hold SolvBTC and other digital assets. We are continually evaluating the risks and potential benefits associated with acquiring and holding SolvBTC and other digital assets as significant treasury assets. For example, although we believe Bitcoin, due to its limited supply, has the potential to serve as a hedge against inflation in the long term, the short-term price of Bitcoin declined in recent periods during which the inflation rate increased. If Bitcoin or SolvBTC prices were to decline, if SolvBTC were unable to maintain its intended one-to-one relationship with Bitcoin, or our Bitcoin treasury strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our listed securities would be materially adversely impacted.
We currently store our digital asset holdings, which currently consist of SolvBTC, in wallet addresses controlled by us rather than with third-party custodians. Self-custody exposes us to risks associated with the loss, theft, destruction or compromise of the private keys or other credentials required to access and transfer our digital assets. Such events may result from cyberattacks, unauthorized access, fraud or misconduct by employees or other persons, operational or human error, inadequate internal controls, hardware or software failures, the loss or unavailability of personnel with access to the relevant credentials, or other security incidents. Transactions involving digital assets generally cannot be reversed, and, if our private keys or other access credentials are lost, destroyed or compromised, no third party may be able to restore our access to the affected digital assets. Our security measures may not be sufficient to prevent these events, and any loss of or inability to access all or a portion of our digital asset holdings could have a material adverse effect on our financial condition, results of operations and the market price of our listed securities.
The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of Bitcoin. A series of high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry in recent years have highlighted the counterparty risks applicable to owning and transacting in digital assets. Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our SolvBTC and USDT holdings, nor have such events adversely impacted our access to our digital assets, they have, in the short-term, likely negatively impacted the adoption rate and use of Bitcoin. Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of Bitcoin, limit the availability to us of financing collateralized by Bitcoin, or create or expose additional counterparty risks.
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The broader digital assets industry, including the technology associated with digital assets, the rate of adoption and development of, and use cases for, digital assets, market perception of digital assets, and the legal, regulatory, and accounting treatment of digital assets are constantly developing and changing, and there may be additional risks in the future that are not possible to predict.
Our operating results will be dependent on the price of digital assets and Bitcoin. If such price declines, our business, operating results, and financial condition would be adversely affected.
Any declines in the volume of digital asset transactions, the price of digital assets, or market liquidity for digital assets generally may adversely affect our operating results. As part of our digital asset treasury strategy, a substantial majority of our assets is concentrated in SolvBTC. We have historically not held Bitcoin directly and do not currently engage in the purchase, sale or trading of Bitcoin. Our operating results are nevertheless exposed to the price of Bitcoin, both because the value of SolvBTC is intended to track the price of Bitcoin and because our mining operations produce Bitcoin. The price of digital assets and associated demand for buying, selling, and trading of digital assets have historically been highly volatile and may continue to be highly volatile in the future. Digital asset prices have experienced significant fluctuations over relatively short periods of time and may be affected by a wide range of factors, including market sentiment, macroeconomic conditions, regulatory developments, technological changes, trading activity, liquidity conditions and events affecting participants in the digital asset ecosystem. There can be no assurance that Bitcoin or any other digital asset will maintain its value over time or recover from significant declines in price.
The price and trading volume of any digital asset is subject to significant uncertainty and volatility, and may significantly decline in the future, without recovery. We have previously experienced the effects of Bitcoin price volatility. For example, declines in Bitcoin prices during portions of 2025 contributed to reduced profitability and gross losses in our cryptocurrency mining operations. Similar declines in the future could adversely affect our operating results and financial condition. Furthermore, reduced investor confidence in digital assets, digital asset trading platforms or the broader digital asset ecosystem could materially reduce demand for Bitcoin and other digital assets and adversely affect the value of our holdings, our results of operations and our financial condition.
Such uncertainty and volatility depend on a number of factors, including:
| ● | market conditions across the cryptoeconomy; |
| ● | changes in liquidity, volume, and trading activities; |
| ● | trading activities on digital asset trading platforms worldwide, many of which may be unregulated, and may include manipulative activities; |
| ● | investment and trading activities of highly active retail and institutional users, speculators, miners, and investors; |
| ● | the speed and rate at which cryptocurrency is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all; |
| ● | decreased user and investor confidence in digital assets and digital asset trading platforms; |
| ● | negative publicity and events relating to the cryptoeconomy; |
| ● | unpredictable social media coverage or “trending” of digital assets; |
| ● | the ability for digital assets to meet user and investor demands; |
| ● | the functionality and utility of digital assets and their associated ecosystems and networks, including digital assets designed for use in various applications; |
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| ● | consumer preferences and perceived value of digital assets and digital asset markets; |
| ● | increased competition from other payment services or other digital assets that exhibit better speed, security, scalability, or other characteristics; |
| ● | regulatory (including enforcement) or legislative changes and updates affecting the cryptoeconomy; |
| ● | the characterization of digital assets under the laws of various jurisdictions around the world; |
| ● | the maintenance, troubleshooting, and development of the blockchain networks underlying digital assets, including by miners, validators, and developers worldwide; |
| ● | the ability for cryptocurrency networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently; |
| ● | ongoing technological viability and security of digital assets and their associated smart contracts, applications and networks, including vulnerabilities against hacks and scalability; |
| ● | fees and speed associated with processing digital asset transactions, including on the underlying blockchain networks and on digital asset trading platforms; |
| ● | financial strength of market participants; |
| ● | the availability and cost of funding and capital; |
| ● | the liquidity of digital asset trading platforms; |
| ● | interruptions in service from or failures of major digital asset trading platforms; |
| ● | availability of an active derivatives market for various digital assets; |
| ● | availability of banking and payment services to support cryptocurrency-related projects; |
| ● | level of interest rates and inflation; |
| ● | monetary policies of governments, trade restrictions, and fiat currency devaluations; and |
| ● | national and international economic and political conditions. |
There is no assurance that any digital asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of digital assets or the demand for trading digital assets decline, our business, operating results, and financial condition could be adversely affected.
Acceptance and/or widespread use of bitcoin is uncertain.
The relatively limited use of Bitcoin in the retail and commercial marketplace may contribute to its price volatility, and this volatility could adversely affect our business, financial condition, results of operations and the value of our securities. Financial institutions, custodians, payment providers, trading platforms and other market participants may impose restrictions on, or discontinue support for, certain digital asset activities, which could adversely affect adoption and liquidity.
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Conversely, a significant portion of Bitcoin demand is generated by investors seeking a long-term store of value or speculators seeking to profit from the short- or long-term holding of the asset. Bitcoin’s price volatility may limit its acceptance as a medium of exchange, as merchants and other market participants may be reluctant to accept Bitcoin as a form of payment. There can be no assurance that Bitcoin will achieve or maintain widespread adoption as a medium of exchange, payment method or store of value.
The relative lack of acceptance of Bitcoins in the retail and commercial marketplace, or a reduction of such use, limits the ability of end users to use Bitcoin to pay for goods and services. Any failure of Bitcoin to achieve broader market acceptance, or any reduction in existing adoption levels, could adversely affect demand for Bitcoin, reduce the market value of our digital asset holdings, including our SolvBTC holdings, and materially and adversely affect our business, financial condition, results of operations and prospects.
Changes to the Bitcoin network and protocol could adversely affect our Bitcoin treasury strategy and the value of our digital asset holdings, including our SolvBTC holdings.
The Bitcoin network is based on an open-source protocol that is maintained and developed by a decentralized community of contributors. Any changes to the Bitcoin protocol, including software upgrades, forks, changes to consensus mechanisms, governance disputes, security vulnerabilities or other modifications to the operation of the Bitcoin network, could adversely affect the functionality, adoption, value or liquidity of Bitcoin and digital assets linked to Bitcoin, including SolvBTC.
In particular, if a significant number of participants adopt changes to the Bitcoin protocol that are not widely accepted by the broader Bitcoin community, the Bitcoin network could experience a “fork,” resulting in multiple competing versions of the blockchain. Such events could create uncertainty, disrupt market confidence, reduce the value of Bitcoin or otherwise adversely affect the market for Bitcoin.
Because our business strategy includes holding SolvBTC, which is intended to track the value of Bitcoin, as a treasury asset, any material changes to the Bitcoin network, or any reduction in market confidence in the security, functionality or long-term viability of Bitcoin, could adversely affect the value of our digital asset holdings, including our SolvBTC holdings, our financial condition, our results of operations and the market price of our securities.
Market manipulation activities within the cryptocurrency market may materially disrupt market integrity, reduce liquidity, and cause significant price volatility, adversely impacting our revenue generation, and business, financial condition and results of operations.
The cryptocurrency market has historically been subject to a high risk of market manipulation. Unlike traditional securities and commodities markets, many cryptocurrency trading platforms operate without consistent oversight or comprehensive regulatory frameworks, particularly those located outside the United States. As a result, these markets are more vulnerable to manipulative practices such as spoofing, wash trading, front-running, and pump-and-dump schemes. Such activities can distort price discovery, create artificial trading volumes, and contribute to extreme volatility.
Furthermore, cryptocurrency markets lack the transparency and market surveillance mechanisms that are typical of regulated exchanges. Certain market participants may possess significant concentrations of digital assets (commonly referred to as “whales”), enabling them to influence market prices through large transactions. The presence of unregulated trading venues, opaque order books, and limited enforcement against manipulative behavior heightens the risk of market distortions. These factors could materially and adversely affect the liquidity, price stability, and integrity of cryptocurrency markets, thereby negatively impacting the value of our digital asset holdings and our business, financial condition and results of operations.
If a malicious actor or botnet obtains control in excess of 50% of the processing power active on the Bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that adversely affects our business.
If a malicious actor or botnet obtains a majority of the processing power dedicated to mining on the Bitcoin network, it may be able to alter the blockchain by constructing alternate blocks if it is able to solve for such blocks faster than the remainder of the miners on the blockchain can add valid blocks. In such alternate blocks, the malicious actor or botnet could control, exclude or modify the ordering of transactions. Using alternate blocks, the malicious actor could “double-spend” its own cryptocurrencies (i.e., spend the same cryptocurrencies in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintains control. To the extent that such malicious actor or botnet does not yield its majority control of the processing power or the cryptocurrency community does not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible. Further, a malicious actor or botnet could create a flood of transactions in order to slow down confirmations of transactions on the Bitcoin network. Such changes could have a material adverse effect on our business, prospects, results of operations or financial condition.
Although there have been no reports of such activity on the Bitcoin network, certain mining pools may have exceeded the 50% threshold on the Bitcoin network in the past. The possible crossing of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of cryptocurrency transactions, and this risk is heightened if over 50% of the processing power on the Bitcoin network falls within the jurisdiction of a single governmental authority. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, does not act to ensure greater decentralization of mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin network will increase, which could have a material adverse effect on our business, prospects, results of operations or financial condition.
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Our SolvBTC holdings are subject to risks specific to SolvBTC and Solv Protocol, and we may be unable to sell or redeem our SolvBTC at or near the price of Bitcoin.
SolvBTC is a token issued by Solv Protocol and is a separate crypto asset from Bitcoin. Its value depends on the Bitcoin and Bitcoin-pegged assets that Solv Protocol holds in reserve to back SolvBTC and on the continued operation of the smart contracts, reserve custody arrangements and minting and redemption mechanism of Solv Protocol. We do not control those reserves or arrangements, and we rely on information published by Solv Protocol and on third-party proof-of-reserve services to assess them. A shortfall in or impairment of the reserves, a failure or exploit of the smart contracts or cross-chain infrastructure on which SolvBTC operates, or a suspension of minting or redemption could cause the price of SolvBTC to fall below the price of Bitcoin or cause SolvBTC to lose all or a substantial part of its value. The trading market for SolvBTC is very limited. According to CoinGecko, as of October 13, 2026, the average daily trading volume of SolvBTC over the preceding 30 days was approximately US$66,000, and the approximately 2,156.65 SolvBTC we held represented approximately 33.9% of the total supply of SolvBTC. As a result, we may be unable to sell a meaningful portion of our SolvBTC without causing a significant decline in its price. We received our SolvBTC as consideration in private placements and have not minted or redeemed any SolvBTC. Our ability to redeem SolvBTC directly with Solv Protocol is subject to its eligibility and know-your-customer requirements. The terms of use of the Solv platform state that Solv does not offer securities services in the United States or to U.S. persons, and Solv lists the United States among the jurisdictions whose users it does not serve. We may therefore be unable to redeem our SolvBTC for the underlying Bitcoin when we need liquidity or at all. Any of these events could result in further impairment charges and could materially and adversely affect our liquidity, financial condition and results of operations.
We receive the net proceeds of our mining operations in USDT and are exposed to risks relating to USDT.
BTC KZ settles the net proceeds of our mining operations in USDT, a U.S. dollar-denominated stablecoin issued by Tether International, S.A. de C.V. The value of USDT depends on its issuer maintaining sufficient reserves and honoring redemptions at par. Only verified customers of the issuer may redeem USDT directly, and other holders can obtain U.S. dollars only by selling USDT in the market. If USDT loses its peg to the U.S. dollar, becomes subject to regulatory action or is frozen by its issuer, the value of the settlement proceeds we receive, or any USDT we hold pending use, could decline or become unavailable. Although we held no USDT as of September 30, 2026, we may hold USDT from time to time as an operating liquidity asset.
The availability of spot ETPs for Bitcoin and other digital assets may adversely affect the market price of our listed securities.
Bitcoin and other digital assets have attracted significant investor interest, and investors in the United States now have multiple avenues to gain exposure to Bitcoin through traditional investment channels, including exchange-traded products and other investment vehicles. In addition to direct ownership through digital asset platforms and custodial arrangements, investors may obtain exposure to Bitcoin through publicly traded products designed to track or reflect the performance of Bitcoin. Investors may seek exposure to Bitcoin through investment vehicles that hold Bitcoin and issue shares representing interests in their underlying Bitcoin holdings, rather than through direct ownership of Bitcoin.
Spot exchange-traded products (“ETPs”) that hold Bitcoin and other digital assets are available to investors through U.S. securities markets and may continue to expand in number, size and scope. To the extent investors view our Class A Ordinary Shares as providing exposure to Bitcoin, the value of our Class A Ordinary Shares may be influenced by the trading activity and performance of spot Bitcoin ETPs and other digital asset investment products. In addition, exchange-traded products providing exposure to other digital assets, including ether and other cryptocurrency-related assets, are available to investors and may continue to evolve and expand. The availability and continued growth of Bitcoin ETPs and other digital asset investment products provide investors with alternative means of obtaining exposure to digital assets. To the extent investors determine that these products provide a more direct, liquid, transparent or cost-effective means of obtaining exposure to Bitcoin or other digital assets, demand for our Class A Ordinary Shares may decline, which could adversely affect the market price of our Class A Ordinary Shares and cause our securities to trade at a discount relative to the value of our digital asset holdings, including our SolvBTC holdings.
Although we are an operating cryptocurrency mining company, and we believe we offer a differentiated value proposition that combines our mining operations with Bitcoin treasury exposure, investors may nevertheless view our securities primarily as a Bitcoin investment vehicle. They may choose to invest in alternative Bitcoin products for various reasons, including: (i) preference for “pure play” Bitcoin exposure without operational business risks; (ii) different tax treatment or regulatory structure; (iii) enhanced liquidity or trading characteristics; (iv) lower fees or expense ratios; or (v) different levels of transparency regarding Bitcoin holdings and net asset value calculations.
Unlike dedicated Bitcoin investment vehicles, we do not seek to track the value of Bitcoin or provide daily transparency regarding our underlying SolvBTC holdings. If our combined business model is viewed favorably relative to pure Bitcoin exposure, our securities may trade at a premium. These valuation dynamics may increase the volatility of our share price and could result in our securities underperforming both our underlying SolvBTC holdings and our operational business performance.
Furthermore, recommendations by broker-dealers to buy, hold, or sell complex products and non-traditional ETPs, or an investment strategy involving such products, may be subject to additional or heightened scrutiny that would not be applicable to broker-dealers making recommendations with respect to our securities. Based on how we are viewed in the market relative to ETPs, and other vehicles which offer economic exposure to Bitcoin, such as Bitcoin futures exchange-traded funds (“ETFs”), leveraged Bitcoin futures ETFs, and similar vehicles offered on international exchanges, any premium or discount in our Class A Ordinary Shares relative to the value of our SolvBTC holdings may increase or decrease in different market conditions.
As a result of the foregoing factors, availability of spot ETPs for Bitcoin and other digital assets could have a material adverse effect on the market price of our listed securities.
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The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of Bitcoin and adversely affect our business.
As a result of our Bitcoin treasury strategy, our assets are concentrated in our digital asset holdings. Accordingly, the emergence or growth of digital assets other than Bitcoin may have a material adverse effect on our financial condition. Bitcoin is currently the largest digital asset by market capitalization; however, there can be no assurance that it will maintain that position in the future. There are numerous alternative digital assets, and many entities, including consortiums and financial institutions, are researching and investing resources into private or permissioned blockchain platforms and digital assets that do not use proof-of-work mining like the Bitcoin network. For example, certain digital asset networks, including Ethereum and other proof-of-stake networks, utilize consensus mechanisms that require significantly less computing power than Bitcoin’s proof-of-work model and may continue to evolve through protocol upgrades and technological developments. If the mechanisms for validating transactions in Ethereum or other alternative digital assets are perceived as superior to Bitcoin’s proof-of-work model, those digital assets could gain market share relative to Bitcoin.
Other alternative digital assets that compete with Bitcoin in certain ways include “stablecoins,” which are designed to maintain a constant price because of, for instance, their issuers’ promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown significantly in market capitalization, transaction volume and adoption as a medium of exchange, settlement mechanism and store of value within the digital asset ecosystem. In addition, tokenized financial assets, including tokenized money market fund interests, U.S. Treasury securities and other real-world assets, have experienced increasing adoption by financial institutions and market participants.
Additionally, various governments and central banks around the world have explored or introduced central bank digital currencies, or CBDCs, and continue to evaluate their use in domestic and cross-border payment and settlement systems. While only a limited number of jurisdictions have fully launched retail CBDCs, numerous others maintain active pilot programs or are evaluating future implementation, including China’s digital yuan (e-CNY) and various cross-border settlement initiatives. Governments and central banks in jurisdictions including the United States, the United Kingdom, the European Union and Israel have also explored or discussed the potential development of CBDCs.
Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, Bitcoin and other digital assets as a medium of exchange or store of value. In addition, technological developments, greater scalability, lower transaction costs, enhanced regulatory acceptance, broader adoption or superior functionality of competing digital assets and payment technologies could reduce demand for Bitcoin and negatively affect its market value. As a result, the emergence or growth of these or other digital assets could cause the market price of Bitcoin to decrease, which could have a material adverse effect on our business, prospects, financial condition, and operating results.
Regulatory change reclassifying Bitcoin or SolvBTC as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940 and could adversely affect the market price of Bitcoin and the market price of our listed securities.
Under Sections 3(a)(1)(A) and (C) of the Investment Company Act of 1940 (the “Investment Company Act”), a company generally will be deemed to be an “investment company” for purposes of the Investment Company Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
A significant portion of our assets are concentrated in our SolvBTC holdings. While senior SEC officials have stated their view that Bitcoin is not offered and sold as a “security” for purposes of the federal securities laws, no comparable statement has been made with respect to SolvBTC. SolvBTC is not Bitcoin. It is a token issued by Solv Protocol, a third party, and management concluded that it does not meet all of the scope criteria of ASC 350-60 that apply to crypto assets such as Bitcoin. A determination that SolvBTC is a security could lead to our classification as an “investment company” under the Investment Company Act, which would subject us to significant additional regulatory controls that could have a material adverse effect on our ability to execute on our Bitcoin-linked treasury strategy, and our business and operations and may also require us to substantially change the manner in which we conduct our business.
We have adopted a written internal process for assessing whether a crypto asset is offered and sold as a “security” within the meaning of Section 2(a)(1) of the Securities Act. Under this process, we assess each crypto asset before we first acquire it, reassess each crypto asset we hold at least annually and reassess promptly after a triggering event, such as new SEC or CFTC guidance, an enforcement action or a material change in the design, reserves or redemption terms of the asset. Each assessment considers whether the asset falls within a category that the SEC has interpreted as not involving securities and applies the Howey investment contract analysis and, where applicable, the Reves analysis for notes. Each assessment also considers the regulatory status, reserves, redemption rights and regulatory history of the issuer and third-party materials such as legal opinions, and results in a low, medium or high risk rating. Our Chief Financial Officer performs each assessment, and our Chief Executive Officer reviews and approves it. We engage outside U.S. securities counsel when an assessment results in a medium or high risk rating or involves a novel structure. We assessed USDT and SolvBTC under this process before we first acquired them and rated the risk that each is offered and sold as a security as low. Any such policies and procedures do not constitute a legal standard but rather represent a framework for our analysis, which permits us to make a risk-based assessment regarding the likelihood that a particular cryptocurrency could be deemed a “security” under applicable laws. Our risk-based assessments do not constitute a legal determination binding on regulators or the courts and do not preclude legal or regulatory action.
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In addition, if SolvBTC is determined to be offered and sold as a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of Bitcoin and in turn adversely affect the market price of our listed securities.
We may require additional capital to fund potential acquisitions, capital expenditures, strategic initiatives, business opportunities, operational challenges or unforeseen circumstances, and such capital may not be available on acceptable terms, or at all, due to factors beyond our control.
To support our growing business, we must have sufficient capital. Our cash requirements may increase as we expand our operations, pursue strategic initiatives, acquire or develop new assets and technologies, invest in our Bitcoin treasury strategy and respond to changing market conditions. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to those of our Class A Ordinary Shares, and our existing shareholders may experience substantial dilution. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. Any refinancing of our indebtedness could be at significantly higher interest rates, require additional restrictive financial and operational covenants, or require us to incur significant transaction fees, issue warrants, ordinary shares, convertible notes or other equity-linked securities.
These restrictions and covenants may restrict our ability to finance our operations and engage in, expand, or otherwise pursue our business activities and strategies. Our ability to comply with these covenants and restrictions may be affected by events beyond our control, and breaches of these covenants and restrictions could result in a default and an acceleration of our obligations under a debt agreement. If we raise additional funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our technologies or our solutions under development, or grant licenses on terms that are not favorable to us, which could lower the economic value of those programs to us. Our outstanding Senior 10% Original Issue Discount Convertible Promissory Notes issued in March 2026 are secured by each of our subsidiaries and rank senior to all of our other debts and liabilities, which will limit our ability to incur additional secured indebtedness. In addition, under our term loan facility with BTC KZ, we are required to prepay the outstanding balance of that loan with at least 50% of the net proceeds from any public or private equity offering. See “Risk Factors - Risks Related to Our Business and Industry - Our outstanding Senior 10% Original Issue Discount Convertible Promissory Notes are senior and secured, and their conversion features may result in substantial dilution and downward pressure on the market price of our Class A Ordinary Shares”.
We evaluate financing opportunities from time to time, and our ability to obtain financing will depend, among other things, on our development efforts, business plans and operating performance and the condition of the capital markets at the time we seek financing and to an extent, subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our ability to obtain financing may also be influenced by the market value of Bitcoin, market sentiment toward digital assets and investor demand for companies pursuing Bitcoin-related strategies. We cannot be certain that additional financing will be available to us on favorable terms, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business, financial condition and results of operations could be adversely affected.
Failure to successfully implement our business strategy or effectively respond to changes in market dynamics may cause our future financial results to suffer.
We, from time to time, make significant investments and other decisions in connection with our long-term business development strategy. In order to expand the breadth and depth of our current business, we may enter industries, markets or business activities that differ from our existing operations and where we have less experience or expertise. The digital asset, blockchain, Bitcoin treasury, cryptocurrency mining and related technology industries in which we operate are characterized by rapid technological change, evolving business models, changing customer preferences, increased competition and an evolving regulatory environment. These developments may require us to re-evaluate our business model, capital allocation priorities and long-term strategic plans from time to time.
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We may not be successful in identifying emerging trends, developing new products or services, implementing strategic initiatives, integrating new business opportunities or adapting our business model to changing market conditions. If we are unable to successfully implement our business strategy, adapt to industry developments or effectively respond to changes in market dynamics, our business, financial condition, results of operations and future prospects could be materially and adversely affected.
Our success relies on the continuing efforts of our senior management team and qualified key personnel, and our business may be harmed if we are unable to retain or motivate them.
Our business operations depend on the continued services of our senior management team and qualified key personnel. Although we have provided different incentives to our senior management team, we cannot assure you that we can continue to retain their services. From time to time, we have experienced changes in senior management as part of the evolution of our business and organizational structure. For example, our Chief Executive Officer resigned on May 30, 2025, and Xiao Wen “Samantha” Huang was appointed as Chief Executive Officer on the same date. In addition, our Chief Investment Officer resigned on March 6, 2026. We may continue to experience management transitions in the future, and one or more members of our senior management team may be unable or unwilling to continue in their present positions.
Meanwhile, we have also provided attractive compensation packages to our qualified key personnel. However, we may not be able to attract, hire, develop and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which we compete for qualified and skilled personnel have greater resources than we have and may be able to offer more attractive terms of employment.
Our future success also depends on our ability to attract, retain and incentivize personnel with expertise in digital assets, blockchain technology, treasury management, finance, compliance, cybersecurity and other specialized areas relevant to our business strategy. Competition for such personnel is intense, and we may not be able to attract, retain or adequately incentivize qualified personnel on commercially reasonable terms, or at all. The loss of personnel with specialized knowledge or experience relevant to our Bitcoin treasury strategy, digital asset activities, regulatory compliance obligations or other strategic initiatives could impair our ability to execute our business plan, respond to market developments and compete effectively. In addition, our efforts to recruit, train and develop employees require significant investments of time and resources, and such employees may become attractive targets for competitors seeking personnel with similar experience and expertise.
If we are unable to retain the services of our senior management team or qualified key personnel, we may not be able to find suitable replacements or may incur significant expenses in finding such replacements, thus our future growth may be constrained, our business may be severely disrupted and our results of operations and financial condition may be materially and adversely affected. In addition, although we have entered into confidentiality and non-competition agreements with our senior management team and qualified key personnel, there is no assurance that any member of our senior management team or any of our qualified key personnel will not join a competitor. In the event that any dispute arises between us, on one hand, and any of our senior management and qualified key personnel, on the other hand, we may have to incur substantial costs and expenses in order to enforce such agreements, or we may be unable to enforce them at all.
We expect to rely heavily on information and technology to operate our existing and future products and services, and any cybersecurity incident or other disruption to our technology infrastructure could result in the loss of critical confidential information or adversely impact our reputation, business or results of operations.
Our ability to attract and retain customers and to compete effectively depends in part upon the satisfactory performance and reliability of our technology network, including the ability to provide features of services that are important to our customers and to protect our confidential business information and the information provided by our customers. We receive, process, store and transmit confidential information relating to our business, customers, employees and other parties. Unauthorized access to our systems or stored information could result in the theft, loss, corruption or improper disclosure of confidential information and could disrupt our operations.
We also rely on our technology to maintain and process various operating and financial data that are essential to the day-to-day operation of our business and formulation of our development strategies. In addition, we rely on third-party service providers and other external systems and infrastructure. Our systems and those of our third-party providers may be vulnerable to cybersecurity incidents, security breaches, ransomware attacks, software viruses, malicious code, acts of vandalism, misplaced or lost data, programming errors, human error or other similar events.
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Our business operations and growth prospects depend on our ability to maintain and make timely and cost-effective enhancements and upgrades to our technology system and to introduce innovative additions that can meet changing operational needs in future. Therefore, we expect to continue to invest in advanced information technology and any equipment to enhance operational efficiency and reliability as we grow. Accordingly, any errors, defects, disruptions, cybersecurity incidents, data breaches or other performance problems affecting our IT infrastructure or that of our third-party providers could damage our reputation, decrease user satisfaction and retention, adversely impact our ability to attract new users and expand our service and product offerings, expose us to litigation, regulatory investigations, penalties or other liabilities, and materially disrupt our operations.
Any actual or perceived failure to adequately protect confidential information or maintain the security, integrity and availability of our systems could adversely affect our business, financial condition, results of operations and prospects. If any of these occur, our business operations, reputation and prospects could be harmed.
If our security measures are breached or fail and result in unauthorized disclosure of data or the loss of digital assets, we could be exposed to protracted and costly litigation and could lose all or part of our digital asset holdings.
Maintaining the security of our systems is of critical importance to us because our systems store and transmit proprietary and confidential information, which may include sensitive personally identifiable information that may be subject to stringent legal and regulatory obligations, and because we hold digital assets. We face an increasing number of threats to our IT infrastructure, including unauthorized activity and access by our employees or third-party agents, system viruses, worms, malicious code and organized cyber-attacks, which could breach our security and disrupt our business. Our SolvBTC holdings and any USDT we hold are stored at our own wallet addresses, and we rely on security procedures established around the private keys for our wallets to minimize the risk of theft or loss.
Unlike cash held in bank accounts, which may benefit from Federal Deposit Insurance Corporation (“FDIC”) insurance up to applicable limits, or securities held in brokerage accounts, which may benefit from Securities Investor Protection Corporation (“SIPC”) protection, our SolvBTC holdings and any USDT we hold do not benefit from any comparable deposit insurance or investor protection scheme. We do not maintain insurance against the theft, loss, or destruction of our digital asset holdings and are not aware of any insurance product that would be available to cover the full value of our holdings. If a private key is lost, stolen or compromised, we may be unable to access, and may permanently lose, the digital assets secured by that key, and such a loss would generally be irreversible and uninsured, and could result in the loss of all or substantially all of the value of our digital asset holdings.
These measures may not be as effective as we anticipate. If our security measures are breached or fail as a result of third-party action, employee error, malfeasance or otherwise, we could be subject to liability or our business could be interrupted, potentially over an extended period of time. Any or all of these issues could harm our reputation, or subject us to third-party lawsuits, regulatory fines or other action or liability. Further, any reputational damage resulting from breach of our security measures could create distrust of our company by investors and counterparties. We may be required to expend significant management time and additional resources to protect against the threat of these disruptions and security breaches or to alleviate problems caused by such disruptions or breaches.
Cybersecurity incidents, data security breaches and other disruptions to our information technology systems could expose us to liability, damage our reputation and adversely affect our business and results of operations.
In addition to the risks relating to the custody and security of our digital assets described elsewhere in this report, we collect, store, process and transmit personal information, confidential information and other data relating to our customers, employees, business partners and operations. The protection of this information and the continued availability of our information technology systems are critical to our business.
We face an increasing number of threats to our information technology systems and infrastructure, including unauthorized access, software vulnerabilities, ransomware attacks, malicious code, human error and other cybersecurity incidents that could disrupt our operations or compromise sensitive information. As we expand, we expect to continue implementing data security and confidentiality requirements in our arrangements with third-party service providers and other business partners that may have access to confidential or sensitive information. We also expect to continue investing in cybersecurity initiatives, information technology risk management and disaster recovery capabilities designed to protect confidential information and reduce the risk of unauthorized access, disclosure or misuse of such information.
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These measures, however, may not be as effective as we anticipate. In addition, there is no assurance that our employees, vendors, service providers or other third parties with access to data or systems will comply with applicable contractual, legal or regulatory requirements relating to data privacy and cybersecurity. If our security measures are breached or fail as a result of third-party action, employee error, malfeasance or otherwise, we could be subject to liability or our business could be interrupted, potentially over an extended period of time. Any such incident, or any actual or perceived failure to protect confidential information or comply with applicable privacy, cybersecurity or data protection requirements, could harm our reputation, disrupt our operations, expose us to regulatory investigations, fines, penalties, litigation and other liabilities, and adversely affect our ability to attract and retain customers and business partners.
Further, any reputational damage resulting from a cybersecurity incident or perceived failure to protect confidential information could create distrust among customers, business partners or investors. We may be required to expend significant management time and additional resources to protect against the threat of these disruptions and security breaches or to alleviate problems caused by such disruptions or breaches.
We may be subject to potential liability in connection with threatened legal proceedings and other matters, which could adversely affect our business or financial results.
We may in the future become a party to various legal or administrative proceedings arising in the ordinary course of our business, including breach of contract claims, anti-competition claims and other matters. Such proceedings are inherently uncertain, and their results cannot be predicted with certainty. Regardless of the outcome and merit of such proceedings, any such legal action could have an adverse impact on our business because of defense costs, negative publicity, diversion of management’s attention and other factors. In addition, it is possible that an unfavorable resolution, including any judgment or settlement subjecting us to liability, of one or more legal or administrative proceedings, could materially and adversely affect our business, financial position, results of operations or cash flows in a particular period or damage our reputation.
A severe or prolonged downturn in the global economy could materially and adversely affect our business, financial condition and results of operations.
Any prolonged slowdown in the global economy may have a negative impact on our business, financial condition and results of operations. In particular, general economic factors and conditions worldwide, including the general interest rate environment and unemployment rates, may affect the price of Bitcoin. There have also been concerns over conflicts in Ukraine and the Middle East, which have resulted in volatility in financial and other markets. Furthermore, the economies may also be affected by the tensions in the relationship between China and the United States. Any of these events may materially and adversely affect our business and financial condition. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.
We face intense competition, which could adversely affect our business, financial condition and results of operations.
We operate in a highly competitive environment. Our competitors include companies that may have larger market shares, greater brand recognition, broader international customer bases, more advanced technologies, greater financial resources or other competitive advantages. In the cryptocurrency mining industry, certain competitors may also benefit from greater access to low-cost electricity, larger and more efficient mining equipment fleets, higher hash rates and greater economies of scale.
We anticipate that competition may increase as digital assets, blockchain technologies and other emerging technologies gain broader acceptance and additional participants enter these markets. Furthermore, we may encounter new competition as we expand our operations, pursue new strategic initiatives and enter new markets or business segments. Some of our competitors may be larger, more established organizations with greater economies of scale, broader industry relationships and greater access to capital and other resources.
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Strong competition in the market may require us to lower our prices, increase our sales and marketing expenses or otherwise invest greater resources to maintain or gain market share as needed to adequately compete. We may also need to devote additional resources to technology development, product innovation, customer acquisition, strategic partnerships and business development initiatives. Such efforts may negatively impact our profitability. If we are unable to compete effectively or adapt to changes and developments in the competitive landscape, our business, financial condition, results of operations and prospects could be materially and adversely affected.
Our services, software and technology systems are complex and may contain undetected errors, bugs, vulnerabilities or other defects that could adversely affect our business.
Our services, software and technology systems are highly technical and complex. Our existing and future products and services may contain undetected software bugs, hardware errors, and security vulnerabilities or other defects. These defects may result in diminished performance, system outages, security vulnerabilities, malfunctions, data loss, unauthorized access, operational disruptions or other failures. We regularly update and enhance our products and systems, and certain errors, defects or vulnerabilities may only become apparent after deployment, under specific conditions or following extended use.
Any defects, vulnerabilities or other issues discovered in our software, systems or infrastructure after release could damage our reputation, disrupt our operations, adversely affect customer confidence, expose us to cybersecurity risks, reduce revenues and subject us to claims, litigation or regulatory scrutiny. In addition, defects, errors or vulnerabilities affecting our systems or services could adversely impact the accuracy, integrity and reliability of our operational, financial or other business processes.
We also could face claims for product liability, tort or breach of warranty. Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and seriously harm our reputation and our business. In addition, if our liability insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business could be seriously harmed.
We may be subject to intellectual property infringement claims or other intellectual property disputes, which could be costly to defend and adversely affect our business.
From time to time, we may be in the future subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement and other violations of the trademarks, copyrights, patents and other intellectual property or proprietary rights of third parties. As we expand our operations, introduce new products and services, pursue digital asset-related initiatives and enter new markets, the likelihood that third parties may assert intellectual property claims against us may increase. In addition, it may be difficult to identify and monitor all patents, copyrights, trademarks and other intellectual property rights that may be relevant to our business.
We may not be able to successfully defend against such claims, which may result in a limitation on our ability to use the intellectual property subject to these claims and also might require us to enter into settlement or license agreements, pay costly damage awards or face an injunction prohibiting us from using the affected intellectual property in connection with our services. Defending ourselves against intellectual property claims, whether they are with or without merit or are determined in our favor, results in costly litigation and may divert the attention of our management and technical personnel from the rest of our business.
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Companies operating in technology, digital asset, software and other innovation-driven industries are frequently subject to litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights. Many companies in these industries, including many of our competitors, have substantially larger patent and intellectual property portfolios than we do, which could make us a target for litigation as we may not be able to assert counterclaims against parties that sue us for patent, or other intellectual property infringement. In addition, various “non-practicing entities” that own patents and other intellectual property rights often attempt to aggressively assert claims in order to extract value from technology companies. Further, from time to time we may introduce new products and services, including in territories where we currently do not have an offering, which could increase our exposure to patent and other intellectual property claims from competitors and non-practicing entities.
It is difficult to predict whether assertions of third-party intellectual property rights or any infringement or misappropriation claims arising from such assertions will substantially harm our business, operating results, and financial condition. If we are forced to defend against any infringement or misappropriation claims, whether they are with or without merit, are settled out of court, or are determined in our favor, we may be required to expend significant time and financial resources on the defense of such claims. In addition, some of our agreements with customers, vendors, service providers or other business partners may require us to indemnify and defend such parties against certain intellectual property infringement claims. Such claims could increase our costs, adversely affect our business relationships and divert management attention from our operations.
Furthermore, an adverse outcome of a dispute may require us to:
| ● | pay significant damages, which may be even greater if we are found to have willfully infringed upon a party’s intellectual property; |
| ● | cease using products, services, technologies, processes or other intellectual property that are alleged to infringe the rights of third parties; |
| ● | cease using solutions that are alleged to infringe or misappropriate the intellectual property of others; |
| ● | expend additional development resources to redesign our solutions; |
| ● | enter into potentially unfavorable license agreements in order to obtain rights to necessary technologies, software, intellectual property or other materials; |
| ● | indemnify our partners and other third parties; and/or |
| ● | take other actions that may have material effects on our business, operating results, and financial condition. |
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The success of our business and operations depends, in part, on the availability, reliability, integrity and security of our information technology systems and infrastructure, as well as those of our affiliates, custodians, service providers and other third parties. System interruption, infrastructure failures or insufficient redundancy in these systems could adversely affect our business, financial condition and results of operations.
System interruption and the lack of integration, resilience, redundancy or recovery capabilities in our information technology systems and infrastructure, or those of third-party service providers on which we rely, may adversely affect our ability to conduct operations, process transactions, manage digital assets, maintain business continuity and support critical business functions. Such interruptions may result from natural disasters, cyberattacks, software defects, telecommunications failures, power outages, acts of terrorism or war, human error, failures of backup or recovery systems, or other events beyond our control. In addition, the loss of some or all of certain key personnel could require us to expend additional resources to continue to maintain our software and systems and could subject us to systems interruptions.
Although we maintain up to date information technology systems and network infrastructures for the operation of our businesses, techniques used to gain unauthorized access to systems and networks continue to evolve, and we may be unable to anticipate, detect or prevent all unauthorized access, system compromises or other security incidents. Any such disruption, failure or unauthorized access could adversely affect our business, financial condition, results of operations and prospects.
We do not have insurance coverage that is customary and standard for companies of comparable size in comparable industries
We do not maintain insurance coverage for many of the risks associated with our operations, including business interruption, cybersecurity incidents, digital asset losses, terrorist attacks, military conflicts, war-related events and certain other operational risks. We also do not maintain insurance covering the full value of our digital asset holdings.
Accordingly, if we were to incur substantial losses, liabilities, disruptions or damages arising from natural disasters, accidents, business interruptions, cybersecurity incidents, theft or loss of digital assets, terrorist attacks, military conflicts, wars or other events for which we are not adequately insured, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
Substantial doubt exists about our ability to continue as a going concern.
Our consolidated financial statements included in this report have been prepared assuming that we will continue as a going concern. We have incurred recurring losses, an accumulated deficit of approximately US$412.7 million as of June 30, 2026, and, for the fiscal year ended June 30, 2026, negative operating cash flows. Although we reported positive working capital as of June 30, 2026, approximately US$116.8 million of our current assets consisted of receivables of cryptocurrency whose fair value is subject to significant market volatility. We incurred a net loss of approximately US$157.5 million for the fiscal year ended June 30, 2026, as compared to approximately US$43.0 million for the fiscal year ended June 30, 2025. We also incurred a gross loss of approximately US$5.3 million from our cryptocurrency mining operations during the fiscal year ended June 30, 2026, as cost of revenue exceeded revenue generated from cryptocurrency production. These conditions, together with our reliance on external financing and uncertainties related to our cryptocurrency mining operations, raise substantial doubt about our ability to continue as a going concern.
Our plans to address these conditions include obtaining additional debt and equity financing, expanding and optimizing our cryptocurrency mining activities, and continuing to evaluate strategic opportunities relating to digital assets. In addition, we closed a financing of US$6.0 million in principal amount of convertible notes (resulting in gross proceeds of approximately US$5.4 million) in March 2026, and we continue to pursue additional equity and debt financing opportunities. While these actions may improve liquidity and support near-term operations, our ability to continue as a going concern is dependent on the successful execution of these plans. There is no assurance that we will be able to generate positive cash flow, improve gross margins or secure additional funding when needed. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. If we are unable to continue as a going concern, you could lose all of your investment.
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We have identified material weaknesses in our internal control over financial reporting, and our disclosure controls and procedures were not effective.
Our management, with the participation of our chief executive officer and chief financial officer, concluded that as of June 30, 2026 our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting. The material weaknesses identified were: (i) the personnel primarily responsible for the preparation of our financial statements did not have requisite levels of knowledge, experience and training in the application of U.S. GAAP commensurate with our financial reporting requirements; (ii) ineffective supervision of our internal and disclosure controls over financial reporting and disclosure processes; (iii) deficiencies in the accounting assessment and review of complex cryptocurrency transactions and impairment of long-lived assets, particularly in relation to the recognition, classification, measurement and derecognition of cryptocurrency assets, and the preparation and review of supporting impairment analyses for cryptocurrency mining equipment. These deficiencies required additional accounting assessments and supporting analyses during the financial reporting process; and (iv) controls over preparation and review of formal cash flow forecasts were not operating effectively, and management did not prepare detailed, forward-looking cash flow projections to support its going concern assessment.
During fiscal year 2026, management undertook certain corrective actions relating to the previously identified deficiencies in monitoring advances, receivables and intangible asset impairment. These included performing recoverability and expected credit loss assessments of receivables, as well as impairment assessments of cryptocurrency assets and mining equipment. However, additional analysis and review were required in connection with the accounting treatment of certain cryptocurrency transactions and the recoverability and impairment assessment of mining equipment.
Accordingly, these corrective actions have not yet been demonstrated to be sufficient to remediate the related financial reporting control deficiencies.
We have implemented or intend to implement remedial measures, including establishing an internal audit function or engaging an external consulting firm, establishing more formal procedures for the assessment and review of complex transactions such as digital asset recognition and valuation, and impairment of long-lived assets, strengthening procedures for monitoring outstanding receivables, advances and counterparty exposures, implementing formal cash flow forecasting processes and providing additional training to finance and operational personnel on U.S. GAAP. We cannot assure you that these measures will be sufficient or that we will not identify additional material weaknesses in the future. If we fail to remediate these material weaknesses, we may be unable to report our financial results accurately or on a timely basis, which could cause investors to lose confidence in our reported financial information, subject us to regulatory scrutiny and adversely affect the market price of our Class A Ordinary Shares.
Our outstanding Senior 10% Original Issue Discount Convertible Promissory Notes are senior and secured, and their conversion features may result in substantial dilution and downward pressure on the market price of our Class A Ordinary Shares.
Except as otherwise indicated, share and per share amounts relating to the notes, the warrants and the pre-delivery shares in this risk factor give effect to the 8-for-1 share consolidation that became effective on July 27, 2026. On March 10, 2026 we entered into a securities purchase agreement with certain institutional investors for the issuance and sale of up to US$10 million of convertible notes and warrants, to take place in up to two tranches. The first tranche closed on March 12, 2026 and consisted of US$6.0 million in principal amount of our Senior 10% Original Issue Discount Convertible Promissory Notes, warrants to purchase up to 33,784 Class A Ordinary Shares and 23,168 Class A Ordinary Shares issued as pre-delivery shares. The first tranche resulted in gross proceeds to us of US$5.4 million before deducting placement agent fees and other offering expenses. We also agreed to sell, on the first trading day following 60 days after the effectiveness of the one-for-one hundred share consolidation and upon satisfaction of certain other conditions, a second tranche of US$4 million in principal amount of notes and accompanying warrants having substantially the same terms. The second tranche has not closed. As of the date of this annual report, US$2,457,548.54 in principal amount of the first-tranche notes remained outstanding.
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The notes bear no interest, have an original issue discount of 10%, mature twelve (12) months from the date of issuance and are convertible immediately upon issuance at the holder’s option, in whole or in part. Upon an event of default, a default interest rate of 10% per annum, or if less the highest amount permitted by law, applies. The conversion price is the lower of (i) a fixed conversion price of US$148.08 or (ii) a price equal to the greater of (x) the Floor Price and (y) a price equal to 90% of the lowest Volume-Weighted Average Price (“VWAP”) of our Class A Ordinary Shares during the ten trading day period immediately preceding the applicable conversion date. Because the alternative conversion price is set by reference to 90% of the lowest VWAP over a trailing ten trading day period, the number of Class A Ordinary Shares issuable on conversion increases as the market price of our Class A Ordinary Shares falls. Sales of the Class A Ordinary Shares issued on conversion may in turn depress the market price further, which would result in the issuance of still more shares on subsequent conversions.
The Floor Price initially equaled US$13.936 and is subject to reset every six months to a price equal to the lower of (a) 20% of the closing price of one Class A Ordinary Share on the date of reset or (b) 20% of the five-day VWAP for the five trading day period ending on the date of reset. Each reset may therefore reduce the Floor Price substantially, and there is no contractual limit on the cumulative effect of successive resets. If the alternative conversion price is less than the Floor Price then in effect, we must issue a number of shares equal to the conversion amount divided by the Floor Price and must in addition either pay the holder the applicable Alternate Conversion Floor Amount in cash or add that amount to the outstanding principal of the notes. Adding the Alternate Conversion Floor Amount to principal increases the amount that is subsequently convertible into Class A Ordinary Shares, which compounds the dilution.
The notes are secured by each of our subsidiaries and rank senior to all of our other debts and liabilities. Events of default include failure to pay principal or interest, breach of covenants, failure to maintain the listing of our shares on the stock exchange and insolvency or bankruptcy. Upon an event of default the holder may demand immediate repayment at a mandatory default amount equal to principal plus accrued interest. If we raise funds through subsequent financings, including public offerings of securities, the holders may require us to use up to 25% of the gross proceeds to redeem the notes plus accrued interest, which would reduce the net proceeds available to us. In the event of a change of control, the holders may demand redemption for cash at 100% of the outstanding principal amount plus accrued interest. A holder may not convert to the extent that the conversion would result in the holder together with its affiliates owning more than 9.99% of our then issued and outstanding Class A Ordinary Shares, but that limitation does not prevent a holder from converting, selling and converting again.
We also issued 23,168 pre-delivery shares to the holders to hold pending conversion of the notes or exercise of the warrants. If at any time the number of pre-delivery shares held by a holder multiplied by the VWAP of our Class A Ordinary Shares falls below 33.3% of the principal amount of that holder’s note, we must issue additional pre-delivery shares to that holder to restore that threshold. A decline in our share price therefore automatically triggers the issuance of additional shares.
The accompanying warrants are exercisable immediately at an initial exercise price of US$148.08 per Class A Ordinary Share, expire five years from the initial date of exercise and contain a Share Combination Event adjustment under which, upon a reverse share split, share combination, recapitalization or similar transaction, the exercise price is reduced to the lowest VWAP during the five consecutive trading days immediately preceding and the five consecutive trading days immediately following the event date. The share consolidations we have effected and that our shareholders have approved are Share Combination Events. As a result of these adjustments, as of October 16, 2026, the exercise price of the March 2026 warrants was US$2.0318 per Class A Ordinary Share and the warrants were exercisable for up to 2,462,209 Class A Ordinary Shares, or approximately 49.2% of our Class A Ordinary Shares then outstanding.
Our shareholders have also approved an equity incentive plan, under which 33,369 Class A Ordinary Shares on a post-split basis were reserved (the “2026 Equity Incentive Plan”). That number was determined before the share consolidations described in this report and is subject to adjustment under the terms of that plan.
The issuance of Class A Ordinary Shares on conversion of the notes, on exercise of the warrants, as additional pre-delivery shares or under the 2026 Equity Incentive Plan would substantially dilute the ownership interests of our existing shareholders and could cause the market price of our Class A Ordinary Shares to decline significantly.
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We have effected two share consolidations in 2026 and our shareholders have approved a further consolidation, and a reverse share split does not guarantee a sustained higher share price.
At an extraordinary general meeting held on January 22, 2026, our shareholders authorized our Board to effect a share consolidation at a ratio ranging from 1-for-5 to 1-for-100. On February 10, 2026, our Board determined the ratio to be 1-for-100, and our Class A Ordinary Shares began trading on Nasdaq on a post-consolidation basis on March 12, 2026. At an extraordinary general meeting held on May 8, 2026, our shareholders approved a share capital reduction and reorganization and authorized a further consolidation at a ratio ranging from 2-for-1 to 4,000-for-1. On July 1, 2026, our Board approved an 8-for-1 consolidation, which became effective on July 27, 2026. At an extraordinary general meeting held on September 10, 2026, our shareholders ratified the July 2026 consolidation and approved, among other things, a further 8-for-1 consolidation, subject to specified conditions and Nasdaq approval requirements.
The Company has undertaken multiple reverse share splits and share consolidations in recent years, including a 40-for-1 reverse share split completed on September 26, 2022, a 100-for-1 reverse share split completed on November 15, 2024, a 25-for-1 reverse share split completed on August 22, 2025, a further 100-for-1 reverse share split completed on February 10, 2026 and an 8-for-1 share consolidation completed on July 27, 2026. A reverse share split or share consolidation reduces the number of issued and outstanding shares but does not increase the aggregate value of our equity. There can be no assurance that the market price of our Class A Ordinary Shares after any consolidation will remain at a level proportionate to the price before the consolidation, or that any increase in price will be sustained. Following each of our previous consolidations, the market price of our Class A Ordinary Shares subsequently declined, and we have found it necessary to undertake additional share consolidations. The market price of our Class A Ordinary Shares after any consolidation will depend on many factors, including our results of operations, market conditions, the price of Bitcoin and the extent of dilution from our outstanding convertible notes and warrants.
In addition, a consolidation reduces the number of holders of round lots and may reduce the liquidity of, and the number of market makers and analysts covering, our Class A Ordinary Shares. Each consolidation is a Share Combination Event under our outstanding warrants and triggers the adjustment described under “Our outstanding Senior 10% Original Issue Discount Convertible Promissory Notes are senior and secured, and their conversion features may result in substantial dilution and downward pressure on the market price of our Class A Ordinary Shares” above. Finally, as described under “If we fail to comply with the continued listing requirements of Nasdaq, we would face possible delisting”, under Nasdaq Listing Rule 5810(c)(3)(A)(iv) a company that has effected a reverse stock split over the prior one-year period is not eligible for any compliance period in respect of the minimum bid price requirement, so our repeated consolidations mean that a future bid price deficiency could result in an immediate Staff Delisting Determination rather than a 180-day cure period.
Fractional shares arising on our consolidations have been rounded up to the next whole number of shares, and at the May 8, 2026 meeting our shareholders authorized us to satisfy that rounding up by capitalizing share premium. Rounding up increases the number of shares outstanding relative to the stated consolidation ratio.
We received the consideration for our recent private placements in Bitcoin-backed tokens rather than cash, and those holdings are illiquid, are carried at cost less impairment and have already been written down.
On October 17, 2025 we issued units for aggregate gross consideration of US$230,837,060, which was payable in 2,000 SolvBTC, a 1:1 wrapped Bitcoin-backed token issued by Solv Protocol. On July 29, 2026 we entered into a securities purchase agreement to issue and sell 3,412,970 units at a purchase price of US$2.93 per unit for non-cash consideration with an agreed value of US$10,000,002.10, payable in SolvBTC. Each unit consisted of one Class A Ordinary Share with a par value of US$0.02 and one warrant to purchase one Class A Ordinary Share at an exercise price of US$4.40, exercisable immediately and expiring on the fifth anniversary of issuance. That private placement closed on August 17, 2026, and the purchase price was paid in approximately 156.6533 SolvBTC based on an agreed value of US$63,835.08 per SolvBTC. We received no cash in either transaction.
Because we were paid in SolvBTC rather than cash, we bear the full risk of a decline in the value of Bitcoin and of SolvBTC from the date of each closing, and we are dependent on our ability to sell or otherwise monetize SolvBTC in order to fund our operations. SolvBTC is not legal tender, is not a listed security and may not be readily saleable in the quantities we hold without depressing its price. Its value depends not only on the price of Bitcoin but also on the continued operation, solvency and security of Solv Protocol and on the continued willingness of market participants to treat SolvBTC as equivalent to Bitcoin. If the peg between SolvBTC and Bitcoin were not maintained, or if the protocol suffered a technical failure, exploit or governance failure, we could lose all or part of the value of our SolvBTC holdings.
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The agreed value of US$63,835.08 per SolvBTC used in the August 2026 private placement was negotiated between the parties and does not necessarily reflect the price at which we could sell SolvBTC. We have already recorded a significant write-down. Management concluded that SolvBTC does not meet all of the scope criteria of ASC 350-60 and therefore accounts for SolvBTC as an indefinite-lived intangible asset under ASC 350-30, measured at cost less impairment. During the fiscal year ended June 30, 2026, we recognized impairment charges on cryptocurrency of US$114,021,240, attributable to the decrease in the fair value of the SolvBTC we held. Because SolvBTC is carried at cost less impairment rather than at fair value, impairments are recognized when the value declines but subsequent recoveries in value are not recognized in our results of operations. Bitcoin, by contrast, is accounted for under ASC 350-60 and measured at fair value with changes recognized in net loss. Bitcoin generated through our cryptocurrency mining operations was recognized as revenue during the fiscal year ended June 30, 2026. We held no Bitcoin as of June 30, 2026. We also did not hold any SolvBTC as of that date. The 2,000 SolvBTC we had transferred to investors under a crypto asset swap and return agreement were recorded as other receivables of approximately US$116.8 million and were returned to us in July 2026.
Our SolvBTC is stored in a self-custodied wallet. We do not hold it with a third-party custodian, and we have no insurance against theft or loss. If the private keys controlling that wallet are lost, stolen or compromised, the loss would in all likelihood be permanent and irreversible.
Distress at other companies with concentrated digital asset treasury holdings could adversely affect the price of Bitcoin and SolvBTC and, in turn, our financial condition.
Certain publicly traded companies have adopted treasury strategies involving significant holdings of Bitcoin or Bitcoin-linked assets. Financial distress, liquidity constraints or other adverse developments affecting one or more significant holders of Bitcoin or Bitcoin-linked assets could result in substantial sales of such assets. For example, a significant holder may be required or elect to sell its digital asset holdings as a result of liquidity needs, financing obligations, adverse market conditions or other financial pressures. Substantial sales of Bitcoin or Bitcoin-linked assets, particularly during periods of market stress or reduced liquidity, could place downward pressure on the market price of Bitcoin. Because the value of SolvBTC is linked to the value of Bitcoin, any resulting decline in the price of Bitcoin could adversely affect the value of our SolvBTC holdings and, consequently, our financial condition. Similar actions by multiple significant holders could further exacerbate adverse market conditions and price volatility. Our use of SolvBTC rather than Bitcoin directly would not insulate us from declines in the value of Bitcoin resulting from such market developments.
Our SolvBTC treasury strategy could subject us to shareholder scrutiny or activism regarding our capital allocation and strategic direction.
Our strategy of maintaining a significant concentration of our assets in SolvBTC may be subject to scrutiny from shareholders and other market participants, particularly if the value of our SolvBTC holdings or the market price of our Class A Ordinary Shares declines materially. Shareholders may disagree with our Board of Directors’ decision to adopt or continue this strategy or may advocate for changes to our treasury strategy, capital allocation policies, Board composition or strategic direction. Responding to shareholder activism or related governance matters could require significant attention from our Board and management, result in additional costs and create uncertainty regarding our strategic direction, any of which could adversely affect our business and the market price of our Class A Ordinary Shares.
We follow Cayman Islands home country practice in lieu of a number of Nasdaq corporate governance requirements, including the requirement to solicit proxies, and we may in the future rely on further exemptions.
We are a foreign private issuer within the meaning of the rules under the Exchange Act. As a foreign private issuer we are permitted to follow the corporate governance practices of our home country, the Cayman Islands, in lieu of certain Nasdaq corporate governance requirements. On June 15, 2026 we furnished a report clarifying the corporate governance practices we follow as a foreign private issuer in lieu of certain Nasdaq corporate governance requirements, together with a confirmation letter dated June 12, 2026 from Harney Westwood and Riegels, our Cayman Islands counsel, as required by Nasdaq.
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While we currently rely on certain Cayman Islands home-country practice exemptions available to foreign private issuers under Nasdaq rules, we presently comply with Nasdaq requirements relating to (i) a majority independent board of directors, (ii) an independent compensation committee, (iii) an independent nominating committee and (iv) a code of conduct applicable to directors, officers and employees. However, we reserve the right to rely on the available home-country practice exemptions with respect to these requirements in the future. The exemptions on which we rely include exemptions from requirements relating to proxy solicitation and proxy statement delivery, shareholder approval for certain issuances exceeding 20% of our issued and outstanding ordinary shares or resulting in a change of control, and shareholder approval for the adoption or material amendment of equity compensation arrangements. As a result, our shareholders do not receive proxy statements complying with Schedule 14A under the Exchange Act in connection with our general meetings, and the information provided to shareholders in connection with those meetings, and the manner in which votes are solicited and tabulated, may be materially less extensive than what a shareholder of a U.S. domestic issuer would receive. As a result, transactions that could have required shareholder approval had we been a U.S. domestic issuer may be completed without obtaining prior shareholder approval.
In addition, we are able to issue Class A Ordinary Shares representing more than 20% of our then issued outstanding shares, including at a price below the applicable Nasdaq minimum price, and to establish or materially amend equity compensation arrangements, in each case without seeking shareholder approval. We have raised a substantial portion of our capital through issuances of that kind, including a private placement in October 2025, a convertible note financing transaction in March 2026 and another private placement in August 2026, and we may continue to do so. Our reliance on these exemptions substantially reduces the ability of our shareholders to influence or prevent dilutive issuances.
We are also exempt from the sections of the Exchange Act that impose liability on insiders who profit from short-swing trades, and from Regulation FD, and we are not required to file quarterly reports on Form 10-Q or current reports on Form 8-K. Accordingly, you may not have the same information about our management, our insiders’ transactions in our securities or developments in our business, and you may not receive it as promptly, as you would if you were investing in a U.S. domestic issuer.
We could lose our foreign private issuer status if a majority of our outstanding voting securities were held by U.S. residents and any of certain other conditions were met. If we lost that status we would be required to comply with the reporting and governance requirements applicable to U.S. domestic issuers, which would result in significant additional legal, accounting and other expenses.
The business, financial condition and results of operations of our Hong Kong subsidiary and/or the value of our securities or our ability to offer or continue to offer securities to investors may be materially and adversely affected to the extent the laws, rules and regulations of the PRC become applicable to us.
We do not currently have any subsidiaries or business operations in mainland China, generate any revenue from mainland China, provide our products or services in mainland China, or solicit any customer, or collect, host or manage any customer’s personal data, in mainland China, and none of our assets are, or are expected to be, located in mainland China. Accordingly, we believe that the laws, rules and regulations of the PRC do not currently have any material impact on our business, financial condition and results of operations or the initial or continued listing of our securities, notwithstanding the fact that we have a subsidiary in Hong Kong.
Pursuant to the Basic Law, (i) national laws of the PRC, except for those listed in Annex III of the Basic Law, shall not be applied in Hong Kong, and (ii) the national laws listed in Annex III of the Basic Law shall be limited to those relating to defense, foreign affairs and other matters that are deemed to be outside the autonomy of Hong Kong under the Basic Law. As a result, national laws of the PRC not listed in Annex III of the Basic Law, such as certain laws relating to cybersecurity, data protection, personal information protection, and certain enterprise tax laws, may not apply in Hong Kong.
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To the extent any PRC laws, rules and regulations, including but not limited to the laws mentioned in the preceding paragraph, were to become applicable to our Hong Kong subsidiary, we may be required to make substantial changes to our business operations and how we seek financing, may have to incur substantial costs in order to comply with such laws, rules and regulations and may be subject to fines, penalties and sanctions if we are unable to comply with such laws, rules and regulations in a timely manner, or at all. The application of such PRC laws, rules and regulations may have a material adverse impact on our business, financial conditions and results of operations and our ability to offer or continue to offer securities to investors, any of which may cause the value of our securities to significantly decline or become worthless. In addition, we will face risks and uncertainties associated with the rapidly evolving PRC legal system. For example, PRC laws, regulations, policies and their interpretations may change quickly with little or no advance notice. In particular, because many laws, regulations and policies are relatively new, and because of the limited number of published decisions and the non-precedential nature of these decisions, the interpretations of these laws, regulations and policies may contain inconsistencies, and their enactment timetable, implementation and enforcement involve uncertainties.
Risks Relating to the Regulatory Environment in the PRC
Our operations and business activities, including cryptocurrency mining and digital asset holding, may be adversely affected by the stringent and evolving regulatory framework and policies in the PRC.
While our current operations are conducted primarily through our Hong Kong subsidiary, Model Queen Limited, we are subject to potential risks and impacts arising from the laws, regulations, and policies of the PRC due to our nexus with mainland China. The PRC government maintains an extremely strict regulatory stance against virtual currency and cryptocurrency-related activities. Pursuant to the Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies (Yin Fa [2026] No. 42) (referred to as Circular 42), jointly issued by the People’s Bank of China and seven other authorities in February 2026, the Chinese government continues to clarify that virtual currency-related business activities constitute illegal financial activities within the territory of China and shall be strictly prohibited in all cases, while setting forth regulations governing new types of activities including the tokenization of real-world assets.
Although the Circular 42 and other related PRC virtual currency regulations are formally promulgated and enforced within mainland China, there is significant uncertainty as to whether, or how, PRC regulatory authorities might interpret or extend the application of these policies to offshore entities with substantial ties to, or management/operations involving, mainland China. If PRC authorities determine that our business model, funding sources, operational support, or management involvement implicates PRC laws or policies regarding virtual currencies, we could be subject to severe regulatory investigations, administrative penalties, or legal liabilities within the PRC jurisdiction.
In addition, our business operations and financial condition could become subject to PRC laws and regulations governing foreign exchange control, cross-border capital outflows, and data security. If PRC authorities tighten supervision over cross-border fund transfers, foreign exchange repatriation, or the handling of data related to digital assets, our ability to transfer funds, pay operational expenses, or distribute returns to our shareholders could be materially and adversely restricted, which may severely impair our business viability and financial results.
Risks Related to the Ownership of Our Ordinary Shares
If we fail to comply with the continued listing requirements of Nasdaq, we would face possible delisting, which would result in a limited public market for our shares and make obtaining future debt or equity financing more difficult for us.
Our Class A Ordinary Shares are listed on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of US$1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.
We have repeatedly failed to satisfy the minimum bid price requirement. On November 14, 2023, the Nasdaq Listing Qualifications Staff notified us that the minimum bid price per share for our ordinary shares had been below US$1.00 for a period of 30 consecutive business days and that we therefore no longer met the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2). On September 26, 2024, Nasdaq determined that for the last 10 consecutive business days, from September 12, 2024 to September 25, 2024, the closing bid price of our ordinary shares had been at US$1.00 per share or greater, we had regained compliance with Listing Rule 5550(a)(2) and Nasdaq considered the matter closed. On November 14, 2024, we received a further letter from Nasdaq notifying us that the minimum closing bid price per share for our ordinary shares had been below US$1.00 for a period of 30 consecutive business days and that we did not meet the minimum bid price requirement. On December 2, 2024, Nasdaq determined that the closing bid price of our ordinary shares had been US$1.00 per share or higher for ten consecutive business days, putting us back into compliance with Listing Rule 5550(a)(2).
We have since regained the minimum bid price only by reducing the number of our outstanding shares. We effected a 100-for-1 reverse share split effective November 15, 2024, a 25-for-1 reverse share split effective August 22, 2025, and another 100-for-1 reverse share split that became effective under Cayman Islands law on February 10, 2026 and effective for trading on Nasdaq on March 12, 2026. In addition, on July 27, 2026, we completed an 8-for-1 share consolidation pursuant to authority previously granted by our shareholders (the “July 2026 8-for-1 share consolidation”). At an extraordinary general meeting held on September 10, 2026, our shareholders ratified the July 2026 8-for-1 share consolidation and approved a further 8-for-1 share consolidation, subject to the satisfaction of specified conditions.
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Our repeated use of reverse share splits and share consolidations may increase the risk of delisting if we fail to satisfy Nasdaq’s minimum bid price requirement in the future. Under Nasdaq Listing Rule 5810(c)(3)(A)(iv), a company that has effected a reverse stock split over the prior one-year period is not eligible for any compliance period in respect of the minimum bid price requirement. Instead, the Nasdaq Listing Qualifications Staff will issue a Staff Delisting Determination, and our Class A Ordinary Shares would be subject to delisting unless we timely requested a hearing before a Nasdaq Hearings Panel and that panel granted relief. In addition, if a company’s security fails to meet the bid price requirement and the company has effected one or more reverse stock splits within the prior two-year period with a cumulative ratio of 250 shares or more to one, then the company is not eligible for any compliance period and Nasdaq will issue a Delisting Determination with respect to that security. We effected share consolidations in March 2026 and July 2026 and have approved a further share consolidation that may be implemented in the future. As a result, if the closing bid price of our Class A Ordinary Shares falls below US$1.00 for 30 consecutive business days during the applicable period following a consolidation, we would not be entitled to the customary 180-day compliance period that would otherwise be available to regain compliance. There can be no assurance that any appeal would be successful, that a Nasdaq Hearings Panel would grant us additional time, or that we would be able to regain compliance with the minimum bid price requirement.
If our securities lose their status on The Nasdaq Capital Market, our securities would likely trade in the over-the-counter market. If our securities were to trade on the over-the-counter market, selling our securities could be more difficult because smaller quantities of securities would likely be bought and sold, transactions could be delayed, and security analysts’ coverage of us may be reduced. In addition, in the event our securities are delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in our securities, further limiting the liquidity of our securities. These factors could result in lower prices and larger spreads in the bid and ask prices for our securities. Such delisting from The Nasdaq Capital Market and continued or further declines in our share price could also greatly impair our reputation and ability to raise additional necessary capital through equity or debt financing, and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions.
The market price of our Class A Ordinary Shares may not correspond to the value of our digital asset holdings, including our SolvBTC holdings.
The market price of our Class A Ordinary Shares may be influenced by a variety of factors that are unrelated to the value of our SolvBTC holdings, including market sentiment, trading dynamics, financing activities, investor perceptions of our business strategy, liquidity conditions and broader market conditions. As a result, our Class A Ordinary Shares may trade at a premium or discount to the value of our SolvBTC holdings. There can be no assurance that investors will value our securities in a manner that reflects the value of our SolvBTC holdings, and the market price of our Class A Ordinary Shares may not correlate with changes in the market price of Bitcoin.
We may issue additional equity securities, convertible securities, warrants or other equity-linked instruments in the future, which could result in substantial dilution to shareholders.
We have historically relied heavily on equity financings, convertible securities, warrants and other equity-linked instruments to fund our operations, strategic initiatives, cryptocurrency mining activities and digital asset treasury strategy. For example, in September 2024 we entered into a financing program involving senior secured convertible notes and warrants that was subsequently amended and expanded through multiple note exchanges and additional closings, including approximately $7.68 million of convertible notes issued in December 2024 and approximately $8.7 million of convertible notes and accompanying Series B warrants issued in January 2025. During the six months ended December 31, 2025, we completed offerings in August and October 2025 that generated approximately US$5.9 million and US$13.8 million in net proceeds, respectively, issued units in a private placement transaction with an aggregate value of approximately US$230.8 million payable in 2,000 SolvBTC, converted approximately US$28.9 million of convertible indebtedness into ordinary shares and issued a substantial number of warrants and pre-funded warrants. In March 2026, we entered into a financing arrangement providing for up to US$10.0 million of senior secured convertible notes and accompanying warrants, of which the first tranche generated approximately US$5.4 million in net proceeds. In July and August 2026, we completed an additional private placement for non-cash consideration with an agreed value of approximately US$10.0 million, payable in SolvBTC, which included the issuance of approximately 3.4 million Class A Ordinary Shares and warrants to purchase approximately 3.4 million additional Class A Ordinary Shares. In addition, warrants to purchase 169,738 Class A Ordinary Shares, other than the warrants issued in March 2026, remained outstanding as of June 30, 2026 and may be exercised in the future.
Several of these financing transactions included convertible securities, warrants, pre-funded warrants and other anti-dilution features that may increase the number of Class A Ordinary Shares issuable in the future. Future financing transactions may also be structured as issuances of ordinary shares, convertible securities, warrants, pre-funded warrants or other equity-linked instruments. Such securities may contain anti-dilution protections, variable conversion prices, warrant repricing provisions or other terms that could increase the number of shares issuable upon conversion or exercise. The exercise, conversion or settlement of these securities could substantially dilute existing shareholders and adversely affect the market price of our Class A Ordinary Shares. In addition, future financing transactions may be consummated at prices below the then-current market price of our Class A Ordinary Shares and may involve securities with rights, preferences or privileges senior to those of existing shareholders. As a result, existing shareholders may experience substantial dilution, and their ownership interests and voting power may be significantly reduced.
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The dual-class share structure of our ordinary shares has the effect of concentrating voting power with holders of our Class B Ordinary Shares, which may limit the ability of holders of Class A Ordinary Shares to influence corporate matters.
Under our Tenth Amended and Restated Memorandum and Articles of Association, adopted by special resolution passed at extraordinary general meeting of shareholders of the Company held on May 8, 2026, with effect from July 27, 2026, we are authorized to issue an aggregate of 1,600,000,000 ordinary shares, consisting of (i) 1,400,000,000 Class A Ordinary Shares, par value US$0.02 per share, and (ii) 200,000,000 Class B Ordinary Shares, par value US$0.02 per share. As of the date of this annual report, there were 5,002,067 Class A Ordinary Shares and 1 Class B Ordinary Share issued and outstanding. The Company may issue additional Class B Ordinary Shares in the future in accordance with its Amended and Restated Memorandum and Articles of Association.
Each Class B Ordinary Share confers upon its holder twenty (20) votes at a meeting of shareholders or on any resolution of shareholders, while each Class A Ordinary Share confers upon its holder one (1) vote. As a result of this twenty-to-one voting ratio, holders of Class B Ordinary Shares may exercise voting power that is significantly disproportionate to their economic ownership interest in the Company and may be able to exert substantial influence over matters submitted to shareholders for approval. As of the date of this annual report, one Class B Ordinary Share was issued and outstanding. It is held by Vast Ocean Inc. and represents less than 0.01% of the total voting power of our outstanding shares.
This concentration of voting rights may delay, discourage or prevent a change in control of the Company, deprive holders of Class A Ordinary Shares of an opportunity to receive a premium for their shares in connection with a sale of the Company, and adversely affect the market price of our Class A Ordinary Shares.
The price of our ordinary shares historically has been volatile, which may affect the price at which you could sell the ordinary shares.
Our Class A ordinary shares are listed on the Nasdaq Capital Market under the symbol “ZNB.” The market price of our Class A Ordinary Shares has historically been highly volatile and may continue to be subject to significant fluctuations in response to market conditions and company-specific developments, which may affect the price at which investors are able to sell their securities. The market price of our Class A Ordinary Shares is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including the following:
| ● | variations in our revenues, earnings and cash flows; | |
| ● | announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; | |
| ● | announcements of new offerings, solutions and expansions by us or our competitors; | |
| ● | changes in financial estimates by securities analysts; | |
| ● | detrimental adverse publicity about us, our services or our industry; | |
| ● | announcements of new regulations, rules or policies relevant for our business; | |
| ● | changes in the market price of Bitcoin and other digital assets; | |
| ● | additions or departures of key personnel; | |
| ● | release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and | |
| ● | potential litigation or regulatory investigations. |
Any of these factors may result in large and sudden changes in the volume and price at which our ordinary shares will trade.
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In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were to be involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
We do not intend to pay dividends on our ordinary shares for the foreseeable future, but if we intend to do so our holding company structure may limit the payment of dividends to our shareholders.
While we have no current intention of paying dividends, should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries and other holdings and investments. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. If future dividends are paid in local currencies, fluctuations in the exchange rate for the conversion of local currencies into U.S. dollars may reduce the amount received by U.S. shareholders upon conversion of the dividend payment into U.S. dollars. Our outstanding Senior 10% Original Issue Discount Convertible Promissory Notes are secured by each of our subsidiaries and rank senior to all of our other debts and liabilities, which further restricts the funds available for distribution to us. See “Risk Factors - Risks Related to Our Business and Industry - Our outstanding Senior 10% Original Issue Discount Convertible Promissory Notes are senior and secured, and their conversion features may result in substantial dilution and downward pressure on the market price of our Class A Ordinary Shares”.
We may be subject to penny stock regulations and restrictions, and you may have difficulty selling our ordinary shares.
The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. If our ordinary shares become a “penny stock”, we may become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
There can be no assurance that our ordinary shares will qualify for exemption from the Penny Stock Rule. In any event, even if our ordinary shares were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding the Class A Ordinary Shares, the market price for the Class A Ordinary Shares and trading volume could decline.
The trading market for our Class A Ordinary Shares will be influenced by research or reports that industry or securities analysts publish about our business. If industry or securities analysts decide to cover us and in the future downgrade our Class A Ordinary Shares, the market price for our Class A Ordinary Shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our Class A Ordinary Shares to decline.
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Techniques employed by short sellers may drive down the market price of our Class A Ordinary Shares.
Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.
If we were to become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact our business operations, and any investment in our ordinary shares could be greatly reduced or even rendered worthless.
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 U.S. domestic public companies.
Because we qualify as 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:
| ● | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; | |
| ● | the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; | |
| ● | the sections of the Exchange Act imposing liability for insiders who profit from trades made in a short period of time; and | |
| ● | the selective disclosure rules by issuers of material nonpublic information under Regulation FD. |
Prior to March 18, 2026, as a foreign private issuer, we were exempt from the provisions of Section 16(a) of the Exchange Act, requiring our directors, executive officers and principal shareholders to file public reports of their beneficial ownership of, and transactions in, our equity securities, as well as from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act. However, on December 18, 2025, the Holding Foreign Insiders Accountable Act was enacted as part of the National Defense Authorization Act for Fiscal Year 2026, mandating that directors and officers of foreign private issuers file reports under Section 16(a) of the Exchange Act (Forms 3, 4 and 5) to disclose their beneficial ownership interests and changes therein, effective March 18, 2026. Accordingly, our directors and executive officers are now subject to the reporting requirements of Section 16(a). However, our officers, directors and principal shareholders remain exempt from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act and related rules with respect to their purchases and sales of our securities.
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 that would be made available to you were you investing in a U.S. domestic issuer.
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Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.
Nasdaq Listing Rules require listed companies to have, among other things, a majority of their board members be independent. As a foreign private issuer, however, we are permitted to follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. In addition, the Nasdaq listing rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. The Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances. We follow home country practice in lieu of the requirements under the Nasdaq listing rules with respect to certain of these corporate governance standards, which may afford less protection to investors. See “Risk Factors - Risks Related to Our Business and Industry - We follow Cayman Islands home country practice in lieu of a number of Nasdaq corporate governance requirements, including the requirement to solicit proxies, and we may in the future rely on further exemptions”.
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, or the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of Nasdaq and other applicable securities laws and regulations. Compliance with these requirements increases our legal, accounting, compliance and administrative costs, makes certain activities more time-consuming and costly, and places significant demands on our management, personnel, systems and other resources. The Exchange Act requires, among other things, that we file periodic reports and make ongoing disclosures regarding our business, financial condition and results of operations.
As a result of disclosures made in this annual report and other filings required of public companies, our business, financial condition and strategic initiatives become more visible to competitors, investors, regulators and other third parties. Such visibility may result in threatened or actual litigation, regulatory inquiries or other proceedings. Even if such matters are resolved in our favor, the associated costs and diversion of management attention could adversely affect our business, reputation, financial condition and results of operations.
Being a public company also increases the cost of maintaining director and officer liability insurance and may require us to accept reduced coverage or incur substantially higher premiums. These factors may make it more difficult for us to attract and retain qualified directors, executive officers and other key personnel.
In addition, as a publicly listed company, we are required to disclose information that would otherwise remain confidential, including certain material contracts, financing transactions and financial information. Competitors, counterparties and other market participants may obtain access to this information and use it to their advantage. To the extent compliance with public company obligations increases our costs or reduces our competitive flexibility, our business, financial condition and results of operations could be adversely affected.
Economic substance legislation of the Cayman Islands may adversely impact us or our operations.
Pursuant to the International Tax Cooperation (Economic Substance) Act (Revised) of the Cayman Islands, or the ES Act, that came into force on July 1, 2019, a “relevant entity” conducting a “relevant activity” is required to satisfy the economic substance test set out in the ES Act. A “relevant entity” includes an exempted company incorporated in the Cayman Islands as is our Company. There are nine designated “relevant activities” under the ES Act, and for so long as our Company is carrying on activities which falls within any of the designated relevant activities, it shall comply with all applicable requirements under the ES Act. If the only business activity that the Company carries on is to hold equity participation in other entities and only earns dividends and capital gains, then based on the current interpretation of the ES Act, our Company is a “pure equity holding company” and will therefore only be subject to the reduced substance requirements, which require us to (i) comply with all applicable requirements under the Companies Act and (ii) have adequate human resources and adequate premises in the Cayman Islands for holding and managing equity participations in other entities. However, there can be no assurance that we will not be subject to more requirements under the ES Act. Uncertainties over the interpretation and implementation of the ES Act may have an adverse impact on our business and operations.
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Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers.
Our corporate affairs are governed by our memorandum and articles of association, as amended and restated from time to time, the Companies Act of the Cayman Islands (Revised) and the common law of the Cayman Islands. We are also subject to the federal securities laws of the United States. The rights of our shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to the Company under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
We have been advised by our Cayman Islands legal counsel that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the federal securities laws of the United States or any state in the United States or (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the federal securities laws of the United States or any state in the United States, so far as the liabilities imposed by those provisions are penal in nature.
Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the Grand Court of the Cayman Islands will at common law enforce final and conclusive in personam judgments of state and/or federal courts of the United States of America (the “Foreign Court”) of a debt or definite sum of money against the Company (other than a sum of money payable in respect of taxes or other charges of a like nature, a fine or other penalty (which may include a multiple damages judgment in an anti-trust action) or where enforcement would be contrary to public policy). The Grand Court of the Cayman Islands will also at common law enforce final and conclusive in personam judgments of the Foreign Court that are non-monetary against the Company, for example, declaratory judgments ruling upon the true legal owner of shares in a Cayman Islands company. The Grand Court of the Cayman Islands will exercise its discretion in the enforcement of non-money judgments by having regard to the circumstances, such as considering whether the principles of comity apply. To be treated as final and conclusive, any relevant judgment must be regarded as res judicata by the Foreign Court. A debt claim on a foreign judgment must be brought within six years of the date of the judgment, and arrears of interest on a judgment debt cannot be recovered after six years from the date on which the interest was due. The courts of the Cayman Islands are unlikely to enforce a judgment obtained from the Foreign Court under civil liability provisions of U.S. federal securities law if such a judgment is found by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Such a determination has not yet been made by the Grand Court of the Cayman Islands. A court of the Cayman Islands may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. A judgment entered in default of appearance by a defendant who has had notice of the Foreign Court’s intention to proceed may be final and conclusive notwithstanding that the Foreign Court has power to set aside its own judgment and despite the fact that it may be subject to an appeal the time-limit for which has not yet expired. The Grand Court of the Cayman Islands may safeguard the defendant’s rights by granting a stay of execution pending any such appeal and may also grant interim injunctive relief as appropriate for the purpose of enforcement.
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As a result of all of the above, our shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as shareholders of a corporation incorporated in the United States.
It may be difficult to enforce a U.S. judgment against the Company or our directors and officers outside the United States, or to assert U.S. securities law claims outside of the United States.
We are a Cayman Islands exempted company incorporated with limited liability and not all of our assets are located in the United States. In addition, some of our directors and officers reside outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in the Cayman Islands courts 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, some of whom are not residents of the United States and whose assets may be located outside of the United States. It may be difficult or impossible for you to bring an action against us in the Cayman Islands if you believe your rights under the U.S. securities laws have been infringed. In addition, there is uncertainty as to whether the courts of the Cayman Islands 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 and it is uncertain whether such Cayman Islands courts would hear original actions brought in the Cayman Islands against the Company or such persons predicated upon the securities laws of the United States or any state.
You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in mainland China/Hong Kong against us or our management based on mainland China/Hong Kong laws.
As of the date of this annual report, two of our independent directors, Yan Zhang and Honglei Jiang, are located in mainland China, and a substantial portion of their assets may be located in mainland China.
It may be difficult for you to effect service of process upon us or the individuals who are residing in mainland China or Hong Kong. It may also be difficult for you to bring actions or enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and those officers and directors of ours who do not reside in the United States nor have substantial assets located in the United States. In addition, there is uncertainty as to whether the courts of mainland China 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.
The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. The courts of mainland China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the courts of mainland China will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court of mainland China would enforce a judgment rendered by a court in the United States.
You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against us or our management named in this annual report, as judgments entered in the United States can be enforced in Hong Kong only at common law. If you want to enforce a judgment of the United States in Hong Kong, it must be a final judgment conclusive upon the merits of the claim, for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges, the proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the judgment is not contrary to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a “competent” court as determined by the private international law rules applied by the Hong Kong courts.
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ITEM 4. INFORMATION ON THE COMPANY
4.A. History and Development of the Company
Overview
Our operations now consist principally of cryptocurrency mining conducted through our wholly owned subsidiary Model Queen, together with our digital asset holdings. We do not conduct, and have not commenced, a Bitcoin liquidity aggregation business. We primarily provide services through our wholly owned subsidiaries.
Our principal executive office is located at 14 Wall Street, 20th Floor, New York, NY 10005. Our telephone number at this address is (929) 317-2699. Our registered office in the Cayman Islands is located at the offices of Ascentium (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands. Our agent for service of process in the United States is our subsidiary CACM Group NY, Inc., located at 14 Wall Street, 20th Floor, New York, NY 10005. We maintain a website at https://ir.thezetanetwork.com/ that contains information about our Company. No information contained on, or accessible through, our website is part of this annual report, and you should not consider it as part of this annual report.
Corporate History and Development
Unless otherwise indicated, share numbers, share prices, exercise prices, conversion prices and other per-share information contained in this section are presented on a historical basis as of the time of the relevant transaction and have not been retroactively adjusted to reflect subsequent reverse share splits, share consolidations or other changes to the Company’s capital structure. Share numbers and per-share amounts relating to the August 2025 offering, the September 2025 payoff letter, the October 2025 offerings and the conversions of the First Tranche Notes during the fiscal year ended June 30, 2026 are presented as retroactively adjusted for all share consolidations through July 27, 2026.
Zeta Network Group (Nasdaq: “ZNB”) (formerly known as Color Star Technology Co., Ltd. (Nasdaq “ADD”)) was founded as an unincorporated business on September 1, 2005, under the name TJS Wood Flooring, Inc., and became a C-corporation in the State of Delaware on February 15, 2007. On April 29, 2008, we changed our name to China Advanced Construction Materials Group, Inc. On December 27, 2018, we consummated a redomicile merger pursuant to which we merged with and into China Advanced Construction Materials Group, Inc., a newly formed Cayman Islands exempted company and the surviving entity in the merger, pursuant to the terms and conditions of an Agreement and Plan of Merger adopted in July 2018. As a result of the merger, we are now governed by the laws of the Cayman Islands. On June 29, 2025, we changed our name from Color Star Technology Co., Ltd. to Zeta Network Group.
By special resolution of shareholders dated 28 June 2019, our name was changed from China Advanced Construction Materials Group, Inc. to Huitao Technology Co., Ltd. On July 12, 2019, our Amended and Restated Memorandum and Articles of Association (“2019 Amended and Restated Memorandum and Articles”) was filed with the Registrar of Companies in the Cayman Islands and a Certificate of Incorporation on Change of Name for Huitao Technology Co. Ltd. was issued.
By special resolution of shareholders dated April 27, 2020, our name was changed from Huitao Technology Co., Ltd. to Color Star Technology Co., Ltd. On May 1, 2020, our Amended and Restated Memorandum and Articles of Association (“2020 Amended and Restated Memorandum and Articles”) was filed with the Registrar of Companies in the Cayman Islands and a Certificate of Incorporation on Change of Name to “Color Star Technology Co., Ltd.” was issued.
On September 3, 2022, Color Metaverse Pte. Ltd., our Singapore subsidiary, entered into a phone purchase agreement with Ziaul Haq for a quantity of 10,000 units of smart phones which shall be paid by the following methods: (i) $2,800,000 by cash and (ii) $2,200,000 to be paid with ordinary shares issued by us. The Share Consideration would be paid to Ziaul Haq at the trading price of the trading day immediately prior to the signing date. As of the date of this annual report, the agreement is no longer outstanding, and we have no obligation to issue any ordinary shares thereunder.
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On September 26, 2022, we completed a 40-for-1 reverse share split of our ordinary shares, which was approved by our shareholders on April 11, 2022. As a result of the reverse share split, the number of ordinary shares outstanding was reduced from approximately 261,757,531 to approximately 6,543,938 ordinary shares, subject to rounding up of all fractional shares to the nearest whole share in lieu of such fractional shares. No preference shares were issued and outstanding then and there.
Effective November 1, 2022, we changed the ticker symbol of our ordinary shares traded on the Nasdaq Capital Market from “CSCW” to “ADD” representing our hope that our business will keep growing.
On January 11, 2023, the Company, Color Sky Entertainment Limited, a Hong Kong corporation and the Company’s wholly owned subsidiary, and Tian Jie (the “Purchaser”), entered into a certain share purchase agreement (the “Disposition SPA”). Pursuant to the Disposition SPA, the Purchaser agreed to purchase Color Sky in exchange for no consideration. Upon the closing of the transaction contemplated by the Disposition SPA, the Purchaser became the sole shareholder of Color Sky and as a result, assumed all assets and liabilities of Color Sky.
On March 24, 2023, we held our annual meeting of shareholders, pursuant to which the shareholders of the Company approved the proposal to amend the authorized share capital of the Company from US$32,000,000 divided into 800,000,000 Ordinary Shares with a par value of US$0.04 each; to 700,000,000 Class A Ordinary Shares with a par value of $0.04 each and 100,000,000 Class B Ordinary Shares with a par value of US$0.04 each, in each case having the rights and subject to the restrictions set out in the Fifth Amended and Restated Memorandum of Association and Articles of Association of the Company (the “2023 Amended and Restated Memorandum and Articles”). This amendment established the Company’s dual-class share structure, pursuant to which holders of Class A Ordinary Shares are entitled to one vote per share and holders of Class B Ordinary Shares are entitled to enhanced voting rights.
On May 19, 2023, the Company entered into a certain concert cooperation agreement (“Agreement”) dated, by and among Rich America Inc., an Ohio corporation, (“Rich America”), Color Star DMCC, a United Arab Emirates corporation (“Color Star DMCC”) and the Company. Pursuant to the Agreement, Rich America agreed to have certain music artists represented by Rich America perform at nine concert events organized by Color Star DMCC to be held between May 2023 and March 2024 (the “Concerts’) for an aggregate consideration of US$8,000,000, to be paid in 6,400,000 restricted Class A Ordinary Shares, par value $0.04 per share, of the Company.
On December 17, 2023, the Company entered into certain copyright acquisition agreement, by and among Nine Star Parties and Entertainment LLC., an Ohio limited liability company, (“Nine Star”), the Company, and Color Star DMCC, a United Arab Emirates corporation (“Color Star DMCC”) and wholly owned subsidiary of the Company. Pursuant to the Agreement, Nine Star agreed to sell to Color Star DMCC all of Nine Star’s right, title and interests in and to 24 pieces of music works created by Nine Star (the “Works”), for an aggregate consideration of US$7,200,000, to be paid in 24,000,000 restricted Class A Ordinary Shares, par value $0.04 per share, of the Company. The 24,000,000 restricted Class A Ordinary Shares to be issued as consideration to Nine Star are exempt from registration pursuant to Regulation S under the Securities Act of 1933, as amended. The transaction contemplated by the Copyright Agreement closed on December 19, 2023 when all of the closing conditions in the copyright acquisition agreement were satisfied.
On September 27, 2024, the Company and certain institutional investors entered into a securities purchase agreement pursuant to which the Company issued an initial tranche of senior secured convertible notes in the aggregate principal amount of approximately US$7.6 million, bearing interest at 6% per annum and maturing twelve months from issuance, together with Series A warrants to purchase up to 2,853,118 Class A Ordinary Shares at an exercise price of US$1.60 per share. The notes were convertible into Class A Ordinary Shares, at the holder’s option, after 45 days from issuance at the lower of (i) US$1.60 per share or (ii) 90% of the lowest volume weighted average price of the Class A Ordinary Shares during the ten trading day period immediately preceding the applicable conversion date.
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On September 29, 2024, we held our annual general meeting of shareholders, pursuant to which our shareholders approved the proposal to effect a reverse share split at a ratio of up to 1-for-250 and, immediately after the approval of that reverse split, the subdivision of our authorized share capital to US$32,000,000, divided into (i) 280,000,000,000 Class A ordinary shares of US$0.0001 par value each and (ii) 40,000,000,000 Class B ordinary shares of US$0.0001 par value each.
On October 8, 2024, the Company and those investors entered into a note exchange agreement pursuant to which the investors delivered to the Company for cancellation and termination the notes previously issued in September 2024. In exchange, the Company issued new convertible notes with substantially all of the same terms, except that the new notes became convertible into Class A ordinary shares at the holder’s option immediately from the date of issuance.
Effective November 15, 2024, the Company effected a 100-for-1 reverse share split of its Class A ordinary shares and Class B ordinary shares and subdivided its authorized share capital of US$32,000,000 into 280,000,000,000 Class A ordinary shares with a par value of US$0.0001 per share and 40,000,000,000 Class B ordinary shares with a par value of US$0.0001 per share. Upon execution of that reverse share split, the Company issued an additional 7,258 Class A ordinary shares as a result of the rounding up of fractional shares.
On November 25, 2024, the Company entered into note exchange agreements with the same investors. Under those agreements, the investors agreed to deliver to the Company for cancellation and termination the notes issued to them in October 2024. In exchange, the Company issued new convertible notes with substantially the same terms, except that a floor price of US$508,000 per share, equal to 20% of the closing price of the Company’s Ordinary Shares on the trading day immediately prior to the execution of the September 2024 securities purchase agreement, was added. The new notes were convertible at the holder’s option, in whole or in part, at the lower of (i) the fixed conversion price of US$32,000 per share or (ii) a price equal to the greater of (x) the floor price and (y) the alternate conversion price described above.
On November 25, 2024, the Company and each of those investors also entered into an amendment to the September 2024 securities purchase agreement to increase the maximum aggregate subscription amount from US$33,000,000 to US$40,000,000, and elected to consummate an additional closing pursuant to which the Company agreed to issue senior secured convertible notes in the aggregate principal amount of approximately US$7.68 million. The Company issued those notes on December 2, 2024. Concurrently with that closing, the investors fully redeemed the notes issued under the November 2024 note exchange agreements.
On January 9, 2025, the Company entered into a copyright acquisition agreement (the “Copyright Agreement”) dated as of January 9, 2025, by and among Nine Star Parties and Entertainment LLC., an Ohio limited liability company (“Nine Star”), the Company, and Color Star DMCC. Pursuant to the Agreement, Nine Star agreed to sell to Color Star DMCC all of Nine Star’s right, title and interests in and to 27 pieces of music works created by Nine Star (the “Works”), for an aggregate consideration of US$8,100,000, to be paid in 2,250,000 restricted Class A Ordinary Shares. The restricted Shares were issued on February 5, 2025. However, the Works were not transferred or assigned to the Company and those shares were surrendered to the Company for no consideration and canceled with effect from September 30, 2025. The Company considered these transactions have never taken place as Nine Star did not complete its performance duties of transferring or assigning the copyrights to the Company.
On January 16, 2025, the Company and those investors elected to consummate a further additional closing under the September 2024 securities purchase agreement, pursuant to which the Company issued senior secured convertible notes in the aggregate principal amount of approximately US$8.7 million, having an original issue discount of 8%, a maturity date twelve months from the date of issuance, bearing interest at a rate of 6% per annum and convertible into Class A ordinary shares, together with Series B warrants to purchase up to 2,467,692 Class A Ordinary Shares at an exercise price of US$2.11 per share. On the same date, the Company and each of those investors entered into amendment no. 2 to the September 2024 securities purchase agreement to revise the definition of exempt issuances.
On February 26, 2025, Model Queen and the Company entered into a certain purchase and sale agreement (the “Purchase Agreement”) with BTC KZ, a company organized under the laws of Kazakhstan, pursuant to which Model Queen shall purchase certain cryptocurrency mining hardware and other equipment (the “Equipment”) from BTC KZ from time to time in separate purchase orders. The parties agreed that the purchase will be made using a combination of US$9,000,000 in cash and US$26,000,000 payable in 16,250,000 restricted Class A Ordinary Shares.
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In April 2025, we commenced cryptocurrency mining operations in Kazakhstan through Model Queen. We acquired specialized mining equipment and commenced mining activities in the final quarter of the fiscal year ended June 30, 2025, generating initial revenue from this new line of business.
On May 15, 2025, Hainan Yuhai Entertainment Co. Ltd., a PRC company wholly owned by Model Queen and established to carry out the entertainment industry business in the PRC, was dissolved.
On May 29, 2025, Color Metaverse Pte. Ltd., a Singaporean company wholly owned by the Company dissolved.
On June 29, 2025, the Company changed its name from Color Star Technology Co., Ltd. to Zeta Network Group.
On June 29, 2025, the Company held its 2025 annual general meeting of shareholders, pursuant to which the shareholders approved a proposal authorizing our Board of Directors to effect a reverse share split and share consolidation of our authorized and issued share capital at a ratio ranging from 1-for-5 to 1-for-100, at a specific ratio to be determined by the Board. In connection therewith, the shareholders authorized the alteration of our authorized share capital from US$32,000,000 divided into (i) 280,000,000,000 Class A Ordinary Shares with a par value of US$0.0001 each and (ii) 40,000,000,000 Class B Ordinary Shares with a par value of US$0.0001 each to as low as (i) 2,800,000,000 Class A Ordinary Shares with a par value of US$0.01 each and (ii) 400,000,000 Class B Ordinary Shares with a par value of US$0.01 each, depending on the ratio ultimately selected by the Board.
Effective August 22, 2025, the Company effected a 25-for-1 reverse share split of its Class A Ordinary Shares and Class B Ordinary Shares, including the issuance of 4 Class A Ordinary Shares as a result of the rounding up of fractional shares.
On July 11, 2025, the Company received an inquiry from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC notifying the Company that the purchase of certain cryptocurrency mining equipment in exchange for the issuance of 16,250,000 of the Company’s Class A Ordinary Shares and $9 million in cash pursuant to the purchase and sale agreement dated February 26, 2025 with BTC KZ may have triggered a change of control under Nasdaq Listing Rule 5110(a). On July 18, 2025, the Company submitted a written response to Nasdaq acknowledging its concerns and agreed to unwind the transaction with BTC KZ by canceling the share consideration in exchange for a secured term loan in the principal amount of $31.6 million from BTC KZ, which also replaced the $5.6 million unpaid balance of the cash consideration. At the request of Nasdaq, we reported the cancellation of the share consideration in a report on Form 6-K furnished on August 6, 2025, and we have not received any further correspondence from Nasdaq on this matter.
On July 25, 2025, the Company entered into a series of related agreements with BTC KZ and Ulife Media and Production International Limited (“ULife”), a wholly owned subsidiary of BTC KZ, in connection with the restructuring of the payment of consideration under the February 26, 2025, purchase and sale agreement. As part of this restructuring, the Company entered into a secured term loan agreement with BTC KZ (the “Loan Agreement”) pursuant to which BTC KZ agreed to lend the Company $31,600,000 (the “Loan”). The Loan bears interest at a rate of 5% per annum, matures on July 24, 2028, and is repayable in equal quarterly installments of $2.85 million beginning September 30, 2025. The Company is also required to prepay the outstanding balance of the Loan with at least 50% of the net proceeds from any public or private equity offering. In connection with the Loan, the Company issued a promissory note to BTC KZ in the principal amount of $31,600,000 (the “Note”). To secure the Company’s obligations under the Loan and the Note, the parties entered into a security agreement granting BTC KZ a first-priority security interest in the Equipment previously acquired under the Purchase Agreement (the “Security Agreement”). The Equipment remains hosted in Kazakhstan pursuant to a hosting agreement dated March 20, 2025 between Model Queen and BTC KZ. In addition, the Company, BTC KZ, and ULife entered into a redemption and share cancellation agreement (the “Share Cancellation Agreement”) pursuant to which the share consideration previously issued to ULife was redeemed and cancelled effective as of August 6, 2025. Following such cancellation, ULife relinquished all ownership and rights in the cancelled shares.
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On August 13, 2025, the Company entered into securities purchase agreements with certain institutional investors for the purchase and sale of 573 Class A Ordinary Shares at a purchase price of $11,200.00 per share, together with warrants to purchase up to 573 Ordinary Shares (the “Warrants”) at an initial exercise price of $0.56 per share. Gross proceeds, before deducting placement agent fees and other offering expenses, were approximately $6.4 million. In addition, the Company entered into an agreement with certain existing investors holding Convertible Notes issued by the Company in January 2025 pursuant to which such investors have agreed to waive certain rights in consideration of the Company issuing to such investors 144 additional warrants to purchase Ordinary Shares, identical in all respects to the Warrants issued in that offering. The offering was consummated on August 14, 2025. During the year ended June 30, 2026, the Warrants investors exercised all their warrants and converted into 2,738 Class A ordinary shares using cashless method.
On September 4, 2025, the Company entered into a Payoff Letter Agreement with each of the holders of the Company’s outstanding convertible notes issued on January 16, 2025 pursuant to the Securities Purchase Agreement dated September 27, 2024, as amended. Pursuant to the Payoff Letter Agreement, the Company and the Holders agreed to fully and finally settle the remaining outstanding principal balances of the Notes through a one-time conversion into Class A ordinary shares, par value $0.0025 per share, at a fixed conversion price of US$920.0 per share.
On October 3, 2025, the Company entered into a Strategic Partnership Agreement with SOLV Foundation, a multi-chain Bitcoin liquid staking and structured finance platform.
On October 7, 2025, the Company entered into a securities purchase agreement with certain institutional investors named thereto (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “October 2025 Offering”): (i) 1,000 Class A Ordinary Shares at a purchase price of $800.00 per share; and (ii) pre-funded warrants to purchase up to 17,750 Class A Ordinary Shares (the “Pre-Funded Warrants”) at a purchase price of $ 798.00 per Pre-Funded Warrant. The Company received approximately $15 million in gross proceeds from the October 2025 Offering, before deducting placement agent fees and estimated offering expenses. The October 2025 Offering closed on October 9, 2025.
On October 15, 2025, the Company entered into a securities purchase agreement with certain investors (the “Purchasers”) pursuant to which the Company agreed to issue and sell to each Purchaser in a private placement offering an aggregate of US$230,837,060 of the Company’s units (the “Units”), each unit consisting of one Class A ordinary share, par value of US$0.0025 per Class A Ordinary Share, and one warrant entitling the Purchaser of a Unit to purchase one Class A Share, at an offering price of $1,360.00 per Unit. The warrants are immediately exercisable for 60 months after issuance at an exercise price of $2,040.00 per Share. The gross consideration for this private placement was payable by 2,000 SolvBTC, a 1:1 wrapped Bitcoin-backed token issued by Solv Protocol, an on-chain Bitcoin reserve providing institutional mechanisms for the productive use of Bitcoin holdings. The Company received aggregate gross consideration of US$230,837,060 from the offering. The private placement closed on October 17, 2025.
On December 31, 2025, the Company entered into a share sale and purchase agreement with Zero Edge Global Limited, an unrelated third party, pursuant to which the Company agreed to sell, and the buyer agreed to purchase, all of the shares of Color Star DMCC, which was 100% owned by the Company, for a consideration of US$1. The transfer of shares was completed on January 5, 2026. The disposal of Color Star DMCC was accounted for as a discontinued operation because it represented a strategic shift that had a major effect on the Company’s operations and financial results in accordance with ASC 205-20-45. Color Star DMCC held our music industry business and our online cultural entertainment platform, Color World.
On January 22, 2026, we held an extraordinary general meeting of shareholders, pursuant to which the shareholders of the Company approved the authorization of our Board of Directors to implement a reverse share split and share consolidation at a ratio ranging from 1-for-5 to 1-for-100, and a corresponding share subdivision following any such consolidation. Shareholders also approved the adoption of the Eighth Amended and Restated Memorandum and Articles of Association and the Ninth Amended and Restated Memorandum and Articles of Association to reflect such capital structure changes, as well as the adoption of the Company’s 2026 Equity Incentive Plan, including the reservation of a number of Class A Ordinary Shares for issuance thereunder.
On January 23, 2026, we entered into a settlement agreement with FT Global Capital, Inc. (“FTGC”) resolving the action filed by FTGC against us on October 13, 2025 in the Supreme Court of the State of New York (Index No. 659090/2025), together with all other disputes between the parties, including disputes relating to a prior financing, and modifying the tail provisions of our prior engagement with FTGC. The settlement amount was US$900,000, of which US$400,000 was paid on January 23, 2026 and US$500,000 was paid on March 16, 2026.
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On February 2, 2026, we filed a registration statement on Form S-8 (File No. 333-293130) registering Class A Ordinary Shares issuable under our 2026 Equity Incentive Plan.
On February 10, 2026, our Board approved the Share Consolidation at an Approved Consolidation Ratio of 1:100 with effect immediately. As a result, the authorized share capital of the Company was altered from USD$32,000,000.00 divided into 11,200,000,000 granted Class A Ordinary shares with a nominal or par value of USD$0.0025 and 1,600,000,000 Class B Ordinary shares with a nominal or par value of USD$0.0025 each, to USD$32,000,000.00 divided into 112,000,000 Class A Ordinary shares with a nominal or par value of USD$0.25 each and 16,000,000 Class B Ordinary shares with a nominal or par value of USD$0.25 each. No fraction of a share shall be issued by virtue of the Share Consolidation, and all fractions of shares resulting from the Share Consolidation will be rounded up to the nearest whole number of shares and each shareholder that would otherwise be so entitled to a fraction of a share shall instead, as a result of the Share Consolidation, be entitled to receive a whole share. On February 10, 2026, we filed our eighth amended and restated memorandum and articles of association with the Registrar of Companies in the Cayman Islands.
Upon the opening of the market on March 12, 2026, our Ordinary Shares began trading on the Nasdaq on a post Share Consolidation basis under the same symbol “ZNB” but with a new CUSIP number, G2287A142.
On March 6, 2026, Mr. Patrick Ngan notified us of his resignation as our Chief Investment Officer, effective March 6, 2026. His resignation was due to personal reasons and was not the result of any disagreement with us on any matter relating to our operations, policies or practices.
On March 10, 2026, we entered into a securities purchase agreement with certain institutional investors for the purchase and sale of up to US$10 million of convertible notes and warrants to purchase our Class A Ordinary Shares, to take place in up to two tranches. The first tranche consisted of (i) US$6,000,000 in aggregate principal amount of our Senior 10% Original Issue Discount Convertible Promissory Notes (the “First Tranche Notes”), (ii) warrants to purchase up to 270,271 Class A Ordinary Shares (the “First Tranche Warrants”) and (iii) 185,344 Class A Ordinary Shares (the “Pre-Delivery Shares”) issued to the investors to hold against delivery of Class A Ordinary Shares upon conversion of the First Tranche Notes or exercise of the First Tranche Warrants. The first tranche closed on March 12, 2026 and resulted in gross proceeds to us of US$5.4 million, before deducting placement agent fees and other offering expenses. The First Tranche Notes were senior secured convertible notes with a variable conversion price subject to a floor price and ranked senior to our other indebtedness. The First Tranche Warrants were immediately exercisable, had a five-year term and were subject to anti-dilution and share adjustment provisions. Subject to specified conditions, the investors also committed to purchase an additional US$4.0 million principal amount of Senior 10% Original Issue Discount Convertible Promissory Notes and related warrants on substantially the same terms as the First Tranche Notes and the First Tranche Warrants. During the year ended June 30, 2026, an aggregate of $6,576,027 under the First Tranche Notes was converted into 407,939 Class A ordinary shares.
At an extraordinary general meeting of shareholders held on May 8, 2026, our shareholders approved certain share changes pursuant to which, among other things, (i) the par value of each issued and outstanding Class A ordinary share and Class B ordinary share would be reduced from US$0.25 to US$0.0025, (ii) each authorized but unissued ordinary share of US$0.25 would be subdivided into 100 ordinary shares of the same class with a par value of US$0.0025 each, and such number of excess authorized but unissued shares would then be cancelled as would result in an authorized share capital of US$320,000 divided into 112,000,000 class A ordinary shares with a nominal or par value of US$0.0025 and 16,000,000 class B ordinary shares with a nominal or par value of US$0.0025 ((i) and (ii), the “Share Capital Reduction and Reorganization”), and (iii) immediately following the foregoing becoming effective, our authorized share capital would be increased to US$32,000,000 divided into 11,200,000,000 class A ordinary shares with a nominal or par value of US$0.0025 and 1,600,000,000 class B ordinary shares with a nominal or par value of US$0.0025, by the creation of 11,088,000,000 class A ordinary shares with a nominal or par value of US$0.0025 and 1,584,000,000 class B ordinary shares with a nominal or par value of US$0.0025 (the “Share Capital Increase”). Our shareholders also approved the adoption of our ninth amended and restated memorandum and articles of association, effective upon the Share Capital Reduction and Reorganization and the Share Capital Increase. At the same meeting, our shareholders authorized our Board of Directors to implement a future share consolidation at any ratio between 2-for-1 and 4,000-for-1 within three years and conditionally approved the adoption of the Tenth Amended and Restated Memorandum and Articles of Association to reflect any such consolidation. The Share Capital Reduction and Reorganization and the Share Capital Increase became effective on June 4, 2026.
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On June 15, 2026, we furnished a report clarifying the corporate governance practices we follow as a foreign private issuer in lieu of certain Nasdaq corporate governance requirements, together with a confirmation letter dated June 12, 2026 from Harney Westwood & Riegels, our Cayman Islands counsel, as required by Nasdaq. We rely on the available home country practice exemptions other than the requirements for a majority independent board of directors, an independent compensation committee, an independent nominating committee and a code of conduct applicable to all directors, officers and employees, with which we currently comply but reserve the right to rely on the available exemptions in the future. The exemptions on which we rely include those from the requirements to solicit proxies and provide proxy statements for all shareholder meetings, to obtain shareholder approval for issuances in excess of 20% of our outstanding ordinary shares or that constitute a change of control, and to obtain shareholder approval to establish or materially amend an equity compensation arrangement.
On June 18, 2026, we furnished our unaudited interim consolidated financial statements as of December 31, 2025 and June 30, 2025 and for the six months ended December 31, 2025 and 2024, together with the related operating and financial review and prospects.
Recent Developments
Since June 30, 2026, we have undertaken a series of significant capital structure, financing and governance transactions, including share consolidations, private placements and amendments to our memorandum and articles of association, as part of our ongoing digital asset treasury and corporate restructuring initiatives. Unless otherwise indicated, share numbers, share prices, exercise prices, conversion prices and other per-share information contained in this section are presented on a historical basis as of the time of the relevant transaction and have not been retroactively adjusted to reflect subsequent reverse share splits, share consolidations or other changes to the Company’s capital structure.
On July 1, 2026, following the resolutions approved at the May 8, 2026 extraordinary general meeting, our Board adopted resolutions approving the implementation of an 8-for-1 share consolidation and the adoption of our Tenth Amended and Restated Memorandum and Articles of Association. Following completion of the Nasdaq notification process, the share consolidation became effective on July 27, 2026. As a result, every eight Class A ordinary shares with a par value of US$0.0025 each were consolidated into one Class A ordinary share with a par value of US$0.02, every eight Class B ordinary shares with a par value of US$0.0025 each were consolidated into one Class B ordinary share with a par value of US$0.02, and our authorized share capital was reduced from 11,200,000,000 Class A ordinary shares and 1,600,000,000 Class B ordinary shares to 1,400,000,000 Class A ordinary shares and 200,000,000 Class B ordinary shares. Fractional shares resulting from the consolidation were rounded up to the next whole number of shares.
Upon the opening of the market on July 27, 2026, our Class A Ordinary Shares began trading on the Nasdaq on a split-adjusted basis under the same symbol “ZNB” but with a new CUSIP number, G2287A159.
On July 29, 2026, we entered into a securities purchase agreement with certain investors pursuant to which we agreed to issue and sell an aggregate of 3,412,970 units at a purchase price of US$2.93 per unit, for non-cash consideration with an agreed value of US$10,000,002.10, payable in SolvBTC. Each unit consisted of one Class A ordinary share, par value US$0.02 per share, and one warrant to purchase one Class A ordinary share. Each warrant was immediately exercisable, has an exercise price of US$4.40 per Class A ordinary share and expires on the fifth anniversary of its issuance date. The private placement closed on August 17, 2026. At the closing, we issued an aggregate of 3,412,970 Class A ordinary shares and warrants to purchase an aggregate of 3,412,970 Class A ordinary shares. The purchase price was paid in approximately 156.6533 SolvBTC, based on an agreed value of US$63,835.08 per SolvBTC. The securities issued were not registered under the Securities Act and were offered and sold in reliance on the exemptions from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation S promulgated thereunder.
At an extraordinary general meeting of shareholders held on September 10, 2026, our shareholders ratified and confirmed the July 2026 8-for-1 share consolidation and the adoption of the Tenth Amended and Restated Memorandum and Articles of Association. At the same meeting, shareholders approved a further share capital reduction and reorganization, an increase in authorized share capital, the adoption of the Eleventh Amended and Restated Memorandum and Articles of Association, which will become effective upon the share capital reduction and reorganization and the increase in authorized share capital, a second 8-for-1 share consolidation subject to specified conditions, and the adoption of the Twelfth Amended and Restated Memorandum and Articles of Association, which will become effective upon the effectiveness of the second 8-for-1 share consolidation. As of the date of this annual report, none of the share capital reduction and reorganization, the increase in authorized share capital, the second 8-for-1 share consolidation, the Eleventh Amended and Restated Memorandum and Articles of Association or the Twelfth Amended and Restated Memorandum and Articles of Association has become effective, and the filing with the Registrar of Companies of the Cayman Islands in respect of the July 2026 share consolidation remains pending.
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4.B. Business Overview
Our operations now consist principally of cryptocurrency mining conducted through our wholly owned subsidiary Model Queen, together with our digital asset holdings. We do not conduct, and have not commenced, a Bitcoin liquidity aggregation business. We primarily provide services through our wholly owned subsidiaries.
Our mining machines are owned by our Hong Kong subsidiary, Model Queen, and are hosted and operated by BTC KZ at BTC KZ’s data center in Ekibastuz, Kazakhstan.
After developing experience in artificial intelligence and network technology in the entertainment and metaverse industries, we shifted our focus to digital finance, commencing operations in our cryptocurrency mining business in Kazakhstan in April 2025. We entered into a Strategic Partnership Agreement with SOLV Foundation (“SOLV”), a multi-chain Bitcoin liquid staking and structured finance platform.
For the fiscal year ended June 30, 2026, all of our revenue from continuing operations was derived from cryptocurrency mining. Our entertainment and education operations were carried on through Color Star DMCC, which we sold under a share sale and purchase agreement dated December 31, 2025 with completion on January 5, 2026, and which is presented as a discontinued operation in our consolidated financial statements included in this report.
Our Operations
Cryptocurrency mining
We launched our cryptocurrency mining business in Kazakhstan in April 2025 through our wholly owned Hong Kong subsidiary, Model Queen Limited. We acquired specialized mining equipment and commenced mining activities in the final quarter of the fiscal year ended June 30, 2025, generating initial revenue from this new line of business.
BTC KZ, as our hosting service provider, selects, at its discretion, the mining pool to which our machines are connected; BTC KZ currently connects our machines to Pool4Miners LLP, a digital mining pool accredited in Kazakhstan since July 2023, and calculates and settles the mining proceeds attributable to our machines. BTC KZ has connected our machines to Pool4Miners since we began mining in April 2025. Accordingly, our contractual counterparty for our mining operations and for the settlement of our mining proceeds is BTC KZ, not the pool operator. We do not maintain an account with, or have any agreement or other direct contractual relationship with, Pool4Miners or any other mining pool operator. We do not receive or hold the Bitcoin mined by our machines. Our exposure to Bitcoin through mining is economic and revenue-linked: the price of Bitcoin affects the amount of USDT payable to us, but we do not hold an inventory of mined Bitcoin. Under the Law of the Republic of Kazakhstan on Digital Assets, only Kazakhstan legal entities and individual entrepreneurs that hold a digital mining license may conduct digital mining in Kazakhstan, and digital mining must be conducted through an accredited digital mining pool. BTC KZ holds the digital mining license for our machines and, as the digital miner, owns the Bitcoin mined by our machines. Our right under the Hosting Agreement is a contractual right to the mining proceeds calculated under that agreement and settled in USDT.
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Under arrangements between BTC KZ and Pool4Miners, to which we are not a party, Pool4Miners charges a pool fee equal to 1% of the mining rewards attributable to our machines. Rewards are calculated under the full-pay-per-share (FPPS) method. Our mining proceeds are calculated and settled under the Hosting Agreement described below. Each day’s mining revenue equals the quantity of Bitcoin mined by our machines on that day, net of the pool fee and as reported by the hosting service provider, multiplied by the daily closing price of Bitcoin published by CoinMarketCap as of 23:59:59 UTC on the day the Bitcoin is mined. From July 2026, the daily closing price published by CoinGecko as of 00:00 UTC is used. Monthly mining revenue is the sum of the daily revenue for the month. From the monthly mining revenue, BTC KZ deducts the hosting fee and the maintenance fee described below, each based on the electricity consumed by our machines, to determine the net amount payable to us. BTC KZ provides us with a monthly operating report, and the net amount is settled quarterly in USDT to a wallet designated by us. We and BTC KZ sign a monthly settlement confirmation within seven business days after the end of each month. For each of the quarters ended March 31, 2026 and June 30, 2026, our mining revenue was less than the hosting and maintenance fees, and BTC KZ made no USDT payment to us. The negative net amounts of approximately US$14,626 and US$405,869, respectively, are carried forward and offset against amounts payable to us in later quarters.
100% of the hash rate of our machines is contributed to Pool4Miners. Pool4Miners distributes the mining rewards attributable to our machines in Bitcoin to the account designated by BTC KZ on a daily basis. We have no visibility into how Pool4Miners holds rewards before it distributes them. After distribution, the Bitcoin is held and managed by BTC KZ, which settles the net amount owed to us in USDT at the end of each quarter. As a result, our net mining proceeds remain with BTC KZ until settled, and we record them as a receivable from BTC KZ. We are not aware whether Pool4Miners maintains insurance covering the theft or loss of mining rewards. If Pool4Miners fails to distribute the mining rewards attributable to our machines, we would generally bear the resulting loss of revenue, unless the failure results from a breach or fault of BTC KZ.
A total of 457.15 Bitcoin, net of the pool fee, was mined from April 1, 2025 to August 31, 2026.
On March 20, 2025, Model Queen entered into a Hosting Services Agreement with BTC KZ (the “Hosting Agreement”), pursuant to which BTC KZ provides hosting services for our mining machines at its Ekibastuz, Kazakhstan-based data center, including racking, power supply, cooling, and security. We pay a hosting fee of $0.07 per kWh of electricity consumed, plus a $0.0015 per kWh maintenance fee. The Hosting Agreement has a one-year term from the machines’ activation date and may be renewed by written agreement. The agreement with BTC KZ was renewed on March 21, 2026 for a term ending on March 20, 2027, with the hosting fee and the maintenance fee increased to $0.072 and $0.002 per kWh, respectively, from April 1, 2026. The arrangement includes mutual indemnities and confidentiality protections, with disputes governed by Hong Kong law and resolved through HKIAC arbitration. The Hosting Agreement provides that title to the machines remains with Model Queen and that BTC KZ shall not gain any proprietary right or lien over the machines or their proceeds. As described above, BTC KZ, as the licensed digital miner, owns the Bitcoin mined by our machines, and our right to the mining proceeds is a contractual right to the net amount settled in USDT under the Hosting Agreement. However, our obligations under the secured term loan from BTC KZ are secured by a first-priority security interest in the machines under a security agreement dated July 25, 2025, which we believe governs with respect to that security interest.
Our mining equipment was acquired from BTC KZ under a purchase and sale agreement dated February 26, 2025 and is hosted and operated in Kazakhstan by BTC KZ under the Hosting Agreement. Our obligations under the secured term loan agreement and promissory note issued to BTC KZ in July 2025 are secured by a first-priority security interest in that equipment. See “4.D. Property, Plants and Equipment”.
Cryptocurrency mining is subject to significant volatility and risks, including fluctuations in cryptocurrency prices, changes in mining difficulty, energy costs and regulatory developments. These factors may materially impact the profitability and cash flows associated with the mining operations. As a nascent segment, we are actively monitoring operational performance and market conditions, and we continue to assess the appropriate capital investment, depreciation policies and impairment indicators related to our mining equipment. Given the rapidly evolving nature of the cryptocurrency industry, results from mining operations may vary significantly in future periods. We remain committed to enhancing operational efficiencies and evaluating strategic opportunities to grow our presence in this emerging sector.
For the fiscal year ended June 30, 2026, we generated cryptocurrency mining revenue of approximately US$28.4 million and incurred cost of revenue of approximately US$33.7 million, resulting in a gross loss of approximately US$5.3 million. That gross loss was primarily due to high energy and hosting costs, depreciation of mining equipment, lower Bitcoin production caused by increased network mining difficulty, and periods of lower Bitcoin prices.
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Strategic partnership with SOLV Foundation and digital asset holdings
On October 3, 2025, we entered into a Strategic Partnership Agreement with SOLV Foundation. On October 17, 2025, we issued and sold units for aggregate gross consideration of US$230,837,060, which was payable in 2,000 SolvBTC. SolvBTC is a 1:1 wrapped Bitcoin-backed token issued by Solv Protocol, an on-chain Bitcoin reserve providing institutional mechanisms for the productive use of Bitcoin holdings.
Under the binding provisions of the Strategic Partnership Agreement, we agreed to utilize SOLV’s platform by depositing Bitcoin held by us or our subsidiaries onto the platform, and SOLV agreed to ensure that the underlying Bitcoin supporting our assets is transferred to a regulated third-party custodian selected or approved by us. The parties also agreed to establish a joint steering committee, which has not been established as of the date of this annual report, and to collaborate on branding and investor communications, subject to the prior written approval of both parties. All acquired digital assets are to be held in custodian accounts controlled by us, and if the agreement is terminated we have the right to request SOLV to return all the deposited Bitcoin and the related proceeds. The agreement does not provide for a term or for any payment between the parties and is governed by the laws of Singapore.
We have not deposited Bitcoin on SOLV’s platform under Section 2.1 of the Strategic Partnership Agreement because neither we nor our subsidiaries have held, in a wallet that we control, any Bitcoin available for deposit. The areas of potential collaboration listed in Section 4 of the Strategic Partnership Agreement are exploratory, and under that agreement they may proceed only under separately negotiated definitive agreements. We have not established a budget, timeline or staffing plan for any of them. We have not entered into any definitive agreement with SOLV under Section 4 of the Strategic Partnership Agreement. We do not aggregate, manage or hold Bitcoin or any other digital asset for or on behalf of any third party, and we do not currently intend to pursue a Bitcoin liquidity aggregation business. We hold our SolvBTC in a self-custodied multi-signature wallet that we control, which we believe is consistent with the requirement in Section 6.1 of the Strategic Partnership Agreement that acquired digital assets be held in custodian accounts controlled by us. The investors in our October 2025 and August 2026 private placements, which paid for our securities in SolvBTC, are not SOLV or its affiliates.
We account for SolvBTC as an indefinite-lived intangible asset and measure it at cost less impairment. On August 17, 2026, we received approximately 156.6533 SolvBTC as the purchase price for the units sold in our private placement that closed on that date. We received 2,000 SolvBTC during the fiscal year ended June 30, 2026 at a carrying amount of US$230,837,060, recognized an impairment of US$114,021,240 in that period, and on June 26, 2026 transferred those 2,000 SolvBTC, with a carrying amount of US$116,815,820, to investors under a crypto asset swap and return agreement. Our right to their return was recorded as other receivables as of June 30, 2026, and those SolvBTC were returned to us in July 2026.
The SolvBTC we hold is stored in a self-custodied, multi-signature Safe smart contract wallet. The Safe wallet is held by Zeta Network Group. Four authorized signers have signing authority over the wallet, being our Chief Executive Officer, our Chairwoman, our Operation Manager and Patrick Wing-Ho Ngan, our former Chief Investment Officer. Mr. Ngan is no longer affiliated with us, and we are in the process of replacing him as an authorized signer. Any outbound transfer of digital assets requires approval by at least three of the four authorized signers before it can be executed on-chain. Accordingly, no single authorized signer can unilaterally transfer our digital assets. We regularly reconcile the digital assets under our control and maintain security controls over the private keys used by the authorized signers. Although these measures are designed to mitigate the risk of theft, loss or unauthorized transfer, they cannot eliminate such risks. Safe is open-source, self-custodial smart contract wallet software deployed on the Ethereum blockchain. We created our Safe wallet through the Safe{Wallet} interface. Safe Labs GmbH makes that interface available to all users under standard terms of use. Other than the standard terms of use applicable to all users of the Safe{Wallet} interface, we have not entered into any agreement with Safe Labs GmbH or any other provider in connection with our Safe wallet. Neither Safe Labs GmbH nor any other third party holds our private keys or digital assets. The wallet does not have any module or guard enabled, and its signers, signing threshold, modules and guards have not changed since it was created. Each signer’s private key is stored on a dedicated mobile device that is kept offline. We do not insure our digital assets, and no third party verifies our holdings. USDT settlement proceeds from BTC KZ are paid to a separate wallet of Model Queen.
Our crypto assets and treasury strategy
Our treasury may hold only SolvBTC, Bitcoin and USDT. We do not currently intend to acquire any crypto asset other than SolvBTC, Bitcoin and USDT. As of September 30, 2026, we held approximately 2,156.6533 SolvBTC and did not hold any USDT or Bitcoin.
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Bitcoin (BTC), the first decentralized digital currency, was launched on January 3, 2009, when Satoshi Nakamoto mined the genesis block, introducing a peer-to-peer electronic cash system built on blockchain technology. BTC’s supply is strictly capped at 21 million coins, with approximately 20.1 million in circulation as of October 13, 2026, following block reward halvings that reinforce its engineered scarcity. Unlike tokens with centralized governance or treasury management, BTC operates without a central authority, and network upgrades and changes are implemented through broad consensus among miners, node operators, developers, and users via the Bitcoin Improvement Proposal (BIP) process. According to CoinGecko, as of October 13, 2026, the price of Bitcoin was approximately US$83,570, and its average daily trading volume over the preceding 30 days was approximately US$31.3 billion. Over the preceding 12 months, the price of Bitcoin ranged from approximately US$58,566 to US$115,227, and over the preceding 30 days it ranged from approximately US$75,590 to US$86,597.
Our SolvBTC does not pay interest, dividends or any other return. We have not deposited any of our SolvBTC in any staking, restaking, lending, vault, liquidity-provision or other yield-bearing arrangement, and we have not received any yield, points or reward tokens in respect of it.
SolvBTC is issued by Solv Protocol, whose foundation, SOLV Foundation, is incorporated in the Cayman Islands. The SolvBTC contract on Ethereum, the network on which we hold our SolvBTC, was deployed on June 27, 2024. SolvBTC is designed to be backed one-for-one by Bitcoin and Bitcoin-pegged assets held in reserve, including native Bitcoin, BTCB and cbBTC, and its reserves are verified through Chainlink Proof of Reserve. New SolvBTC is minted only upon a deposit of reserve assets and is burned upon redemption. SolvBTC has no fixed supply cap or issuance schedule, no inflationary or deflationary mechanism other than minting and redemption and no lock-up or scheduled release, and it does not itself pay interest or yield. SolvBTC is available on more than 20 networks. Transfers on Ethereum require gas fees paid in ETH, which were approximately US$0.11 for a standard transfer as of October 13, 2026. According to CoinGecko, as of October 13, 2026, approximately 6,367 SolvBTC were outstanding across all networks, of which approximately 2,471 were on Ethereum, the price of SolvBTC was approximately US$83,417 and its average daily trading volume over the preceding 30 days was approximately US$66,000. Over the preceding 12 months, the price of SolvBTC ranged from approximately US$58,464 to US$114,985, excluding five days on which the reported price deviated from the price of Bitcoin by more than 5%. SolvBTC trades mainly on decentralized exchanges, such as Uniswap V3 on Ethereum. Our approximately 2,156.65 SolvBTC represented approximately 33.9% of the total supply of SolvBTC as of that date.
USDT is a U.S. dollar-denominated stablecoin first issued on October 6, 2014. It is issued by Tether International, S.A. de C.V., which is authorized as a stablecoin issuer by the National Commission of Digital Assets of El Salvador. According to the Relevant Information Document of Tether dated February 20, 2026, verified customers may purchase and redeem USDT through Tether, subject to a minimum of US$100,000 and to fees, USDT is issued upon purchase and removed from circulation upon redemption, and holders are not entitled to any increase in the value of the reserves. Tether publishes quarterly reserve reports accompanied by independent auditors’ reports. USDT pays no interest or yield and has no fixed supply cap, lock-up or scheduled release. It is available on multiple networks, including Ethereum and TRON, each with its own network fees. The USDT we receive is held on the TRON network, where a transfer cost approximately US$2.20 to US$4.40 in network fees as of October 13, 2026 if paid by burning TRX. According to CoinGecko, as of October 13, 2026, approximately 184.2 billion USDT were in circulation, its average daily trading volume over the preceding 30 days was approximately US$59.3 billion, and its price ranged from approximately US$0.9984 to US$1.0010 over the preceding 12 months.
We hold SolvBTC as a long-term reserve asset. We expect any economic benefit from our treasury strategy to arise solely from appreciation in the market price of SolvBTC. We have not used cash to acquire SolvBTC or any other crypto asset for our treasury, we do not currently intend to use cash to acquire any crypto asset for our treasury during the next twelve months, and we have no plan to raise capital for our treasury. We hold any USDT that we receive as settlement of our mining proceeds solely as an operating liquidity asset. We do not hold USDT as an investment or to seek a return, and we do not deploy it in any lending, staking or other yield-bearing arrangement.
We have not adopted, and do not currently intend to adopt, a policy that sets target or maximum percentages of our treasury holdings to be held in particular crypto assets. We do not lend, pledge, stake, hedge or otherwise deploy our crypto assets in any yield-bearing arrangement, and any acceptance of crypto assets as consideration for our securities requires approval by management. Management will review the composition of our treasury holdings, including the concentration of our assets in SolvBTC, at least quarterly. Our treasury policy was adopted by our management on September 30, 2025. In June 2026, we transferred our 2,000 SolvBTC to the investors in our October 2025 private placement under the crypto asset swap and return agreement described under “Item 3.D. Risk Factors.” We did not receive any yield or other return on that transfer, and those SolvBTC were returned to us in July 2026.
Legacy entertainment and education operations
We used to provide online entertainment performances and online innovative education through our wholly owned subsidiaries. We offered students a professional artist training platform featured by exclusive content and live interaction, with the mission of delivering world-class entertainment learning experiences and promoting entertainment exchange with our strong resources and deep connections in the industry.
Live music events were a staple of the Company since its conception, and it possessed its own ultra-modern concert stage that is capable of large motions in three dimensions and has advanced lighting and sound systems.
In the summer of 2023, we announced a partnership with the World Boxing Association, which allowed us to organize WBA-approved boxing competitions. The first match took place in Dubai on August 26, 2023, where six fighters competed for the WBA gold belt. In addition to the match tickets, the event was also broadcast on international and local television and livestreamed on various online platforms such as Sina Sports and Tencent QQ Live. According to broadcasters, the competition garnered over 4 million viewers in total.
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These operations were conducted through Color Star DMCC, which we sold under a share sale and purchase agreement dated December 31, 2025 with completion on January 5, 2026. The disposal was accounted for as a discontinued operation because it represented a strategic shift that had a major effect on our operations and financial results. We did not generate any revenue from entertainment or education operations in the fiscal year ended June 30, 2025.
Construction management consulting services
In September 2023, we began a construction management consulting services business through CACM. We subsequently discontinued this business and no longer provide construction management consulting services.
Our Suppliers and Customers
For the years ended June 30, 2026 and 2025, one vendor accounted for 100% of our total purchases.
For the year ended June 30, 2026, one customer accounted for 100% of the Company’s total sales. For the year ended June 30, 2025, one customer accounted for 100% of the Company’s total sales.
Research and Development
We incurred no research and development expenses during the fiscal years ended June 30, 2026, 2025 and 2024.
Intellectual Property
As of the date of this report, we maintain the domain name, https://ir.thezetanetwork.com/. Our former subsidiary, Color Star DMCC, previously held copyrights and other intellectual property rights associated with the Color World platform and related entertainment and educational activities. The related intangible assets were fully impaired during the fiscal year ended June 30, 2025. Following the disposal of Color Star DMCC in January 2026, we no longer hold these intangible assets. As of June 30, 2026 and 2025, the net carrying amount of copyrights and related intangible assets was nil.
Legal Proceedings
FT Global Capital Inc. (“FTGC”) held a default judgment against the Company in the matter of FT Global Capital, Inc. v. Color Star Technology Co. Ltd., Index No. 651370/2025, Supreme Court of the State of New York, County of New York. FTGC claimed that it was entitled, as the Company’s exclusive placement agent, to receive certain cash and warrants placement agent fees in connection with any public or private offerings, or financing or capital-raising transactions, for a period of twelve months following the execution of Exclusive Placement Agent Agreement, dated September 7, 2024, between the Company and FTGC, and for another twelve-month period following the expiration of the Exclusive Placement Agent Agreement (“Tail Provisions”).
On September 22, 2025 (the “Effective Date”), the Company and FTGC entered into a settlement agreement (the “Settlement Agreement”), pursuant to which the Company and FTGC agreed to resolve their differences and settle their dispute regarding the cash and warrants placement agent fees claimed by FTGC. Under the Settlement Agreement, both parties agreed to settle these claims through i) a cash payment of $450,000 (the “First Cash Payment”), and ii) the issuance of 14,320 of the Company’s Class A ordinary shares (the “Share Issuance”), subject to the Court granting an order authorizing issuance of the securities subject of this paragraph after a hearing pursuant to Section 3(a)(10) of the Securities Act, 15 U.S.C. §77c(a)(10) (the “Section 3(a)(10) Order”).
In the event that the Court does not grant the Section 3(a)(10) Order, the Company shall instead pay FTGC a cash amount of $600,000. In addition, if, at the time of the Share Issuance, the Company’s closing stock price per share (measured as of the trading day immediately prior to the issuance date) is less than $1.36 per share, the Company shall pay FTGC an additional cash amount equal to ($1.36 – such closing price) × the number of shares issued to FTGC (the “True-up Cash Payment”). As of June 30, 2026, the Company had no payables balance in connection with the Settlement Agreement with FTGC’s claims in connection with the January 2025 financing.
On October 31, 2025, the Company and FTGC entered into an amendment to the Settlement Agreement (“Amendment”), pursuant to which both parties agreed that, upon the Company’s lump-sum payment of $950,000 to FTGC, i) the Settlement Agreement and the Amendment shall be deemed fully satisfied and terminated, ii) the Judgement shall be deemed fully satisfied, iii) FTGC shall withdraw and discharge all enforcement instruments or restraints issued in connection with the Judgment, and iv) FTGC shall cease all collection, enforcement, or restraint activity of any kind related to the Judgment or the Settlement Agreement. The Company paid the US$950,000 lump sum, and the Judgment has been deemed fully satisfied. The Settlement Agreement, as amended by the Amendment, resolved and settled all claims between the parties, except only (i) the disputes relating to the Company’s financing that occurred on or about October 9, 2025 (the “October Financing”) and (ii) the Tail Provisions.
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On October 13, 2025, FTGC filed a Complaint against the Company in the Supreme Court of the State of New York (FT Global Capital, Inc. v. Zeta Network Group, formerly known as Color Star Technology Co., Ltd., Index No. 659090/2025) (the “2025 Action”). On January 23, 2026, the parties entered into a settlement agreement (“Second Confidential Settlement Agreement”), pursuant to which both parties agreed to (i) modify the Tail Provisions, and (ii) resolve any and all disputes between them including disputes relating to the October Financing and the 2025 Action. The settlement payment is $900,000, of which $400,000 shall be paid within three business days after the reception of the fully executed agreement (“First Payment”) and $500,000 shall be paid within sixty days from January 23, 2026 (“Second Payment”). The Company recognized a loss of $900,000 in the caption of “finance expense” in the consolidated statements of operations included elsewhere in this report. The Company paid the First Payment on January 23, 2026 and the Second Payment on March 16, 2026.
Other than as described above, we are not currently a party to any material legal or arbitration proceedings.
Regulations Relating to Blockchain, Digital Assets and Cryptocurrency
We operate in a complex and rapidly evolving regulatory environment and are subject to a wide range of laws and regulations enacted by U.S. federal, state and local governments, governmental agencies and regulatory authorities, including the SEC, the CFTC, FinCEN and other regulators, as well as similar authorities in foreign jurisdictions in which we conduct business or hold assets.
The regulatory framework applicable to blockchain technology, digital assets, cryptocurrency mining, digital asset custody and Bitcoin-related financial activities continues to evolve. Regulatory authorities in the United States and internationally have increased their focus on digital asset markets and may adopt new laws, regulations, interpretive guidance or enforcement policies that affect our business, operations, financing activities, digital asset treasury strategy and cryptocurrency mining operations.
We currently maintain cryptocurrency mining operations in Kazakhstan and hold significant digital assets, including SolvBTC. As a result, our business may be affected by laws and regulations relating to digital asset ownership, trading, custody, taxation, anti-money laundering compliance, sanctions, cybersecurity, energy usage and cryptocurrency mining. Future legal and regulatory developments may increase compliance costs, restrict certain activities, require changes to our business model or adversely affect the value and liquidity of our digital asset holdings.
We cannot predict with certainty how future laws, regulations or governmental actions will apply to our business. Any material changes in the legal or regulatory treatment of Bitcoin, SolvBTC, cryptocurrency mining or digital asset finance activities could have a material adverse effect on our business, financial condition, results of operations and prospects.
Kazakhstan
We operate in a complex regulatory environment and expect to be subject to a wide range of laws and regulations enacted by Kazakhstan as well as by similar entities in other countries. Other regulatory bodies, governmental or semi-governmental, have shown an interest in regulating or investigating companies engaged in the blockchain or cryptocurrency business.
Kazakhstan started to develop the cryptocurrency industry and to promote both blockchain operations and cryptocurrency markets in 2017. On June 25, 2020, the president signed a law that introduced amendments to the regulation of digital technologies and legitimized mining. Key definitions such as “crypto asset”, or cryptocurrency, and “digital mining” were also introduced into the law “On Informatization”.
Under the Law on Digital Assets of the Republic of Kazakhstan, a digital asset refers to property created in digital form and assigned a digital code. This includes items that utilize cryptography and computational tools. It is not considered a currency or legal tender and is instead recorded and secured via the immutability of distributed ledger technology.
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According to interpretive provisions issued by the Astana International Financial Centre, a digital asset represents value in digital form and has the following characteristics: (1) it can be traded digitally and serve as a medium of exchange, a unit of account or a store of value; (2) it can be exchanged for legal tender but is not issued or backed by any government; (3) it operates solely based on consensus within the digital asset user community; and (4) it must be distinguished from legal tender and electronic money.
The Law of the Republic of Kazakhstan on Digital Assets (Law No. 193-VII of February 6, 2023) provides that digital mining is conducted by a digital miner through an accredited digital mining pool using a digital mining data center. Only Kazakhstan individual entrepreneurs and legal entities may conduct digital mining in Kazakhstan, and a digital miner must hold a digital mining license. A digital mining pool must be a legal entity accredited under the laws of Kazakhstan, and one condition of accreditation is that its hardware and software are located in Kazakhstan. BTC KZ holds the digital mining license for our machines, and Pool4Miners LLP is an accredited digital mining pool. Model Queen does not itself conduct digital mining in Kazakhstan.
Regulations may substantially change in the future, and we cannot predict how future regulations will apply to our business or when they will be effective. As the regulatory and legal environment evolves, we may become subject to new laws and further regulation by the Kazakhstan government and other agencies, which may affect mining and other activities.
For a discussion of risks relating to regulation of digital assets and cryptocurrency-related activities, see “Item 3.D. Risk Factors.”
4.C. Organizational structure
The following is a list of our subsidiaries as of the date of this annual report.
| Subsidiary | Place of incorporation | Ownership percentage | Principal activity | |||||
| CACM Group NY, Inc. | New York, United States | 100 | % | Formerly construction management consulting services | ||||
| Color Star Technology Ohio Inc. | Ohio, United States | 100 | % | Has not commenced operations | ||||
| Model Queen Limited | Hong Kong | 100 | % | Cryptocurrency mining | ||||
Below is a chart illustrating our corporate structure:
4.D. Property, Plants and Equipment
Offices
Our principal executive office is located at 14 Wall Street, 20th Floor, New York, NY 10005, where we lease premises of a shared office on a monthly rental basis. Our subsidiary CACM Group NY, Inc., which is our agent for service of process in the United States, is located at 14 Wall Street, 20th Floor, New York, NY 10005. We lease our offices from independent third parties.
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In July 2023, we entered into a lease agreement for office space in Dubai, United Arab Emirates for the period from August 4, 2023 through August 3, 2025, with a rental fee of US$8,621 per month. We did not make any lease payments under that lease, and the present value of the unpaid lease payments was US$206,875 as of June 30, 2025. That lease was held by Color Star DMCC, which we sold with completion on January 5, 2026, and the related right-of-use asset and lease liability were presented within discontinued operations. As of June 30, 2026, the right-of-use asset and the lease liability of the discontinued operation were nil.
Cryptocurrency mining equipment
Our cryptocurrency mining machines are hosted and operated in Kazakhstan by BTC KZ. We acquired the equipment from BTC KZ under a purchase and sale agreement dated February 26, 2025, and the equipment is hosted in Kazakhstan pursuant to a hosting agreement dated March 20, 2025 between Model Queen and BTC KZ. The equipment secures our obligations under the secured term loan agreement and the promissory note we issued to BTC KZ in July 2025, under which BTC KZ holds a first-priority security interest in the equipment.
Our fleet consists of 10,000 Bitmain Antminer T21 machines with an energy efficiency of 19 J/TH, which were new when acquired, were placed in service on April 1, 2025 and had been in service for approximately 18 months as of September 30, 2026. BTC KZ does not have fleet-wide scheduled downtime for the miners. BTC KZ performs routine maintenance, such as dust cleaning and inspections, on a rotating basis, and periodically performs unscheduled maintenance to repair malfunctioning miners and limit overall downtime. During the fiscal year ended June 30, 2026, our miners had no scheduled downtime, and unscheduled downtime was approximately 1%. As of September 30, 2026, based on BTC KZ’s operating report, 9,543 of our 10,000 miners were in operation, and the remaining miners were undergoing or awaiting repair.
We depreciate our cryptocurrency mining equipment over an estimated useful life of three years. As of June 30, 2026, our cryptocurrency mining equipment had a cost of US$17,670,000, accumulated depreciation of US$3,926,667 and a net carrying amount of US$13,743,333.
As of June 30, 2025, our cryptocurrency mining equipment had a cost of US$35,000,000, accumulated depreciation of US$2,916,667 and a net carrying amount of US$32,083,333. During the fiscal year ended June 30, 2026, we determined that the estimated fair value of our cryptocurrency mining equipment, based on market prices for similar assets, was less than its carrying value, and we recognized an impairment loss of US$8,580,000. The impairment loss reduced the carrying amount of the equipment to its estimated fair value of US$17,670,000, which became the new cost basis. Depreciation expense was US$9,760,000 for the fiscal year ended June 30, 2026, compared to US$2,916,667 for the fiscal year ended June 30, 2025.
We do not own any real property.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not Applicable.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements that appear in this annual report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this annual report, particularly in “Risk Factors.” All amounts included in the fiscal years ended June 30, 2026, 2025 and 2024 (“Annual Financial Statements”) are derived from our audited consolidated financial statements included elsewhere in this annual report. These Annual Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP.
5.A. Operating Results
Overview
Summary of Business
Our operations now consist principally of cryptocurrency mining conducted through our wholly owned subsidiary Model Queen, together with our digital asset holdings. We do not conduct, and have not commenced, a Bitcoin liquidity aggregation business. We primarily provide services through our wholly owned subsidiaries.
We launched our online cultural entertainment platform, Color World, globally on September 10, 2020. We used to operate Color World by Color Sky Entertainment Limited, our subsidiary in Hong Kong, which was formerly known as Color China Entertainment Limited. After our internal reallocation of resources, from January 2023 until January 5, 2026, we operated Color World through Color Star DMCC (“DMCC”), our United Arab Emirates subsidiary. It used to be a platform primarily providing celebrity-led education services. The curriculum development created by us included music, sports, animation, painting and calligraphy, film and television, life skills, etc., covering plenty of aspects of entertainment, sports and culture. We signed contracts with well-known international artists and more than 50 celebrity teachers were retained to launch online lectures. In January 2022, Color World was transformed into a metaverse with “artificial intelligence + celebrity entertainment” as its core features. After transforming into a metaverse platform, Color World invited many global superstar celebrities to join the platform to expand on the celebrity content by creating more celebrity masterclasses, online virtual performances, celebrity merchandise, games and so on.
However, following an assessment of the platform’s commercial performance and future cash flow prospects, the Company determined to dispose online cultural entertainment business. On May 29, 2025, Color Metaverse was struck off the register. On December 31, 2025, we entered into a share sale and purchase agreement with a third party to dispose of our 100% ownership interest in DMCC. The transfer of shares was completed on January 5, 2026.
In September 2023, we began a construction management consulting services business through CACM. We subsequently discontinued this business and no longer provide construction management consulting services.
In April 2025, we commenced cryptocurrency mining via our wholly-owned subsidiary, Model Queen. We acquired specialized mining equipment and commenced mining activities in the final quarter of the fiscal year ended June 30, 2025, generating initial revenue from this new line of business.
Cryptocurrency mining is subject to significant volatility and risks, including fluctuations in cryptocurrency prices, changes in mining difficulty, energy costs, and regulatory developments. These factors may materially impact the profitability and cash flows associated with the mining operations.
As a nascent segment, we are actively monitoring operational performance and market conditions, and continue to assess the appropriate capital investment, depreciation policies, and impairment indicators related to our mining equipment. Given the rapidly evolving nature of the cryptocurrency industry, results from mining operations may vary significantly in future periods.
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We remain committed to enhancing operational efficiencies and evaluating strategic opportunities to grow our presence in this emerging sector.
Principal Factors Affecting Our Financial Performance
We believe that the following factors will continue to affect our financial performance:
| ● | Market Price of Bitcoin. Our business is heavily dependent on the spot price of bitcoin. The prices of cryptocurrencies, specifically bitcoin, have experienced substantial volatility, which may reflect “bubble” type volatility, meaning that high or low prices may have little or no merit, may be subject to rapidly changing investor sentiment, and may be influenced by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting. Bitcoin (as well as other cryptocurrencies) may have value based on various factors, including their acceptance as a means of exchange by consumers and producers, scarcity, and market demand. |
| ● | Regulatory Environment. We operate and plan to operate in a complex and rapidly evolving regulatory environment and expect to be subject to a wide range of laws and regulations enacted by various regulatory bodies. The regulatory environment is subject to potential substantial changes in the future, making it presently impossible to ascertain their application and effect on our business. While we anticipate increased scrutiny from regulators in 2026 and beyond regarding bitcoin mining, the impact of these regulations on our operations remains uncertain. As the legal and regulatory environment continues to evolve, we may be subjected to new laws and regulations enforced by agencies such as the SEC, potentially affecting our mining activities. |
Key Components of Results of Operations
Revenues
We generated revenues from the following services:
Construction Management Consulting Services. We earned revenues from our customer for providing consulting services. Sale of construction management consulting services is accounted for as a single performance obligation which is satisfied at a point in time at the time the services are performed.
Cryptocurrency Mining. We acquired specialized mining equipment and commenced mining activities, generating initial revenue from this new line of business. Our mining machines are hosted and operated by our hosting service provider. Our hosting service provider selects, at its discretion, the third-party mining pool to which our machines are connected, and facilitates our participation in the mining pool, calculates the mining proceeds attributable to our machines, and arranges for the settlement of those proceeds on our behalf. The hosting service provider, on our behalf, receives non-cash consideration in the form of Bitcoin (“BTC”), fair value of which we measure at 23:59:59 UTC on the date of contract inception using the principal market for BTC. The arrangements are continuously renewed as the mining machines continue to provide computing power throughout the day, and thus the value of the consideration should be assessed continuously throughout the day, and we have concluded to use the 23:59:59 UTC BTC price each day. Daily settlements are made to our hosting service provider, on our behalf, by the mining pool based on the hash calculations provided over the contract periods occurring over a 24-hour period and the payout is made the following day. Our performance is completed over time as the hash rate has been contributed to the mining pool. The mining pool receives and consumes the benefit of our hash calculation services as those services are performed. Accordingly, our performance obligation is satisfied over time as we provide computing power to the mining pool and the mining pool simultaneously receives and consumes the benefits of those services.
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Results of Operations
The tables in the following discussion summarize our consolidated statements of operations for the periods indicated. This information should be read together with our consolidated financial statements included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
| For the Years Ended | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Revenue | $ | 28,362,773 | $ | 8,726,016 | $ | 107,800 | ||||||
| Cost of revenue | 33,651,661 | 8,975,518 | 14,000 | |||||||||
| Gross (loss) profit | (5,288,888 | ) | (249,502 | ) | 93,800 | |||||||
| Selling, general and administrative expenses | (4,202,224 | ) | (2,626,290 | ) | (2,287,944 | ) | ||||||
| Allowance for credit losses | - | - | (332 | ) | ||||||||
| Stock compensation expense | (646,413 | ) | (1,675,065 | ) | (3,868,649 | ) | ||||||
| Impairment loss of long-lived assets | (8,580,000 | ) | - | - | ||||||||
| Loss from operations | (18,717,525 | ) | (4,550,857 | ) | (6,063,125 | ) | ||||||
| Total other expense, net | (140,325,146 | ) | (9,414,905 | ) | (190,118 | ) | ||||||
| Loss before provision for income taxes | (159,042,671 | ) | (13,965,762 | ) | (6,253,243 | ) | ||||||
| Provision for income taxes | - | - | - | |||||||||
| Net loss from continuing operations | (159,042,671 | ) | (13,965,762 | ) | (6,253,243 | ) | ||||||
| Net income (loss) from discontinued operations, net of income taxes | 1,577,876 | (29,035,693 | ) | (20,611,097 | ) | |||||||
| Net loss | $ | (157,464,795 | ) | $ | (43,001,455 | ) | $ | (26,864,340 | ) | |||
Fiscal Year Ended June 30, 2026 Compared to Fiscal Year Ended June 30, 2025
| For the Years Ended June 30, | ||||||||||||||||
| Percentage | ||||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Revenue | $ | 28,362,773 | $ | 8,726,016 | $ | 19,636,757 | 225 | % | ||||||||
| Cost of revenue | 33,651,661 | 8,975,518 | $ | 24,676,143 | 275 | % | ||||||||||
| Gross loss | (5,288,888 | ) | (249,502 | ) | $ | 5,039,386 | 2,020 | % | ||||||||
| Selling, general and administrative expenses | (4,202,224 | ) | (2,626,290 | ) | $ | 1,575,934 | 60 | % | ||||||||
| Stock compensation expense | (646,413 | ) | (1,675,065 | ) | $ | (1,028,652 | ) | (61 | )% | |||||||
| Impairment loss of long-lived assets | (8,580,000 | ) | - | $ | 8,580,000 | 100 | % | |||||||||
| Loss from operations | (18,717,525 | ) | (4,550,857 | ) | $ | 14,166,668 | 311 | % | ||||||||
| Total other expense, net | (140,325,146 | ) | (9,414,905 | ) | $ | 130,910,241 | 1,390 | % | ||||||||
| Loss before provision for income taxes | (159,042,671 | ) | (13,965,762 | ) | $ | 145,076,909 | 1,039 | % | ||||||||
| Provision for income taxes | - | - | $ | - | - | % | ||||||||||
| Net loss from continuing operations | (159,042,671 | ) | (13,965,762 | ) | $ | 145,076,909 | 1,039 | % | ||||||||
| Net income (loss) from discontinued operations, net of income taxes | 1,577,876 | (29,035,693 | ) | $ | (30,613,569 | ) | (105 | )% | ||||||||
| Net loss | $ | (157,464,795 | ) | $ | (43,001,455 | ) | $ | 114,463,340 | 266 | % | ||||||
Revenue. Revenue for the year ended June 30, 2026, increased by 225% to approximately $28.4 million as compared to $8.7 million for the year ended June 30, 2025. During the year ended June 30, 2026, we continued our cryptocurrency mining business and generated approximately $28.4 million cryptocurrency mining revenue from mining 312.17 Bitcoins. During the year ended June 30, 2025, our cryptocurrency mining operations were conducted for only three months, during which we generated approximately $8.7 million cryptocurrency mining revenue from mining 88.54 Bitcoins. The average production value per Bitcoin decreased from approximately $98,557 for the year ended June 30, 2025 to approximately $90,855 for the year ended June 30, 2026.
The following table sets forth components of our revenue for the periods indicated:
| For the Years Ended June 30, | ||||||||||||||||
| Percentage | ||||||||||||||||
| Revenue | 2026 | 2025 | Change | Change | ||||||||||||
| Cryptocurrency mining revenue | 28,362,773 | 8,726,016 | 19,636,757 | 225 | % | |||||||||||
| Total revenue | $ | 28,362,773 | $ | 8,726,016 | $ | 19,636,757 | 225 | % | ||||||||
Cost of Revenue. Cost of revenue for the year ended June 30, 2026 increased by 275% to approximately $33.7 million as compared to $9.0 million for the year ended June 30, 2025. During the year ended June 30, 2026, we continued our cryptocurrency mining business and incurred approximately $33.7 million cryptocurrency mining cost of revenue. There was only three months of cost of revenue related to cryptocurrency mining business during the year ended June 30, 2025.
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The following table sets forth components of our cost of revenue for the periods indicated:
| For the Years Ended June 30, | ||||||||||||||||
| Percentage | ||||||||||||||||
| Cost of Revenue | 2026 | 2025 | Change | Change | ||||||||||||
| Cryptocurrency mining cost | 33,651,661 | 8,975,518 | 24,676,143 | 275 | % | |||||||||||
| Total cost of revenue | $ | 33,651,661 | $ | 8,975,518 | $ | 24,676,143 | 275 | % | ||||||||
Gross Loss. We had a gross loss of approximately $5.3 million and $0.2 million for the crypto mining during the years ended June 30, 2026 and 2025, respectively. The gross loss incurred for the years ended June 30, 2026 and 2025, resulted from our cryptocurrency mining revenue (measured at fair value) based on current market conditions being lower than our operational expenses, which included electricity, hosting, and mining equipment depreciation.
Bitcoin is the only crypto asset that the Company earns through mining.
Historical cost to mine one Bitcoin
| Fiscal year ended June 30, 2026 | Fiscal year ended June 30, 2025 | |||||||
| Hosting fees (including electricity) ⁽¹⁾ | $ | 23,353,561 | $ | 5,931,742 | ||||
| Maintenance fees ⁽¹⁾ | $ | 538,100 | $ | 127,109 | ||||
| Cash cost | $ | 23,891,661 | $ | 6,058,851 | ||||
| Depreciation of mining machines ⁽²⁾ | $ | 9,760,000 | $ | 2,916,667 | ||||
| Cost of revenue | $ | 33,651,661 | $ | 8,975,518 | ||||
| Financing costs ⁽³⁾ | $ | 726,714 | — | |||||
| Total cost | $ | 34,378,375 | $ | 8,975,518 | ||||
| Bitcoin earned ⁽⁴⁾ | 312.175 | 88.538 | ||||||
| Average production value per Bitcoin ⁽⁵⁾ | $ | 90,855 | $ | 98,557 | ||||
| Cash cost per Bitcoin | $ | 76,533 | $ | 68,432 | ||||
| Total cost per Bitcoin | $ | 110,125 | $ | 101,375 | ||||
| (1) | Charged by BTC KZ, the Company’s hosting service provider, per kWh of the miners’ metered electricity consumption: $0.07 and $0.0015, respectively, through March 31, 2026, and $0.072 and $0.002, respectively, from April 1, 2026. |
| (2) | Straight-line over three years from April 1, 2025, with no residual value, or $972,222 per month. Following the impairment of the mining machines to $17,670,000, depreciation was reduced to $654,444 per month from January 1, 2026. The impairment is not included. |
| (3) | Interest at 5% per annum on the secured term loan from BTC KZ dated July 25, 2025, which replaced the unpaid purchase price of, and is secured by, the mining machines. The unpaid purchase price did not bear interest before that date. This interest is recorded in total other expense, net, and is not included in cost of revenue. |
| (4) | As reported by BTC KZ, net of the 1% pool fee. |
| (5) | Bitcoin earned each day multiplied by the daily price of Bitcoin used in our revenue recognition. |
Illustrative breakeven price
The table above presents our actual results, based on our financial statements and the monthly settlement statements of BTC KZ. The following illustration is not a forecast. It estimates the Bitcoin price at which our mining operations would break even as of September 30, 2026, assuming that all 10,000 of our miners operate at their rated hash rate of 190 TH/s and rated power consumption of 3,610 W, or 1.9 EH/s and 36,100 kW in total.
The illustration also assumes hosting and maintenance fees of $0.074 per kWh, depreciation of $654,444 per month, or approximately $21,516 per day, interest at 5% per annum on the outstanding BTC KZ loan balance of $8,593,101, or approximately $1,177 per day, a network hash rate of approximately 950.3 EH/s based on network difficulty as of September 30, 2026, a daily block reward of approximately 452.9 Bitcoin based on 144 blocks per day, a block subsidy of 3.125 Bitcoin and average transaction fees of approximately 0.020 Bitcoin per block in September 2026, and a pool fee of 1%.
On this basis, daily hosting and maintenance fees are approximately $64,114 (36,100 kW × 24 hours × $0.074), daily total costs are approximately $86,807 ($64,114 + $21,516 + $1,177), and the Bitcoin earned per day is approximately 0.8965 (1.9 EH/s ÷ 950.3 EH/s × 452.9 × 99%). The resulting cash breakeven price is approximately $71,500 per Bitcoin ($64,114 ÷ 0.8965), and the total-cost breakeven price is approximately $96,800 per Bitcoin ($86,807 ÷ 0.8965). According to CoinGecko, the price of Bitcoin was approximately $83,600 as of 00:00 UTC on September 30, 2026.
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Selling, General and Administrative Expenses. Selling, general and administrative expenses mainly consist of office rent and expenses, costs associated with staff and support personnel who manage our business activities, and professional fees paid to third parties. We incurred selling, general and administrative expenses of approximately $4.2 million for the year ended June 30, 2026, as compared to approximately $2.6 million for the year ended June 30, 2025, an increase of approximately $1.6 million.
The increase was primarily due to approximately $0.5 million increase in payroll and approximately $1.0 million increase in professional fees as we had several equity financing activities and the disposal of DMCC transaction during the year ended June 30, 2026.
Stock Compensation Expenses. Stock compensation expenses were approximately $0.6 million for the year ended June 30, 2026, as compared to approximately $1.7 million for the year ended June 30, 2025. The decrease was mainly due to the decrease of stock price for the year ended June 30, 2026, during which we issued stock granted to our management and employees with a lower fair value as compared to the same period in 2025.
Impairment loss of long-lived assets. Impairment loss of long-lived assets was $8.6 million for the year ended June 30, 2026, as compared to nil for the year ended June 30, 2025. During the year ended June 30, 2026, we determined our mining equipment would no longer generate sufficient undiscounted future cash flows to recover its carrying value. Accordingly, we wrote down the carrying amount of the mining equipment to its estimated fair value of approximately $17.7 million, resulting in approximately $8.6 million impairment charge.
Loss from Operations. We incurred losses from operations of approximately $18.7 million and approximately $4.6 million for the year ended June 30, 2026, and 2025, respectively. The increase of approximately $14.2 million in losses was primarily due to the reasons previously discussed.
Total Other Expense, Net. Our total other expense, net, primarily consists of interest income, loss on extinguishment of debts, amortization of debt issuance costs, impairment of cryptocurrency and finance expense. We had a total other expense, net, of approximately $140.3 million and $9.4 million for the year ended June 30, 2026, and 2025, respectively. The increase of other expenses was primarily due to (i) the increase in finance expense of approximately $19.8 million in connection with the convertible notes issued in January 2025 and March 2026 that we were required to issue additional principal balance to the convertible notes holders, the term loan agreement entered into in July 2025, and the settlement for financing costs related to August 2025, October 2025, and March 2026 financing activities with a third party, (ii) the impairment of cryptocurrency of approximately $114.0 million due to the decrease in the fair value of SolvBTC we held during the year ended June 30, 2026, and (iii) the decrease in interest income of approximately $0.6 million as we earned interest income from a short-term third party loan during the year ended June 30, 2025, with no comparable income in the current period.
Provision for Income Taxes. We did not incur income tax expense for the year ended June 30, 2026, and 2025 as we had operating losses.
Net Loss from Continuing Operations. We incurred a net loss from continuing operations of approximately $159.0 million for the year ended June 30, 2026, as compared to approximately $14.0 million for the year ended June 30, 2025. This change was the result of the combination of the changes as discussed above.
Net Income (Loss) from Discontinued Operations. We incurred net income from discontinued operations of approximately $1.6 million for the year ended June 30, 2026, as compared to a net loss from discontinued operations of approximately $29.0 million for the year ended June 30, 2025. The improvement was primarily due to (i) the decrease in selling, general and administrative expenses of approximately $2.5 million due to reduced operation in preparation for the sale of DMCC, (ii) the decrease in allowance for credit losses of approximately $1.1 million due to the absence of receivables during the year ended June 30, 2026, (iii) the decrease in provision for impairment loss on prepayments of approximately $10.5 million due to the decrease of prepayments during the year ended June 30, 2026, (iv) the decrease of impairment loss of intangible assets of approximately $14.6 million, as the intangible assets were fully written off in the year ended June 30, 2025, when they were no longer able to generate future cash flows, and (v) the increase of other income (expense), net of approximately $1.8 million due to the gain on disposal of DMCC during the year ended June 30, 2026.
Net Loss. We incurred a net loss of approximately $157.5 million for the year ended June 30, 2026, as compared to approximately $43.0 million for the year ended June 30, 2025. This change was the result of the combination of the changes as discussed above.
Fiscal Year Ended June 30, 2025 Compared to Fiscal Year Ended June 30, 2024
| For the Years Ended June 30, | ||||||||||||||||
| Percentage | ||||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Revenue | $ | 8,726,016 | $ | 107,800 | $ | 8,618,216 | 7,995 | % | ||||||||
| Cost of revenue | 8,975,518 | 14,000 | $ | 8,961,518 | 64,011 | % | ||||||||||
| Gross (loss) profit | (249,502 | ) | 93,800 | $ | (343,302 | ) | (366 | )% | ||||||||
| Selling, general and administrative expenses | (2,626,290 | ) | (2,287,944 | ) | $ | 338,346 | 15 | % | ||||||||
| Allowance for credit losses | - | (332 | ) | $ | (332 | ) | (100 | )% | ||||||||
| Stock compensation expense | (1,675,065 | ) | (3,868,649 | ) | $ | (2,193,584 | ) | (57 | )% | |||||||
| Loss from operations | (4,550,857 | ) | (6,063,125 | ) | $ | (1,512,268 | ) | (25 | )% | |||||||
| Total other expense, net | (9,414,905 | ) | (190,118 | ) | $ | 9,224,787 | 4,852 | % | ||||||||
| Loss before provision for income taxes | (13,965,762 | ) | (6,253,243 | ) | $ | 7,712,519 | 123 | % | ||||||||
| Provision for income taxes | - | - | $ | - | - | % | ||||||||||
| Net loss from continuing operations | (13,965,762 | ) | (6,253,243 | ) | $ | 7,712,519 | 123 | % | ||||||||
| Net loss from discontinued operations, net of income taxes | (29,035,693 | ) | (20,611,097 | ) | $ | 8,424,596 | 41 | % | ||||||||
| Net loss | $ | (43,001,455 | ) | $ | (26,864,340 | ) | $ | 16,137,115 | 60 | % | ||||||
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Revenue. Revenue for the years ended June 30, 2025, increased by 7,995% to approximately $8.7 million as compared to approximately $0.1 million for the year ended June 30, 2024. During the year ended June 30, 2025, we began our cryptocurrency mining business and generated approximately $8.7 million cryptocurrency mining revenue. There was no revenue from construction management consulting services for the year ended June 30, 2025. During the year ended June 30, 2024, we generated revenue of approximately $0.1 million from construction management consulting services. There was no cryptocurrency mining revenue for the year ended June 30, 2024.
The following table sets forth components of our revenue for the periods indicated:
| For the Years Ended June 30, | ||||||||||||||||
| Percentage | ||||||||||||||||
| Revenue | 2025 | 2024 | Change | Change | ||||||||||||
| Construction management consulting services | - | 107,800 | (107,800 | ) | (100 | )% | ||||||||||
| Cryptocurrency mining revenue | 8,726,016 | - | 8,726,016 | 100 | % | |||||||||||
| Total revenue | $ | 8,726,016 | $ | 107,800 | $ | 8,618,216 | 7,995 | % | ||||||||
Cost of Revenue. Cost of revenue for the years ended June 30, 2025, increased by 64,011% to approximately $9.0 million as compared to approximately $14,000 for the year ended June 30, 2024. Our cost of cryptocurrency mining revenue was approximately $9.0 million for the year ended June 30, 2025. There were no costs related to construction management consulting services for the year ended June 30, 2025. Our service cost was $14,000 from cost of construction management consulting services for the year ended June 30, 2024. There was no cost of cryptocurrency mining revenue for the year ended June 30, 2024.
The following table sets forth components of our cost of revenue for the periods indicated:
| For the Years Ended June 30, | ||||||||||||||||
| Percentage | ||||||||||||||||
| Cost of Revenue | 2025 | 2024 | Change | Change | ||||||||||||
| Construction management consulting services | - | 14,000 | (14,000 | ) | (100 | )% | ||||||||||
| Cryptocurrency mining cost | 8,975,518 | - | 8,975,518 | 100 | % | |||||||||||
| Total cost of revenue | $ | 8,975,518 | $ | 14,000 | $ | 8,961,518 | 64,011 | % | ||||||||
Gross (Loss) Profit. We had a gross loss of approximately $0.2 million for the cryptocurrency mining and a gross profit of approximately $0.1 million for the construction management consulting services during the years ended June 30, 2025, and 2024, respectively.
Selling, General and Administrative Expenses. Selling, general and administrative expenses mainly consist of office rent and expenses, costs associated with staff and support personnel who manage our business activities, and professional fees paid to third parties. We incurred selling, general and administrative expenses of approximately $2.6 million for the year ended June 30, 2025, as compared to approximately $2.3 million for the year ended June 30, 2024, an increase of approximately $0.3 million.
The increase was primarily due to a $0.6 million increase in professional service fees associated with our acquisitions of mining equipment and intangible assets during the year ended June 30, 2025, partially offset by a $0.2 million decrease in salary expenses.
Allowance for Credit Losses. Allowance for credit losses were nil and $332 for the years ended June 30, 2025, and 2024, respectively.
Stock Compensation Expenses. Stock compensation expenses were approximately $1.7 million for the year ended June 30, 2025, as compared to approximately $3.9 million for the year ended June 30, 2024. The decrease was mainly due to the shares that we issued to our consulting service providers were vesting in the year ended June 30, 2024 and the decrease of stock price for the year ended June 30, 2025, which we issued the stock granted to our management and employees stock with lower fair value of in the year ended June 30, 2025 as compared to the same period in 2024.
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Loss from Operations. We incurred losses from operations of approximately $4.6 million and approximately $6.1 million for the years ended June 30, 2025, and 2024, respectively. The decrease of approximately $1.5 million in losses was primarily due to the reasons previously discussed.
Total Other Expense, Net. Our total other expense, net, primarily consists of interest income, loss on extinguishment of debts, amortization of debt issuance costs and finance expense. We had a total other expense, net, of approximately $9.4 million and $0.2 million for the years ended June 30, 2025, and 2024, respectively. The increase of other expenses was primarily due to the increase in the amortization of debt issuance costs of approximately $5.9 million, the increase in finance expense of approximately $3.5 million in connection with the convertible notes that we issued in September and November 2024, and January 2025, the increase of loss on extinguishment of debts of approximately $0.4 million as we paid off or modified our existing convertible notes before their due date, offset by the increase of interest income of approximately $0.6 million as we earned interest income from a short-term third party loan during the year ended June 30, 2025.
Provision for Income Taxes. We did not incur income tax expense for the years ended June 30, 2025, and 2024 as we had operating losses.
Net Loss from Continuing Operations. We incurred a net loss from continuing operations of approximately $14.0 million for the year ended June 30, 2025, as compared to approximately $6.3 million for the year ended June 30, 2024. This change was the result of the combination of the changes as discussed above.
Net Loss from Discontinued Operations. We incurred a net loss from discontinued operations of approximately $29.0 million for the year ended June 30, 2025, as compared to approximately $20.6 million for the year ended June 30, 2024. The increase was primarily due to (i) the increase in impairment loss of intangible assets of approximately $14.6 million, as the related intangible assets were written off because they were no longer expected to generate future cash flows, (ii) the decrease in gross profit of approximately $0.7 million, as no operating activities were conducted by DMCC during the year ended June 30, 2025, (iii) the increase in provision for impairment loss on prepayments of approximately $10.5 million, related to prepayments for live concert and entertainment productions, and (iv) the decrease in other (expense) income, net of approximately $0.6 million. These increases were partially offset by (v) the decrease in selling, general and administrative expenses of approximately $2.2 million, primarily due to the decrease in amortization expenses of approximately $1.8 million and salary expenses of approximately $0.4 million, and (vi) the decrease in allowance for credit losses on our aged receivables of approximately $15.8 million.
Net Loss. We incurred a net loss of approximately $43.0 million for the year ended June 30, 2025, as compared to approximately $26.9 million for the year ended June 30, 2024. This change was the result of the combination of the changes as discussed above.
5.B. Liquidity and Capital Resources
As of June 30, 2026, we had cash and cash equivalents of approximately $44,000, which was held by our consolidated entities in the U.S. and Hong Kong. Although the Company reported positive working capital as of June 30, 2026, approximately $116.8 million of its current assets consisted of receivables of cryptocurrency whose fair value is subject to market conditions, including significant volatility in the market price and the availability of market participants willing to purchase the assets. The Company had an accumulated deficit of approximately $412.7 million as of June 30, 2026.
In assessing our liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. Our liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations.
We have engaged in cryptocurrency mining. Our business is capital intensive, and equity financing has been utilized to finance our working capital requirements and capital expenditures. Our working capital was approximately $105.5 million as of June 30, 2026, as compared to working capital deficit of approximately $8.8 million as of June 30, 2025.
In addition, we completed several equity and convertible note financings and received net proceeds of $255.1 million during the year ended June 30, 2026. Of this amount, approximately $230.7 million, net of offering costs, represented non-cash consideration in the form of SolvBTC received in connection with the issuance of units in October 2025, and approximately $24.4 million, net of offering costs and debt issuance costs, was received in cash. Furthermore, in August 2026 we completed a private placement for non-cash consideration with an agreed value of $10.0 million, payable in approximately 156.6533 SolvBTC.
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During the year ended June 30, 2026, while the mining operations represent a potential new revenue stream, the Company incurred a gross loss, primarily due to high energy costs, depreciation of mining equipment, and other direct operating costs exceeding the revenue from cryptocurrency production. These results reflect the early-stage and capital-intensive nature of the business, as well as exposure to market volatility and regulatory risks in the digital asset space. If we are unable to generate sufficient cash flow within the normal operating cycle of a twelve-month period to pay for our future payment obligations, we may be required to curtail or cease our operations. Management is trying to alleviate the going concern risk through obtaining additional equity financings to support our working capital. However, there is no assurance that management will be successful in their future plans. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. As described in Note 2 to the consolidated financial statements, these conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the date these financial statements are issued.
The following table provides summary information about our net cash flow for financial statement periods presented in this report:
| For the Years Ended June 30, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Net cash used in operating activities from continuing operations | $ | (6,951,974 | ) | $ | (8,337,201 | ) | $ | (2,780,452 | ) | |||
| Net cash used in investing activity from continuing operations | - | (3,400,000 | ) | - | ||||||||
| Net cash provided by financing activities from continuing operations | 5,935,192 | 12,777,876 | 2,561,197 | |||||||||
| Net change in cash and cash equivalents | $ | (1,016,782 | ) | $ | 1,040,675 | $ | (219,255 | ) | ||||
Principal demands for liquidity are for working capital and general corporate purposes.
Operating Activities
Net cash used in operating activities totaled approximately $7.0 million for the year ended June 30, 2026, which was mainly due to a net loss from continuing operations of approximately $159.0 million and non-cash adjustments to reconcile the net loss to net cash used in operating activities of approximately $1.4 million of change in fair value of derivative liabilities, offset by non-cash adjustments to reconcile the net loss to net cash used in operating activities of approximately $9.8 million of depreciation expense, approximately $0.6 million of stock compensation expense, approximately $20.7 million of finance expense on convertible notes payable, approximately $4.4 million of amortization of debt issuance costs, approximately $114.0 million of impairment of cryptocurrency, and approximately $8.6 million of impairment loss of long-lived assets. Net cash from changes in operating assets and liabilities resulted in a net cash outflow, which consists of the increase of USDT of approximately $6.3 million (which was later transferred to BTC KZ in repayment of the term loan), the increase of prepayments of approximately $600, and the decrease of other payables and accrued liabilities of approximately $94,000, offset by the decrease of receivables from service provider of approximately $1.8 million as we received cryptocurrency mining revenue earned in prior period that has been held by the service provider.
Net cash used in operating activities totaled approximately $8.3 million for the year ended June 30, 2025, which was mainly due to a net loss from continuing operations of approximately $14.0 million, offset by non-cash adjustments to reconcile the net loss to net cash used in operating activities of approximately $6.0 million of amortization of debt issuance costs, approximately $1.7 million of stock compensation expense, approximately $3.0 million of finance expense on convertible notes payable, approximately $2.9 million of depreciation expense, and approximately $0.2 million of loss on extinguishment of debts. Net cash from changes in operating assets and liabilities resulted in a net cash outflow, which consists of the increase of receivables from service provider of approximately $2.7 million as we commenced cryptocurrency mining in April 2025 and had USDT receivable as of June 30, 2025, and the decrease of other payables and accrued liabilities of approximately $5.6 million, offset by the decrease of prepayments of approximately $11,000.
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Net cash used in operating activities totaled approximately $2.8 million for the year ended June 30, 2024, which was mainly due to a net loss from continuing operations of approximately $6.3 million, offset by non-cash adjustments to reconcile the net loss to net cash used in operating activities of approximately $300 of allowance for credit losses, approximately $3.9 million of stock compensation expense, and $100,000 of amortization of debt issuance costs. Net cash from changes in operating assets and liabilities resulted in a net cash outflow, which mainly consists of the decrease of other payables and accrued liabilities of approximately $0.5 million, offset by the decrease of prepayment of approximately $21,000.
Investing Activities
There were no investing activities for the year ended June 30, 2026.
Net cash used in investing activities totaled approximately $3.4 million for the year ended June 30, 2025, which was due to the purchase of cryptocurrency mining equipment of $3.4 million and loan to a third party of $4.0 million, and offset by the proceeds from loan repayment by a third party of $4.0 million.
There were no investing activities for the year ended June 30, 2024.
Financing Activities
Net cash provided by financing activities totaled approximately $5.9 million for the year ended June 30, 2026, which was due to proceeds from issuance of ordinary shares and pre-funded warrants, net of offering costs, of approximately $13.8 million, proceeds from issuance of ordinary shares, net of offering costs, of approximately $5.9 million, proceeds from short-term loan of $0.3 million, and proceeds from the issuance of convertible notes, net of debt issuance costs, of approximately $4.8 million, offset by the repayment of long-term loan of approximately $16.7 million, the repayment of a convertible note of approximately $1.9 million, and the payments on offering costs for issuance of units of approximately $0.2 million.
Net cash provided by financing activities totaled approximately $12.8 million for the year ended June 30, 2025, which was due to the proceeds from convertible notes, net of debt issuance cost, of approximately $14.3 million, offset by the repayment of a convertible note of approximately $1.1 million and the repayment of borrowings from related parties of approximately $0.4 million.
Net cash provided by financing activities totaled approximately $2.6 million for the year ended June 30, 2024, which was due to the sale of ordinary shares, net of offering costs, of approximately $1.4 million through our private placement offering, the proceeds from a convertible notes, net of debt issuance cost, of $1.0 million, and the borrowings from our related parties of approximately $0.2 million to pay for certain operating expenses.
Indebtedness
In July 2025, we entered into a secured term loan agreement with BTC KZ pursuant to which BTC KZ agreed to lend us $31,600,000 (the “Loan”). The Loan bears interest at a rate of 5% per annum and matures on July 24, 2028. We are also required to prepay the outstanding balance of the Loan with at least 50% of the net proceeds from any public or private equity offering. Our obligations under the Loan are secured by a first-priority security interest in our mining equipment. As of June 30, 2026, the outstanding balance of the Loan was $8,593,101, of which $8,593,101 is payable in the twelve months ending June 30, 2027.
On May 28, 2026, we entered into a loan agreement with a third party and subsequently entered into a supplemental agreement on June 28, 2026, pursuant to which the third party agreed to lend $300,000 to us to fund our daily corporate operations. The outstanding loan principal bears interest at a rate of 5% per annum, accruing from June 28, 2026 until the date the principal is repaid in full. The principal and all accrued and unpaid interest are due and payable one year from the date of the agreement.
As of June 30, 2026, the face value of the convertible notes we issued in March 2026 was $2,187,571, and the convertible notes payable, net of unamortized discounts, was $1,791,015. As of June 30, 2026, we also owed $310,000 to Hui Xu, the general manager of CACM, under an interest-free loan due on demand.
Commitments and Contingencies
In the normal course of business, we are subject to loss contingencies, such as legal proceedings and claims arising out of our business, that cover a wide range of matters, including, among others, government investigations and tax matters. In accordance with ASC No. 450-20, “Loss Contingencies”, we will record accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.
Inflation
Inflation in the U.S. and Hong Kong have not materially affected our results of operations. Although we have not been materially affected by inflation in the past, we may be affected if U.S. and Hong Kong experience higher rates of inflation in the future.
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Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
5.C. Research and Development, Patents and Licenses, etc.
Research and Development
There are no research and development expenses during the years ended June 30, 2026, 2025 and 2024.
Patents and Licenses, etc.
As of June 30, 2026 and 2025, we held nil in copyrights, net of accumulated amortization.
5.D. Trend Information
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
5.E. Critical Accounting Estimates
Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting policies that are significant to the preparation of financial statements. These accounting policies are important for an understanding of their financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. Our significant accounting policies are more fully described in Note 2 to the consolidated financial statements included elsewhere in this annual report, but we believe that the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our consolidated financial statements.
Accounting for long-lived assets
Long-lived assets held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technological or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.
If the value of an asset is determined to be impaired, the impairment to be recognized is measured in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less disposition costs.
Competitive pricing pressures and changes in interest rates could materially and adversely affect our estimates of future net cash flows to be generated by the long-lived assets, and thus could result in future impairment losses. During the fiscal year ended June 30, 2026, we recognized an impairment loss of $8,580,000 on our cryptocurrency mining equipment, which reduced its carrying amount to its estimated fair value of $17,670,000, based on market prices for similar assets.
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Income taxes
We account for income taxes in accordance with FASB ASC 740, “Income Taxes,” which requires us to use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.
ASC 740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.
Impairment of SolvBTC
SolvBTC was acquired through the issuance of units in October 2025. Management concluded that SolvBTC does not meet all of the scope criteria of ASC 350-60 and therefore accounts for SolvBTC as an indefinite-lived intangible asset under ASC 350-30. SolvBTC is measured at cost less impairment in accordance with ASC 350-30. As of June 30, 2026, the 2,000 SolvBTC had been transferred out and were subsequently transferred back to the Company (see Note 6 for details).
The evaluation of SolvBTC for impairment requires management to exercise judgment in determining the fair value of the asset and assessing whether its carrying amount exceeds its fair value. In determining the fair value of SolvBTC, management considers significant assumptions and factors, including the selection of the principal market in which the asset would be transacted, the level of market activity, and the liquidity of SolvBTC in that market. Management performed an impairment assessment of SolvBTC during the period between June 15, 2026 and June 26, 2026, and determined that its carrying amount of approximately $230.8 million exceeded its fair value of approximately $116.8 million, based on the market price of SolvBTC as of that date. Accordingly, the Company recognized an impairment charge of $114.0 million for the year ended June 30, 2026. The determination of the fair value of SolvBTC is sensitive to fluctuations in the market price of SolvBTC. Changes in the market price could result in a material change in the fair value of SolvBTC and could result in additional impairment charges in future periods. Management assesses SolvBTC for impairment annually and whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, in accordance with ASC 350-30. The Company first acquired SolvBTC in October 2025 and therefore did not hold SolvBTC during the fiscal years ended June 30, 2025 and 2024.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A. Directors and Senior Management
The following table sets forth information regarding our executive officers and directors as of the date of this annual report.
| Directors and Executive Officers | Age | Position/Title | ||
| Chloe Zhou Parker | 46 | Chairwoman of the Board and Director | ||
| Xiao Wen “Samantha” Huang | 42 | Director and Chief Executive Officer | ||
| Lili Jiang | 42 | Chief Financial Officer | ||
| Hung-Jen Kuo | 53 | Independent Director | ||
| Honglei Jiang | 44 | Independent Director | ||
| Yan Zhang | 45 | Independent Director |
Biography
Chloe Zhou Parker
Ms. Parker has served as our director and chairwoman of the Board since September 2025. Ms. Parker has extensive experience in real estate investment and management, as well as blockchain business development. She has served as the Chief Executive Officer of Marina VIP LLC, a real estate investment and management company, since July 2022, where she provides strategic leadership and vision and directs all aspects of operations. Ms. Parker has also served as the business development director at Bitwisdom Ltd. since October 2023, where she leads growth in blockchain-based services and drives client acquisition and partnership. Ms. Parker received her associate of science degree in hospitality management from César Ritz Colleges, Switzerland in 2000.
Xiao Wen “Samantha” Huang
Ms. Huang has served as our director since March 2025 and our Chief Executive Officer since May 2025. From August 2019 to October 2024, Ms. Huang served as the President at BK FOOD INC. (New York), where she was responsible for setting strategic goals and ensuring alignment with the company’s vision. From June 2013 to June 2019, Ms. Huang served as the Executive Director at Pengpai Pros & Partners (New York). From July 2010 to February 2013, she served as a Chief Investment & Finance Officer at Shanghai Daoshe Law Firm. Ms. Huang obtained her bachelor’s degree in accounting and finance from Shanghai University in July 2006. Ms. Huang was appointed to be a director of the Board on March 17, 2025 and was appointed to be the Chief Executive Officer of the Company on May 30, 2025.
Lili Jiang
Ms. Jiang has been serving as our Chief Financial Officer since March 28, 2019. She previously served as the Manager of the Overseas Medical Business Department of Aolan Health Management Co., Ltd (“Aolan”) from May 2016 to March 28, 2019. Prior to joining Aolan, Ms. Jiang was the Business Executive Assistant at the Australian Embassy in China from July 2011 to April 2016. She is a Certified Public Accountant in Australia. Ms. Jiang has a bachelor’s degree in Accounting and Finance from Sydney Technical University in Australia, and a Master’s degree in Economics in Finance from University of New South Wales in Sydney, Australia.
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Hung-Jen Kuo
Mr. Kuo has been serving as our independent director since August 12, 2020. He has more than 25 years of experience in the global securities fund investment & business management industry. He is currently the Executive President CEO of Fosun Capital. Before joining Fosun Group, he was the head general manager and director of the China Securities Services Division of Deutsche Bank, China. Mr. Kuo previously served as the chief investment expert of Noah Group, the managing director of Gopher Assets Management and the general manager of Gopher Public Fund. At the end of 2010, Mr. Kuo represented American Russell Investments and to participate in establishing Ping An Russell (Shanghai) Investment Management Company, one of the first private equity fund management companies in China. Mr. Kuo successfully introduced Russell’s investment MOM model to China, led investment research team building and business development, and issued China’s first MOM product. Mr. Kuo joined Russell Investment’s global Seattle headquarters in 2001, holding various positions in core departments such as investment management, research, and operations. In 1996, Mr. Kuo joined Aurora Group in Taipei as the assistant to CEO covering on business strategies and IPO project and jointly managing Russell Investment’s global assets. Mr. Kuo holds a master’s degree in finance from the University of Colorado and a bachelor’s degree in business administration from Sun Yat-sen University in Taiwan.
Honglei Jiang
Mr. Jiang has served as our independent director since January 4, 2023. Mr. Jiang has served as the chairman of the board of Beijing Huaihao Education Consulting Co., Ltd. since 2020. From 2017 to 2020, Mr. Jiang served as chief executive officer of Deyi Financial Leasing Co., Ltd. From February 2015 to December 2016, Mr. Jiang served as executive vice president of Kunsheng Financial Leasing Co., Ltd. Mr. Jiang earned his master’s degree in investment economics from Dongbei University of Finance & Economics in 2008, and obtained his bachelor’s degree in economics from Changchun University of Science and Technology in 2005.
Yan Zhang
Ms. Zhang has served as our independent director since March 2025. She has served as a Sourcing Manager at Shenzhen YAOGU Industrial Co., Ltd since April 2020, where she is responsible for identifying and evaluating suppliers, managing costs, maintaining supplier relationships, developing strategic sourcing plans, mitigating risks, and leveraging data analytics to optimize procurement and supply chain efficiency. Ms. Zhang obtained her bachelor’s degree in food science and technology from HuaiHai Institute of Technology in July 2003.
Changes in Our Board and Senior Management
Ms. Wei Zhang, a director and the chairwoman of the Board, notified the Company of her resignation as a director and as the chairwoman of the Board for personal reasons, effective September 24, 2025. Effective on September 24, 2025, the Board appointed Ms. Chloe Zhou Parker as a director and chairwoman of the Board. Effective March 6, 2026, Patrick Wing-Ho Ngan resigned as our Chief Investment Officer. Mr. Ngan had served as Chief Investment Officer since October 8, 2025. We have not appointed a successor Chief Investment Officer. There are no family relationships among any of our directors and executive officers.
Employment Agreements
We have entered into employment agreements with each of our executive officers, which can be terminated upon both parties’ agreement or by law. We may terminate an executive officer’s employment for cause at any time without advance notice in certain events. We may terminate an executive officer’s employment by giving a prior written notice or by paying certain compensation. An executive officer may terminate his or her employment at any time by giving a prior written notice.
Each executive officer has agreed to hold, unless expressly consented to by us, at all times during and within one year after the termination of his or her employment agreement, in strict confidence and not to use, any of our confidential information or the confidential information of our customers and suppliers. Other than the service contract with Ms. Wei Zhang, our former chairwoman, which provided for benefits upon termination, none of our directors has entered into a service contract with us that provides for benefits upon termination of service.
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6.B. Compensation
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our principal executive officer and our other most highly paid executive officer (the “named executive officers”) for services rendered in all capacities during the noted periods. No other executive officers received total annual salary and bonus compensation in excess of $100,000 during the fiscal year ended June 30, 2026.
| Name and Principal Position | Year Ended June 30 | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation Earnings ($) | Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
| Wei Zhang | 2026 | 227,500 | - | 260,182 | - | - | - | 180,000 | 667,682 | |||||||||||||||||||||||||||
| Chairman of the Board (Former) | ||||||||||||||||||||||||||||||||||||
| Xiao Wen “Samantha” Huang | 2026 | 84,000 | - | - | - | - | - | - | 84,000 | |||||||||||||||||||||||||||
| Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
| Lili Jiang | 2026 | 120,000 | - | 156,015 | - | - | - | - | 276,015 | |||||||||||||||||||||||||||
| Chief Financial Officer | ||||||||||||||||||||||||||||||||||||
| Chloe Zhou Parker | 2026 | 76,894 | 76,894 | |||||||||||||||||||||||||||||||||
| Chairwoman of the Board and Director | ||||||||||||||||||||||||||||||||||||
| Patrick Wing-Ho Ngan | 2026 | 20,000 | 20,000 | |||||||||||||||||||||||||||||||||
| Chief Investment Officer (Former) | ||||||||||||||||||||||||||||||||||||
The executive directors did not receive any compensation for serving on the Board. The following table represents compensation earned by our non-executive directors in fiscal year ended June 30, 2026.
| Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-equity incentive plan compensation | Nonqualified deferred compensation earnings | All other compensation | Total | ||||||||||||||||||||||
| Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
| Hung-Jen Kuo | 36,000 | - | - | - | - | - | 36,000 | |||||||||||||||||||||
| Honglei Jiang | 36,000 | - | - | - | - | - | 36,000 | |||||||||||||||||||||
| Yan Zhang | 36,000 | - | - | - | - | - | 36,000 | |||||||||||||||||||||
We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers.
Equity Incentive Plans
At an extraordinary general meeting held on January 22, 2026, our shareholders approved by ordinary resolution the adoption of an equity incentive plan (the “2026 Equity Incentive Plan”) and all transactions contemplated thereunder, including the reservation of 33,369 Class A Ordinary Shares on a post-split basis thereunder and the future issuance of shares. The number of shares so reserved was determined before the share consolidations described under “Corporate History and Development” and is subject to adjustment in accordance with the terms of that plan. On February 2, 2026, we filed a registration statement on Form S-8 (File No. 333-293130) registering Class A Ordinary Shares issuable under the 2026 Equity Incentive Plan. The 2026 Equity Incentive Plan is our only equity incentive plan currently in effect.
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6.C. Board Practices
Terms of Directors and Officers
Officers of the Company may be elected by the Company in general meeting or appointed by the directors and may consist of a president, one or more vice presidents, a secretary, one or more assistant secretaries, a treasurer, one or more assistant treasurers and such other officers as the Company in general meeting or the directors may from time to time think necessary and all such officers shall perform such duties as may be prescribed by the company in general meeting or the directors. They shall hold office until their successors are elected or appointed but any officer may be removed at any time by the Company in general meeting or by the directors. If any office becomes vacant the Company in general meeting or the directors may fill the same. Any person may hold more than one of these offices and no officer need be a member or director.
The directors shall have power at any time and from time to time to appoint any person to be a director, either to fill a casual vacancy or as an addition to the existing directors but so that the total number of directors (exclusive of alternate directors) shall not at any time exceed the number fixed in accordance with the articles of association of the Company. The holder or holders of more than half of the paid-up share capital of the Company (as to issue price) giving the right to attend and vote at general meetings of the Company may appoint any person to be a director and may in like manner remove any director and may in like manner appoint another person in his stead.
The office of director shall be vacated if the director: (a) is prohibited by law from serving as director; (b) becomes bankrupt or makes any arrangement or composition with his creditors; or (c) dies or is found to be or becomes of unsound mind; or (d) resigns his office by notice in writing to the company or otherwise pursuant to any agreement between the Company and such director; or (e) is removed from office by notice of the holder or holders of more than half of the paid-up share capital of the Company (as to Issue price) giving the right to attend and vote at general meetings of the company notwithstanding anything in the articles of association of the Company or any agreement between the Company and such director; (f) is requested by all the other directors (numbering at least two) to resign; or (g) if he absents himself (without being represented by proxy or an alternate director appointed by him) from three consecutive meetings of the board of directors without special leave of absence from the directors, and they pass a resolution that he has by reason of such absence vacated office.
Duties of Directors
Under Cayman Islands law, our directors owe fiduciary duties to our Company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our Company a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time. Our Company has the right to seek damages if a duty owed by our directors is breached. In limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached.
Committees of the Board of Directors
We have established three fully independent committees under the board of directors: the audit committee, the compensation committee and the corporate governance and nominating committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.
Audit Committee
Hung-Jen Kuo, Honglei Jiang and Yan Zhang are members of our Audit Committee, and Honglei Jiang serves as the chairman. All members of our Audit Committee satisfy the independence standards promulgated by the SEC and by Nasdaq as such standards apply specifically to members of audit committees.
Our Audit Committee performs several functions, including:
| ● | selecting our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors; |
| ● | reviewing with our independent auditors any audit problems or difficulties and management’s response; |
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| ● | reviewing and approving all proposed related-party transactions, as defined in Item 404 of Regulation S- K under the Securities Act of 1933, as amended; |
| ● | discussing the annual audited financial statements with management and our independent auditors; |
| ● | reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of significant internal control deficiencies; |
| ● | annually reviewing and reassessing the adequacy of our audit committee charter; |
| ● | meeting separately and periodically with management and our independent auditors; |
| ● | reporting to the Board; and |
| ● | such other matters that are specifically delegated to our audit committee by the Board from time to time. |
Compensation Committee
Hung-Jen Kuo, Honglei Jiang and Yan Zhang are members of our Compensation Committee, and Yan Zhang serves as the chairman. All members of our Compensation Committee are qualified as independent under the current definition promulgated by Nasdaq. The Compensation Committee is responsible for, among other things:
| ● | reviewing and approving the total compensation package for our senior executives; and |
| ● | reviewing periodically, and approving, any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. |
Nominating and Corporate Governance Committee
Hung-Jen Kuo, Honglei Jiang and Yan Zhang are members of our Nominating and Corporate Governance Committee, and Hung-Jen Kuo is the chairman. All members of our Nominating and Corporate Governance Committee are qualified as independent under the current definition promulgated by Nasdaq. The Nominating and Corporate Governance Committee is responsible for, among other things:
| ● | identify qualified individuals to become Board members, consistent with criteria approved by the Board, and to recommend that the Board select, the director nominees for the next annual meeting of shareholders; |
| ● | develop and recommend to the Board a set of corporate governance guidelines applicable to the Company; and |
| ● | to oversee the evaluation of the Board and management. |
Audit Committee Financial Expert
Our audit committee consists of Hung-Jen Kuo, Honglei Jiang and Yan Zhang. Our board of directors has determined Hung-Jen Kuo, Honglei Jiang and Yan Zhang are “independent directors” within the meaning of Nasdaq Stock Market Rule 5605(a)(2) and meet the criteria for independence set forth in Rule 10A-3 (b) of the Exchange Act. Hung-Jen Kuo, Honglei Jiang and Yan Zhang meet the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.
Code of Business Conduct and Ethics
The Board has adopted a Code of Conduct and Ethics that applies to the Company’s directors, officers and employees. A copy of the Code of Conduct and Ethics is incorporated by reference as Exhibit 11.1 to this annual report. Printed copies of our Code of Ethics may be obtained, without charge, by contacting the Corporate Secretary, Zeta Network Group, located at 14 Wall Street, 20th Floor, New York, NY 10005.
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Insider Trading Policy
Our insider trading policies and procedures are included in our Code of Business Conduct and Ethics.
6.D. Employees
As of June 30, 2026, 2025 and 2024, we had 20, 14 and 47 full-time employees, respectively. As required by applicable law, we have entered into employment contracts with all our officers, managers and employees. We believe that we maintain a satisfactory working relationship with our employees and we have not experienced any significant labor disputes or any difficulty in recruiting staff.
6.E. Share Ownership
The following table sets forth information regarding the beneficial ownership of our Class A Ordinary Shares and Class B Ordinary Shares as of October 16, 2026 by:
| ● | each of the Company’s directors, and executive officers; and |
| ● | each person known to the Company to own beneficially more than 5% of our Class A Ordinary Shares or Class B Ordinary Shares. |
Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Class A Ordinary Shares and Class B Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person is based on 5,002,067 Class A Ordinary Shares and 1 Class B Ordinary Share outstanding as of October 16, 2026.
| Class A Ordinary Shares Beneficially Owned | Class B Ordinary Shares Beneficially Owned | Voting Power* | ||||||||||||||||||
| Number | % | Number | % | % | ||||||||||||||||
| Directors and Executive Officers(1): | ||||||||||||||||||||
| Chloe Zhou Parker | - | - | ||||||||||||||||||
| Xiao Wen “Samantha” Huang | - | - | ||||||||||||||||||
| Lili Jiang | 153 | 0.003 | 0.003 | |||||||||||||||||
| Yan Zhang | - | - | ||||||||||||||||||
| Hung-Jen Kuo | - | - | ||||||||||||||||||
| Honglei Jiang | - | - | ||||||||||||||||||
| All directors and executive officers as a group (six individuals): | 153 | 0.003 | 0.003 | |||||||||||||||||
| Vast Ocean Inc. | 2 | 0.00004 | 1 | 100.0 | 0.0004 | |||||||||||||||
| 5% Shareholders: | - | - | ||||||||||||||||||
| L1 Capital Global Opportunities Master Fund, Ltd.(2) | 538,443 | 9.74 | ||||||||||||||||||
| * | The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis. The number and percentage of Class A Ordinary Shares exclude Class A Ordinary Shares convertible from Class B Ordinary Shares as the beneficial ownership of Class B Ordinary Shares is presented separately. Each holder of Class B Ordinary Shares is entitled to twenty (20) votes per Class B Ordinary Share and each holder of Class A Ordinary Shares is entitled to one vote per Class A Ordinary Share. |
| (1) | Unless otherwise indicated, the business address of each of the individuals is 14 Wall Street, 20th Floor, New York, NY 10005. |
| (2) | Based solely on the Schedule 13G/A filed with the SEC on September 1, 2026 by L1 Capital Global Opportunities Master Fund, Ltd. The 538,443 Class A Ordinary Shares reported consist of 11,584 Class A Ordinary Shares, 1,038 Class A Ordinary Shares issuable upon conversion of a Senior 10% Original Issue Discount Convertible Promissory Note, 5 Class A Ordinary Shares issuable upon exercise of warrants purchased in February 2025, 2 Class A Ordinary Shares issuable upon exercise of warrants purchased in September 2025, and 525,814 Class A Ordinary Shares issuable upon exercise of warrants purchased in March 2026. The reported amount excludes a further 435,286 Class A Ordinary Shares issuable upon exercise of warrants purchased in March 2026 that are not exercisable by reason of a 9.99% beneficial ownership limitation. David Feldman and Joel Arber are the directors of L1 Capital Global Opportunities Master Fund, Ltd. Its address is 3rd Floor, Citrus Grove Building, 106 Goring Ave., George Town, PO Box 10085, Grand Cayman, Cayman Islands KY1-1001 |
| The Company is not aware of any arrangement that may, at a subsequent date, result in a change of control of the Company. |
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6.F. Disclosure of Actions to Recover Erroneously Awarded Compensation
N/A.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A. Major Shareholders
Information regarding beneficial owners of more than 5% of our voting securities is included under “Item 6.E. Share Ownership.”
As of October 16, 2026, there were 446 holders of record entered in our ordinary share register. The number of individual holders of record is based exclusively upon our share register and does not address whether a share or shares may be held by the holder of record on behalf of more than one person or institution who may be deemed to be the beneficial owner of a share or shares in our company.
To our knowledge, as of October 16, 2026, 1,406,923, or approximately 28.13%, of our Class A Ordinary Shares were held by 38 record holders in the United States.
To our knowledge, we are not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person, severally or jointly.
To our knowledge, based on the Schedules 13D and 13G and the Forms 3 filed with the SEC, the following significant changes in the percentage ownership held by our major shareholders occurred during the past three years.
In March 2025, ULife acquired 16,250,000 Class A Ordinary Shares, or approximately 67.12% of our then outstanding shares, as share consideration under the purchase and sale agreement dated February 26, 2025. Those shares were redeemed and cancelled on August 6, 2025, and ULife has not held any of our shares since then.
Hudson Bay Capital Management LP reported beneficial ownership of 6.94% of our ordinary shares in a Schedule 13G filed on February 6, 2023 and 1.00% in a Schedule 13G/A filed on February 2, 2024.
Intracoastal Capital LLC reported beneficial ownership of 9.99% of our Class A Ordinary Shares in a Schedule 13G filed on January 27, 2025 and a Schedule 13G/A filed on May 9, 2025, 4.99% in a Schedule 13G/A filed on August 12, 2025 and 3.7% in a Schedule 13G filed on August 20, 2025.
UBS Group AG reported beneficial ownership of 7.1% of our Class A Ordinary Shares in a Schedule 13G filed on February 10, 2025 and 0.0% in a Schedule 13G/A filed on April 30, 2025.
Anson Funds Management LP and its affiliates reported beneficial ownership of 9.9% of our Class A Ordinary Shares in a Schedule 13G filed on May 15, 2025, 0% in a Schedule 13G/A filed on November 14, 2025 and 8.2% in a Schedule 13G filed on May 15, 2026.
Arena Investors, LP and its affiliates reported beneficial ownership of 6.1% of our Class A Ordinary Shares in a Schedule 13G filed on August 21, 2025 and 0.0% in a Schedule 13G/A filed on November 14, 2025.
L1 Capital Global Opportunities Master Fund, Ltd. reported beneficial ownership of 9.99% of our Class A Ordinary Shares in a Schedule 13G filed on March 18, 2026 and in a Schedule 13G/A filed on September 1, 2026.
7.B. Related Party Transactions
Policies and Procedures for Related Party Transactions
Our Audit Committee is responsible for reviewing and approving all proposed related-party transactions, as defined in Item 404 of Regulation S-K under the Securities Act. See “6.C. Board Practices - Committees of the Board of Directors - Audit Committee”. However, as described under “Item 16G. Corporate Governance,” we follow home country practice in lieu of the Nasdaq requirement that our audit committee or another independent body of our board of directors conduct an appropriate review and oversight of all related party transactions for potential conflict of interest situations on an ongoing basis.
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Loans from Directors and Officers
Certain directors and officers of the Company and its subsidiaries have extended interest-free loans, due on demand, to us. The balances outstanding on these loans as of June 30, 2026, 2025, and 2024 are as follows:
| Name of Related Party | Relationship | June 30, 2026 | June 30, 2025 | June 30, 2024 | ||||||||||
| Wei Zhang | Former Chairman of the Board and Director of the Company | $ | - | $ | - | $ | 198,110 | |||||||
| Hui Xu | General Manager of CACM | 310,000 | 310,000 | 560,000 | ||||||||||
| Louis Luo | Former Director and Former Chief Executive Officer of the Company | - | 3,073 | 3,087 | ||||||||||
| Total | $ | 310,000 | $ | 313,073 | $ | 761,197 | ||||||||
Share Grants to Directors and Officers
We have granted restricted Class A ordinary shares to members of our Board, our senior management and consultants. Restricted share grants are measured based on the market price on the grant date. Grants to our directors and officers, in each case made pursuant to the recipient’s employment contract, were as follows:
In February 2024, we granted an aggregate of 1 restricted Class A ordinary shares with a fair value of $14,000 to Mr. Louis Luo, our former Chief Executive Officer, vesting quarterly over a required service period of one year from February 14, 2024 to February 13, 2025.
In April 2024, we granted an aggregate of 1 restricted Class A ordinary shares with a fair value of $660 to Ms. Lili Jiang, our Chief Financial Officer, vesting quarterly over a required service period of one year from April 1, 2024 to March 31, 2025.
In August 2024, we granted an aggregate of 1 restricted Class A ordinary shares with a fair value of $2,900 to Ms. Wei Zhang, vesting quarterly over a required service period of one year from August 9, 2024 to August 8, 2025.
In February 2025, we granted an aggregate of 1 restricted Class A ordinary shares with a fair value of $595 to Mr. Louis Luo, vesting quarterly over a required service period of one year from February 14, 2025 to February 13, 2026.
In April 2025, we granted an aggregate of 1 restricted Class A ordinary shares with a fair value of $22 to Ms. Lili Jiang, vesting quarterly over a required service period of one year from April 1, 2025 to March 31, 2026.
In August 2025, we granted an aggregate of 1 restricted Class A ordinary shares with a fair value of $1,475 to Ms. Wei Zhang, vesting quarterly over a required service period of one year from August 9, 2025 to August 8, 2026.
In April 2026, we granted an aggregate of 1 restricted Class A ordinary shares with a fair value of $1 to Ms. Lili Jiang, vesting quarterly over a required service period of one year from April 1, 2026 to March 31, 2027.
In September 2025, our Board granted an aggregate of 621 Class A ordinary shares, with a fair value of $645,778 determined using the closing price of $1,040.00 on September 4, 2025, to Ms. Wei Zhang and Ms. Lili Jiang and employees under the 2025 Equity Incentive Plan. Those shares vested immediately upon grant.
Employment Agreements
We have entered into employment agreements with each of our executive officers. See “6.A. Directors and Senior Management - Employment Agreements”.
7.C. Interests of Experts and Counsel
Not applicable.
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ITEM 8. FINANCIAL INFORMATION
8.A. Consolidated Statements and Other Financial Information
The financial statements required by this item may be found at the end of this Annual Report on 20-F, beginning on page F-1.
Legal Proceedings
See “4.B. Business Overview - Legal Proceedings.”
Dividends
We have never declared or paid any dividend on our ordinary shares and we do not anticipate paying any dividends on our ordinary shares in the future. We currently intend to retain all future earnings to finance our operations and to expand our business.
8.B. Significant Changes
Except as disclosed elsewhere in this annual report, no other significant changes to our financial condition have occurred since the date of the annual financial statements contained herein.
ITEM 9. THE OFFER AND LISTING
9.A. Offer and Listing Details
Our Class A ordinary shares are listed for trading on the Nasdaq Capital Market under the symbol “ZNB.” The shares began trading on February 25, 2013 on the Nasdaq Capital Market.
9.B. Plan of Distribution
Not Applicable.
9.C. Markets
Our Class A ordinary shares are currently traded on the Nasdaq Capital Market.
9.D. Selling Shareholders
Not Applicable.
9.E. Dilution
Not Applicable.
9.F. Expenses of the Issuer
Not Applicable.
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ITEM 10. ADDITIONAL INFORMATION
10.A. Share Capital
Not Applicable.
10.B. Memorandum and Articles of Association
Summary
We are a Cayman Islands exempted company with limited liability and our affairs are governed by our tenth amended and restated memorandum and articles of association, adopted on May 8, 2026 and effective on July 27, 2026 (the “Amended and Restated Memorandum and Articles”), the Companies Act (Revised) of the Cayman Islands and the common law of the Cayman Islands.
As of the date hereof, the authorized share capital of the Company is USD$32,000,000.00 divided into 1,400,000,000 class A ordinary shares with a nominal or par value of USD$0.02 (“Class A Ordinary Shares”) each and 200,000,000 class B ordinary shares with a nominal or par value of USD$0.02 (“Class B Ordinary Shares” and together with the Class A Ordinary Shares, the “Ordinary Shares”).
Class A Ordinary Shares and Class B Ordinary Shares
The following description of our share capital and provisions of the tenth amended and restated memorandum and articles of association of the Company adopted by special resolution passed at extraordinary general meeting of shareholders of the Company held on May 8, 2026 (the “EGM”), with effect from July 27, 2026 (the “Amended and Restated Memorandum and Articles of Association”) are summaries and do not purport to be complete. Reference is made to our Amended and Restated Memorandum and Articles of Association, copies of which are filed as an exhibit to this annual report on Form 20-F.
Objects of Our Company
Except as prohibited or limited by the Companies Act (Revised) of the Cayman Islands (the “Companies Act”), the Company shall have and be capable of from time to time and all times exercising any and all of the powers at any time or from time to time exercisable by a natural person or body corporate in doing in any part of the world whether as principal, agent, contractor or otherwise whatever may be considered by it necessary for the attainment of its objects and whatever else may be considered by it as incidental or conducive thereto or consequential thereon, including, but without in any way restricting the generality of the foregoing, the power to make any alterations or amendments to this memorandum of association and the articles of association of the Company and the power to pay all expenses of and incidental to the promotion, formation and incorporation of the Company; to register the Company to do business in any other jurisdiction; to sell, lease or dispose of any property of the Company; to draw, make, accept, endorse, discount, execute and issue promissory notes, debentures, bills of exchange, bills of lading, options, warrants and other negotiable or transferable instruments; to lend money or other assets and to act as guarantors; to borrow or raise money on the security of the undertaking or on all or any of the assets of the Company or without security; to invest monies of the Company in such manner as the directors determine; to promote other companies; to sell the undertaking of the Company for cash or any other consideration; to distribute assets in specie to shareholders of the Company; to make charitable or benevolent donations; to pay pensions or gratuities or provide other benefits in cash or kind to directors, officers, employees, past or present, and their families; to carry on any trade or business and generally to do all acts and things which, in the opinion of the Company or the directors, may be conveniently or profitably or usefully acquired and dealt with, carried on, executed or done by the Company in connection with the business.
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Share Capital
The holders of our Class A Ordinary Shares are entitled to one (1) vote per share and to receive notice of, attend at and vote as a shareholder at any general meeting of the Company.
The holders of our Class B Ordinary Shares are entitled to twenty (20) votes per share and to receive notice of, attend at and vote as a shareholder at any general meeting of the Company.
The Class B Ordinary Shares shall be convertible into Class A Ordinary Shares at any time by the holder thereof on an one-for-one basis. The right to convert shall be exercisable by the holder of the Class B Ordinary Shares delivering a written notice to the Company that such holder elects to convert a specified number of Class B Ordinary Shares into Class A Ordinary Shares.
Except for the voting rights and conversion rights set out in the Amended and Restated Memorandum and Articles of Association, the Class A Ordinary Shares and the Class B Ordinary Shares shall rank pari passu and shall have the same rights, preferences, privileges and restrictions.
Dividends
Subject to the Companies Act and our Amended and Restated Memorandum and Articles of Association, the directors may from time to time declare dividends (including interim dividends) and distributions on issued shares of the Company and authorize payment of the same out of funds of the Company lawfully available therefor. No dividend or distribution shall be paid except out of the profits of the Company, realized or unrealized, or out of the share premium account or as otherwise permitted by the Companies Act.
The directors may declare that any dividend or distribution be paid wholly or partly by the distribution of specific assets and in particular of paid-up shares (as to issue price), debentures or debenture stock of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the directors may settle the same as they think expedient and in particular may issue fractional certificates and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all members and may vest any such specific assets in trustees as may seem expedient to the directors.
No dividend or distribution shall bear interest against the Company.
Voting
Voting at any shareholders’ meeting is by show of hands unless a poll is demanded by the chairman or persons holding certain amounts of shares as set forth in our Amended and Restated Memorandum and Articles of Association. Actions that may be taken at a general meeting also may be taken by a unanimous resolution of the shareholders in writing.
No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business; two members present in person, by electronic facilities or by proxy shall be a quorum provided always that if the Company has one member of record the quorum shall be that one member present in person, by electronic facilities or by proxy. An ordinary resolution to be passed at a general meeting requires the affirmative vote of a simple majority of the votes cast.
A special resolution is required to, amongst other things, change the name of the Company, approve a merger, amend our Amended and Restated Memorandum and Articles of Association, continue into a jurisdiction outside of the Cayman Islands, reduce the share capital.
Transfer of Shares
Subject to any applicable requirements set forth in our Amended and Restated Memorandum and Articles of Association and provided that a transfer of ordinary shares complies with applicable rules of the Nasdaq, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or in a form prescribed by Nasdaq or in any other form approved by our board of directors, executed by or on behalf of the transferor and, unless the share is fully paid up or the transferee otherwise consents, by or on behalf of the transferee and shall be accompanied by the certificate (if any) of the shares to which it relates and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer.
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The transferor shall be deemed to remain a shareholder until the name of the transferee is entered in the register of members in respect of the relevant shares.
If our directors refuse to register a transfer they shall, within two months after the date on which the instrument of transfer was lodged, send to the transferee notice of such refusal.
The registration of transfers may be suspended at such times and for such periods as the directors may from time to time determine, provided always that such registration shall not be suspended for more than thirty days in any year.
Winding-Up/Liquidation
If the Company is, or is likely to become, unable to pay its debts, the directors shall have power to present a winding up petition in the name of the Company and/or to apply for the appointment of provisional liquidators in respect of the Company.
Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares, if the Company shall be wound up, the liquidator may, with the sanction of an ordinary resolution of the Company and any other sanction required by law, divide amongst the members in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the members as the liquidator, with the like sanction, shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.
Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares, if the Company shall be wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively. And if in a winding up the assets available for distribution amongst the members shall be more than sufficient to repay the whole of the capital at the commencement of the winding up, the excess shall be distributed amongst the members in proportion to the capital at the commencement of the winding up paid up on the shares held by them respectively. But our Amended and Restated Memorandum and Articles of Association is to be without prejudice to the rights of the holders of shares issued upon special terms and conditions.
Forfeiture of Shares
If a member fails to pay any call or instalment of a call for any part of the issue price on the day appointed for payment thereof, the directors may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalments together with any interest which may have accrued and all expenses that may have been incurred by the Company by reason of such non-payment.
The notice shall name a further day (not earlier than the expiration of fourteen (14) days from the date of service of the notice) on or before which the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time appointed the shares in respect of which the call was made will be liable to be forfeited.
If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited, by a resolution of the directors to that effect. Such forfeiture shall include all dividends declared or other monies due in respect of the forfeited shares and not actually paid before forfeiture.
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A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the directors think fit.
Redemption and Purchase of Own Shares
Subject to the provisions of the Companies Act and our Amended and Restated Memorandum and Articles of Association: a) shares may be issued on the terms that they are, or at the option of the Company or the member are, liable to be redeemed on such terms and in such manner as the Company, by resolution, or as the directors, before the issue of the shares, may determine; b) the Company may purchase shares, including any redeemable shares, issued by the Company upon the terms and in such manner as the directors or the Company, by resolution, may from time to time determine, and such authority may be general in respect of any number of purchases, for a set period, or indefinite; c) the Company may make payment in respect of any redemption or purchase of its own shares in any manner authorized by the Companies Act, including out of capital; d) subject to the provisions of our Amended and Restated Memorandum and Articles of Association, the rights attaching to any issued shares may, by special resolution, be varied so as to provide that such shares are, or at the option of the Company or the member are, liable to be redeemed on such terms and in such manner as the Company may, determine.
Under the Companies Act, the redemption or repurchase of any share may be paid out of our Company’s profits, share premium or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital if our Company can, immediately following the date on which the payment out of capital is proposed to be made, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, or (b) if such redemption or repurchase would result in there being no shares outstanding. In addition, our directors may accept the surrender of any fully paid share for no consideration.
Conversion of Class B Ordinary Shares
The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time by the holder thereof on an one-for-one basis. The right to convert is exercisable by the holder of the Class B Ordinary Shares delivering a written notice to the Company that such holder elects to convert a specified number of Class B Ordinary Shares into Class A Ordinary Shares.
The number of Class B Ordinary Shares held by a holder thereof will be automatically and immediately converted into an equal and corresponding number of Class A Ordinary Shares upon any direct or indirect sale, transfer, assignment or disposition of such number of Class B Ordinary Shares by the holder thereof or an affiliate or such holder or the direct or indirect transfer or assignment of the voting power attached to such number of Class B Ordinary Shares through voting proxy or otherwise to any person or entity that is not an affiliate of such holder. For the avoidance of doubt, the creation of any pledge, charge, encumbrance or other third party right of whatever description on any of Class B Ordinary Share to secure contractual or legal obligations shall not be deemed as a sale, transfer, assignment or disposition unless and until any such pledge, charge, encumbrance or other third-party right is enforced and results in the third party holding directly or indirectly beneficial ownership or voting power through voting proxy or otherwise to the related Class B Ordinary Shares, in which case all the related Class B Ordinary Share shall be automatically converted into the same number of Class A Ordinary Share. Any conversion is effected by re-designation of the relevant Class B Ordinary Shares as Class A Ordinary Shares, as further described in the Amended and Restated Memorandum and Articles of Association.
Inspection of Books and Records
Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of members not being Directors and no member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Companies Act (Revised) of the Cayman Islands or authorized by the Directors or by the Company in a general meeting. However, the Directors shall from time to time cause to be prepared and to be laid before the Company in a general meeting, profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by Companies Act (Revised) of the Cayman Islands. (See “10.H. Documents on Display”)
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Issuance of Additional Shares
Our Amended and Restated Memorandum and Articles of Association authorize our Board of Directors to issue additional Ordinary Shares from time to time as our Board of Directors shall determine, to the extent there are available authorized but unissued shares.
Anti-Takeover Provisions
Some provisions of our Amended and Restated Memorandum and Articles of Association may discourage, delay or prevent a change of control of our Company or management that shareholders may consider favorable, including provisions that:
| ● | authorize our Board of Directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders (subject to variation of rights of shares provisions in our Amended and Restated Memorandum and Articles of Association); and |
| ● | limit the ability of shareholders to requisition and convene general meetings of shareholders. Our Amended and Restated Memorandum and Articles of Association allow one or more shareholders holding in the aggregate not less than one-fourth of such paid-up capital (as to the total consideration paid for such shares) of the Company as at the date of the requisition as carries the right of voting at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our directors are obliged to convene such meeting. |
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our Amended and Restated Memorandum and Articles of Association for a proper purpose and for what they believe in good faith to be in the best interests of our Company.
General Meetings of Shareholders and Shareholder Proposals
Our shareholders’ general meetings may be held in such place within or outside the Cayman Islands as our board of directors considers appropriate.
As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. The directors may, whenever they think fit, convene an extraordinary general meeting.
Shareholders’ general meetings and any other general meetings of our shareholders may be convened by our board of directors, whenever they think fit. If at any time there are not sufficient directors capable of acting to form a quorum, any director or any one or more members holding one-fifth (20%) of such paid-up capital (as to the total consideration paid for such shares) as at the date of the requisition as carries the right of voting at general meetings may convene an extraordinary general meeting in the same manner as nearly as possible as that in which meetings may be convened by the directors. Our board of directors shall give not less than five (5) days’ notice of a shareholders’ meeting, specifying the place (if any), the day and the hour of meeting and, in case of special business, the general nature of that business, to every person shown as a member in our register of members on the date the notice is given (or on any other date determined by our directors to be the record date for such meeting, provided that the record date may not be earlier than the date of the notice of such meeting) and to every person upon whom the ownership of a share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a member who would otherwise be entitled to receive notice of the meeting. With the consent of members entitled to receive notice of the meeting or their proxies holding in the aggregate not less than ten percent (10%) of the paid-up share capital of the Company (as to the total consideration paid for such shares) giving the right to attend and vote at general meetings, a meeting may be convened by such shorter notice and in such manner as those members or their proxies may think fit. A general meeting may be held as a physical meeting, as a virtual meeting where members attend and participate by means of electronic facilities, or as a hybrid meeting combining both. A member participating by electronic facilities shall be deemed to be present at the meeting for all purposes of our Amended and Restated Memorandum and Articles of Association.
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Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our Amended and Restated Memorandum and Articles of Association allow one or more shareholders holding shares representing in aggregate not less than one-fourth (25%) of such paid-up share capital (as to the total consideration paid for such shares) of the Company as at the date of the requisition as carries the right of voting at general meetings to requisition an extraordinary general meeting of our shareholders by written requisition expressing the object of the meeting proposed to be called, which shall be left at or posted to the registered office of the Company and may consist of several documents in like form each signed by one or more requisitionists. In such case our directors are obliged to convene such meeting. If the directors do not proceed to convene the meeting within twenty-one (21) days from the date of the requisition being so left, the requisitionists, or any other member or members holding in the aggregate not less than one-tenth of such paid-up share capital (as to the total consideration paid for such shares) of the Company as at the date of the requisition as carries the right of voting at general meetings, may themselves convene the extraordinary general meeting, and the requisitionists shall be reimbursed by the Company for all reasonable expenses incurred as a result of the failure by the directors to convene the meeting. Otherwise, our Amended and Restated Memorandum and Articles of Association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.
Exempted Company
We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:
| ● | is not required to open its register of members for inspection; |
| ● | does not have to hold an annual general meeting; |
| ● | may issue shares with no par value; |
| ● | may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
| ● | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
| ● | may register as an exempted limited duration company; and |
| ● | may register as a segregated portfolio company. |
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Register of Members
Under Cayman Islands law, we must keep a register of members and there should be entered therein:
| ● | the names and addresses of the members, a statement of the shares held by each member, and of the amount paid or agreed to be considered as paid, on the shares of each member; |
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| ● | the date on which the name of any person was entered on the register as a member; and |
| ● | the date on which any person ceased to be a member. |
Under Cayman Islands law, the register of members of our Company is prima facie evidence of the matters set out therein (i.e. the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members is deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Once our register of members has been updated, the shareholders recorded in the register of members are deemed to have legal title to the shares set against their name.
If the name of any person is incorrectly entered in, or omitted from, our register of members, or if there is any default or unnecessary delay in entering on the register the fact of any person having ceased to be a member of our Company, the person or member aggrieved (or any member of our Company or our Company itself) may apply to the Cayman Islands Grand Court for an order that the register be rectified, and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.
Material Differences between U.S. Corporate Law and Cayman Islands Corporate Law
The Companies Act is derived, to a large extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Companies Act and the current Companies Act of England and Wales. In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. The following is a summary of certain provisions of Cayman Islands law applicable to us and certain significant differences between the Companies Act and the laws applicable to companies incorporated in the State of Delaware.
Mergers and Similar Arrangements. The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property, and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company, and an undertaking that a copy of the certificate of merger or consolidation will be given to the shareholders and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.
A merger between a Cayman Islands parent company and its Cayman Islands subsidiaries or subsidiaries does not require authorization by a resolution of shareholders. For this purpose, a subsidiaries is a company of which at least 90% of the issued shares entitled to vote are owned by the parent company.
The consent of each holder of a fixed or floating security interest of a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Except in certain limited circumstances, a dissenting shareholder of a Cayman Islands constituent company is entitled to payment of the fair value of his or her shares upon dissenting from a merger or consolidation. The exercise of such dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, except for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
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In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must, in addition, represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
(a) the statutory provisions as to the required majority vote have been met;
(b) the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class;
(c) the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and
(d) the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.
When a takeover offer is made and accepted by holders of 90% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction is thus approved, or if a takeover offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits. In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule, a derivative action may not be brought by a minority shareholder. However, based on English law authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge:
(a) an act which is illegal or ultra vires with respect to the company and is therefore incapable of ratification by the shareholders;
(b) an act which, although not ultra vires, requires authorization by a qualified (or special) majority (that is, more than a simple majority) which has not been obtained; and
(c) an act which constitutes a “fraud on the minority” where the wrongdoers are themselves in control of the company.
Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our Amended and Restated Memorandum and Articles of Association provide that every director, secretary, or other officer of the Company (including alternate directors, proxy directors and former directors and officers), any trustee for the time being acting in relation to the Company (including any nominee shareholder holding shares in the Company) and their heirs and personal representatives (each an “Indemnified Person”) shall be entitled to be indemnified out of the assets of the Company against all actions, proceedings, costs, damages, expenses, claims, losses or liabilities which they or any of them may sustain or incur by reason of any act done or omitted in or about the execution of the duties of their respective offices or trusts or otherwise in relation thereto, including any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgement is given in his favour or in which he is acquitted except to the extent that any of the foregoing arise through his dishonesty.
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Anti-Takeover Provisions in Our Articles. Some provisions of our Amended and Restated Memorandum and Articles of Association may discourage, delay, or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one or more series and to determine the terms and rights of such preferred shares without approval of our shareholders. Under the Companies Act, our directors may only exercise the rights and powers granted to them under our memorandum and articles of association for what they believe in good faith to be in the best interests of our company and for a proper purpose.
Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands law, a director owes three types of duties to the company: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Companies Act imposes a number of statutory duties on a director. A Cayman Islands director’s fiduciary duties are not codified, however the courts of the Cayman Islands have held that a director owes the following fiduciary duties (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future, and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care, and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and, also, to act with the skill, care, and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time. We have the right to seek damages if a duty owed by any of our directors is breached.
Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and our Amended and Restated Memorandum and Articles of Association provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.
Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s memorandum and articles of association. Our Amended and Restated Memorandum and Articles of Association provide that the Directors shall, upon the requisition in writing of one or more members holding in the aggregate not less than one-fourth of such paid-up capital (as to issue price) of the Company as at the date of the requisition carries the right of voting at general meetings, convene an extraordinary general meeting. Any such requisition shall express the object of the meeting proposed to be called, and shall be left at or posted to the registered office and may consist of several documents in like form each signed by one or more requisitionists. If the Directors do not proceed to convene a general meeting within twenty-one days from the date of such requisition being left as aforesaid, the requisitionist(s) or any one or more of them or any other member or members holding in the aggregate not less than one-tenth of such paid up capital (as to issue price) of the Company as at the date of the requisition carries the right of voting at general meetings, may convene an extraordinary general meeting to be held at the registered office or at some convenient place at such time, subject to the Amended and Restated Memorandum and Articles of Association as to notice, as the person(s) convening the meeting fix.
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Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands, but the Amended and Restated Memorandum and Articles does not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.
Under our Amended and Restated Memorandum and Articles of Association, the holder or holders of more than half of the paid-up share capital of the Company (as to issue price) giving the right to attend and vote at general meetings may appoint any person to be a director and may in like manner remove any director. A director’s office shall be vacated if the director (i) is prohibited by law from serving as director; (ii) becomes bankrupt or makes any arrangement or composition with his creditors; (iii) dies or is found to be or becomes of unsound mind; (iv) resigns his office by notice in writing to the Company or otherwise pursuant to any agreement between the Company and such director; (v) is removed from office by notice of the holder or holders of more than half of the paid-up share capital of the Company (as to Issue Price) giving the right to attend and vote at general meetings of the Company notwithstanding anything in our Amended and Restated Memorandum and Articles of Association or any agreement between the Company and such director; (vi) is requested by all the other directors (numbering at least two) to resign; or(vii) if he absents himself (without being represented by proxy or an alternate director appointed by him) from three consecutive meetings of the board of directors without special leave of absence from the directors, and they pass a resolution that he has by reason of such absence vacated office.
Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.
Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.
Dissolution; Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
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Under the Companies Act and our Amended and Restated Memorandum and Articles of Association, the Company may be wound up by a special resolution of our shareholders, or if the winding up is initiated by our board of directors, by either a special resolution of our members or, if our company is unable to pay its debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an order of the courts of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under the Companies Act and our Amended and Restated Memorandum and Articles of Association, if at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of at least two-thirds of the issued shares of that class or with the sanction of a resolution passed at a meeting of the holders of such class of shares by the holder or holders of at least two-thirds of such shares present in person or by proxy at such meeting.
Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, our Amended and Restated Memorandum and Articles of Association may only be amended with a special resolution of our shareholders.
Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by our Amended and Restated Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in the Amended and Restated Memorandum and Articles of Association governing the ownership threshold above which shareholder ownership must be disclosed.
Anti-Money Laundering Matters, Sanctions. In order to comply with legislation, regulations and guidance aimed at the prevention of money laundering, terrorist financing and proliferation financing, and sanctions legislation the Company may be required to adopt and maintain anti-money laundering procedures, and may require subscribers and their beneficial owners, controllers or authorized persons (where applicable) (“Related Persons”) to provide evidence to verify their identity. Where permitted, and subject to certain conditions, the Company may also rely on, or delegate to, a suitable person the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information).
The Company reserves the right to request such information as is necessary to verify the identity of a subscriber or their Related Persons. In the event of delay or failure on the part of the subscriber in producing any information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited.
The Company also reserves the right to refuse to make any redemption payment to a shareholder if directors or officers suspect or are advised that the payment of redemption proceeds to such shareholder might result in a breach of applicable anti-money laundering, sanctions or other laws or regulations by any person in any relevant jurisdiction, or if such refusal is considered necessary or appropriate to ensure compliance with any such laws or regulations in any applicable jurisdiction.
If any person in the Cayman Islands knows or suspects, or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or money laundering, or is involved with terrorism or terrorist financing and property, and the information for that knowledge or suspicion came to their attention in the course of business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) the Financial Reporting Authority of the Cayman Islands (“FRA”), pursuant to the Proceeds of Crime Act (Revised) of the Cayman Islands, if the disclosure relates to criminal conduct or money laundering, or (ii) a police officer of the rank of constable or higher, or the FRA, pursuant to the Terrorism Act (Revised) of the Cayman Islands, if the disclosure relates to involvement with terrorism or terrorist financing and property.
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Economic Substance - Cayman Islands. The Cayman Islands, together with several other non-European Union jurisdictions, have introduced legislation aimed at addressing concerns raised by the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) initiative as to offshore structures engaged in certain activities which attract profits without real economic activity. The International Tax Co-operation (Economic Substance) Act, (Revised) (the “Economic Substance Act”) contains economic substance requirements for in-scope Cayman Islands entities which are engaged in certain “relevant activities”. As we are a Cayman Islands exempted company, our compliance obligations will include filing an annual notification, which need to state whether we are carrying out any relevant activities and if so, whether we have satisfied economic substance tests to the extent required under the Economic Substance Act. If the Cayman Islands Tax Information Authority determines that the Company or any of its Cayman Islands subsidiaries has failed to meet the requirements imposed by the Economic Substance Act the Company may face significant financial penalties, restriction on the regulation of its business activities and/or may be struck off as a registered entity in the Cayman Islands.
The Economic Substance Act and associated guidance may continue to evolve and may be subject to interpretation, clarification or amendment. We may need to allocate additional resources to keep updated with these developments, and may have to make changes to our operations in order to comply with all requirements under the Economic Substance Act. Failure to satisfy these requirements may subject us to penalties under the Economic Substance Act.
Cayman Islands Data Protection. We have certain duties under the Data Protection Act (Revised) of the Cayman Islands (the “DPA”), based on internationally accepted principles of data privacy.
Privacy Notice. This privacy notice puts our shareholders on notice that through your investment into us you will provide us with certain personal information which constitutes personal data within the meaning of the DPA, or personal data.
Investor Data. We will collect, use, disclose, retain and secure personal data to the extent reasonably required only and within the parameters that could be reasonably expected during the normal course of business. We will only process, disclose, transfer or retain personal data to the extent legitimately required to conduct our activities on an ongoing basis or to comply with legal and regulatory obligations to which we are subject. We will only transfer personal data in accordance with the requirements of the DPA and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction or damage to the personal data.
In our use of this personal data, we will be characterized as a “data controller” for the purposes of the DPA, while our affiliates and service providers who may receive this personal data from us in the conduct of our activities may either act as our “data processors” for the purposes of the DPA or may process personal information for their own lawful purposes in connection with services provided to us.
We may also obtain personal data from other public sources. Personal data includes, without limitation, the following information relating to a shareholder and/or any individuals connected with a shareholder as an investor: name, residential address, email address, contact details, corporate contact information, signature, nationality, place of birth, date of birth, tax identification, credit history, correspondence records, passport number, bank account details, source of funds details and details relating to the shareholder’s investment activity.
Who this Affects. If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation your investment in us, this will be relevant for those individuals and you should transit the content of this Privacy Notice to such individuals or otherwise advise them of its content.
How We May Use a Shareholder’s Personal Data. We may, as the data controller, collect, store and use personal data for lawful purposes, including, in particular: (i) where this is necessary for the performance of our rights and obligations under any agreements; (ii) where this is necessary for compliance with a legal and regulatory obligation to which we are or may be subject (such as compliance with anti-money laundering and FATCA/CRS requirements); and/or (iii) where this is necessary for the purposes of our legitimate interests and such interests are not overridden by your interests, fundamental rights or freedoms.
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Should we wish to use personal data for other specific purposes (including, if applicable, any purpose that requires your consent), we will contact you.
Why We May Transfer Your Personal Data. In certain circumstances we may be legally obliged to share personal data and other information with respect to your shareholding with the relevant regulatory authorities such as the Cayman Islands Monetary Authority or the Tax Information Authority. They, in turn, may exchange this information with foreign authorities, including tax authorities.
We anticipate disclosing personal data to persons who provide services to us and their respective affiliates (which may include certain entities located outside the US, the Cayman Islands or the European Economic Area), who will process your personal data on our behalf.
The Data Protection Measures We Take. Any transfer of personal data by us or our duly authorized affiliates and/or delegates outside of the Cayman Islands shall be in accordance with the requirements of the DPA.
We and our duly authorized affiliates and/or delegates shall apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of personal data, and against accidental loss or destruction of, or damage to, personal data.
We shall notify you of any personal data breach that is reasonably likely to result in a risk to your interests, fundamental rights or freedoms or those data subjects to whom the relevant personal data relates.
Contacting the Company. For further information on the collection, use, disclosure, transfer or processing of your personal data or the exercise of any of the rights listed above, please contact us through our website at https://ir.thezetanetwork.com or through phone number +1 (929) 317-2699.
10.C. Material Contracts
We have not entered into any material contracts other than in the ordinary course of business and other than those described in this annual report.
10.D. Exchange Controls
Cayman Islands
There are currently no exchange control regulations in the Cayman Islands applicable to us or our shareholders.
The PRC
There are currently no exchange control regulations in the PRC applicable to us or our shareholders.
10.E. Taxation
The following summary of the material Cayman Islands, the PRC, Hong Kong and U.S. tax consequences of an investment in our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date hereof, all of which are subject to change, possibly with retroactive effect. This summary is not intended to be, nor should it be construed as, legal or tax advice and is not exhaustive of all possible tax considerations. This summary also does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local, and other tax laws. Investors should consult their own tax advisors with respect to the tax consequences of the acquisition, ownership and disposition of our ordinary shares.
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Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based on profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction or produced before a court of the Cayman Islands. The Cayman Islands is a party to a double tax treaty entered into with the United Kingdom in 2010 but is otherwise not a party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
People’s Republic of China Taxation
Under the EIT Law, an enterprise established outside the PRC with a “de facto management body” within the PRC is considered a PRC resident enterprise for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income as well as tax reporting obligations. Under the Implementation Rules, 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, SAT Circular 82 issued in April 2009 specifies that certain offshore-incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if all of the following conditions are met: (a) senior management personnel and core management departments in charge of the daily operations of the enterprises have their presence mainly in the PRC; (b) their financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (c) major assets, accounting books and company seals of the enterprises, and minutes and files of their board’s and shareholders’ meetings are located or kept in the PRC; and (d) half or more of the enterprises’ directors or senior management personnel with voting rights habitually reside in the PRC. Further to SAT Circular 82, the SAT issued SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 provides for procedures and administration details of determination on PRC resident enterprise status and administration on post-determination matters. If the PRC tax authorities determine that Zeta Network Group is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. Also, a 10% withholding tax would be imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived by our non-PRC enterprise shareholders from transferring our shares or ordinary shares and potentially a 20% of withholding tax would be imposed on dividends we pay to our non-PRC individual shareholders and with respect to gains derived by our non-PRC individual shareholders from transferring our shares or ordinary shares.
It is unclear whether, if we are considered a PRC resident enterprise, holders of our shares or ordinary shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas.
The SAT issued SAT Circular 59 together with the Ministry of Finance in April 2009 and SAT Circular 698 in December 2009. Both SAT Circular 59 and SAT Circular 698 became effective retroactively as of January 1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-PRC resident enterprise. Under SAT Circular 698, where a non-PRC resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company, and the overseas holding company is located in a tax jurisdiction that: (1) has an effective tax rate of less than 12.5% or (2) does not impose tax on foreign income of its residents, the non-PRC resident enterprise, being the transferor, must report to the relevant tax authority of the PRC resident enterprise this Indirect Transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC tax at a rate of up to 10%. Although it appears that SAT Circular 698 was not intended to apply to share transfers of publicly traded companies, there is uncertainty as to the application of SAT Circular 698 and we and our non-PRC resident investors may be at risk of being required to file a return and being taxed under SAT Circular 698 and we may be required to expend valuable resources to comply with SAT Circular 698 or to establish that we should not be taxed under SAT Circular 698.
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Pursuant to the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Tax Arrangement, where a Hong Kong resident enterprise which is considered a non-PRC tax resident enterprise directly holds at least 25% of a PRC enterprise, the withholding tax rate in respect of the payment of dividends by such PRC enterprise to such Hong Kong resident enterprise is reduced to 5% from a standard rate of 10%, subject to approval of the PRC local tax authority. Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, a resident enterprise of the counter-party to such Tax Arrangement should meet the following conditions, among others, in order to enjoy the reduced withholding tax under the Tax Arrangement: (i) it must directly own the required percentage of equity interests and voting rights in such PRC resident enterprise; and (ii) it should directly own such percentage in the PRC resident enterprise anytime in the 12 months prior to receiving the dividends. Furthermore, the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties (For Trial Implementation), or the Administrative Measures, which became effective in October 2009, requires that the non-resident enterprises must obtain the approval from the relevant tax authority in order to enjoy the reduced withholding tax rate under the tax treaties. There are also other conditions for enjoying such reduced withholding tax rate according to other relevant tax rules and regulations. According to Circular 81, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future.
Hong Kong Taxation
Entities incorporated in Hong Kong are subject to profits tax in Hong Kong at the rate of 16.5%. According to Tax (Amendment) (No. 3) Ordinance 2018 published by Hong Kong government, effective April 1, 2018, under the two-tiered profits tax rates regime, the profits tax rate for the first HK$2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations.
United States Federal Income Taxation
The following is a discussion of United States federal income tax considerations relating to the acquisition, ownership, and disposition of our ordinary shares by a U.S. Holder, as defined below, that acquires our ordinary shares and holds our ordinary shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon existing United States federal income tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service (the “IRS”) with respect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (such as, for example, certain financial institutions, insurance companies, regulated investment companies, real estate investment trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships and their partners, tax-exempt organizations (including private foundations)), investors who are not U.S. Holders, investors that own (directly, indirectly, or constructively) 10% or more of our voting stock, investors that hold their ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction), or investors that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not address any tax laws other than the United States federal income tax laws, including any state, local, alternative minimum tax or non-United States tax considerations, or the Medicare tax. Each potential investor is urged to consult its tax advisor regarding the United States federal, state, local and non-United States income and other tax considerations of an investment in our ordinary shares.
General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ordinary shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise elected to be treated as a United States person under the Code.
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If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our ordinary shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding our ordinary shares are urged to consult their tax advisors regarding an investment in our ordinary shares.
The discussion set forth below is addressed only to U.S. Holders that purchase ordinary shares. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our ordinary shares.
Taxation of Dividends and Other Distributions on our Ordinary Shares
Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect to the ordinary shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the ordinary shares are readily tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Because there is no income tax treaty between the United States and the Cayman Islands, clause (1) above can be satisfied only if the ordinary shares are readily tradable on an established securities market in the United States. Under U.S. Internal Revenue Service authority, ordinary shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on Nasdaq. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our ordinary shares, including the effects of any change in law after the date of this report.
To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your ordinary shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
Taxation of Dispositions of Ordinary Shares
Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the ordinary shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the ordinary shares for more than one year, you may be eligible for reduced tax rates on any such capital gains. The deductibility of capital losses is subject to limitations.
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Passive Foreign Investment Company
A non-U.S. corporation is considered a PFIC for any taxable year if either:
| ● | at least 75% of its gross income for such taxable year is passive income; or |
| ● | at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). |
Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock. In determining the value and composition of our assets for purposes of the PFIC asset test, (1) cash, digital assets and certain other assets held for investment purposes may be treated as assets held for the production of passive income, depending on the applicable facts and circumstances and the interpretation of relevant U.S. federal income tax rules, and (2) the value of our assets generally must be determined based on the market value of our ordinary shares from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets on any particular quarterly testing date for purposes of the asset test.
We must make a separate determination each year as to whether we are a PFIC. Our PFIC status will depend on a number of factors, including the composition and value of our assets, the amount of cash and digital assets we hold, the extent to which our cryptocurrency mining operations are treated as generating active income, and the market value of our ordinary shares from time to time. Accordingly, there can be no assurance that we will not be classified as a PFIC for the current taxable year or any future taxable year. We will make this determination following the end of any particular tax year. In particular, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our ordinary shares, and because cash, digital assets and certain other investment assets may be treated as passive assets for PFIC purposes, our PFIC status may depend in significant part on the market value of our ordinary shares, the value and treatment of our digital asset holdings and the amount of cash and other potentially passive assets that we hold. Accordingly, fluctuations in the market price of the ordinary shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our ordinary shares from time to time that may not be within our control. If we are a PFIC for any year during which you hold ordinary shares, we will continue to be treated as a PFIC for all succeeding years during which you hold ordinary shares. However, if we cease to be a PFIC and you did not previously make a timely “mark-to-market” election as described below, you may avoid some of the adverse effects of the PFIC regime by making a “purging election” (as described below) with respect to the ordinary shares.
If we are a PFIC for your taxable year(s) during which you hold ordinary shares, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the ordinary shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the ordinary shares will be treated as an excess distribution. Under these special tax rules:
| ● | the excess distribution or gain will be allocated ratably over your holding period for the ordinary shares; |
| ● | the amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and |
| ● | the amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
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The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the ordinary shares cannot be treated as capital, even if you hold the ordinary shares as capital assets.
A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for first taxable year which you hold (or are deemed to hold) ordinary shares and for which we are determined to be a PFIC, you will include in your income each year an amount equal to the excess, if any, of the fair market value of the ordinary shares as of the close of such taxable year over your adjusted basis in such ordinary shares, which excess will be treated as ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the ordinary shares over their fair market value as of the close of the taxable year. However, such ordinary loss is allowable only to the extent of any net mark-to-market gains on the ordinary shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the ordinary shares, are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of the ordinary shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such ordinary shares. Your basis in the ordinary shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under “Taxation of Dividends and Other Distributions on our ordinary shares” generally would not apply.
The mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including Nasdaq. If the ordinary shares are regularly traded on Nasdaq and if you are a holder of ordinary shares, the mark-to-market election would be available to you were we to be or become a PFIC.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold ordinary shares in any taxable year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such ordinary shares, including regarding distributions received on the ordinary shares and any gain realized on the disposition of the ordinary shares.
If you do not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during the period you hold our ordinary shares, then such ordinary shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election” creates a deemed sale of such ordinary shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the ordinary shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your ordinary shares for tax purposes.
You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our ordinary shares and the elections discussed above.
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Information Reporting and Backup Withholding
Dividend payments with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders. However, transactions effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.
Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our ordinary shares, subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold ordinary shares.
10.F. Dividends and Paying Agents
Not Applicable.
10.G. Statement by Experts
Not Applicable.
10.H. Documents on Display
The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and files reports, registration statements and other information with the SEC. The Company’s reports, registration statements and other information can be inspected on the SEC’s website at www.sec.gov. You may also visit us on the World Wide Web at https://ir.thezetanetwork.com/. However, information contained on our website does not constitute a part of this annual report.
10.I. Subsidiary Information
Not Applicable.
10.J. Annual Report to Security Holders
If we are required to provide an annual report to security holders in response to the requirements of Form 6-K, we will submit the annual report to security holders in electronic format in accordance with the EDGAR Filer Manual.
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Liquidity risk
We are exposed to liquidity risk, which is the risk that we will be unable to provide sufficient capital resources and liquidity to meet our commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, we will turn to other financial institutions to obtain short-term funding to meet the liquidity shortage.
Inflation risk
Inflationary factors, such as increases in personnel and overhead costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenue if our revenues do not increase with such increased costs.
Interest rate risk
Our exposure to interest rate risk primarily relates to the interest rate on our borrowings. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed to material risks due to changes in interest rates. An increase in interest rates, however, may raise the cost of any debt we incur in the future.
Cryptocurrency Risk
The price of Bitcoin has experienced significant fluctuations over its relatively short existence and may continue to fluctuate significantly in the future. Bitcoin prices ranged from approximately $9,200 per coin as of June 30, 2020; approximately $35,000 per coin as of June 30, 2021; approximately $19,000 per coin as of June 30, 2022; approximately $30,000 per coin as of June 30, 2023; approximately $63,000 per coin as of June 30, 2024; approximately $107,000 per coin as of June 30, 2025; and approximately $59,000 per coin as of June 30, 2026, according to Coin Market Cap.
We expect our results of operations to continue to be affected by the Bitcoin price as all of our revenue from continuing operations is from Bitcoin mining production as of the date of this report. Any future significant reductions in the price of Bitcoin will likely have a material and adverse effect on our results of operations and financial condition. We cannot assure you that the Bitcoin price will remain high enough to sustain our operation or that the Bitcoin price will not decline significantly in the future. Furthermore, fluctuations in the Bitcoin price can have an immediate impact on the trading price of our Class A Ordinary Shares even before our financial performance is affected, if at all.
We are also exposed to risks associated with our receivables of SolvBTC, which had a carrying amount of approximately US$116.8 million as of June 30, 2026. SolvBTC is a separate crypto asset from Bitcoin, and its market price may diverge from the price of Bitcoin. Its value and liquidity may be adversely affected by limited trading activity, reduced market confidence, disruptions to its underlying protocol, or concerns regarding the custody, availability or recoverability of its underlying Bitcoin reserves. Restrictions, delays or costs associated with redemption or conversion could also limit our ability to realize the value of our holdings. We may be unable to sell or redeem our SolvBTC when needed or at prices consistent with its carrying amount, particularly during periods of market stress. A decline in its fair value could result in additional impairment charges, and difficulties in realizing its value could adversely affect our liquidity, results of operations and financial condition.
Various factors, mostly beyond our control, could impact the Bitcoin price. For example, the usage of Bitcoins in the retail and commercial marketplace is relatively low in comparison with the usage for speculation, which contributes to Bitcoin’s price volatility. Additionally, the reward for Bitcoin mining will decline over time, with the most recent halving event having occurred in April 2024, which may further contribute to Bitcoin price volatility.
We are also exposed to risks associated with our holdings of SolvBTC. As of June 30, 2026, we recorded other receivables of approximately US$116.8 million for the return of the 2,000 SolvBTC that we had transferred to investors under a crypto asset swap and return agreement, and those SolvBTC were returned to us in July 2026. As of September 30, 2026, we held approximately 2,156.6533 SolvBTC. SolvBTC is a separate crypto asset from Bitcoin, and its market price may diverge from the price of Bitcoin. Its value and liquidity may be adversely affected by limited trading activity, reduced market confidence, disruptions to its underlying protocol, or concerns regarding the custody, availability or recoverability of its underlying Bitcoin reserves. Restrictions, delays or costs associated with redemption or conversion could also limit our ability to realize the value of our holdings. We may be unable to sell or redeem our SolvBTC when needed or at prices consistent with its carrying amount, particularly during periods of market stress. A decline in its fair value could result in additional impairment charges, and difficulties in realizing its value could adversely affect our liquidity, results of operations and financial condition.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A. Debt Securities
Not applicable.
12.B. Warrants and Rights
Not applicable.
12.C. Other Securities
Not applicable.
12.D. American Depositary Shares
We do not have any American Depositary Shares.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not Applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
On September 26, 2018, we filed a definitive proxy statement to change our place of incorporation from Delaware to the Cayman Islands. The re-domicile involved the Company’s merger with and into a newly formed Cayman Islands exempted company (“CADC Cayman”), which was the surviving entity in the merger. Each outstanding share of common stock of the Company was converted into the right to receive one ordinary share of CADC Cayman, which was issued by CADC Cayman in connection with the merger pursuant to a registered offering. We effected a 25-for-1 reverse share split effective August 22, 2025, a 100-for-1 share consolidation effective for trading on Nasdaq on March 12, 2026 and an 8-for-1 share consolidation effective July 27, 2026, and our shareholders approved changes to our share capital and our memorandum and articles of association, as described under Item 4.A and Item 10.B above. Other than as described above and elsewhere in this annual report, there were no material modifications to the rights of holders of our registered securities during the fiscal year ended June 30, 2026.
ITEM 15. CONTROLS AND PROCEDURES
| (a) | Disclosure Controls and Procedures |
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, 2026, as required by Rule 13a-15(b) under the Exchange Act.
Based on this evaluation, management concluded that our disclosure controls and procedures were not effective as of June 30, 2026, due to the material weaknesses in our internal control over financial reporting described below.
| (b) | Management’s Annual Report on Internal Control Over Financial Reporting |
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.
Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with established policies and procedures.
Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2026, using the criteria established in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Based on this assessment, management concluded that our internal control over financial reporting was not effective as of June 30, 2026, due to the following material weaknesses:
| 1. | Insufficient U.S. GAAP technical expertise |
The personnel primarily responsible for the preparation of our financial statements did not possess sufficient knowledge, experience and training in the application of U.S. GAAP commensurate with the complexity of our financial reporting requirements.
In particular, our financing arrangements, cryptocurrency transactions, impairment assessments and other complex accounting matters require significant technical accounting knowledge and judgment.
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| 2. | Inadequate supervision and review of financial reporting |
Our internal controls over financial reporting did not provide sufficiently effective supervision and review of the financial reporting process, including the preparation and review of significant accounting estimates, complex transactions and related financial statement disclosures.
These deficiencies increase the risk that material accounting errors, inappropriate classifications or incomplete disclosures may not be identified and corrected on a timely basis.
| 3. | Deficiencies in the assessment and review of significant accounting estimates and complex transactions |
During the fiscal year ended June 30, 2026, management performed assessments of receivables, advances and impairment indicators, including matters previously identified in fiscal year 2025.
However, deficiencies remained in the design and operation of controls over the timely identification, evaluation, documentation and review of significant accounting judgments and estimates.
These deficiencies were particularly relevant to the accounting for digital assets, including the assessment of recognition, classification and valuation of cryptocurrency transactions, and the recoverability and impairment assessment of cryptocurrency mining equipment.
The absence of sufficiently robust and timely review controls increases the risk that material misstatements in asset recognition, measurement, classification and related disclosures may not be prevented or detected on a timely basis.
| 4. | Inadequate formal cash flow forecasting and going concern assessment controls |
Controls over the preparation and review of formal cash flow forecasts were not operating effectively.
Management did not maintain sufficiently detailed and regularly updated forward-looking cash flow projections, including appropriate sensitivity analyses, to support the assessment of the Company’s liquidity requirements and ability to continue as a going concern.
These deficiencies increase the risk that potential liquidity shortfalls and uncertainties affecting the Company’s ability to meet its financial obligations may not be identified and evaluated on a timely basis.
Management recognizes the importance of maintaining effective internal control over financial reporting and is taking steps to strengthen the Company’s financial reporting processes and control environment.
During fiscal year 2026, management undertook additional assessments of receivables, advances and asset impairment matters, including the evaluation of significant accounting estimates relating to cryptocurrency and mining equipment.
Nevertheless, management acknowledges that the performance of these assessments does not, by itself, demonstrate that the underlying material weaknesses have been fully remediated.
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Management intends to continue implementing the following remedial measures:
| * | Strengthening the technical accounting capabilities of finance personnel, including providing additional U.S. GAAP training and obtaining external technical accounting assistance where necessary. |
| * | Enhancing management supervision and independent review of significant accounting transactions, estimates and financial statement disclosures. |
| * | Establishing more formal procedures for the timely assessment, documentation and review of complex transactions, including digital asset recognition and valuation, impairment of long-lived assets and other significant accounting estimates. |
| * | Strengthening procedures for monitoring outstanding receivables, advances and counterparty exposures. |
| * | Implementing formal cash flow forecasting and liquidity monitoring procedures, including periodic review of cash flow projections and sensitivity analyses to support going concern assessments. |
| * | Continuing to evaluate the need for additional internal audit resources or external professional assistance to improve the Company’s internal control environment. |
Management will continue to monitor the implementation and operating effectiveness of these measures.
As of June 30, 2026, the material weaknesses described above had not been fully remediated. Management cannot provide assurance that the remediation measures will be sufficient to address all identified deficiencies or that additional material weaknesses will not be identified in future periods.
(c) Attestation Report of the Registered Public Accounting Firm
Not applicable.
(d) Changes in Internal Control Over Financial Reporting
During the fiscal year ended June 30, 2026, management undertook additional accounting assessments and review procedures relating to receivables, advances, digital assets and impairment of long-lived assets.
However, these activities had not resulted in the full remediation of the material weaknesses described above as of June 30, 2026.
Except as described above, there were no changes in our internal control over financial reporting during the fiscal year ended June 30, 2026 that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. RESERVED
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our audit committee consists of Hung-Jen Kuo, Honglei Jiang and Yan Zhang. Our board of directors has determined Hung-Jen Kuo, Honglei Jiang and Yan Zhang are “independent directors” within the meaning of Nasdaq Stock Market Rule 5605(a)(2) and meet the criteria for independence set forth in Rule 10A−3(b) of the Exchange Act. Hung-Jen Kuo, Honglei Jiang and Yan Zhang meet the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.
ITEM 16B. CODE OF ETHICS
The Board has adopted a Code of Conduct and Ethics that applies to the Company’s directors, officers and employees. A copy of the Code of Conduct and Ethics is incorporated by reference as Exhibit 11.1 to this annual report. Printed copies of our Code of Ethics may be obtained, without charge, by contacting the Corporate Secretary, Zeta Network Group, located at 14 Wall Street, 20th Floor, New York, NY 10005.
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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by our principal external auditors, for the periods indicated.
| Year Ended June 30, 2026 | Year Ended June 30, 2025 | |||||||
| Audit fees(1) | $ | 294,270 | 343,503 | |||||
| Audit related fees(2) | - | - | ||||||
| Tax fees(3) | - | - | ||||||
| All other fees(4) | - | 18,800 | ||||||
| Total | $ | 294,270 | 362,303 | |||||
| (1) | “Audit fees” means the aggregate fees billed for each of the fiscal years for professional services rendered by our principal accountant for the audit of our annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. |
| (2) | “Audit related fees” means the aggregate fees billed in each of the fiscal years for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.” |
| (3) | “Tax Fees” represents the aggregate fees billed in each of the fiscal years for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning. |
| (4) | “All Other Fees” represents the aggregate fees billed in each of the fiscal years listed for products and services provided by our principal accountant other than services reported under “Audit fees,” “Audit-related fees” and “Tax fees.” |
The policy of our audit committee and our board of directors is to pre-approve all audit and non-audit services provided by our principal auditors, including audit services, audit-related services, and other services as described above, other than those for de minimis services which are approved by the audit committee or our board of directors prior to the completion of the services.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
On August 6, 2025, we redeemed and cancelled 16,250,000 Class A Ordinary Shares held by ULife, a subsidiary of BTC KZ, under the redemption and share cancellation agreement dated July 25, 2025. The redemption formed part of the restructuring of the purchase price for our mining machines, under which the share consideration was replaced by a secured term loan from BTC KZ in the principal amount of US$31.6 million. The redemption was not made under a publicly announced plan or program. Other than this redemption, neither we nor any affiliated purchaser purchased any of our equity securities during the fiscal year ended June 30, 2026.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
On January 23, 2025, the Company dismissed Audit Alliance LLP (“Audit Alliance”) as its independent registered public accounting firm and appointed Assentsure PAC (“Assentsure”) as its new independent registered public accounting firm, effective on the same date. The dismissal of Audit Alliance and appointment of Assentsure were approved by the Audit Committee of the Company’s Board of Directors.
The audit reports of Audit Alliance LLP on the Company’s consolidated financial statements for the fiscal years ended June 30, 2024 and 2023 did not contain an adverse opinion or disclaimer of opinion and were not qualified as to audit scope or accounting principles. However, both reports included an explanatory paragraph regarding substantial doubt about the Company’s ability to continue as a going concern.
90
During the fiscal years ended June 30, 2024 and 2023 and the subsequent interim period through January 23, 2025, there were no disagreements between the Company and Audit Alliance on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Audit Alliance’s satisfaction, would have caused Audit Alliance to make reference to the matter in its reports, and no reportable events as described in Item 16F(a)(1)(v) of Form 20-F, except as otherwise disclosed in the Company’s Form 6-K furnished on January 23, 2025.
During the two fiscal years preceding the appointment of Assentsure PAC and through January 23, 2025, the Company did not consult Assentsure PAC regarding the application of accounting principles to any specified transaction, the type of audit opinion that might be rendered on the Company’s financial statements, or any matter that was the subject of a disagreement or reportable event, as described in Item 16F of Form 20-F.
The Company disclosed the change of its independent registered public accounting firm in a Form 6-K furnished to the SEC on January 23, 2025. Audit Alliance LLP furnished a letter dated January 23, 2025, addressed to the SEC, stating that it agreed with the statements in the Form 6-K insofar as they related to Audit Alliance LLP. The letter was filed as Exhibit 16.1 to that Form 6-K.
ITEM 16G. CORPORATE GOVERNANCE
We are a foreign private issuer within the meaning of the rules under the Exchange Act. As such, we are exempt from certain provisions applicable to United States domestic public companies. Among other things, we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, and our executive officers, directors and principal shareholders are exempt from the short-swing profit recovery provisions contained in Section 16 of the Exchange Act, although since March 18, 2026 our directors and executive officers are subject to the reporting requirements of Section 16(a). We are also not required to provide the same level of disclosure on certain issues, such as executive compensation, as a U.S. domestic public company, and we are exempt from the provisions of Regulation FD.
Other than as described in this section, our corporate governance practices do not differ from those followed by domestic companies listed on the Nasdaq Capital Market. Nasdaq Listing Rule 5635 generally provides that shareholder approval is required of U.S. domestic companies listed on the Nasdaq Capital Market prior to issuance (or potential issuance) of securities (i) equaling 20% or more of the company’s common stock or voting power for less than the greater of market or book value, (ii) resulting in a change of control of the company, and (iii) which is being issued pursuant to a stock option or purchase plan to be established or materially amended or other equity compensation arrangement made or materially amended. Notwithstanding this general requirement, Nasdaq Listing Rule 5615(a)(3)(A) permits foreign private issuers to follow their home country practice rather than these shareholder approval requirements. The Cayman Islands do not require shareholder approval prior to any of the foregoing types of issuances. The Company, therefore, is not required to obtain such shareholder approval prior to entering into a transaction with the potential to issue securities as described above. The Board of Directors of the Company has elected to follow the Company’s home country rules as to such issuances and will not be required to seek shareholder approval prior to entering into such a transaction.
On June 15, 2026, we furnished a report clarifying the corporate governance practices we follow as a foreign private issuer in lieu of certain Nasdaq corporate governance requirements, together with a confirmation letter dated June 12, 2026 from Harney Westwood & Riegels, our Cayman Islands counsel, as required by Nasdaq. We rely on the available home country practice exemptions other than the requirements for a majority independent board of directors, an independent compensation committee, an independent nominating committee and a code of conduct applicable to all directors, officers and employees, with which we currently comply but reserve the right to opt out of in the future. The exemptions on which we rely include those from the requirements to solicit proxies and provide proxy statements for all shareholder meetings, to obtain shareholder approval for issuances in excess of 20% of our issued and outstanding ordinary shares or that constitute a change of control, and to obtain shareholder approval to establish or materially amend an equity compensation arrangement. As described in that report, we also follow home country practice in lieu of the Nasdaq requirements to have regularly scheduled executive sessions with only independent directors each year; an annual meeting of shareholders to be held no later than one year after the end of the issuer’s fiscal year-end; a quorum for any meeting of common stockholders to be no less than 33 1/3% of the outstanding shares of common voting stock; and an appropriate review and oversight of all related party transactions for potential conflict of interest situations on an ongoing basis by the company’s audit committee or another independent body of the board of directors, and to obtain shareholder approval before issuing securities in connection with the acquisition of the stock or assets of another company.
Because we rely on these home country practice exemptions, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements. See “Risk Factors”.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
91
ITEM 16J. INSIDER TRADING POLICIES
The Company’s
ITEM 16K. CYBERSECURITY
Risk Management and Strategy
We believe that cybersecurity is important to our operations and we recognize the importance of timely and appropriately assessing, preventing, identifying and managing risks associated with cybersecurity threats. Such risks include, among other things, potential operational risks, financial risks, intellectual property theft, fraud, extortion, harm to employees and clients, violation of privacy and other litigation and legal risks, and reputational risks.
We do
In the year ended June 30, 2026, we have not encountered any cybersecurity incidents which have affected or are reasonably likely to affect us, and we have not implemented any specific policies with respect to monitoring and managing cybersecurity threats. However, we intend to adopt cybersecurity processes, technologies and controls to aid in our efforts to assess, prevent, identify and manage such risks. We cannot assure that we will not encounter any material cybersecurity incidents in the future or that our business operations, financial position or results of operations will not be materially and adversely affected as a result. Since we do not currently implement a comprehensive cybersecurity risk management program, our efforts may not be adequate, and we may fail to accurately assess the severity of an incident, may not be sufficient to prevent or limit harm, or may fail to sufficiently remediate an incident in a timely fashion, any of which could harm our business, reputation, results of operations and financial condition.
Governance
The Board of Directors oversees the Company’s cybersecurity risks management and receives and reviews management reports on material cybersecurity risks and issues on an as-needed basis. In particular, the Board reviews and approves the cybersecurity-related disclosure in the periodic reports (including our annual reports on Form 20-F) of the Company.
Our operations team has the primary responsibility for day-to-day assessment and management of cybersecurity risks. When cybersecurity incidents occur, our operations team will collect the relevant information, prepare solutions to address the issues, and report the incidents to our management, which supervises our operations team.
92
PART III
ITEM 17. FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 18.
ITEM 18. FINANCIAL STATEMENTS
The consolidated financial statements and related notes required by this item are contained on pages F-1 through F-42.
ITEM 19. EXHIBITS
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| * | Filed herewith. |
94
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| ZETA NETWORK GROUP | ||
| /s/ Xiao Wen “Samantha” Huang | ||
| Name: | Xiao Wen “Samantha” Huang | |
| Title: | Chief Executive Officer | |
| Date: October 19, 2026 | ||
95
ZETA NETWORK GROUP
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2026, 2025 AND 2024
F-1
 | Assentsure PAC UEN – 201816648N 180B Bencoolen Street #03-01 The Bencoolen Singapore 189648 http://www.assentsure.com.sg | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Zeta Network Group
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Zeta Network Group and its subsidiaries (collectively, the “Company”) as of June 30, 2026 and 2025, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the two years ended June 30, 2026, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial positions of the Company as of June 30, 2026 and 2025, and the results of its operations and cash flows for each of the two years ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred recurring losses from operations, has a significant accumulated deficit and working capital deficiency, and has limited available cash resources. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our opinion is not modified with respect to this matter.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates.
F-2
| | Assentsure PAC UEN – 201816648N 180B Bencoolen Street #03-01 The Bencoolen Singapore 189648 http://www.assentsure.com.sg | |
| 1. | Accounting for SolvBTC Transactions, Including Impairment and Classification of Cryptocurrency Receivables |
Description of the Critical Audit Matter
As described in Note 6 to the consolidated financial statements, the Company acquired approximately 2,000 SolvBTC through a private placement transaction during the year ended June 30, 2026, with an initial recorded value of approximately $230.8 million.
The Company accounted for SolvBTC as an indefinite-lived intangible asset under ASC 350-30. During June 2026, the Company transferred the SolvBTC to investors pursuant to a Crypto Asset Swap and Return Agreement and recognised contractual rights to receive cryptocurrency. At June 30, 2026, the Company reported cryptocurrency receivables of approximately $116.8 million and an aggregate reduction in value of approximately $114.0 million during the year.
We identified the accounting for these transactions as a critical audit matter because evaluating the recognition, derecognition, classification and measurement of the SolvBTC and the resulting contractual cryptocurrency receivables involved especially challenging and complex auditor judgment. In particular, significant judgment was required in evaluating the applicable US GAAP accounting guidance, the contractual settlement provisions, the distinction between impairment of the original cryptocurrency assets
and subsequent fair value movements of the receivables, and the appropriateness of market-based valuation inputs.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to this matter included the following:
| ● | Examining the Securities Purchase Agreements and Crypto Asset Swap and Return Agreement and evaluating the accounting treatment of the original SolvBTC holdings, their subsequent derecognition and the contractual rights arising from the transfers. | |
| ● | Inspecting blockchain transaction records and Safe Wallet histories to corroborate the original receipt of SolvBTC, subsequent transfers to investors and return of the cryptocurrency after year-end. | |
| ● | Obtaining confirmations directly from all 30 investors to corroborate the quantities of cryptocurrency contractually receivable at June 30, 2026. | |
| ● | Evaluating the Company’s digital wallet arrangements, including authorised signers and multisignature approval procedures, and observing a live transfer and return of SolvBTC between Company-controlled wallets, corroborated to blockchain records. | |
| ● | Evaluating management’s impairment and fair value assessments, including the underlying valuation methodology, observable cryptocurrency market prices and relevant market activity and liquidity information. | |
| ● | Assessing the recoverability of the contractual cryptocurrency receivables through examination of the contractual obligations, investor confirmations and subsequent settlement evidence. |
2. Valuation and Impairment of Cryptocurrency Mining Equipment
Description of the Critical Audit Matter
As described in Note 8 to the consolidated financial statements, the Company held cryptocurrency mining equipment with a net carrying amount of approximately US$13.7 million as of June 30, 2026. During the year, the Company recognised an impairment loss of approximately US$8.6 million on its cryptocurrency mining equipment.
The Company evaluates its mining equipment for impairment under ASC 360 whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The assessment involves estimating undiscounted future cash flows from the continued use and eventual disposition of the equipment and, where the carrying amount is not recoverable, determining its fair value.
We identified the valuation and impairment of cryptocurrency mining equipment as a critical audit matter because evaluating management’s impairment assessments involved especially challenging and subjective auditor judgment. In particular, significant judgment was required in evaluating projected Bitcoin production and prices, network mining difficulty, equipment utilisation, electricity and hosting costs, remaining useful lives, estimated disposal proceeds and market-based valuation assumptions.
F-3
| | Assentsure PAC UEN – 201816648N 180B Bencoolen Street #03-01 The Bencoolen Singapore 189648 http://www.assentsure.com.sg | |
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to this matter included the following:
| ● | Evaluating management’s identification of impairment indicators and the application of the recoverability and impairment measurement requirements under ASC 360. | |
| ● | Evaluating management’s projected undiscounted cash flows, including significant assumptions relating to Bitcoin prices, production volumes, mining difficulty, equipment utilisation, electricity and hosting costs, and expected disposal proceeds. | |
| ● | Comparing significant forecast assumptions with historical mining performance, contractual hosting arrangements and relevant external market information. | |
| ● | Evaluating the reasonableness of the equipment’s estimated remaining useful life and the depreciation methodology applied following the impairment recognised during the year. | |
| ● | Assessing the market-based valuation information used in estimating the fair value of the mining equipment, including quoted prices for comparable mining equipment and adjustments for equipment age, condition and remaining economic useful life. | |
| ● | Examining supporting documentation relating to the existence and condition of the mining equipment, including physical sighting records, equipment count sheets and serial-number testing. |
| 3. | Accounting for Complex Financing Transactions, Including Convertible Notes and Derivative Instruments |
Description of the Critical Audit Matter
During the year ended June 30, 2026, the Company entered into financing arrangements involving convertible promissory notes, warrants and related contractual provisions. These arrangements included variable conversion prices, contractual floor prices, anti-dilution adjustments and other settlement provisions.
Management evaluated the accounting for these instruments under ASC 470, ASC 480 and ASC 815 and determined that the embedded conversion features and warrants required liability classification and fair value measurement. The accounting also involved the allocation of financing proceeds, recognition and amortisation of debt discounts, accounting for conversions and remeasurement of derivative liabilities.
We identified the accounting for these financing transactions as a critical audit matter because evaluating the classification and valuation of the instruments involved especially challenging and subjective auditor judgment. In particular, significant judgment was required in interpreting the contractual provisions, evaluating the applicable US GAAP requirements and assessing the valuation methodologies and significant assumptions used in measuring the derivative liabilities.
F-4
| | Assentsure PAC UEN – 201816648N 180B Bencoolen Street #03-01 The Bencoolen Singapore 189648 http://www.assentsure.com.sg | |
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to this matter included the following:
| ● | Examining the underlying convertible note agreements, securities purchase agreements, warrant agreements and related amendments to evaluate the significant contractual terms and settlement provisions. | |
| ● | Evaluating management’s accounting assessment of the convertible notes, embedded conversion features and warrants under ASC 470, ASC 480 and ASC 815, including the appropriateness of the classification of derivative liabilities. | |
| ● | Evaluating the allocation of financing proceeds between the debt instruments and derivative liabilities, including the recognition and amortisation of debt discounts. | |
| ● | Examining conversion notices and related supporting documentation and evaluating the accounting for conversions, adjustments to outstanding principal and derecognition of the related debt and derivative components. | |
| ● | Evaluating the valuation methodologies and significant assumptions used in determining the fair values of the embedded conversion features and warrants, including share prices, volatility, risk-free interest rates, contractual terms and conversion or exercise provisions. | |
| ● | Evaluating the qualifications, competence and objectivity of management’s external valuation specialist and assessing the relevance of the specialist’s valuation report to the financial reporting measurements. | |
| ● | Evaluating the recognition of changes in fair value of derivative liabilities and assessing the related presentation and disclosures in the consolidated financial statements. |
/s/ Assentsure PAC
We have served as the Company’s auditor since 2025.
October 19, 2026
PCAOB ID:
F-5
 | AUDIT ALLIANCE LLP® A Top 18 Audit Firm 10 Anson Road, #20-16 International Plaza, Singapore 079903. |  |
UEN: T12LL1223B GST Reg No : M90367663E
Tel: (65) 6227 5428
10 Anson Road #20-16 International Plaza Singapore 079903
Website : www.allianceaudit.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Zeta Network Group (formerly known as Color Star Technology Co., Ltd.)
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of operations, changes in shareholders’ equity, and cash flows for the year ended June 30, 2024, and the related notes to the consolidated financial statements and schedule (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the result of its operations and cash flows for the year ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred recurring operating losses and negative cash flows from operating activities and has an accumulated deficits, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Registered Office: 10 Anson Road #20-16 International Plaza Singapore 079903
F-6
| AUDIT ALLIANCE LLP® A Top 18 Audit Firm 10 Anson Road, #20-16 International Plaza, Singapore 079903. | |
UEN: T12LL1223B GST Reg No : M90367663E
Tel: (65) 6227 5428
10 Anson Road #20-16 International Plaza Singapore 079903
Website : www.allianceaudit.com
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Audit Alliance LLP
We have served as the Company’s auditor from 2021 to 2025.
Singapore,
October 17, 2024
PCAOB ID 3487
Registered Office: 10 Anson Road #20-16 International Plaza Singapore 079903
F-7
ZETA NETWORK GROUP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Receivables from service provider, net | ||||||||
| Other receivables, net | ||||||||
| Prepayments, net | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Plant and equipment, net | ||||||||
| Non-current assets of discontinued operations | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Other payables and accrued liabilities | $ | $ | ||||||
| Other payables - related parties | ||||||||
| Short-term loan | ||||||||
| Long-term loan - current portion | ||||||||
| Convertible notes payable | ||||||||
| Derivative liabilities | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ** | ** | ||||||
| Additional paid-in-capital | ||||||||
| Deferred stock compensation | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
| * |
| ** |
The accompanying notes are an integral part of these consolidated financial statements.
F-8
ZETA NETWORK GROUP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Years Ended June 30, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| REVENUE | $ | $ | $ | |||||||||
| COST OF REVENUE | ||||||||||||
| Cost of revenue (exclusive of depreciation expenses) | ||||||||||||
| Cost of revenue - depreciation expenses | ||||||||||||
| TOTAL COST OF REVENUE | ||||||||||||
| GROSS (LOSS) PROFIT | ( | ) | ( | ) | ||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ( | ) | ( | ) | ( | ) | ||||||
| ALLOWANCE FOR CREDIT LOSSES | ( | ) | ||||||||||
| STOCK COMPENSATION EXPENSE | ( | ) | ( | ) | ( | ) | ||||||
| IMPAIRMENT LOSS OF LONG-LIVED ASSETS | ( | ) | ||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ||||||
| OTHER EXPENSE, NET | ||||||||||||
| Other expense , net | ( | ) | ||||||||||
| Interest income | ||||||||||||
| Loss on extinguishment of debts | ( | ) | ||||||||||
| Amortization of debt issuance costs | ( | ) | ( | ) | ( | ) | ||||||
| Impairment of cryptocurrency | ( | ) | ||||||||||
| Change in fair value of derivative liabilities | ||||||||||||
| Finance expense | ( | ) | ( | ) | ( | ) | ||||||
| TOTAL OTHER EXPENSE, NET | ( | ) | ( | ) | ( | ) | ||||||
| LOSS BEFORE PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ( | ) | ||||||
| PROVISION FOR INCOME TAXES | ||||||||||||
| NET LOSS FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ( | ) | ||||||
| NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | ( | ) | ( | ) | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| LOSS PER CLASS A and CLASS B ORDINARY SHARE | ||||||||||||
| Weighted average number of shares* | ||||||||||||
| Basic and diluted | ||||||||||||
| (Loss) income per share - basic and diluted | ||||||||||||
| Basic and diluted - continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Basic and diluted - discontinued operations | $ | $ | ( | ) | $ | ( | ) | |||||
| Total | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-9
ZETA NETWORK GROUP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS’ EQUITY
| Class A Ordinary shares* | Class B Ordinary shares* | Additional | Deferred | Accumulated other |
||||||||||||||||||||||||||||||||
| Number | Par | Number | Par | paid-in | share | Accumulated | comprehensive | |||||||||||||||||||||||||||||
| of shares | amount | of shares | amount | capital | compensation | deficit | income (loss) | Total | ||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Sale of ordinary shares | ||||||||||||||||||||||||||||||||||||
| Ordinary shares issued for acquisition of intangible assets | ||||||||||||||||||||||||||||||||||||
| Ordinary shares issued for acquisition of concert cooperation rights | ||||||||||||||||||||||||||||||||||||
| Cashless exercise of warrants into ordinary shares | ||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes payable into ordinary shares | ||||||||||||||||||||||||||||||||||||
| Stock compensation expense | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of fractional shares upon the 100-for-1, 25-for-1, 100-for-1, and 8-for-1 reverse share split | ( | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Sale of ordinary shares | ||||||||||||||||||||||||||||||||||||
| Cashless exercise of warrants into ordinary shares | ||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes payable into ordinary shares | ||||||||||||||||||||||||||||||||||||
| Issuance of warrants in connection with the issuance of convertible notes | - | - | ||||||||||||||||||||||||||||||||||
| Ordinary shares issued for acquisition of equipment | ||||||||||||||||||||||||||||||||||||
| Ordinary shares issued for compensation | ||||||||||||||||||||||||||||||||||||
| Stock compensation expense | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of fractional shares upon the 100-for-1, 25-for-1 and 8-for-1 reverse share split | ||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of ordinary shares | ||||||||||||||||||||||||||||||||||||
| Incremental fair value on modification of warrants | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Cashless exercise of warrants into ordinary shares | ( | ) | ||||||||||||||||||||||||||||||||||
| Conversion of convertible notes payable into ordinary shares | ||||||||||||||||||||||||||||||||||||
| Cancellation of shares issued for acquisition of equipment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Issuance of ordinary shares and pre-funded warrants | ||||||||||||||||||||||||||||||||||||
| Cashless exercise of pre-funded warrants into ordinary shares | ( | ) | ||||||||||||||||||||||||||||||||||
| Issuance of units for cryptocurrency | ||||||||||||||||||||||||||||||||||||
| Issuance of pre-delivery shares with no value given | ( | ) | ||||||||||||||||||||||||||||||||||
| Ordinary shares issued for compensation | ||||||||||||||||||||||||||||||||||||
| Stock compensation expense | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of fractional shares upon the 100-for-1, 25-for-1 and 8-for-1 reverse share split | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-10
ZETA NETWORK GROUP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Years Ended June 30, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net income (loss) from discontinued operations | ( | ) | ( | ) | ||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ( | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Allowance for credit losses | ||||||||||||
| Depreciation | ||||||||||||
| Stock compensation expense | ||||||||||||
| Impairment loss of long-lived assets | ||||||||||||
| Loss on extinguishment of debts on convertible notes payable | ||||||||||||
| Finance expense on convertible notes payable | ||||||||||||
| Amortization of debt issuance costs | ||||||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||||||
| Impairment of cryptocurrency | ||||||||||||
| Changes in operating assets and liabilities | ||||||||||||
| USDT | ( | ) | ||||||||||
| Receivables from service provider | ( | ) | ||||||||||
| Prepayments | ( | ) | ||||||||||
| Other payables and accrued liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in operating activities from discontinued operations | ||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Loan to a third party | ( | ) | ||||||||||
| Proceeds from loan repayment by a third party | ||||||||||||
| Purchase of equipment | ( | ) | ||||||||||
| Net cash used in investing activities from continuing operations | ( | ) | ||||||||||
| Net cash used in investing activities from discontinued operations | ||||||||||||
| Net cash used in investing activities | ( | ) | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Repayments of long-term loan | ( | ) | ||||||||||
| Proceeds from short-term loan | ||||||||||||
| Borrowings from related parties | ||||||||||||
| Repayment of borrowings from related parties | ( | ) | ( | ) | ||||||||
| Proceeds from convertible notes, net of debt issuance costs | ||||||||||||
| Repayments of a convertible note | ( | ) | ( | ) | ||||||||
| Payments on offering costs for issuance of units | ( | ) | ||||||||||
| Proceeds from issuance of ordinary shares and pre-funded warrants, net of offering costs | ||||||||||||
| Proceeds from issuance of ordinary shares, net of offering costs | ||||||||||||
| Net cash provided by financing activities from continuing operations | ||||||||||||
| Net cash provided by financing activities from discontinued operations | ||||||||||||
| Net cash provided by financing activities | ||||||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||||||
| CASH AND CASH EQUIVALENTS, beginning of year | ||||||||||||
| CASH AND CASH EQUIVALENTS, end of year | $ | $ | $ | |||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||
| Cash paid for interest expense | $ | $ | $ | |||||||||
| Cash paid for income tax | $ | $ | $ | |||||||||
| NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
| Initial recognition of operating right of use asset and lease liability | $ | $ | $ | |||||||||
| Ordinary shares issued for prepayments on concert cooperation rights | $ | $ | $ | |||||||||
| Ordinary shares issued for acquisition of intangible assets | $ | $ | $ | |||||||||
| Conversion of other payables to term loan | $ | $ | $ | |||||||||
| Cryptocurrency received from issuance of units | $ | $ | $ | |||||||||
| Debt issuance costs for convertible notes included in other payables and accrued liabilities | $ | $ | $ | |||||||||
| Incremental fair value on modification of warrants | $ | $ | ||||||||||
| Cashless exercise of warrants into ordinary shares | $ | $ | $ | |||||||||
| Conversion of convertible notes and interest payables into ordinary shares | $ | $ | $ | |||||||||
| Fair value of warrants issued in connection with the issuance of convertible notes | $ | $ | $ | |||||||||
| Issuance of ordinary shares with proceeds included in other payables and accrued liabilities | $ | $ | $ | |||||||||
| Ordinary shares issued for acquisition of equipment | $ | $ | $ | |||||||||
| Capital expenditure payable | $ | $ | $ | |||||||||
| Exchange of BTC into USDT | $ | $ | $ | |||||||||
| Cancellation of shares issued for acquisition of equipment | $ | $ | $ | |||||||||
| Cashless exercise of pre-funded warrants into ordinary shares | $ | $ | $ | |||||||||
| Repayment of long-term loans through the transfer of USDT | $ | $ | $ | |||||||||
| Transfer of SolvBTC in exchange for other receivable | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-11
ZETA NETWORK GROUP AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and description of business
Zeta Network Group (formerly known as Color Star Technology Co., Ltd., the “Company”, or “Zeta”) is a digital company which engages in cryptocurrency mining via its wholly-owned subsidiary, Model Queen Limited (“Model Queen”).
On June 29, 2025, the Company changed its name from “Color Star Technology Co., Ltd.” to “Zeta Network Group.”
CACM Group NY, Inc.
On August 20, 2018, CACM Group NY, Inc. (“CACM”) was incorporated in the State of New York and is
Color Metaverse Pte. Ltd.
On February 21, 2022, Color Metaverse Pte. Ltd. (“Color Metaverse”), a private company limited by shares, was incorporated in Singapore and is wholly established and owned by the Company. Color Metaverse had not commenced operations since its incorporation. On May 29, 2025, Color Metaverse was struck off the register.
Color Star Technology Ohio Inc.
On August 11, 2022, Color Star Technology Ohio Inc. (“Color Star Ohio”) was incorporated in the State of Ohio and is
Color Star DMCC
On January 23, 2023, Color Star DMCC (“DMCC”) was incorporated in the United Arab Emirates with share capital of AED
Model Queen Limited
On August 9, 2023, Model Queen Limited (“Model Queen”) was incorporated in Hong Kong Special Administrative Region and is
Note 2 – Summary of significant accounting policies
Going concern uncertainty
The Company had cash of approximately $
F-12
During the year ended June 30, 2026, the Company generated cryptocurrency mining revenue of approximately $
In response to its liquidity and operational challenges, management has taken several steps intended to support the Company’s ongoing operations:
| - | Continues to pursue additional equity and debt financing opportunities; and | |
| - | Continues to evaluate opportunities to reduce operating expenditures, including through the disposition of unprofitable subsidiaries, and to manage or restructure its current liabilities. |
Management’s assessment of the Company’s ability to continue as a going concern involves significant judgment, including evaluating the feasibility of financing plans, potential cash flows from new business initiatives, cryptocurrency market conditions, mining economics, and the impact of subsequent events.
While these actions may improve liquidity and support near-term operations, the Company’s ability to continue as a going concern is dependent on the successful execution of these plans. There is no assurance that the Company will be able to generate positive cash flow, improve gross margins, or secure additional funding when needed.
Accordingly, substantial doubt remains about the Company’s ability to continue as a going concern. These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to operate and meet its obligations as they come due. No adjustments have been made to the financial statements as a result of this uncertainty.
Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These consolidated financial statements include the accounts of all the directly and indirectly owned subsidiaries listed below. All intercompany transactions and balances have been eliminated in consolidation.
Principles of consolidation
The consolidated financial statements reflect the activities of the following subsidiaries. All material intercompany transactions and balances have been eliminated.
| Subsidiaries | Place incorporated | Ownership percentage | ||||
| CACM | % | |||||
| Color Star Ohio | % | |||||
| DMCC(1) | % | |||||
| Model Queen | % | |||||
| (1) | Disposed on January 5, 2026 and was presented as a discontinued operation in accompanying consolidated financial statements (see Note 3 for details). |
F-13
Use of estimate and assumptions
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and judgments include the allowance for expected credit losses on receivables, valuation allowances for deferred tax assets, stock-based compensation, impairment assessments and estimated useful lives of plant and equipment, recognition, classification and impairment of cryptocurrency receivables, and fair value measurement of warrants and derivative liabilities. Actual results could differ materially from those estimates.
Revenue recognition
The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (ASC 606) to recognize its revenue for all periods presented. The core principle underlying this ASC 606 is that the Company recognizes its revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This requires the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.
The ASC 606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASC 606 under previous standards and using the five-step model under the new guidance and confirmed that there were no material differences in the pattern of revenue recognition.
The Company accounts for a contract with a customer when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration to collect is substantially probable.
The Company offered the following services:
| (a) | Construction management consulting services |
Sale of construction management consulting services is accounted for as a single performance obligation which is satisfied at a point in time at the time the services are performed.
| (b) | Cryptocurrency mining |
The Company engages in cryptocurrency mining by providing computing power in a third-party operated mining pool. The Company provides a service to perform hash calculations for the third-party operated mining pool, which is an output of the Company’s ordinary activities, in exchange for non-cash consideration in the form of Bitcoin (“BTC”).
F-14
The Company participates in third-party-operated cryptocurrency mining pools by providing computing power to perform hash calculations, which constitute an output of our ordinary activities. The Company’s mining machines are hosted and operated by the hosting service provider. The hosting service provider selects, at its discretion, the third-party mining pool to which the machines are connected and facilitates the Company’s participation in the mining pool, calculates the mining proceeds attributable to the Company’s machines, and arranges for the settlement of those proceeds on behalf of the Company. The hosting service provider, on behalf of the Company, provides hash calculations to the mining pool. The contracts are terminable without penalty at any time by either party, and thus the contract term is shorter than a 24-hour period and the contracts are continuously renewed. Applying the criteria per ASC 606-10-25-1, the contract arises at the point that the Company provides hash calculations to the mining pool, which is considered contract inception, because the mining pool consumption is in tandem with delivery of the hash calculations. The Company has identified a single performance obligation of providing hash calculations for the mining pool. The continuous renewal options do not represent material rights because they do not provide the mining pool with the right to purchase additional goods or services at a discount. Specifically, the contract is renewed at the same terms, conditions, and rate as the current contract which is consistent with market rates, and there are no upfront or incremental fees in the initial contract. The Company has full control of the mining equipment used in the mining pool, and if the Company determines it will increase or decrease the hash rate calculations of its machines and/or fleet (i.e., for repairs or when power costs are excessive), the hash rate provided to the mining pool will correspondingly increase or decrease.
The hosting service provider, on behalf of the Company, receives non-cash consideration in the form of BTC, the fair value of which is measured at 23:59:59 UTC on the date of contract inception using observable market pricing information for BTC. The market pricing information obtained from CoinMarketCap was used as the Company’s primary pricing source for determining the fair value of BTC. CoinMarketCap aggregates observable pricing information from multiple active cryptocurrency exchanges and is used by management as a market-based valuation input consistent with ASC 820. The contract renews continuously throughout the day, and thus the value of the consideration should be assessed continuously throughout the day, and the Company has concluded to use the 23:59:59 UTC BTC price each day. According to the contract, daily settlements are made to the hosting service provider, on behalf of the Company, by the mining pool based on the hash calculations provided over the contract periods occurring over a 24-hour period and the payout is made the following day. There are no other forms of variable considerations, such as discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties, or other similar items. The Company earns non-cash consideration based on the Full-Pay-Per-Share (“FPPS”) payout method in the form of BTC and exchanges them into USDT. There is a single performance obligation (i.e., to provide hash calculations or hash rate to the mining pool) for the contract; therefore, all consideration from the mining pool is allocated to this single performance obligation. The Company’s performance is completed over time as the hash rate has been contributed to the mining pool. The performance obligation of hash calculations is fulfilled over time, as opposed to a point in time, because the Company provides the hash calculations throughout the contract period and the mining pool simultaneously obtains control of the service and uses it to produce BTC. There are no deferred revenues or other liability obligations recorded by the Company since there are no payments in advance of the performance, and there are no remaining performance obligations after providing hash calculations.
Information of revenues is as follows:
| For the Years Ended June 30, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Construction management consulting services | ||||||||||||
| Cryptocurrency mining revenue | ||||||||||||
| Total revenue | $ | $ | $ | |||||||||
Financial instruments
US GAAP specifies a hierarchy of valuation techniques for determining the fair value of financial instruments and related fair value measurements based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). The valuation hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In accordance with FASB ASC 820, the following summarizes the fair value hierarchy:
F-15
The three levels of inputs are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;
Level 3 inputs to the valuation methodology are unobservable.
The carrying amounts of cash and cash equivalents, receivables, and certain short-term payables and accrued liabilities approximate their fair values due to their short-term nature.
The Company’s derivative liabilities are measured at fair value in accordance with the applicable accounting guidance. The carrying amounts and fair value considerations relating to convertible notes payable and borrowings are addressed in the respective accounting policies and accompanying notes to the consolidated financial statements.
Cash and cash equivalents
The Company considers all highly liquid investments with the original maturity of three months or less at the date of purchase to be cash equivalents.
USDT
USD Tether (“USDT”) is a crypto asset similar to cryptocurrency. The main difference between a stablecoin (such as USDT or USDC) and a payment cryptocurrency (such as BTC) is that a stablecoin is designed to ensure that its value remains constant when compared to a particular currency. This could be because the stablecoin is backed by an amount of currency held on deposit at a particular bank or though mathematical formulae that aim to balance demand and supply. It is a type of digital asset which the Company will hold to meet certain working capital requirements. The Company classifies USDT as a financial asset on the basis that one USDT can be redeemed for one US dollar from an issuer.
Cryptocurrency - current
Cryptocurrency - current (including BTC) awarded to the Company through its mining activities is accounted for in connection with the Company’s revenue recognition policy disclosed above.
BTC is accounted for under ASC 350-60 and is measured at fair value, with changes in fair value recognized in net income. The Company measures BTC in the statement of financial position in accordance with ASC 350-60 Intangibles—Goodwill and Other—Crypto Assets.
Cryptocurrency awarded to the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows.
SolvBTC
SolvBTC was acquired through the issuance of units in October 2025 (See Note 15).
Management concluded that SolvBTC does not meet all of the scope criteria of ASC 350-60 and therefore accounts for SolvBTC as an indefinite-lived intangible asset under ASC 350-30. SolvBTC is measured at cost less impairment in accordance with ASC 350-30.
For the years ended June 30, 2026, 2025 and 2024, the Company recognized impairment charges of cryptocurrency in the amount of $
F-16
Receivables from service provider, net
Receivables from service provider include cryptocurrency mining revenue earned by the Company that is held by the service provider on the Company’s behalf, net of an allowance for credit losses. Receivables from service provider do not bear interest. Allowance for credit losses for receivables from service provider is established based on various factors including historical payments and current economic trends. The Company reviews its allowance for receivables from service provider by assessing the receivables over a specific aging and amount. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect collectability. Receivables from service provider are written off on a case-by-case basis after exhaustive efforts at collection are made, net of any amounts that may be collected.
Other receivables
Other receivables primarily include receivables of SolvBTC from investors, net of an allowance for credit losses. Allowance for credit losses for other receivables is established based on various factors including historical payments and current economic trends. The Company reviews its allowance for other receivables by assessing individual other receivables over a specific aging and amount. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect collectability. Other receivables are written off on a case-by-case basis after exhaustive efforts at collection are made, net of any amounts that may be collected.
Plant and equipment, net
Plant and equipment are stated at cost or at fair value of the identifiable assets acquired on the acquisition date less accumulated depreciation and impairment loss. Expenditures for maintenance and repairs are charged to operations as incurred while additions, renewals and improvements are capitalized. Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method with
The estimated useful lives of assets are as follows:
| Useful life | ||
| Cryptocurrency mining equipment* |
| * |
Accounting for long-lived assets
The Company classifies its long-lived assets into cryptocurrency mining equipment.
Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technological or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.
If the value of an asset is determined to be impaired, the impairment to be recognized is measured in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less disposition costs.
There were $
Convertible notes
Upon adoption of ASU 2020-06 on July 1, 2021, the elimination of the beneficial conversion feature (“BCF”) and cash conversion models in ASC 470-20 that requires separate accounting for embedded conversion features in convertible instruments results in the convertible debt instruments being recorded as a single liability (i.e., there is no separation of the conversion feature, and all proceeds are allocated to the convertible debt instruments as a single unit of account). If embedded features that are not clearly and closely related to the host instrument and do not qualify for equity classification, they are accounted for as derivative liabilities. These derivative liabilities are measured at fair value upon initial recognition and remeasured at each reporting date, with changes in fair value recognized in the consolidated statements of operations until the instruments are settled. Unless conversion features are derivatives that must be bifurcated from the host contracts in accordance with ASC 815-15 or, in the case of convertible debt, if the instruments are issued with a substantial premium, in the latter case, ASC 470-20-25-13 requires the substantial premium to be attributable to the conversion feature and recorded in additional paid-in capital (APIC).
F-17
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Class A Ordinary Shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. Warrants that do not meet all the criteria for equity classification are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter. The Company determined that upon the review of its warrant agreements, the Company concluded that its First Tranche Warrants qualify for liability accounting treatment and all other warrants qualify for equity accounting treatment.
For issued warrants that do not meet all of the criteria for equity classification and issued with debt instruments, the proceeds from the sale of the debt instruments are allocated to the two elements based on their fair values. The warrants derivative liabilities were recorded at its fair value upon initial recognition, with the residual proceeds attributed to the debt instruments, and remeasured at each reporting date, with changes in fair value recognized in the consolidated statements of operations.
For issued warrants that meet all of the criteria for equity classification and issued with debt instruments, the proceeds from the sale of the debt instruments are allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portion of the proceeds allocated to the warrants is accounted for as paid-in capital. The remainder of the proceeds is allocated to the debt instrument portion of the transaction at a discount and amortized over the term of the debt instrument using the effective interest rate method.
Stock-based compensation
Stock-based compensation expense is recognized on a graded vesting basis over the requisite service period in accordance with ASC 718, Compensation—Stock Compensation. The measurement and recognition of compensation expense for all stock-based compensation made to employees and officers, including employee restricted stock, is based on estimated fair value of the awards on the date of grant, of which restricted stock is based on the market value of the Company’s ordinary share. The value of awards that are ultimately expected to vest is recognized as expense on a straight-line basis over the vesting service periods in the consolidated statements of operations. Forfeitures are accounted for as they occur.
Income taxes
The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes,” which requires the Company to use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.
F-18
ASC 740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that has a greater than
Discontinued operations
A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operation if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs: (1) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale; (2) the component of an entity or group of components of an entity is disposed of by sale; (3) the component of an entity or group of components of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff).
Loss per share
The Company reports earnings (loss) per share in accordance with U.S. GAAP, which requires presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings per share.
Basic loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period using the two-class method. Using the two-class method, net loss is allocated between two classes of ordinary shares based on their rights, including the liquidation and dividend rights.
Diluted loss per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants, options, restricted stock-based grants and convertible preferred stock, to issue ordinary shares were exercised and converted into ordinary shares. Ordinary share equivalents having an anti-dilutive effect on loss per share are excluded from the calculation of diluted loss per share.
Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase ordinary shares at the average market price during the period. When the Company has a loss, no potential dilutive items are included since they would be anti-dilutive.
Stock dividends or stock splits are accounted for retroactively if the stock dividends or stock splits occur during the period, or retroactively if the stock dividends or stock splits occur after the end of the period but before the release of the financial statements, by considering it effective as of the beginning of the earliest period presented.
Segments
The Company uses the management approach in determining reportable operating segments.
F-19
Recent Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company adopted this new guidance on its consolidated financial statements (see Note 14).
In November 2023, the FASB issued ASU 2023 07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update enhances segment disclosures by requiring disclosure of significant expenses included in a segment’s profit or loss measure, identification of the CODM, how the CODM uses the reported measure(s) to assess performance, and certain interim disclosures for segment profit or loss and assets. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, and retrospective application is required. The Company adopted this new guidance for its segment disclosures and allocates resources on a consolidated basis, using the significant revenue and expense categories of the Company as the key measurement (see Note 19 – Segment Information).
In December 2023, the FASB issued Accounting Standards Update No. 2023-08, Intangibles – “Goodwill and Other - Crypto Assets (Topic 350-60): Accounting for and Disclosure of Crypto Assets” (ASU 2023-08”), which requires entities to measure crypto assets that meet specific criteria at fair value with changes recognized in net income each reporting period. Additionally, ASU 2023-08 requires an entity to present crypto assets measured at fair value separately from other intangible assets in the balance sheets and record changes from remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement. The amendments also require that an entity provide disclosures about significant holdings, contractual sale restrictions, and changes during the reporting period. The objectives of the amendments are to provide investors and other capital allocators with more decision-useful information that better reflects the underlying economics of crypto assets within the scope and an entity’s financial position while reducing cost and complexity associated with applying cost-less-impairment accounting. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. The Company adopted this new guidance on its consolidated financial statements (See Note 2 and Note 4).
In March 2024, the FASB issued ASU 2024 02, Codification Improvements — Amendments to Remove References to the Concepts Statements, which removes references to the non-authoritative FASB Concepts Statements from various locations in the Codification. This update is effective for public business entities for fiscal years beginning after December 15, 2024 (and for other entities after December 15, 2025). Early adoption is permitted. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements.
In November 2024, the FASB issued ASU 2024 03, Disaggregation of Income Statement Expenses (“DISE”), which requires more detailed disaggregation of cost and expense items in the notes to the financial statements. The standard is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of this guidance on its disclosures.
In addition, the Company continues to monitor other recently issued but not yet effective pronouncements, including those with narrower scopes or clarifying amendments, and will assess their applicability and potential impact on its financial statements in future periods. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
F-20
Note 3 – Discontinued operations
On December 31, 2025, the Company entered into a share sale and purchase agreement with a third party buyer, pursuant to which the Company agreed to sell and the buyer agreed to purchase all the shares of DMCC, which was
Reconciliation of the carrying amounts of major classes of assets and liabilities from discontinued operations in the consolidated balance sheets as of June 30, 2026, and 2025 are as follows:
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Right-of-use asset | $ | $ | ||||||
| Total non-current assets of discontinued operations | ||||||||
| Total assets of discontinued operations | $ | $ | ||||||
| LIABILITIES | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Other payables and accrued liabilities | $ | $ | ||||||
| Lease liability - current | ||||||||
| Total current liabilities of discontinued operations | ||||||||
| Total liabilities of discontinued operations | $ | $ | ||||||
Reconciliation of the amounts of major classes of income and losses from discontinued operations in the consolidated statements of operations for the years ended June 30, 2026, 2025 and 2024 are as follows:
| For the Years Ended June 30, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| REVENUE | $ | $ | $ | |||||||||
| COST OF REVENUE | ||||||||||||
| GROSS PROFIT | ||||||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ( | ) | ( | ) | ( | ) | ||||||
| ALLOWANCE FOR CREDIT LOSSES | ( | ) | ( | ) | ||||||||
| PROVISION FOR IMPAIRMENT LOSS ON PREPAYMENTS | ( | ) | ||||||||||
| IMPAIRMENT LOSS OF INTANGIBLE ASSETS | ( | ) | ||||||||||
| LOSS FROM DISCONTINUED OPERATIONS | ( | ) | ( | ) | ( | ) | ||||||
| OTHER INCOME (EXPENSE), NET | * | ( | ) | |||||||||
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||
| NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS | $ | $ | ( | ) | $ | ( | ) | |||||
| * |
F-21
Reconciliation of the amount of cash flows from discontinued operations in the consolidated statements of cash flows for the years ended June 30, 2026, 2025 and 2024 are as follows:
| For the Years Ended June 30, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Net cash provided by operating activities from discontinued operations | $ | $ | $ | |||||||||
| Net cash provided by investing activities from discontinued operations | $ | $ | $ | |||||||||
| Net cash provided by financing activities from discontinued operations | $ | $ | $ | |||||||||
Note 4 – Cryptocurrency
The Company measures BTC at fair value, which is determined using a Level 1 inputs in the fair value hierarchy.
| Quantities (in coins) | Cryptocurrency | |||||||
| BTC | Amounts | |||||||
| Balance on June 30, 2024 | $ | |||||||
| Revenue recognized from cryptocurrency mined | ||||||||
| USDT receivable* | ( | ) | ( | ) | ||||
| Balance on June 30, 2025 | ||||||||
| Revenue recognized from cryptocurrency mined | ||||||||
| USDT receivable* | ( | ) | ( | ) | ||||
| Balance on June 30, 2026 | $ | |||||||
| * |
Note 5 – Receivable from service provider, net
Receivables from service provider consisted of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| USDT receivables due from third-party service provider | $ | $ | ||||||
| Subtotal | ||||||||
| Less: Allowance for credit losses | ||||||||
| Receivables from service provider, net | $ | $ | ||||||
For the years ended June 30, 2026, and 2025, allowance on credit losses were recognized.
Note 6 – Other receivables, net
Other receivables consisted of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| SolvBTC receivables due from investors* | $ | $ | ||||||
| * |
F-22
The Company accounts for SolvBTC as an indefinite-lived intangible asset and measures SolvBTC at cost less impairment in accordance with ASC 350-30. The Company assessed the fair value of SolvBTC for purposes of its impairment assessment. Based on the market price as of June 26, 2026, the fair value of the
| Quantities (in coins) | Cryptocurrency | |||||||
| SolvBTC | Amounts | |||||||
| Balance on June 30, 2025 | $ | |||||||
| Cryptocurrency received from issuance of units | ||||||||
| Impairment of cryptocurrency | ( | ) | ||||||
| Transferred out | ( | ) | ( | ) | ||||
| Balance on June 30, 2026 | $ | |||||||
The Company recorded an aggregate reduction in value of approximately $
Note 7 – Prepayments
Prepayments, consisted of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| Prepayment for payroll tax | ||||||||
| Less: Provision for impairment loss on prepayments | ||||||||
| Prepayments | $ | $ | ||||||
For the years ended June 30, 2026, and 2025, no provision for impairment loss on prepayments were recognized.
Note 8 – Plant and equipment, net
Plant and equipment consist of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| Cryptocurrency mining equipment* | $ | $ | ||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Plant and equipment, net | $ | $ | ||||||
| * | Management considered operational performance, historical results, and other indicators of impairment in assessing the recoverability of mining equipment. During the year ended June 30, 2026, the Company determined that the estimated fair value of its cryptocurrency mining equipment, based on market prices for similar assets, was less than its carrying value of $ |
Depreciation expense was $
F-23
Note 9 – Other payables and accrued liabilities
Other payables and accrued liabilities of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| Payroll and payroll tax payable | $ | $ | ||||||
| Interest payable | ||||||||
| Settlement arrangement payable (1) | ||||||||
| Capital expenditure payable (2) | ||||||||
| Other payables | ||||||||
| Total other payables and accrued liabilities | $ | $ | ||||||
| (1) | |
| (2) |
Note 10 – Related party transactions
Other payables – related parties
Other payables – related party consisted of the following:
| Name of Related Party | Relationship | Nature | June 30, 2026 | June 30, 2025 | ||||||||
| Hui Xu | ||||||||||||
| Louis Luo | ||||||||||||
| Total | $ | $ | ||||||||||
Note 11 – Short-term loan
On May 28, 2026, the Company entered into a loan agreement with a third party and subsequently entered into a supplemental agreement on June 28, 2026, pursuant to which the third party agreed to lend $
Note 12 – Current maturity of long-term loan
On July 25, 2025, the Company entered into a series of related agreements with BTC KZ, a company organized under the laws of Kazakhstan, and Ulife Media and Production International Limited (“ULife”), a wholly owned subsidiary of BTC KZ, in connection with the restructuring of the payment of consideration under a prior purchase agreement dated February 26, 2025 (see Note 15 for details) involving the acquisition of certain cryptocurrency mining machines. As disclosed in Note 15, the Company had agreed to pay to ULife a total of $
Due to regulatory concerns surrounding the issuance of the Share Consideration, the parties mutually agreed to cancel the Share Consideration and restructure the unpaid balance into a secured term loan arrangement. As part of this restructuring, the Company entered into a secured term loan agreement with BTC KZ pursuant to which BTC KZ agreed to lend the Company $
F-24
The obligation is payable as follows:
| Amount | ||||
| For the twelve months ending June 30, 2027 | $ | |||
| Total long-term debt payment | ||||
| Current portion of long-term loan | ||||
| Long-term loan – non-current portion | $ | |||
Interest expense for the years ended June 30, 2026, 2025 and 2024 for the above loan amounted to $
Note 13 – Convertible notes payable and derivative liabilities
On July 11, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Streeterville Capital, LLC, a Utah limited liability company (the “Investor”), pursuant to which the Company issued the Investor an unsecured promissory note on July 11, 2023 in the original principal amount of $
On January 19, 2024, the Investor redeemed $
On August 13, 2024, the Company entered into a securities purchase agreement with the Investor, pursuant to which the Company issued the Investor an unsecured promissory note on August 13, 2024, in the original principal amount of $
F-25
Pursuant to the SPA dated September 27, 2024, the Company initially issued senior secured convertible notes (the “Initial Notes”) together with accompanying Series A Warrants to purchase up to
The Initial Notes are convertible into the Company’s Ordinary Shares at the holder’s option, after
On October 8 and November 25, 2024, the Company entered into note exchange agreements (the “October Exchange Agreement” and the “November Exchange Agreement”) with the purchasers who were parties to the SPA dated September 27, 2024 (the “Purchasers”). Under these agreements, the Initial Notes were delivered back to the Company for cancellation and replaced with new convertible notes having substantially similar terms (the “New Notes” and “New Notes 2”), except that the November Exchange Agreement introduced a floor conversion price of $
Pursuant to the SPA dated September 27, 2024, the Company may sell to the investors, from time to time, up to US$
On January 16, 2025, the Company consummated an additional closing under the same SPA (the “Third Offering”), pursuant to which it issued senior secured convertible notes to the Purchasers in the aggregate principal amount of approximately $
The New Notes 3 are convertible into the Company’s Ordinary Shares at the holder’s option, immediately upon issuance, in whole or in part, until the New Notes 3 is fully converted, at the lower of (i) the fixed conversion price of $
F-26
On September 4, 2025, the Company entered into a Payoff Letter Agreement with each of the holders (the “Holders”) of the Company’s outstanding New Notes 3. Pursuant to the Payoff Letter Agreement, the Company and the Holders agreed to fully and finally settle the remaining outstanding principal balances of the New Notes 3 through a one-time conversion into Class A ordinary shares, par value $
On March 10, 2026, the Company entered into a securities purchase agreement (the “SPA 12”) with certain institutional investors for the purchase and sale of up to $
The First Tranche Notes bear no interest and are convertible immediately upon issuance, subject to certain exceptions, into the Class A ordinary shares at an initial conversion price equal to the lower of (i) $
The First Tranche Warrants are exercisable immediately upon issuance, subject to certain exceptions, will expire five years from the initial date of exercise, and have an initial exercise price of $
The Company issued the Pre-Delivery Shares for the investors to hold against the Company’s delivery of Ordinary Shares upon the conversion of the First Tranche Notes or the exercise of the First Tranche Warrants. The investors may not vote or dispose of the Pre-Delivery Shares until their conversion or exercise. With respect to each investor, during the period beginning on the date on which the applicable investor’s New Note 4 is no longer outstanding following the final closing, and ending on the date that is six-months after such date (as applicable, the “Purchase Right Period”), such investor will have the right, but not the obligation, to purchase all or any portion or portions of its Pre-Delivery Shares at a price per share equal to
The Company evaluated the embedded features of the First Tranche Notes in accordance with ASC 470 and ASC 815. Based on this evaluation, the embedded conversion feature (“Conversion Feature”) is required to be bifurcated from the host debt instrument and accounted for separately as a derivative liability. The Conversion Feature is not considered clearly and closely related to the debt host and meets the definition of a derivative under ASC 815. In addition, the First Tranche Notes are not otherwise measured at fair value through earnings, and the Conversion Feature does not qualify for the scope exception for instruments indexed to the Company’s own stock due to variable-priced settlement provisions.
F-27
The Company evaluated the First Tranche Warrants in accordance with ASC 480 and ASC 815. Based on this evaluation, the warrants are free from the debt instrument and do not meet all of the criteria for equity classification, and accordingly, accounted for separately as a derivative liability.
Accordingly, the Conversion Feature and First Tranche Warrants are initially measured at fair value and recorded as derivative liabilities, with subsequent changes in fair value recognized in earnings in the period in which they occur.
At issuance, the Company allocated the proceeds between the warrants derivative liabilities, conversion feature derivative liabilities and the host debt using an allocation approach consistent with the measurement basis of each component. The warrants and conversion feature derivative liabilities were recorded at their fair value, with the residual proceeds attributed to the host debt. The fair values of the First Tranche Warrants and the Conversion Feature were determined using a Binomial Tree model. Key assumptions include the Company’s stock price, volatility, risk-free interest rate, discount rate for the Company, Alternative Conversion Price and Floor Price, and contractual term of the notes and warrants.
Debt discount and issuance costs were attributed to the host debt as those costs were primarily incurred to obtain debt financing. Debt discount recorded as a reduction of the carrying amount of the debt and amortized over the term of the First Tranche Notes using the effective interest method.
As of the issuance date of the First Tranche Notes and First Tranche Warrants, valuation assumptions for the Conversion Feature and First Tranche Warrants included stock prices of $
Valuation assumptions for Conversion Feature on each conversion and principal addition date included stock prices from $
As of June 30, 2026, the fair values of the conversion feature and First Tranche Warrants were remeasured to $
The fair value measurement of the Conversion Feature and First Tranche Warrants represent Level 3 inputs under the fair value hierarchy due to the use of unobservable inputs.
| Conversion feature | ||||||||||||||||
| Converted portion | Unconverted portion | Warrants | Total | |||||||||||||
| Issuance date, March 12, 2026 | $ | $ | $ | $ | ||||||||||||
| Date of principal addition | ||||||||||||||||
| Date of conversion | ||||||||||||||||
| June 30, 2026 | ||||||||||||||||
| Change in fair value | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
F-28
The Company has convertible notes, net of unamortized discounts as follows:
| Face value of convertible notes payable | Unamortized debt discounts | Convertible notes payable, net of unamortized discounts | ||||||||||
| Issuance of convertible notes, March 12, 2026 | $ | $ | ( | ) | $ | |||||||
| Fair value allocation of conversion feature | ( | ) | ( | ) | ||||||||
| Fair value allocation of warrants | ( | ) | ( | ) | ||||||||
| Amortization of debt discounts | ||||||||||||
| Principal addition | ( | ) | ||||||||||
| Conversion | ( | ) | ( | ) | ||||||||
| Balance as of June 30, 2026 | $ | $ | ( | ) | $ | |||||||
As of June 30, 2026, and 2025, the convertible notes balance amount to $
As of June 30, 2026, and 2025, the derivative liabilities balance amount to $
Note 14 – Income taxes
(a) Corporate income tax
Zeta
Under the current laws of the Cayman Islands, Zeta is not subject to tax on income or capital gains. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.
CACM
CACM is organized in the New York State in the United States. CACM had taxable income for the U.S. income tax purposes for the years ended June 30, 2026, 2025 and 2024. The applicable tax rate is
Color Star Ohio
Color Star Ohio is organized in the Ohio State in the United States. Color Star Ohio had taxable income for the U.S. income tax purposes for the years ended June 30, 2026, 2025 and 2024. The applicable tax rate is
Model Queen
Model Queen is organized in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is
F-29
Loss before provision for income taxes consisted of:
| Loss before provision for income taxes consisted of: | For the Year Ended June 30, 2026 | For the Year Ended June 30, 2025 | For the Year Ended June 30, 2024 | |||||||||
| Cayman | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| United States | ( | ) | ( | ) | ( | ) | ||||||
| Hong Kong | ( | ) | ( | ) | ||||||||
| PRC | ( | ) | ||||||||||
| Loss before provision for income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Adoption of ASU 2023-09
Effective July 1, 2025, the Company adopted Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision-usefulness of income tax disclosures, primarily through expanded requirements relating to the effective tax rate reconciliation and income taxes paid.
The Company adopted ASU 2023-09 effective July 1, 2025, on a prospective basis. Accordingly, the enhanced income tax rate reconciliation disclosure requirements have been applied to the year ended June 30, 2026. The comparative information for the years ended June 30, 2025 and 2024 has not been retrospectively adjusted.
Income tax rate reconciliation
The comparative income tax rate reconciliations for the years ended June 30, 2025 and 2024 are presented in accordance with the disclosure requirements applicable prior to the adoption of ASU 2023-09.
The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the years ended June 30, 2026:
| For the Year Ended June 30, 2026 | ||||||||
| Federal statutory rate | $ | ( | ) | % | ||||
| State statutory rate | ( | ) | % | |||||
| Valuation allowance | ( | )% | ||||||
| State tax effect | ( | )% | ||||||
| Foreign tax effect | ( | )% | ||||||
| Effective tax rate | $ | % | ||||||
The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the years ended June 30, 2025, and 2024:
| For the Year Ended June 30, 2025 | For the Year Ended June 30, 2024 | |||||||
| Federal statutory rate | % | % | ||||||
| State statutory rate | % | % | ||||||
| Valuation allowance | ( | )% | ( | )% | ||||
| Others (1) | ( | )% | ( | )% | ||||
| Effective tax rate | % | % | ||||||
Significant components of deferred tax assets were as follows:
| June 30, 2026 | June 30, 2025 | |||||||
| Deferred tax assets | ||||||||
| Net operating loss carryforward in the U.S. | ||||||||
| Net operating loss carryforward in Hong Kong | ||||||||
| Impairment loss of long-lived assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Total net deferred tax assets | $ | $ | ||||||
F-30
As of June 30, 2026, and 2025, CACM and Color Star Ohio’s net operating loss carry forward for the U.S. income taxes was approximately $
As of June 30, 2026, and 2025, Model Queen’s net operating loss carry forward for the Hong Kong income taxes was $
Changes in the valuation allowance for deferred tax assets increased by $
For the years ended June 30, 2026, 2025 and 2024, no income taxes were paid.
(b) Uncertain tax positions
There were uncertain tax positions as of June 30, 2026, and 2025, and management does not anticipate any potential future adjustments which would result in a material change to its tax positions. For the years ended June 30, 2026, 2025 and 2024, the Company did incur any tax related interest or penalties.
Note 15 – Shareholders’ equity
Shares Reverse Split
On September 29, 2024, the Company held its 2024 annual meeting of shareholders, pursuant to which the shareholders of the Company approved the proposal to effect a reverse share split at a ratio of up to one-for-two hundred fifty (“Reverse Split”), and immediately after the approval of the Reverse Split, the subdivision of the Company’s authorized share capital to US$
On June 29, 2025, the Company held its 2025 annual meeting of shareholders, pursuant to which the shareholders of the Company approved the proposal to authorize the Company’s board of directors (the “Board”) to effect a reverse share split (the “Reverse Share Split” and share consolidation (the “Share Consolidation”) (the Reverse Share Split and Share Consolidation, the “Reverse Share Split and Share Consolidation”), of the Company’s authorized and issued share capital, at a ratio of up to one-for-one hundred. Such Reverse Share Split and Share Consolidation to be effected, at the specific Approved Consolidation Ratio (subject to the above maximum), as to be determined by the Board, and in order to effect the Reverse Share Split and Share Consolidation and subject to adjustment pending the Board’s determination of the precise Approved Consolidation Ratio of the Reverse Share Split and Share Consolidation, the authorized share capital of the Company shall be altered from US$
F-31
On January 22, 2026, the Company held its extraordinary general meeting of shareholders. The shareholders authorized the Board to effect a reverse share split (the “2026 Reverse Share Split”) and share consolidation (the “2026 Share Consolidation”, together with the 2026 Reverse Share Split, the “2026 Reverse Share Split and Share Consolidation”), of the Company’s authorized and issued share capital, at a ratio of up to one-for-one hundred, but in any case at a ratio of not less than one-for-five (the “Approved Consolidation Ratio”). Such 2026 Reverse Share Split and Share Consolidation to be effected, at the specific Approved Consolidation Ratio (subject to the above maximum and minimum), as to be determined by the Board, and in order to effect the Reverse Share Split and Share Consolidation and subject to adjustment pending the Board’s determination of the precise Approved Consolidation Ratio of the Reverse Share Split and Share Consolidation, the authorized share capital of the Company shall be altered (assuming an Approved Consolidation Ratio of 1:100) from US$
On May 8, 2026, the Company held its extraordinary general meeting of shareholders. The shareholders authorized the Board, in its sole discretion, as to how and when to implement and effect the share consolidation (the “2026 Share Consolidation 2”), whereby issued and authorized Class A Ordinary Shares with a nominal or par value of US$
Change in Share Capital
On May 8, 2026, the Company held its extraordinary general meeting of shareholders, at which the shareholders approved (i) a reduction of the authorized share capital from US$
F-32
Issuance of Class A Ordinary Shares
On August 22, 2024, the Company entered into certain securities purchase agreement (the “SPA 8”) with a certain sophisticated investor as such term is defined in Rule 506(b) of Regulation D of the Securities Act of 1933, as amended, pursuant to which the Company agreed to sell
On August 13, 2025, the Company entered into securities purchase agreements (the “SPA 9”) with certain institutional investors for the purchase and sale of
On October 7, 2025, the Company entered into a securities purchase agreement (the “SPA 10”) with certain institutional investors named thereto (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Offering 2”): (i)
On October 15, 2025, the Company entered into a securities purchase agreement (the “SPA 11”) with certain investors pursuant to which the Company agreed to issue and sell to each investor in a private placement offering an aggregate of $
Restricted Stock Grants
Restricted stock grants are measured based on the market price on the grant date. The Company has granted restricted Class A ordinary shares to the members of the board of directors (the “Board”), senior management and consultants.
In August 2024, the Company granted an aggregate of
In February 2025, the Company granted an aggregate of
In April 2025, the Company granted an aggregate of
In August 2025, the Company granted an aggregate of
F-33
In April 2026, the Company granted an aggregate of
For the years ended June 30, 2026, 2025 and 2024, the Company recognized approximately $
Following is a summary of the restricted stock grants:
| Restricted stock grants | Shares | Weighted Average Grant Date Fair Value Per Share | Aggregate Intrinsic Value | |||||||||
| Unvested as of June 30, 2024 | $ | $ | ||||||||||
| Forfeited | $ | |||||||||||
| Granted | $ | |||||||||||
| Vested | ( | ) | $ | |||||||||
| Unvested as of June 30, 2025 | $ | $ | ||||||||||
| Forfeited | $ | |||||||||||
| Granted | $ | |||||||||||
| Vested | ( | ) | $ | |||||||||
| Unvested as of June 30, 2026 | $ | $ | ||||||||||
Class A Ordinary Shares Issued for Compensation
In October 2024, the Board granted an aggregate of
In September 2025, the Board granted an aggregate of
For the years ended June 30, 2026, 2025 and 2024, the Company recorded approximately $
Class A Ordinary Shares Issued for Acquisitions
The Company entered into certain copyright acquisition agreement (“Copyright Agreement”) dated as of January 9, 2025, by and among Nine Star Parties and Entertainment LLC., an Ohio limited liability company (“Nine Star”), the Company, and Color Star DMCC and wholly owned subsidiary of the Company. Pursuant to the Agreement, Nine Star agreed to sell to Color Star DMCC all of Nine Star’s right, title and interests in and to 27 pieces of music works created by Nine Star (the “Works”), for an aggregate consideration of $
F-34
On February 26, 2025, Model Queen entered into a certain purchase and sale agreement with BTC KZ (“BTC KZ”), pursuant to which Model Queen shall purchase certain cryptocurrency mining hardware and other equipment (“Equipment”) from BTC KZ from time to time in separate purchase orders.
The parties agreed that the purchase was made using a combination of $
On July 25, 2025, the Company, BTC KZ, and ULife entered into a redemption and share cancellation agreement (the “Share Cancellation Agreement”) pursuant to which the Share Consideration previously issued to ULife were redeemed and cancelled effective as of August 6, 2025. Following such cancellation, ULife relinquished all ownership and rights in the cancelled shares. The parties mutually agreed to restructure the unpaid balance into a secured term loan arrangement (see Note 12).
Warrants
Pursuant to the SPA dated September 27, 2024, the Company issued the Initial Note and accompanying with the Series A Warrants to purchase up to an aggregate of
Pursuant to the SPA dated September 27, 2024, the Company issued the New Notes 3 accompanying with the Series B Warrants to purchase up to an aggregate of
Pursuant to the SPA 9 dated August 13, 2025, the Company issued the Class A ordinary shares accompanying with the Warrants to purchase up to
In addition, the Company entered into an agreement with certain existing investors holding New Notes 3 issued by the Company in January 2025, pursuant to which such investors have agreed to waive certain rights in consideration of the Company issuing to such investors
In August 2025, pursuant to the SPA 9 dated August 13, 2025, the holders of the Warrants and New Note 3 investors exercised all their warrants and converted into
F-35
Pursuant to the SPA 10 dated October 7, 2025, the Company issued the Class A ordinary shares accompanying with the Pre-Funded Warrants to purchase up to
Pursuant to the SPA 11 dated October 15, 2025, the Company issued an aggregate of $
On March 10, 2026, the Company entered into the SPA 12 with certain institutional investors for the purchase and sale of up to $
The summary of warrant activity is as follows:
| Warrants Outstanding | Weighted Average Exercise Price | Average Remaining Contractual Life | ||||||||||
| June 30, 2024 | $ | |||||||||||
| Granted | $ | |||||||||||
| Forfeited | ( | ) | $ | - | ||||||||
| Exercised | ( | ) | $ | - | ||||||||
| June 30, 2025 | $ | |||||||||||
| Granted | $ | |||||||||||
| Forfeited | ( | ) | $ | - | ||||||||
| Exercised | ( | ) | $ | - | ||||||||
| June 30, 2026 | $ | |||||||||||
Conversion of convertible notes payable into Class A Ordinary Shares
During the year ended June 30, 2026, convertible note payable of $
Note 16 – Loss per share
The Company computes loss per share of Class A ordinary shares and Class B ordinary shares using the two-class method. The rights, including the liquidation and dividend rights, of the holders of Class A ordinary shares and Class B ordinary shares are identical. As a result, the undistributed earnings (loss) for each year are allocated based on the contractual participation rights of Class A ordinary shares and Class B ordinary shares as if the earnings for the year had been distributed. As the liquidation and dividend rights are identical, the undistributed loss is allocated on a proportionate basis.
F-36
The following tables set forth the computation of basic and diluted loss per share of Class A ordinary shares and Class B ordinary shares for continuing operations:
| For the Year Ended June 30, 2026 | For the Year Ended June 30, 2025 | For the Year Ended June 30, 2024 | ||||||||||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | |||||||||||||||||||
| Basic and diluted loss per share: | ||||||||||||||||||||||||
| Numerator | ||||||||||||||||||||||||
| Allocation of undistributed loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Denominator | ||||||||||||||||||||||||
| Number of shares used in per share computation | ||||||||||||||||||||||||
| Basic and diluted loss per share - continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
The following tables set forth the computation of basic and diluted income (loss) per share of Class A ordinary shares and Class B ordinary shares for discontinued operations:
| For the Year Ended June 30, 2026 | For the Year Ended June 30, 2025 | For the Year Ended June 30, 2024 | ||||||||||||||||||||||
| Class A Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | |||||||||||||||||||
| Basic and diluted income (loss) per share: | ||||||||||||||||||||||||
| Numerator | ||||||||||||||||||||||||
| Allocation of undistributed income (loss) from discontinued operations | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| Denominator | ||||||||||||||||||||||||
| Number of shares used in per share computation | ||||||||||||||||||||||||
| Basic and diluted income (loss) per share - discontinued operations | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
The summary of anti-dilutive instruments excluded from the computation of loss per share, amount is as follows:
| Warrants | Convertible Notes | Pre-Delivery Shares | Total | |||||||||||||
| Ordinary shares subject to outstanding: | ||||||||||||||||
| For the year ended June 30, 2026 | ||||||||||||||||
| For the year ended June 30, 2025 | ||||||||||||||||
| For the year ended June 30, 2024 | ||||||||||||||||
Note 17 – Commitments and contingencies
Contingencies
From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Except as disclosed below, the Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows.
F-37
Second Confidential Settlement Agreement
The Company and FT Global Capital Inc. (“FTGC”) previously entered into the Confidential Settlement Agreement dated September 22, 2025 (the “Prior Settlement Agreement”), as amended by the Amendment to Confidential Settlement Agreement dated October 31, 2025 (the “Prior Amendment,” and together with the Prior Settlement Agreement, the “Prior Settlement Documents”), which resolved and settled all claims between the Parties, except only (i) the disputes relating to the Company’s financing that occurred on or about October 9, 2025 (the “October Financing”) and (ii) the tail provisions of the Engagement Agreement, consisting of Section 1(C) together with the portions of Sections 1(A) and 1(B) incorporated therein solely for purposes of calculating compensation (the “Tail Provisions”)
On October 13, 2025, FTGC filed a Complaint against the Company in the Supreme Court of the State of New York (FT Global Capital, Inc. v. Zeta Network Group, formerly known as Color Star Technology Co., Ltd., Index No. 659090/2025) (the “2025 Action”). On January 23, 2026 (“Effective Date”), the parties entered into a settlement agreement (“Second Confidential Settlement Agreement”), pursuant to which both parties agreed to modify the Tail Provisions, (ii) resolve any and all disputes between them including disputes relating to the October Financing and the 2025 Action. The settlement payment is $
Pursuant to Second Confidential Settlement Agreement, the parties also agreed that, from the Effective Date through and including September 7, 2026, FTGC shall be entitled to only a cash fee equal to
As of June 30, 2026, the settlement payment in connection with the October Financing, First Payment, Second Payment, and Tail Fee Compensation have been fully settled.
Note 18 – Concentrations of risk
Credit Risk
The Company is exposed to credit risk from its cash in banks and advances on performance obligations.
As of June 30, 2026, and 2025, there were and
Customer Concentration Risk
As of June 30, 2026 and 2025, there were no accounts receivable.
For the year ended June 30, 2026, one customer accounted for
Vendor Concentration Risk
There were accounts payable as of June 30, 2026 and 2025.
For the year ended June 30, 2026, 2025 and 2024, one vendor accounted for
F-38
Digital Asset Custody and Security Risks
The Company holds significant digital assets that are subject to specialized custody arrangements. To safeguard these assets, the Company utilizes a combination of multi-signature cryptographic protocols and strict internal controls that segregate operational duties. However, cryptocurrency custody is subject to unique and evolving security risks. Security measures and technical safeguards cannot provide absolute assurance against future loss. Digital assets are inherently vulnerable to sophisticated cyberattacks, security breaches, software vulnerabilities, loss of private keys, or fraudulent activity. If the Company’s custody controls are compromised, or if a system failure occurs, the Company could experience significant theft or permanent loss of its digital asset holdings, which would materially and adversely affect its financial condition and operating results.
Note 19 – Segment information
The Company conducts business as operating segments which comprise of consulting services and cryptocurrency mining, based upon the Company’s revenue streams, organizational and management structure, as well as information regularly reviewed by the Company’s CODM to assess performance and allocate resources. In addition, the CODM regularly reviews revenue, significant operating expense categories as presented below, and consolidated net loss as a whole. The accounting policies of the segment are the same as those described in Note 2.
The key measure of segment profitability that the CODM uses to allocate resources and assess performance is segment loss. The CODM also reviews consolidated net loss, as reported on the consolidated statements of operations, to assess the Company’s overall financial performance. The unallocated expenses below represent corporate expenses that were not allocable to the specified segment.
| For the Year Ended June 30, 2026 | ||||||||||||
| Consulting service | Cryptocurrency mining | Total | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Less cost of revenue | ||||||||||||
| Segment gross loss | ( | ) | ( | ) | ||||||||
| Less: | ||||||||||||
| Payroll expenses | ||||||||||||
| Professional expenses | ||||||||||||
| Travel expenses | ||||||||||||
| Office expenses | ||||||||||||
| Impairment loss of long-lived assets | | |||||||||||
| Other selling, general and administrative expenses | ||||||||||||
| Finance expense | ||||||||||||
| Segment loss | ( | ) | ( | ) | ( | ) | ||||||
| Reconciliation of loss | ||||||||||||
| Less: unallocated amounts | ||||||||||||
| Payroll expenses | ||||||||||||
| Professional expenses | ||||||||||||
| Travel expenses | ||||||||||||
| Office expenses | ||||||||||||
| Other selling, general and administrative expenses | ||||||||||||
| Stock compensation expenses | ||||||||||||
| Interest income | ( | ) | ||||||||||
| Amortization of debt issuance costs | ||||||||||||
| Impairment of cryptocurrency | ||||||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||||||
| Finance expense | ||||||||||||
| Net loss from continued operations | $ | ( | ) | |||||||||
F-39
| For the Year Ended June 30, 2025 | ||||||||||||
| Consulting service | Cryptocurrency mining | Total | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Less cost of revenue | ||||||||||||
| Segment gross loss | ( | ) | ( | ) | ||||||||
| Less: | ||||||||||||
| Payroll expenses | ||||||||||||
| Professional expenses | ||||||||||||
| Travel expenses | ||||||||||||
| Office expenses | ||||||||||||
| Other selling, general and administrative expenses | ||||||||||||
| Finance expense | ||||||||||||
| Segment loss | ( | ) | ( | ) | ( | ) | ||||||
| Reconciliation of loss | ||||||||||||
| Less: unallocated amounts | ||||||||||||
| Payroll expenses | ||||||||||||
| Professional expenses | ||||||||||||
| Travel expenses | ||||||||||||
| Office expenses | ||||||||||||
| Other selling, general and administrative expenses | ||||||||||||
| Stock compensation expenses | ||||||||||||
| Other expense, net | ||||||||||||
| Interest income | ( | ) | ||||||||||
| Loss on extinguishment of debts | ||||||||||||
| Amortization of debt issuance costs | ||||||||||||
| Finance expense | ||||||||||||
| Net loss from continued operations | $ | ( | ) | |||||||||
F-40
| For the Year Ended June 30, 2024 | ||||||||||||
| Consulting service | Cryptocurrency mining | Total | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Less cost of revenue | ||||||||||||
| Segment gross profit | ||||||||||||
| Less: | ||||||||||||
| Payroll expenses | ||||||||||||
| Professional expenses | ||||||||||||
| Travel expenses | ||||||||||||
| Office expenses | ||||||||||||
| Other taxes | ||||||||||||
| Other selling, general and administrative expenses | ||||||||||||
| Finance expense | ||||||||||||
| Segment loss | ( | ) | ( | ) | ||||||||
| Reconciliation of loss | ||||||||||||
| Less: unallocated amounts | ||||||||||||
| Payroll expenses | ||||||||||||
| Professional expenses | ||||||||||||
| Travel expenses | ||||||||||||
| Office expenses | ||||||||||||
| Other selling, general and administrative expenses | ||||||||||||
| Stock compensation expenses | ||||||||||||
| Allowance for credit losses | ||||||||||||
| Amortization of debt issuance costs | ||||||||||||
| Finance expense | ||||||||||||
| Net loss from continued operations | $ | ( | ) | |||||||||
Note 20 – Subsequent events
Shares Reverse Split
Effective July 27, 2026, the Company effected a
July 2026 Securities Purchase Agreement
On July 29, 2026, the Company entered into a securities purchase agreement (“SPA 13”) with certain investors pursuant to which the Company agrees to issue and sell to each investor in a private placement offering, the investors agree to purchase an aggregate of $
The warrants will be immediately exercisable from the date of issuance and will expire on the fifth anniversary of the date of issuance, at an exercise price of $
F-41
The gross proceeds of the offering are payable by approximately
The offering was closed on August 17, 2026 and non-cash consideration with an agreed value of $
September 2026 Shareholder Meeting
On September 10, 2026, the shareholders approved as a special resolution on the following:
Share Capital Reduction, Reorganization and Increase
The par value of each issued Class A ordinary share with a nominal or par value of $
Immediately following the Share Capital Reduction, each authorized but unissued Class A ordinary share with a nominal or par value of $
Immediately following the Share Capital Reduction, the Share Sub-Division and the Cancellation, the authorized share capital of the Company shall be changed from $
Second Share Consolidation
A share consolidation at the ratio of eight (8)-for-one (1), whereby every eight (8) Class A ordinary shares with a nominal or par value of $
As a consequence of the Second Share Consolidation, the Company’s authorized share capital will be changed from $
F-42
Exhibit 2.1
Description of Securities
Registered under Section 12 of the Securities Exchange Act of 1934
We are a Cayman Islands exempted company with limited liability and our affairs are governed by our tenth amended and restated memorandum and articles of association adopted by special resolution passed at an extraordinary general meeting of shareholders held on May 8, 2026 and effective on July 27, 2026 (the “Amended and Restated Memorandum and Articles”), the Companies Act (Revised) of the Cayman Islands (the “Companies Act”), the common law of the Cayman Islands, our corporate governance documents and rules and regulations of the stock exchange on which our shares are traded.
As of the date hereof, the authorized share capital of the Company is USD$32,000,000.00 divided into 1,400,000,000 class A ordinary shares with a nominal or par value of USD$0.02 (“Class A Ordinary Shares”) each and 200,000,000 class B ordinary shares with a nominal or par value of USD$0.02 (“Class B Ordinary Shares” and together with the Class A Ordinary Shares, the “Ordinary Shares”).
As of June 30, 2026, 628,761 Class A Ordinary Shares are issued and outstanding and 1 Class B Ordinary Share is issued and outstanding. All of our issued and outstanding Ordinary Shares are fully paid.
Ordinary Shares
The following are summaries of material provisions of our Amended and Restated Memorandum and Articles, corporate governance policies and the Companies Act insofar as they relate to the material terms of our Ordinary Shares.
Objects of Our Company
Under our Amended and Restated Memorandum and Articles, the objects of our Company are unrestricted and we have the full power and authority to carry out any object not prohibited by the law of the Cayman Islands.
Share Capital
The holders of our Class A Ordinary Shares are entitled to one vote for each such share held and shall be entitled to notice of any general meeting, and, subject to the terms of Amended and Restated Memorandum and Articles, to vote thereat.
The holders of our Class B Ordinary Shares are entitled to twenty votes for each such share held and shall be entitled to notice of any general meeting, and, subject to the terms of Amended and Restated Memorandum and Articles, to vote thereat.
Except for the voting rights and conversion rights set out in the Amended and Restated Memorandum and Articles, the Class A Ordinary Shares and the Class B Ordinary Shares rank pari passu and have the same rights, preferences, privileges and restrictions.
Dividends
The holders of our Ordinary Shares are entitled to such dividends as may be declared by our Board of Directors subject to the Companies Act and to our Amended and Restated Memorandum and Articles. No dividend or distribution shall be paid except out of the profits of the Company, realized or unrealized, or out of the share premium account or as otherwise permitted by the Companies Act.
Voting
Voting at any shareholders’ meeting is by show of hands unless a poll is demanded by the chairman or persons holding certain amounts of shares as set forth in the Amended and Restated Memorandum and Articles. Actions that may be taken at a general meeting also may be taken by a unanimous resolution of the shareholders in writing.
No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business; two members present in person, by electronic facilities or by proxy shall be a quorum provided always that if the Company has one member of record the quorum shall be that one member present in person, by electronic facilities or by proxy. An ordinary resolution to be passed at a general meeting requires the affirmative vote of a simple majority of the votes cast by such members as, being entitled to do so, vote in person or by proxy.
A special resolution of members is required to change the name of the Company, approve a merger, wind up the Company, amend the Amended and Restated Memorandum and Articles and reduce the share capital.
Transfer of Ordinary Shares
Subject to the restrictions set out below, any of our shareholders may transfer all or any of his, its or her Ordinary Shares by an instrument of transfer in the usual or common form or any other form approved by our Board of Directors or in a form prescribed by the stock exchange on which our shares are then listed.
Our Board of Directors may, in its absolute discretion and without assigning any reason therefor, refuse to register any transfer of any Ordinary Share, whether or not it is fully paid up as to issue price. Without limitation, our directors may decline to recognize any instrument of transfer if (a) the instrument of transfer is not accompanied by the certificate covering the shares to which it relates (if any) and/or such other evidence as our Board of Directors may require to prove the title of the transferor to, or his/her right to transfer, the shares; or (b) the instrument of transfer is in respect of more than one class of shares.
If our directors refuse to register a transfer, they shall, within two months after the date on which the instrument of transfer was lodged, send to the transferee notice of such refusal.
The registration of transfers may be suspended and the register closed at such times and for such periods as our Board of Directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.
Winding-Up/Liquidation
If the Company is, or is likely to become, unable to pay its debts, our directors have power to present a winding up petition in the name of the Company and/or to apply for the appointment of provisional liquidators.
Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares, if the Company shall be wound up, the liquidator may, with the sanction of an ordinary resolution of the Company and any other sanction required by law, divide amongst the members in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the members as the liquidator, with the like sanction, shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.
Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares, if the Company shall be wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively. And if in a winding up the assets available for distribution amongst the members shall be more than sufficient to repay the whole of the capital at the commencement of the winding up, the excess shall be distributed amongst the members in proportion to the capital at the commencement of the winding up paid up on the shares held by them respectively. But our Amended and Restated Memorandum and Articles is to be without prejudice to the rights of the holders of shares issued upon special terms and conditions.
2
Calls on Ordinary Shares and Forfeiture of Ordinary Shares
Our Board of Directors may from time to time make calls upon shareholders for any amounts unpaid on their Ordinary Shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid on the specified time are subject to forfeiture.
Redemption of Shares
Subject to the provisions of the Companies Act and our Amended and Restated Memorandum and Articles: a) shares may be issued on the terms that they are, or at the option of the Company or the member are, liable to be redeemed on such terms and in such manner as the Company, by resolution, or as the directors, before the issue of the shares, may determine; b) the Company may purchase shares, including any redeemable shares, issued by the Company upon the terms and in such manner as the directors or the Company, by resolution, may from time to time determine, and such authority may be general in respect of any number of purchases, for a set period, or indefinite; c) the Company may make payment in respect of any redemption or purchase of its own shares in any manner authorized by the Companies Act, including out of capital; d) subject to the provisions of our Amended and Restated Memorandum and Articles, the rights attaching to any issued shares may, by special resolution, be varied so as to provide that such shares are, or at the option of the Company or the member are, liable to be redeemed on such terms and in such manner as the Company may, determine.
Under the Companies Act, the redemption or repurchase of any share may be paid out of our Company’s profits, share premium or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital if our Company can, immediately following the date on which the payment out of capital is proposed to be made, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, or (b) if such redemption or repurchase would result in there being no shares outstanding. In addition, our directors may accept the surrender of any fully paid share for no consideration.
Conversion of Class B Ordinary Shares
The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time by the holder thereof on an one-for-one basis. The right to convert is exercisable by the holder of the Class B Ordinary Shares delivering a written notice to the Company that such holder elects to convert a specified number of Class B Ordinary Shares into Class A Ordinary Shares.
The number of Class B Ordinary Shares held by a holder thereof will be automatically and immediately converted into an equal and corresponding number of Class A Ordinary Shares upon any direct or indirect sale, transfer, assignment or disposition of such number of Class B Ordinary Shares by the holder thereof or an affiliate or such holder or the direct or indirect transfer or assignment of the voting power attached to such number of Class B Ordinary Shares through voting proxy or otherwise to any person or entity that is not an affiliate of such holder. For the avoidance of doubt, the creation of any pledge, charge, encumbrance or other third party right of whatever description on any of Class B Ordinary Share to secure contractual or legal obligations shall not be deemed as a sale, transfer, assignment or disposition unless and until any such pledge, charge, encumbrance or other third-party right is enforced and results in the third party holding directly or indirectly beneficial ownership or voting power through voting proxy or otherwise to the related Class B Ordinary Shares, in which case all the related Class B Ordinary Share shall be automatically converted into the same number of Class A Ordinary Share. Any conversion is effected by re-designation of the relevant Class B Ordinary Shares as Class A Ordinary Shares, as further described in the Amended and Restated Memorandum and Articles.
Inspection of Books and Records
Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of members not being Directors and no member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Companies Act or authorized by the Directors or by the Company in a general meeting. However, the Directors shall from time to time cause to be prepared and to be laid before the Company in a general meeting, profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by Companies Act. (See “Where You Can Find More Information”)
3
Issuance of Additional Shares
Our Amended and Restated Memorandum and Articles authorize our Board of Directors to issue additional Ordinary Shares from time to time as our Board of Directors shall determine, to the extent there are available authorized but unissued shares.
Our Amended and Restated Memorandum and Articles also authorize our Board of Directors to issue unissued shares with or without preferred, deferred or other special rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise, subject to compliance with the variation of rights of shares provision in the Amended and Restated Memorandum and Articles, including:
| ● | the designation of the series; | |
| ● | the number of shares of the series; | |
| ● | the dividend rights, dividend rates, conversion rights, voting rights; and | |
| ● | the rights and terms of redemption and liquidation preferences. |
Our Board of Directors may, issue preferred shares without action by our shareholders to the extent there are authorized but unissued shares available.
Anti-Takeover Provisions
Some provisions of our Amended and Restated Memorandum and Articles may discourage, delay or prevent a change of control of our Company or management that shareholders may consider favorable, including provisions that:
| ● | authorize our Board of Directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders (subject to variation of rights of shares provisions in our Amended and Restated Memorandum and Articles); and | |
| ● | limit the ability of shareholders to requisition and convene general meetings of shareholders. Our Amended and Restated Memorandum and Articles allow one or more shareholders holding in the aggregate not less than one-fourth of such paid-up capital (as to the total consideration paid for such shares) of the Company as at the date of the requisition as carries the right of voting at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our directors are obliged to convene such meeting. |
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our Amended and Restated Memorandum and Articles for a proper purpose and for what they believe in good faith to be in the best interests of our Company.
General Meetings of Shareholders and Shareholder Proposals
Our shareholders’ general meetings may be held in such place within or outside the Cayman Islands as our Board of Directors considers appropriate.
As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. The directors may, whenever they think fit, convene an extraordinary general meeting.
Shareholders’ general meetings and any other general meetings of our shareholders may be convened by our Board of Directors. Our Board of Directors shall give not less than five (5) days’ notice of a shareholders’ meeting, specifying the place (if any), the day and the hour of meeting and, in case of special business, the general nature of that business, to those persons entitled to receive such notices under the Amended and Restated Memorandum and Articles.
Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our Amended and Restated Memorandum and Articles of Association provide that the Directors shall, upon the requisition in writing of one or more members holding in the aggregate not less than one-fourth of such paid-up capital (as to issue price) of the Company as at the date of the requisition carries the right of voting at general meetings, convene an extraordinary general meeting. Any such requisition shall express the object of the meeting proposed to be called, and shall be left at or posted to the registered office and may consist of several documents in like form each signed by one or more requisitionists. If the Directors do not proceed to convene a general meeting within twenty-one days from the date of such requisition being left as aforesaid, the requisitionist(s) or any one or more of them or any other member or members holding in the aggregate not less than one-tenth of such paid up capital (as to issue price) of the Company as at the date of the requisition carries the right of voting at general meetings, may convene an extraordinary general meeting to be held at the registered office or at some convenient place at such time, subject to the Amended and Restated Memorandum and Articles of Association as to notice, as the person(s) convening the meeting fix. Otherwise, our Amended and Restated Memorandum and Articles do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.
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Exempted Company
We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. A Cayman Islands exempted company:
| ● | is a company that conducts its business mainly outside of the Cayman Islands; | |
| ● | is exempted from certain requirements of the Companies Act, including the filing an annual return of its shareholders with the Registrar of Companies or the Immigration Board; | |
| ● | does not have to make its register of members open for inspection; |
| ● | does not have to hold an annual general meeting; | |
| ● | may issue negotiable or bearer shares or shares with no par value (subject to the provisions of the Companies Act); | |
| ● | may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); and | |
| ● | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands. |
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Register of Members
Under Cayman Islands law, we must keep a register of members and there should be entered therein:
| ● | the names and addresses of the members, a statement of the shares held by each member, and of the amount paid or agreed to be considered as paid, on the shares of each member; | |
| ● | the date on which the name of any person was entered on the register as a member; and | |
| ● | the date on which any person ceased to be a member. |
Under Cayman Islands law, the register of members of our Company is prima facie evidence of the matters set out therein (i.e. the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members is deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Once our register of members has been updated, the shareholders recorded in the register of members are deemed to have legal title to the shares set against their name.
If the name of any person is incorrectly entered in, or omitted from, our register of members, or if there is any default or unnecessary delay in entering on the register the fact of any person having ceased to be a member of our Company, the person or member aggrieved (or any member of our Company or our Company itself) may apply to the Cayman Islands Grand Court for an order that the register be rectified, and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.
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Material Differences between U.S. Corporate Law and Cayman Islands Corporate Law
The Companies Act is modeled after that of English law but does not follow many recent English law statutory enactments. In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the State of Delaware.
Mergers and Similar Arrangements. A merger of two or more constituent companies under Cayman Islands law requires a plan of merger or consolidation to be approved by the directors of each constituent company and authorization by (a) a special resolution of the shareholders and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association.
A merger between a Cayman Islands parent company and its Cayman Islands subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman Islands subsidiary if a copy of the plan of merger is given to every member of that Cayman Islands subsidiary to be merged unless that member agrees otherwise. For this purpose a subsidiary is a company of which at least ninety percent (90%) of the issued shares entitled to vote are owned by the parent company.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Save in certain circumstances, a dissentient shareholder of a Cayman constituent company is entitled to payment of the fair value of his shares upon dissenting to a merger or consolidation. The exercise of appraisal rights will preclude the exercise of any other rights save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| ● | the statutory provisions as to the required majority vote have been met; |
| ● | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
| ● | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
| ● | the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
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When a takeover offer is made and accepted by holders of 90.0% of the shares within four months, the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits. In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle, including when:
| ● | a company acts or proposes to act illegally or ultra vires; |
| ● | the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and |
| ● | those who control the company are perpetrating a “fraud on the minority.” |
Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, actual fraud or the consequences of committing a crime. Our Amended and Restated Memorandum and Articles provide that every director, secretary, or other officer of the Company (including alternate directors, proxy directors and former directors and officers), any trustee for the time being acting in relation to the Company (including any nominee shareholder holding shares in the Company) and their heirs and personal representatives (each an “Indemnified Person”) shall be entitled to be indemnified out of the assets of the Company against all actions, proceedings, costs, damages, expenses, claims, losses or liabilities which they or any of them may sustain or incur by reason of any act done or omitted in or about the execution of the duties of their respective offices or trusts or otherwise in relation thereto, including any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgement is given in his favour or in which he is acquitted except to the extent that any of the foregoing arise through his dishonesty. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in our Amended and Restated Memorandum and Articles.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
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As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he or she owes the following duties to the company — a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits him or her to do so) and a duty not to put himself or herself in a position where the interests of the company conflict with his or her personal interest or his or her duty to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and our Amended and Restated Memorandum and Articles provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.
Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
Cayman Islands law does not provide shareholders any right to put proposals before a meeting or requisition a general meeting. However, these rights may be provided in articles of association. Our Amended and Restated Memorandum and Articles allow one or more shareholders holding in the aggregate not less than one-fourth of such paid-up capital (as to the total consideration paid for such shares) of the Company as at the date of the requisition as carries the right of voting at general meetings to requisition an extraordinary general meeting. Other than this right to requisition a shareholders’ meeting, our Amended and Restated Memorandum and Articles do not provide our shareholders other right to put proposal before a meeting. As a Cayman Islands exempted company, we are not obliged by law to call shareholders’ annual general meetings.
Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands, but the Amended and Restated Memorandum and Articles does not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our Amended and Restated Memorandum and Articles, the holder or holders of more than half of the paid-up share capital of the Company (as to issue price) giving the right to attend and vote at general meetings may appoint any person to be a director and may in like manner remove any director. The office of director shall be vacated if the director: a) is prohibited by law from serving as Director; b) becomes bankrupt or makes any arrangement or composition with his creditors; c) dies or is found to be or becomes of unsound mind; d) resigns his office by notice in writing to the Company or otherwise pursuant to any agreement between the Company and such Director; e) is removed from office by notice of the holder or holders of more than half of the paid-up share capital of the Company (as to issue price) giving the right to attend and vote at general meetings of the Company notwithstanding anything in the Amended and Restated Memorandum and Articles or any agreement between the Company and such Director; f) is requested by all the other directors (numbering at least two) to resign; or g) if he absents himself (without being represented by proxy or an alternate Director appointed by him) from three consecutive meetings of the board of directors without special leave of absence from the directors, and they pass a resolution that he has by reason of such absence vacated office.
Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.
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Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.
Dissolution; Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so. Under the Companies Act and the Amended and Restated Memorandum and Articles, our company may be dissolved, liquidated or wound up by a special resolution of our shareholders.
Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and the Amended and Restated Memorandum and Articles, if at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of at least two-thirds of the issued shares of that class or with the sanction of a resolution passed at a meeting of the holders of such class of shares by the holder or holders of at least two-thirds of such shares present in person or by proxy at such meeting.
Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, our Amended and Restated Memorandum and Articles may only be amended with a special resolution of our shareholders.
Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by our Amended and Restated Memorandum and Articles on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our Amended and Restated Memorandum and Articles governing the ownership threshold above which shareholder ownership must be disclosed.
Warrants
As of June 30, 2026, we had 203,522 warrants issued and outstanding. Our warrants are exercisable to purchase ordinary shares at a weighted average exercise price of $1,946.03 per share as of June 30, 2026. Our warrants generally have a term of 3 to 5.5 years from the date of issuance.
We may issue warrants to purchase our ordinary shares, preferred shares, debt securities or any combination thereof. Warrants may be issued independently or together with any other securities that may be sold by us pursuant to a prospectus or any combination of the foregoing and may be attached to, or separate from, such securities. To the extent warrants that we issue are to be publicly-traded, each series of such warrants will be issued under a separate warrant agreement to be entered into between us and a warrant agent.
Each warrant will entitle the holder of warrants to purchase the number of ordinary shares, preferred shares or debt securities of the relevant class or series at the exercise price stated or determinable in the prospectus for the warrants. Warrants may be exercised at any time up to the close of business on the expiration date shown in the applicable prospectus, unless otherwise specified in such prospectus. After the close of business on the expiration date, if applicable, unexercised warrants will become void. Warrants may be exercised in the manner described in the applicable prospectus. When the warrant holder makes the payment and properly completes and signs the warrant certificate at the corporate trust office of the warrant agent, if any, or any other office indicated in the prospectus, we will, as soon as possible, forward the securities or other rights that the warrant holder has purchased. If the warrant holder exercises less than all of the warrants represented by the warrant certificate, we will issue a new warrant certificate for the remaining warrants. If we so indicate in the applicable prospectus, holders of the warrants may surrender securities as all or part of the exercise price for warrants.
Prior to the exercise of any warrants to purchase ordinary shares or preferred shares of the relevant class or series, holders of the warrants will not have any of the rights of holders of Ordinary Shares or preferred shares purchasable upon exercise, including the right to vote or to receive any payments of dividends or payments upon our liquidation, dissolution or winding up on the Ordinary Shares or preferred shares purchasable upon exercise, if any.
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Exhibit 8.1
List of Subsidiaries
| Name | Place of Incorporation | |
| CACM Group NY, Inc. | New York, United States | |
| Color Star Technology Ohio Inc. | Ohio, United States | |
| Model Queen Limited | Hong Kong |
Exhibit 12.1
Certification by the Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Xiao Wen “Samantha” Huang, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Zeta Network Group (the “Company”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
| 4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
| Date: | October 19, 2026 | |
| By: | /s/ Xiao Wen “Samantha” Huang | |
| Name: | Xiao Wen “Samantha” Huang | |
| Title: | Chief Executive Officer |
Exhibit 12.2
Certification by the Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Lili Jiang, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Zeta Network Group (the “Company”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
| 4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
| Date: | October 19, 2026 | |
| By: | /s/ Lili Jiang | |
| Name: | Lili Jiang | |
| Title: | Chief Financial Officer |
Exhibit 13.1
Certification by the Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Zeta Network Group (the “Company”) on Form 20-F for the year ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Samantha Parker, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: | October 19, 2026 | |
| By: | /s/ Xiao Wen “Samantha” Huang | |
| Name: | Xiao Wen “Samantha” Huang | |
| Title: | Chief Executive Officer |
Exhibit 13.2
Certification by the Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Zeta Network Group (the “Company”) on Form 20-F for the year ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lili Jiang, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: | October 19, 2026 | |
| By: | /s/ Lili Jiang | |
| Name: | Lili Jiang | |
| Title: | Chief Financial Officer |
Exhibit 15.1
 |
AUDIT ALLIANCE LLP® A Top 18 Audit Firm 10 Anson Road, #20-16 International Plaza, Singapore 079903. |
 |
UEN: T12LL1223B GST Reg No : M90367663E
Tel: (65) 6227 5428
10 Anson Road #20-16 International Plaza Singapore 079903
Website : www.allianceaudit.com
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements on Form F-3 (File No. 333-281668 and 333-292327) and Form S-8 (File No. 333-293130) of our report dated October 17, 2024, with respect to the consolidated financial statements of Zeta Network Group (formerly known as Color Star Technology Co., Ltd.) and its subsidiaries, included in this Annual Report on Form 20-F for the year ended June 30, 2026.
/s/ Audit Alliance LLP
Singapore
October 19, 2026
Registered Office: 10 Anson Road #20-16 International Plaza Singapore 079903
Exhibit 15.2
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Assentsure PAC UEN – 201816648N 180B Bencoolen Street #03-01 The Bencoolen Singapore 189648 http://www.assentsure.com.sg |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements on Form F-3 (File No. 333-281668 and 333-292327) and Form S-8 (File No. 333-293130) of our report dated October 16, 2026, with respect to the consolidated financial statements of Zeta Network Group and its subsidiaries, included in this Annual Report on Form 20-F for the year ended June 30, 2026.
/s/ Assentsure PAC
Assentsure PAC
Singapore
October 19, 2026